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Shake Shack Inc. (SHAK)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was solid: revenue rose 15.9% to $367.4M, same‑Shack sales grew 4.9%, and restaurant‑level margin reached 22.8%; GAAP diluted EPS was $0.30 and adjusted pro forma EPS was $0.36 .
  • Versus consensus, revenue modestly beat ($367.4M vs $363.8M*) while GAAP EPS was roughly in line/slightly below ($0.30 vs $0.31*); adjusted EBITDA outperformed company’s prior trend but consensus focused on EBITDA indicated a miss vs $51.7M* (company’s adjusted EBITDA was $54.1M) .
    Values retrieved from S&P Global.
  • Management increased the FY25 outlook midpoint for adjusted EBITDA and net income, raised licensing revenue and restaurant‑level margin, but guided higher G&A; Q4 revenue guidance is $406–$412M with low single‑digit comps .
  • Stock narrative catalysts: sustained comp momentum from paid media and LTOs, ramping supply‑chain savings to offset mid‑teens beef inflation, and an app‑driven value platform (“1‑3‑5”) driving traffic in early Q4 .

What Went Well and What Went Wrong

What Went Well

  • Same‑Shack sales accelerated to +4.9% with positive traffic growth (+1.3%), driven by paid media, app promotions, and LTOs (Dubai Chocolate Shake; summer BBQ), with strong regional comps in South, West, Midwest and double‑digit comps in several metros .
  • Labor efficiency improved meaningfully: labor as % of Shack sales fell 310 bps YoY to 24.9%, reflecting activity‑based labor model, improved retention, and throughput; speed of service improved to ~5m50s from ~7m in 2023 .
  • Strategic quote: “Over the last week, our in‑app traffic is up 85%, and our overall traffic has seen over a 400 basis point change,” highlighting the quick pivot to value and its impact on traffic trajectory .

What Went Wrong

  • Food & paper costs rose 110 bps YoY to 29.3% of Shack sales on mid‑teens beef inflation; management expects elevated beef costs through year end and into next year .
  • Macro pressure in New York Metro and Washington, D.C. weighed on results; October trends softened as French Onion Soup Burger LTO underperformed expectations, prompting a shift toward app‑based value offers .
  • G&A increased to 12.1% of revenue in Q3 and is guided higher for Q4/FY25 due to scaled paid media and people investments; analysts pressed for clarity on the Q4 step‑up .

Financial Results

Revenue, EPS, Margins — Prior Year, Sequential, and vs Estimates

MetricQ3 2024Q1 2025Q2 2025Q3 2025Q3 2025 Consensus*Notes
Total Revenue ($MM)$316.9 $320.9 $356.5 $367.4 $363.8*Beat
Shack Sales ($MM)$304.9 $309.8 $343.2 $352.8 ——
Licensing Revenue ($MM)$12.0 $11.1 $13.2 $14.6 ——
GAAP Diluted EPS ($)($0.26) $0.10 $0.41 $0.30 $0.31*In line/slight miss
Adjusted Pro Forma EPS ($)$0.25 $0.14 $0.44 $0.36 ——
Restaurant‑Level Profit Margin (%)21.0% 20.7% 23.9% 22.8% ——
Adjusted EBITDA ($MM)$45.8 $40.7 $58.9 $54.1 $51.7*Beat (company metric)

Values retrieved from S&P Global.

Segment Breakdown

Revenue MixQ1 2025Q2 2025Q3 2025
Shack Sales ($MM, % of total)$309.8 (96.6%) $343.2 (96.3%) $352.8 (96.0%)
Licensing Revenue ($MM, % of total)$11.1 (3.4%) $13.2 (3.7%) $14.6 (4.0%)

KPIs

KPIQ1 2025Q2 2025Q3 2025
Same‑Shack Sales YoY+0.2% +1.8% +4.9%
Average Weekly Sales (AWS)$72k —$78k (+2.6% YoY)
System‑Wide Sales ($MM)$489.4 $549.9 $571.5
Company‑Operated Openings4 13 13
Licensed Openings7 9 7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($B)FY 2025$1.4–$1.5 ≈$1.45 Maintained range; clarified midpoint
Licensing Revenue ($MM)FY 2025$49–$51 $54.1–$54.5 Raised
Restaurant‑Level Margin (%)FY 2025~22.5 ~22.7–23.0 Raised
G&A (% of revenue)FY 2025~11.5% ~12.3–12.5% Raised
Equity‑based Comp ($MM)FY 2025$22 $20 Lowered
Net Income ($MM)FY 2025$45–$60 $50–$60 Raised lower bound
Adjusted EBITDA ($MM)FY 2025$205–$215 $210–$215 Raised lower bound
Q4 Total Revenue ($MM)Q4 2025—$406–$412 New
Q4 Licensing Revenue ($MM)Q4 2025—$15.4–$15.7 New
Q4 Same‑Shack SalesQ4 2025—Low single digits YoY New
Openings (Q4)Q4 2025—27–37 total; 15–20 company‑op.; 12–17 licensed New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
Labor model & ops efficiencyRolled out scorecard and activity‑based labor; margin expansion despite traffic headwinds Labor % down 310 bps YoY; faster service (~5:50), higher throughput and retention Improving
Supply chain savings (beef inflation)Low single‑digit blended food inflation; beef mid‑single‑digit in Q1; savings initiatives underway Beef up mid‑teens; savings offset to low single‑digit net impact in Q4; more in 2026 Savings ramping
Paid media & marketingBuilding brand marketing model; foundations laid Paid media at scale drove Q3 traffic and comps; new creative agency; Chief Brand Officer appointed Scaling
Digital/app value & loyaltyLaunched new offer capability; loyalty planned for 2026 “1‑3‑5” app promos ($1 drinks/$3 fries/$5 shakes) driving ~85% app traffic growth; loyalty launch in 2026 Accelerating
Menu innovation/LTOsDubai Chocolate Pistachio Shake; Summer BBQ; expanding proteins internationally Dubai Chocolate Shake success; French Onion Soup Burger underperformed; pipeline of newsworthy LTOs; fry equipment upgrade Mixed; refining
Regional trendsWeather/macros weighed on NYC, Mid‑Atlantic in Q1 Macro headwinds persist in NY Metro & D.C.; strength in South/West/Midwest and several metros Mix shift
DevelopmentLargest class on record expected; lower build costs 13 company‑op + 7 licensed opened; planning 55–60 company‑op openings in 2026 Accelerating
Equipment/techKitchen Innovation Lab; drive‑thru combo menu Fry holding rollout; equipment innovation center; kiosk/digital investments Scaling

