On this page of StockholderLetter.com we present the 5/19/2023 shareholder letter from Shake Shack Inc. — ticker symbol SHAK. Reading current and past SHAK letters to shareholders can bring important insights into the investment thesis.
2022 Annual Report Opening in Universal Studios in Osaka, Japan
Collaboration with artist Min Heo for the Koreatown Shack in LA F U L L Y E A R 2 0 2 2 R E S U LT S Total Revenue $900.5M $1,378.5M FY 2022 Total Revenue Shack System-wide Sales1 + 21.7% growth year-overyear + 22.7% growth year-overyear +21.7% growth year-over-year $901M $740M $595M $459M $523M $359M GAAP Profitability Metrics: $26.9M $26.0M Operating Loss Net Loss 2017 2018 2019 2020 2021 2022 Shack System-wide Sales +22.7% growth year-over-year Non-GAAP Profitability Metrics: $1,378M $151.0M $70.5M Shack-level Operating Profit2 Adjusted EBITDA3 17.4% of Shack Sales 7.8% of Total Revenue + 26.7% growth year-overyear + 25.8% growth year-overyear $1,123M $895M $672M $532M 2017 1. 2. 3. $779M 2018 2019 2020 2021 2022 Shack system-wide sales is an operating measure and consists of sales from the Company's domestic Company-operated Shacks, domestic licensed Shacks and international licensed Shacks. The Company does not recognize the sales from licensed Shacks as revenue. Of these amounts, revenue is limited to Shack sales from domestic Company-operated Shacks and licensing revenue based on a percentage of sales from domestic and international licensed Shacks. "Shack-level operating profit," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including food and paper costs, labor and related expenses, other operating expenses and occupancy and related expenses. A reconciliation to the most directly comparable financial measure presented in accordance with GAAP is set forth in the Non-GAAP Financial Measures section within Item 7 of the Form 10-K for the fiscal year ended December 28, 2022. Adjusted EBITDA, a non-GAAP measure, is defined as EBITDA excluding equity-based compensation expense, deferred lease costs, impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations. A reconciliation to the most directly comparable financial measure presented in accordance with GAAP is set forth in the Non-GAAP Financial Measures section within Item 7 of the Form 10-K for the fiscal year ended December 28, 2022.
2022 BUSINESS HIGHLIGHTS Average Weekly Sales ( AWS )1 AWS Total YoY Shack Sales Growth (Decline) 2 $75 $70 $65 44% $60 31% 23% 17% 17% 22% $55 $50 AWS $71K $68K $76K $73K $76K $73K Full Year 2021 First Quarter 2022 Second Quarter 2022 Third Quarter 2022 Fourth Quarter 2022 Full Year 2022 120% AWS grew 2.8% in 2022 versus 100% 2021. Our sales were impacted by 80% Omicron in early 2022 and broader 60% macro pressures throughout the year. 40% However, higher menu prices and strong 20% growth of in-Shack traffic supported our 0% continued recovery. -20% Urban versus Suburban Same-Shack Sales % Driven by urban recovery, sameShack sales (SSS) grew 7.8% in 2022 versus 2021. Shacks in our urban markets grew SSS 14% and in our suburban markets grew SSS 3% in 2022 versus 2021. First Quarter 2022 Second Quarter 2022 19% 19% 10% 10% Third Quarter 2022 11% 6% 4% 3% Urban SSS % versus PY 2% Suburban SSS % versus PY Fourth Quarter 2022 8% 5% 3% Total SSS % versus PY System-wide Shack Count +18.2% Domestic Company-operated Domestic licensed 369 International licensed 275 208 159 1. 2. 72 12 59 10 90 124 2017 2018 436 90 22 311 149 126 106 22 25 33 163 183 218 254 2019 2020 2021 2022 System-wide Shack Count grew 18.2% in 2022 versus 2021. We opened 36 new Company-operated Shacks in a variety of formats including drive-thru. We opened 33 new licensed Shacks with our partners, including locations in four new markets in China. Average Weekly Sales ( AWS ) is calculated by dividing total Shack sales by the number of operating weeks for all Shacks in operation during the period. For Shacks that are not open for the entire period, fractional adjustments are made to the number of operating weeks such that it corresponds to the period of associated sales. Full Year 2021 total YoY Shack sales growth excludes impact of the 53rd fiscal accounting week in 2020. The favorable impact of the 53rd week in fiscal 2020 was an incremental Shack sales of $10.7 million.
W E S TA N D FOR SOMETHING GOOD This year, we will be sharing our progress and what's ahead in our 2022 Stand For Something Good Summary. It will be made available at investor.shakeshack.com in the Corporate Governance section. We will share our status against our commitments, from social impact to environmental responsibility and governance. In creating this summary, we will engage stakeholders, collect impact data, work with our leadership team to ensure alignment, highlight suppliers focus on quality ingredients, and identify areas for progress in the future.
2 0 2 3 S T R AT E G I C P R I O R I T I E S Recruit, Reward & Retain a Winning Team We prioritize our people, with continued investments in recruitment and retention to optimize our business. Relentless Focus on the Guest Experience Create crave-able experiences through operational, digital and culinary excellence. Targeted Development Strategy A balanced portfolio of formats, including drive-thrus, allow us to maximize our potential in each market. Improve Shack Margins We are working to improve Shack profitability by driving sales, optimizing labor, improving offpremise profitability, tactical menu pricing and supply chain initiatives. Invest with Discipline for Strong Returns We focus our development, digital and other investments on growth opportunities with strong return potential.
 • shareholder letter icon 5/19/2023 Letter Continued (Full PDF)
 • stockholder letter icon 4/25/2024 SHAK Stockholder Letter
 • stockholder letter icon 4/24/2025 SHAK Stockholder Letter
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 • Benford's Law Stocks icon SHAK Benford's Law Stock Score = 92


