Rahul Crowe

Rahul Crowe asked about the evolution of Shake Shack's loyalty program and strategies for communicating brand value through it. He also inquired about ongoing headwinds in the New York City and Northeast markets and any 2026 initiatives aimed at improving performance in these regions.

Answer

CEO Rob Lynch highlighted the success of the in-app $1, $3, $5 promotion, which has driven a 50% increase in app downloads and profitable growth, serving as the foundation for the loyalty program launching by year-end. He emphasized an 'Enlightened Hospitality-driven' approach for the loyalty platform. Regarding the Northeast, Lynch acknowledged disproportionate weather impacts in Q4 2025 and January 2026. He stated that future development will diversify the company's footprint away from the Northeast, but Shake Shack remains committed to its New York roots, with remodels planned. He noted strong demand and surprising success in new markets across the United States.

Rahul Crowe inquired about the evolution of Shake Shack's loyalty program and how it will communicate brand value throughout the year. He also asked about initiatives planned for 2026 to address the ongoing headwinds in the New York City and Northeast markets.

Answer

CEO Rob Lynch stated that the significant increase in app downloads, driven by the $1, $3, $5 value platform, forms the foundation for the loyalty program launching by year-end. He expressed confidence in the program's ability to drive profitable growth through targeted value. Regarding the Northeast, Mr. Lynch acknowledged disproportionate weather impacts but highlighted strong Q4 and January results despite these challenges. He emphasized a strategy to diversify Shake Shack's footprint, with most 2026 development outside the Northeast, to mitigate regional weather exposure while still committing to NYC market remodels.

Rahul Crowe asked about build cost inflation for both Roadhouse and Bubba's, and how cash-on-cash returns are tracking. He also inquired if there's a conscious goal for the company versus franchise mix, which has been slowly increasing.

Answer

Michael Bailen, VP of Investor Relations, detailed that Roadhouse's average all-in investment cost is increasing to around $8.9 million in 2026 due to higher rents and California stores, while Bubba's is expected to decrease by over $500,000 to $8.4-$8.5 million due to building work, prototype improvements, and conversions. He stated they target a mid-teen IRR for new restaurants, which they are achieving or exceeding. The question regarding company versus franchise mix was not directly addressed.