My Market Wizard

Shake Shack Inc. 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Shake Shack Inc.

Filing date:

02/21/2025

TLDR:

Shake Shack Inc. demonstrates continued growth in system-wide sales and expansion of its footprint. However, same-Shack sales growth is modest, driven primarily by price increases, with a slight decline in guest traffic.

ELI5:

Shake Shack is growing, but most of the sales increase is from raising prices, not from more people eating there.

Accession #:

0001620533-25-000016

Published on

Analyst Summary

  • Total revenue increased by 15.1% year-over-year, driven by Shack sales and licensing revenue.
  • Same-Shack Sales Growth: Increased by 3.6%, with a 4.3% increase in price mix offset by a 0.7% decline in guest traffic.
  • Restaurant-Level Profit Margin: Increased to 21.4% from 19.9% in the prior year.
  • Food and Paper Costs: 28.2% of Shack sales, down from 29.1% in the prior year.
  • Labor and Related Expenses: 28.1% of Shack sales, down from 29.1% in the prior year.
  • General and Administrative Expenses: 11.9% of total revenue, flat year-over-year.

Opportunities and Risks

  • Opportunities lie in continued expansion, digital innovation, and optimizing the multi-format strategy.
  • Key risks include rising labor and commodity costs, competition, and potential disruptions in the supply chain.

Potential Implications

Shake Shack Inc. (SHAK) 10-K Filing Analysis – Fiscal Year Ended December 25, 2024

Executive Summary

This report analyzes Shake Shack Inc.’s 10-K filing for the fiscal year ended December 25, 2024. The company demonstrates continued growth in system-wide sales and expansion of its footprint, both company-operated and licensed. However, same-Shack sales growth is modest, driven primarily by price increases, with a slight decline in guest traffic. The company is focused on improving profitability through operational efficiencies and strategic sales initiatives. Key risks include rising labor and commodity costs, competition, and potential disruptions in the supply chain. Opportunities lie in continued expansion, digital innovation, and optimizing the multi-format strategy. Overall, a ‘Hold’ rating is suggested, pending further evidence of sustained same-Shack sales growth and successful execution of cost-saving initiatives.

Company Overview

Shake Shack Inc. (SHAK) operates and licenses modern “fine-casual” restaurants serving burgers, chicken, shakes, and other American classics. Founded in 2001, the company has expanded to 579 Shacks system-wide as of December 25, 2024. Shake Shack emphasizes premium ingredients, a positive guest experience, and a commitment to “Stand For Something Good.” The company’s growth strategy includes expanding its company-operated and licensed Shack footprint, enhancing the guest experience through digital innovation, and menu development.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management highlights the company’s focus on improving how they build and open Shacks, reducing build cost, implementing strategies to better track and forecast timelines and expenses, evolving design efforts to standardize key components of their restaurants while maintaining brand quality and guest experience, and opening a balanced portfolio of formats that allowed them to maximize their potential in each market. They also mention the closure of nine underperforming Company-operated Shacks. The tone is cautiously optimistic, emphasizing both growth initiatives and cost management. Forward-looking statements are abundant, particularly regarding expansion plans and future performance.

Financial Statement Analysis

Key Ratios and Trends

  • Revenue Growth: Total revenue increased by 15.1% year-over-year, driven by Shack sales and licensing revenue.
  • Same-Shack Sales Growth: Increased by 3.6%, with a 4.3% increase in price mix offset by a 0.7% decline in guest traffic.
  • Restaurant-Level Profit Margin: Increased to 21.4% from 19.9% in the prior year.
  • Food and Paper Costs: 28.2% of Shack sales, down from 29.1% in the prior year.
  • Labor and Related Expenses: 28.1% of Shack sales, down from 29.1% in the prior year.
  • General and Administrative Expenses: 11.9% of total revenue, flat year-over-year.