SHAK 5/19/2023 Shareholder/Stockholder Letter Transcript:

2022 Annual Report
Opening in Universal Studios
in Osaka, Japan

Collaboration with artist Min Heo
for the Koreatown Shack in LA
F U L L Y E A R 2 0 2 2 R E S U LT S
Total Revenue
$900.5M
$1,378.5M
FY 2022 Total Revenue
Shack System-wide Sales1
+ 21.7% growth year-overyear
+ 22.7% growth year-overyear
+21.7% growth year-over-year
$901M
$740M
$595M
$459M
$523M
$359M
GAAP Profitability Metrics:
$26.9M
$26.0M
Operating Loss
Net Loss
2017
2018
2019
2020
2021
2022
Shack System-wide Sales
+22.7% growth year-over-year
Non-GAAP Profitability Metrics:
$1,378M
$151.0M
$70.5M
Shack-level Operating Profit2
Adjusted EBITDA3
17.4% of Shack Sales
7.8% of Total Revenue
+ 26.7% growth year-overyear
+ 25.8% growth year-overyear
$1,123M
$895M
$672M
$532M
2017
1.
2.
3.
$779M
2018
2019
2020
2021
2022
   Shack system-wide sales    is an operating measure and consists of sales from the Company's domestic Company-operated Shacks, domestic licensed Shacks and international licensed Shacks. The Company does not recognize the sales from
licensed Shacks as revenue. Of these amounts, revenue is limited to Shack sales from domestic Company-operated Shacks and licensing revenue based on a percentage of sales from domestic and international licensed Shacks.
"Shack-level operating profit," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including food and paper costs, labor and related expenses, other operating expenses and occupancy and related expenses.
A reconciliation to the most directly comparable financial measure presented in accordance with GAAP is set forth in the Non-GAAP Financial Measures section within Item 7 of the Form 10-K for the fiscal year ended December 28, 2022.
   Adjusted EBITDA,    a non-GAAP measure, is defined as EBITDA excluding equity-based compensation expense, deferred lease costs, impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as
well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations. A reconciliation to the most directly comparable financial
measure presented in accordance with GAAP is set forth in the Non-GAAP Financial Measures section within Item 7 of the Form 10-K for the fiscal year ended December 28, 2022.

