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Shake Shack Inc. (SHAK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat: total revenue $356.5M (+12.6% YoY) versus consensus $354.1M*, and adjusted pro forma diluted EPS $0.44 versus consensus $0.38*; GAAP diluted EPS was $0.41. Restaurant-level margin expanded 190 bps YoY to 23.9%, and adjusted EBITDA reached a record $58.9M. *
  • Management raised FY25 adjusted EBITDA guidance to $210–$220M (from $205–$215M), maintained FY revenue at $1.4–$1.5B and restaurant-level margin ~22.5%, and introduced Q3 revenue guidance of $358–$364M with margin 22–22.5%.
  • Comp trajectory improved: same-Shack sales +1.8% in Q2 and +3.2% in July period, supported by national Dubai Shake LTO, emerging paid media tests, and operational scorecard gains.
  • Near-term catalysts: accelerated paid media rollout, enhanced combo strategy in drive-thru, kitchen innovation pilots, and strong development (45–50 company-operated openings in 2025).

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and EBITDA record: restaurant-level margin 23.9% (+190 bps YoY) and adjusted EBITDA $58.9M (+24.8% YoY), driven by labor model adherence and operational scorecards. “We showed great progress… expanding our restaurant level margin by 190 basis points year over year.”
  • Comp and mix improvement via innovation: Q2 comps +1.8% with ~1 ppt mix contribution; Dubai Shake and summer BBQ platform supported traffic and mix; July comps +3.2% with positive traffic.
  • Strategic paid media tests: initial two-week paid media around Dubai Shake and Dollar Soda showed encouraging results without being embedded in guidance; G&A flexibility supports scaling.

What Went Wrong

  • Beef inflation and other cost pressures: food & paper costs rose to 28.2% of Shack sales (+40 bps YoY) on mid-single-digit beef cost increases; items per check declined 1.5% on smaller party sizes.
  • Traffic softness early in the quarter: Q2 traffic down 70 bps despite improving monthly cadence; increased marketing and digital mix lifted other operating expenses (+40 bps YoY).
  • Regional macro headwinds: continued underperformance in NYC/Northeast comps (despite high AUV and margins), with tourism and broader macro cited; ongoing caution embedded in guidance.

Financial Results

Core P&L and Profitability vs prior periods and estimates

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD Millions)$328.7 $320.9 $356.5
GAAP Diluted EPS ($)$0.21 $0.10 $0.41
Adjusted Pro Forma EPS ($)$0.26 $0.14 $0.44
Adjusted EBITDA ($USD Millions)$46.7 $40.7 $58.9
Restaurant-level Profit Margin (%)22.7% 20.7% 23.9%
Same-Shack Sales (%)+4.3% +0.2% +1.8%

Revenue and EPS vs S&P Global consensus

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus ($USD)$329.0M*$327.6M*$354.1M*
Revenue Actual ($USD)$328.7M $320.9M $356.5M
Beat/MissMiss ($0.3M)*Miss ($6.7M)*Beat ($2.4M)
Primary EPS Consensus Mean ($)$0.25*$0.16*$0.38*
EPS Actual (Primary) ($)$0.26 $0.14 $0.44

Values with asterisks retrieved from S&P Global.*

Segment breakdown (Company-operated vs Licensing)

MetricQ4 2024Q1 2025Q2 2025
Shack Sales ($USD Millions)$316.6 $309.8 $343.2
Licensing Revenue ($USD Millions)$12.1 $11.1 $13.2
System-wide Sales ($USD Millions)$500.7 $489.4 $549.9