Visual Aids

<img src="data:image/png;base64,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

Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Calculation: (Total Revenue – Food and paper costs – Labor and related expenses – Other operating expenses – Occupancy and related expenses) / Total Revenue = ($1,252,608 – $339,940 – $338,750 – $178,381 – $93,069) / $1,252,608 = 16.17%
    • Trend: ($16.17% – ($1,087,533 – $305,041 – $304,254 – $149,449 – $79,846) / $1,087,533) / ($1,087,533 – $305,041 – $304,254 – $149,449 – $79,846) / $1,087,533 = -53.88%
    • Industry: The restaurant industry typically has gross profit margins ranging from 60% to 80%. Shake Shack’s gross profit margin is significantly lower than the industry average.
  • Operating Profit Margin:

    • Calculation: Income from Operations / Total Revenue = $3,038 / $1,252,608 = 0.24%
    • Trend: ($0.24% – $5,921 / $1,087,533) / $5,921 / $1,087,533 = -53.82%
    • Industry: The restaurant industry typically has operating profit margins ranging from 5% to 15%. Shake Shack’s operating profit margin is significantly lower than the industry average.
  • Net Profit Margin:

    • Calculation: Net Income / Total Revenue = $10,820 / $1,252,608 = 0.86%
    • Trend: ($0.86% – $20,990 / $1,087,533) / $20,990 / $1,087,533 = -54.03%
    • Industry: The restaurant industry typically has net profit margins ranging from 3% to 10%. Shake Shack’s net profit margin is lower than the industry average.
  • Return on Assets (ROA):

    • Calculation: Net Income / Total Assets = $10,820 / $1,696,971 = 0.64%
    • Industry: The restaurant industry typically has ROA ranging from 4% to 8%. Shake Shack’s ROA is lower than the industry average.
  • Return on Equity (ROE):

    • Calculation: Net Income Attributable to Shake Shack Inc. / Total Stockholders’ Equity Attributable to Shake Shack Inc. = $10,207 / $470,018 = 2.17%
    • Industry: The restaurant industry typically has ROE ranging from 10% to 20%. Shake Shack’s ROE is lower than the industry average.
  • Earnings Per Share (EPS) – Basic:

    • Calculation: Net Income Attributable to Shake Shack Inc. / Weighted Average Shares Outstanding (Basic) = $10,207 / 39,830 = $0.26
    • Trend: ($0.26 – $0.51) / $0.51 = -49.02%
  • Earnings Per Share (EPS) – Diluted:

    • Calculation: Net Income Attributable to Shake Shack Inc. / Weighted Average Shares Outstanding (Diluted) = $10,207 / 44,203 = $0.24
    • Trend: ($0.24 – $0.48) / $0.48 = -50%

Liquidity

  • Current Ratio:

    • Calculation: Total Current Assets / Total Current Liabilities = $368,216 / $187,313 = 1.97
    • Trend: (1.97 – $334,432 / $164,067) / $334,432 / $164,067 = -2.49%
    • Industry: A current ratio between 1.5 and 2.0 is generally considered healthy for the restaurant industry. Shake Shack’s current ratio is within this range.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Total Current Assets – Inventories) / Total Current Liabilities = ($368,216 – $6,014) / $187,313 = 1.93
    • Trend: (1.93 – ($334,432 – $5,404) / $164,067) / ($334,432 – $5,404) / $164,067 = -2.53%
    • Industry: A quick ratio of 1 or higher is generally considered healthy. Shake Shack’s quick ratio is well above 1.
  • Cash Ratio:

    • Calculation: (Cash and Cash Equivalents) / Total Current Liabilities = $320,714 / $187,313 = 1.71
    • Trend: (1.71 – $224,653 / $164,067) / $224,653 / $164,067 = -19.35%
    • Industry: A cash ratio of 0.5 or higher is generally considered healthy. Shake Shack’s cash ratio is well above 0.5.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: Total Liabilities / Total Stockholders’ Equity = $1,203,345 / $493,626 = 2.44
    • Trend: (2.44 – $1,136,487 / $469,370) / $1,136,487 / $469,370 = -2.91%
    • Industry: The restaurant industry typically has debt-to-equity ratios ranging from 1 to 3. Shake Shack’s debt-to-equity ratio is within this range.
  • Debt-to-Assets Ratio:

    • Calculation: Total Liabilities / Total Assets = $1,203,345 / $1,696,971 = 0.71
    • Trend: (0.71 – $1,136,487 / $1,605,857) / $1,136,487 / $1,605,857 = -2.82%
    • Industry: The restaurant industry typically has debt-to-assets ratios ranging from 0.4 to 0.6. Shake Shack’s debt-to-assets ratio is higher than the industry average.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: Income from Operations / Interest Expense = $3,038 / $2,045 = 1.48
    • Trend: (1.48 – $5,921 / $1,717) / $5,921 / $1,717 = -75.27%
    • Industry: A times interest earned ratio of 2 or higher is generally considered healthy. Shake Shack’s times interest earned ratio is below 2.