2022 BUSINESS HIGHLIGHTS
Average Weekly Sales (   AWS   )1
AWS
Total YoY Shack Sales Growth (Decline) 2
$75
$70
$65
44%
$60
31%
23%
17%
17%
22%
$55
$50
AWS
$71K
$68K
$76K
$73K
$76K
$73K
Full
Year
2021
First
Quarter
2022
Second
Quarter
2022
Third
Quarter
2022
Fourth
Quarter
2022
Full
Year
2022
120% AWS grew 2.8% in 2022 versus
100% 2021. Our sales were impacted by
80% Omicron in early 2022 and broader
60% macro pressures throughout the year.
40% However, higher menu prices and strong
20% growth of in-Shack traffic supported our
0% continued recovery.
-20%
Urban versus Suburban Same-Shack Sales %
Driven by urban recovery, sameShack sales (SSS) grew 7.8% in 2022
versus 2021. Shacks in our urban markets
grew SSS 14% and in our suburban markets
grew SSS 3% in 2022 versus 2021.
First Quarter
2022
Second Quarter
2022
19%
19%
10%
10%
Third Quarter
2022
11%
6%
4%
3%
Urban SSS % versus PY
2%
Suburban SSS % versus PY
Fourth Quarter
2022
8%
5%
3%
Total SSS % versus PY
System-wide Shack Count
+18.2%
Domestic Company-operated
Domestic licensed
369
International licensed
275
208
159
1.
2.
72
12
59
10
90
124
2017
2018
436
90
22
311
149
126
106
22
25
33
163
183
218
254
2019
2020
2021
2022
System-wide Shack Count grew
18.2% in 2022 versus 2021. We
opened 36 new Company-operated Shacks
in a variety of formats including drive-thru.
We opened 33 new licensed Shacks with
our partners, including locations in four new
markets in China.
Average Weekly Sales (   AWS   ) is calculated by dividing total Shack sales by the number of operating weeks for all Shacks in operation during the period. For Shacks that are not open for the entire period, fractional
adjustments are made to the number of operating weeks such that it corresponds to the period of associated sales.
Full Year 2021 total YoY Shack sales growth excludes impact of the 53rd fiscal accounting week in 2020. The favorable impact of the 53rd week in fiscal 2020 was an incremental Shack sales of $10.7 million.

W E S TA N D
FOR
SOMETHING
GOOD
This year, we will be sharing our
progress and what's ahead in our
2022 Stand For Something
Good Summary. It will be made
available at investor.shakeshack.com
in the Corporate Governance
section. We will share our status
against our commitments, from social
impact to environmental responsibility
and governance. In creating this
summary, we will engage
stakeholders, collect impact data,
work with our leadership team to
ensure alignment, highlight suppliers   
focus on quality ingredients, and
identify areas for progress in the
future.

2 0 2 3 S T R AT E G I C P R I O R I T I E S
Recruit, Reward & Retain
a Winning Team
We prioritize our people, with continued
investments in recruitment
and retention to optimize our business.
Relentless Focus on
the Guest Experience
Create crave-able experiences through
operational, digital and culinary excellence.
Targeted Development Strategy
A balanced portfolio of formats, including
drive-thrus, allow us to maximize our potential
in each market.
Improve Shack Margins
We are working to improve Shack profitability by
driving sales, optimizing labor, improving offpremise profitability, tactical menu pricing and
supply chain initiatives.
Invest with Discipline
for Strong Returns
We focus our development, digital and other
investments on growth opportunities with strong
return potential.



shareholder letter icon 5/19/2023 Letter Continued (Full PDF)
 

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