KPIs

KPIQ4 2024Q1 2025Q2 2025
Average Weekly Sales (AWS, $000)n/a$72 $78
New Company-operated Shacks Opened19 4 13
New Licensed Shacks Opened9 7 9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)FY 2025$205–$215 $210–$220 Raised
Total Revenue ($USD Billions)FY 2025$1.4–$1.5 $1.4–$1.5 (tracking midpoint) Maintained
Restaurant-level Profit Margin (%)FY 2025~22.5 (raised from ~22) ~22.5 Maintained
G&A (% of Total Revenue)FY 2025~11.5% 11.5%–12.0% Raised (range widened)
System-wide Unit OpeningsFY 202580–90 (45–50 company-operated; 35–40 licensed) 80–90 (45–50 company-operated; 35–40 licensed) Maintained
Same-Shack SalesFY 2025Low single digits Low single digits Maintained
Food & Paper InflationFY 2025Flat to low single digits; beef up low-mid single digits Low single digits; beef up mid-high single digits Raised beef inflation
Labor InflationFY 2025Low single digits Low single digits Maintained
Adjusted Pro Forma Tax RateFY 202524%–25% 24%–25% Maintained
Total Revenue ($USD Millions)Q3 2025n/a$358–$364 New
Licensing Revenue ($USD Millions)Q3 2025n/a$13.3–$13.6 New
Restaurant-level Profit Margin (%)Q3 2025n/a22–22.5 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Technology & guest recognitionQ1: Launched multi-visit challenge; building guest recognition across channels. Testing paid media at scale; digital menu boards; app adoption via Dollar Soda. Expanding tools and media muscle
Supply chain optimizationQ1: Pursuing cost-to-serve reductions; food & paper flat/low single digits. Mitigating beef inflation via supply chain/logistics productivity. Active mitigation despite higher beef
Tariffs/macroQ1: Minimal expected tariff impact; macro uncertainty embedded. Guidance assumes no material macro/geopolitical change. Cautious, steady assumptions
Product & LTO cadenceQ1: BBQ platform relaunch; limited Dubai Shake in select markets. Dubai Shake national; comps +3.2% in July; ongoing quarterly hero platforms and sides/beverages. Accelerating and scaling innovation
Regional trendsQ1: Headwinds in NYC/LA/DC; Southeast/South strong. New Atlanta “Battery” Shack pilots equipment; NYC/Northeast high AUV but lower comps. Diversifying footprint; operational pilots
Kitchen innovation labQ1: Initiatives underway (layouts/processes). Early equipment prototypes improved throughput/service times in Atlanta test. Positive early results
Legal/regulatoryQ4/Q1: Non-GAAP adjustments include restatement/legal settlements. Ongoing, modest legal settlement accruals reflected in non-GAAP. No new issues highlighted

Management Commentary

  • “We expanded restaurant level margin by nearly 200 basis points year over year to approximately 24%, our highest in the last twenty four quarters.” — Rob Lynch, CEO.
  • “Total revenue for the second quarter was $356.5 million, ahead of our guidance range… We grew adjusted EBITDA by 24.8% year over year to $58.9 million.” — Katie Fogertey, CFO.
  • “We embarked on a paid media campaign… we couldn’t be more excited about the results… we have not put any impact… into our 3Q and full year outlook.” — Rob Lynch/CFO on paid media.
  • “We remain on track to open 45 to 50 company operated Shacks in 2025, marking this as the largest class in company history.” — Rob Lynch.
  • “We are very confident that we're going to be able to mitigate a lot of this beef inflation with supply chain and operational productivity.” — Rob Lynch.

Q&A Highlights

  • Labor productivity and margin drivers: Highest labor attainment to date; margin flow-through supported by new labor guides and scorecards; continued YOY wins expected on labor line.
  • Paid media and marketing strategy: Testing top-of-funnel paid media across ~15 markets; Dubai Shake vs Dollar Soda cohorts; no impact embedded in guidance yet.
  • Dubai Shake impact and cadence: Strong sell-through, with media amplifying consumption; runs through August with new innovations following.
  • Drive-thru combo strategy: Reduces friction, improves throughput and accuracy; mix shift toward doubles boosts revenue/margin.
  • Kitchen innovation: Atlanta “Battery” pilot shows improved speed/throughput via modernized stations and equipment.
  • Traffic outlook: Sequential improvement each month; July +3.2% comps with positive traffic; media started late July.

Estimates Context

  • Q2 2025 vs consensus: revenue $356.5M beat $354.1M*; adjusted pro forma EPS $0.44 beat $0.38*. EBITDA (S&P GAAP) tracked near but above consensus*. Values retrieved from S&P Global.*
  • Prior quarters: Q1 2025 revenue $320.9M missed $327.6M*; EPS $0.14 missed $0.16*. Q4 2024 EPS $0.26 beat $0.25*, revenue slightly below $329.0M*. Values retrieved from S&P Global.*
  • Implications: FY25 adjusted EBITDA guidance raised (to $210–$220M) reflects strong margin momentum; consensus likely to lift near-term EPS and margin forecasts, with revenue estimates modestly affected by paid media tests once quantified.

Key Takeaways for Investors

  • Margin story intact and strengthening: 190 bps YOY expansion, with operational scorecards and labor model delivering sustainable improvement despite beef inflation.
  • Comp acceleration evidence: +1.8% in Q2 and +3.2% in July on LTOs and early paid media—traffic is improving without heavy pricing reliance.
  • Guidance credibility: FY25 adjusted EBITDA raised to $210–$220M; revenue/margin maintained, signaling confidence in underlying execution and visibility.
  • Development-driven growth: Largest company-operated opening class (45–50) on track; diversified geography and drive-thru formats enhance scalability.
  • Marketing muscle building: Paid media and targeted digital activations introduce a new lever for traffic and mix; current guidance conservatively excludes potential upside.
  • Supply chain offsets: Active procurement/logistics work expected to mitigate beef inflation, supporting margin resilience.
  • Near-term trading lens: Focus on July/August comps from Dubai Shake/media tests and Q3 margin delivery vs 22–22.5% guide; watch beef inflation trajectory and G&A mix as media scales.