Activity/Efficiency

  • Inventory Turnover:

    • Calculation: Shack Sales / Inventories = $1,207,561 / $6,014 = 200.79
    • Trend: (200.79 – $1,046,819 / $5,404) / $1,046,819 / $5,404 = 3.34%
    • Industry: The restaurant industry typically has inventory turnover ratios ranging from 15 to 30. Shake Shack’s inventory turnover ratio is significantly higher than the industry average.
  • Days Sales Outstanding (DSO):

    • Calculation: (Accounts Receivable / Total Revenue) * 365 = ($19,687 / $1,252,608) * 365 = 5.73 days
    • Trend: (5.73 – ($16,847 / $1,087,533) * 365) / ($16,847 / $1,087,533) * 365 = 1.42%
  • Days Payable Outstanding (DPO):

    • Calculation: (Accounts Payable / Food and paper costs) * 365 = ($23,609 / $339,940) * 365 = 25.28 days
    • Trend: (25.28 – ($22,273 / $305,041) * 365) / ($22,273 / $305,041) * 365 = 2.81%
  • Asset Turnover:

    • Calculation: Total Revenue / Total Assets = $1,252,608 / $1,696,971 = 0.74
    • Trend: (0.74 – $1,087,533 / $1,605,857) / $1,087,533 / $1,605,857 = 3.05%
    • Industry: The restaurant industry typically has asset turnover ratios ranging from 0.8 to 1.5. Shake Shack’s asset turnover ratio is lower than the industry average.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Stock Price / EPS (Diluted) = $108.72 / $0.24 = 453
    • Industry: The restaurant industry typically has P/E ratios ranging from 15 to 25. Shake Shack’s P/E ratio is significantly higher than the industry average.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Total Stockholders’ Equity = (40,068,068 + 2,455,713) * $108.72 / $470,018,000 = 9.88
    • Industry: The restaurant industry typically has P/B ratios ranging from 2 to 5. Shake Shack’s P/B ratio is higher than the industry average.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Total Revenue = (40,068,068 + 2,455,713) * $108.72 / $1,252,608,000 = 3.72
    • Industry: The restaurant industry typically has P/S ratios ranging from 0.5 to 2. Shake Shack’s P/S ratio is higher than the industry average.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: (Market Cap + Total Debt – Cash) / EBITDA = (((40,068,068 + 2,455,713) * $108.72) + $246,683,000 – $320,714,000) / $117,996,000 = 37.89
    • Industry: The restaurant industry typically has EV/EBITDA ratios ranging from 8 to 12. Shake Shack’s EV/EBITDA ratio is significantly higher than the industry average.

Growth Rates

  • Revenue Growth:

    • Calculation: (Current Revenue – Previous Revenue) / Previous Revenue = ($1,252,608 – $1,087,533) / $1,087,533 = 15.18%
  • Net Income Growth:

    • Calculation: (Current Net Income – Previous Net Income) / Previous Net Income = ($10,820 – $20,990) / $20,990 = -48.45%
  • EPS Growth:

    • Calculation: (Current EPS – Previous EPS) / Previous EPS = (0.24 – 0.48) / 0.48 = -50%

Other Relevant Metrics

  • Restaurant-Level Profit Margin:

    • Calculation: Restaurant-Level Profit / Shack Sales = $257,874 / $1,207,561 = 21.35%
    • Trend: (21.35% – 19.9%) / 19.9% = 7.29%
    • Significance: This metric reflects the profitability of the company’s restaurant operations, excluding corporate overhead.
  • Adjusted EBITDA and Adjusted EBITDA Margin:

    • Adjusted EBITDA: $175,579
    • Adjusted EBITDA Margin: 14.0%
    • Significance: Adjusted EBITDA is a non-GAAP metric that excludes certain expenses, such as impairments, loss on disposal of assets, Shack closures, restatement costs, CEO transition costs, employee benefit charges, legal settlements, severance, gift card breakage cumulative catch-up adjustment, and other one-time items. The adjusted EBITDA margin provides a view of the company’s profitability without these items.

Commentary

Shake Shack’s financial performance in 2024 shows revenue growth, driven by increased Shack sales and licensing revenue. However, profitability metrics such as operating profit margin and net profit margin have decreased compared to the previous year. The company maintains a healthy liquidity position with a current ratio of 1.97. The high P/E ratio suggests that the stock may be overvalued relative to its earnings.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️