Management Commentary

  • “We are extremely proud of our third quarter results...We are making the necessary strategic investments today that set us up for long term success.” — CEO Rob Lynch .
  • “We are diversifying our supplier base...and continue to invest in technologies that support our supply chain department…to offset a meaningful part of beef inflation.” .
  • “We invested media behind Dubai Chocolate Shake as well as our dollar soda and app‑only promotion and these investments are a reason why we are delivering the sales growth…today.” .
  • “We grew adjusted EBITDA by 18.2% year over year to $54.1 million…Our balance sheet remains strong with $357.8 million in cash and cash equivalents.” — CFO Katie Fogertey .

Q&A Highlights

  • Supply chain savings: Management expects Q4 food & paper costs to show only low single‑digit net inflation as savings initiatives ramp, even with mid‑teens beef inflation; further benefits expected in 2026 .
  • Value vs premium balance: Pivot from underperforming French Onion LTO to “1‑3‑5” app promos produced rapid traffic gains; premium LTOs will be more “newsworthy” to earn media while core menu prices are held disciplined .
  • G&A step‑up: Paid media scaling is the “fuel” for comp growth; Q4/FY25 G&A guided higher with intent to outgrow expenditure rate over time as revenue scales .
  • Operations: Focus on reducing >7‑minute tickets and relieving fry bottlenecks via holding equipment and labor deployment; target “five to six minutes” typical ticket time .

Estimates Context

  • Q3 performance vs S&P Global consensus: Revenue beat ($367.4M vs $363.8M*), GAAP EPS was roughly in line/slightly below ($0.30 vs $0.31*), and EBITDA consensus ($51.7M*) was below company’s adjusted EBITDA ($54.1M) though consensus may reference different EBITDA definitions* .
    Values retrieved from S&P Global.
  • Forward estimates: Q4 2025 revenue consensus $410.5M* sits within guidance $406–$412M; Primary EPS consensus $0.382* and EBITDA consensus $58.9M* pace with heightened G&A and beef inflation offsets .
    Values retrieved from S&P Global.
  • Likely revisions: Raise licensing revenue and restaurant‑level margin assumptions; modestly higher FY net income and adjusted EBITDA ranges; watch for higher G&A percent and macro headwinds in NY/D.C. .

Key Takeaways for Investors

  • Comp engine is improving: paid media + app‑based value + disciplined pricing are driving positive traffic in a tough backdrop; look for durability into Q4 and 2026 .
  • Margin trajectory intact despite beef: supply‑chain savings and operational efficiencies should mute COGS inflation to low single‑digit net impact by Q4, with more savings in 2026 .
  • Guidance quality improved: FY25 restaurant‑level margin and licensing revenue raised; adjusted EBITDA and net income floors lifted; Q4 guidance bracketed around consensus .
  • Regional mix matters: continued macro pressure in NY Metro and D.C. offsets broader strength; development pipeline tilts away from those regions, reducing outsized exposure over time .
  • Execution agility: rapid pivot to value offers drove immediate traffic gains; pipeline of “newsworthy” LTOs and equipment upgrades should support throughput and check growth .
  • Watch G&A ramp: elevated paid media is strategic near‑term headwind to corporate margin but is intended to drive comps and LT brand equity; monitor ROI and scaling in 2026 .
  • Development acceleration: largest class of company‑operated openings this year and at least 55–60 planned in 2026, with lower build costs and expanding licensed footprint .

Appendix: Additional Q3 Press Releases

  • Q3 results press release summarizing headline metrics and openings .
  • Earnings call logistics press release (date/time/access) .

Appendix: Consensus and Actuals (Detail)

MetricQ3 2025 ActualQ3 2025 Consensus*
Revenue ($)$367,411,000 $363,783,700*
Primary EPS ($)$0.30 (GAAP diluted) $0.30729*
EBITDA ($)$48,698,000 (EBITDA) / $54,141,000 (Adj. EBITDA) $51,736,330*

Values retrieved from S&P Global.