Board Has Initiated Search for
Successor
Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK)
today announced that Randy Garutti, the Company’s Chief Executive
Officer, has informed the Board that, after more than two decades
in the Company, he will retire in 2024 upon the selection of his
successor. Mr. Garutti shared a letter to his team that is viewable
here: A Message from our CEO, Randy Garutti.
He will continue to lead the Company as its CEO and as an
executive Board member through that time. The Company intends to
retain Mr. Garutti as an advisor following his CEO service through
the end of 2024 to ensure a proper transition.
The Board of Directors has launched an external search led by
Korn Ferry to identify Mr. Garutti’s successor. The Board of
Directors search committee will be led by Chairman Danny Meyer and
independent Directors Chuck Chapman, Jeff Lawrence, Lori George,
and Josh Silverman.
Randy Garutti, Chief Executive Officer, stated, "It has been my
honor to lead the talented Shake Shack team from our humble
beginnings as a hot dog cart in Madison Square Park in New York
City to the public company we are today. Together, we have achieved
more than anyone dreamed, delighting communities across 18
countries, 33 states and more than 500 Shacks, while targeting to
surpass $1.0 billion in revenue this year. I am most proud of the
growth opportunities we created for our team members at every level
and our shared commitment to uplift and take care of each other,
our guests, our communities, our suppliers, and our
shareholders.”
Mr. Garutti continued, “I will continue to lead Shake Shack
through the search for a new CEO. Our seasoned leadership team is
exceptional and well positioned to deliver on our ambitious plans.
I have never been more optimistic about Shake Shack's potential and
am deeply committed to ensuring a seamless transition. The Shake
Shack season of my life has been full of joy. The next season will
focus on my incredible wife and three children who have been the
greatest supporters of me and the Shack family. I love this company
and will never stop rooting for the Company's success."
Danny Meyer, the Company’s Founder and Chairman of the Board of
Directors, said, “I have had the privilege and pleasure of working
with Randy since he first joined Union Square Hospitality Group 24
years ago as our youngest ever General Manager for Tabla and Union
Square Cafe, and next as Director of Operations for all of USHG’s
acclaimed fine dining restaurants. He developed a devoted and avid
following among our team members as an exceptional leader who
always led his businesses with enlightened hospitality. When we
launched a hot dog cart out of Eleven Madison Park in 2001, and
then three years later, turned it into Shake Shack - a kiosk in
Madison Square Park - Randy asked for the ball. Shake Shack was an
overnight hit, but it had not dawned on me that we might grow the
business beyond its first park location until Randy urged that we
do so with a second Shack, nearly five years later. Now, nearly 20
years and over 500 Shacks later, Randy has more than earned the
richly-deserved opportunity to think about his next act.”
Mr. Meyer continued, “I don’t have adequate words to express the
gratitude I feel for having Randy as my colleague and partner for
all these years. He has built and led a globally-beloved brand
whose rich culture has deep roots and he has paved the way for our
next CEO to build on a rock-solid foundation. The Board and I are
now excited to launch a search for his successor, and are heartened
that Randy will be at the helm until his successor begins.”
Financial Outlook
The Company is reiterating its Fourth Quarter and Fiscal Year
2023 guidance provided in its Q3 2023 Shake Shack Shareholder
Letter.
For the Fourth Quarter, ending December 27, 2023, the Company
continues to expect:
- Total revenue of $276.25 million to $281.75 million, including
Licensing revenue of $10.25 million to $10.75 million,
- Same-Shack sales to be up low-single digits
year-over-year,
- Shack-level operating profit margin of approximately
19.0%,
- Approximately 14 domestic Company-operated openings,
- Approximately 5 licensed openings.
For the Fiscal Year 2023, ending December 27, 2023, the Company
continues to expect:
- Total revenue of approximately $1.08 billion, growing about 20%
year-over-year, including Licensing revenue of $40.5 million to
$41.0 million,
- Same-Shack sales to grow by mid-single digits
year-over-year,
- Shack-level operating profit margin of 19.7% to 20%,
approximately 220 to 250 basis points improvement
year-over-year,
- General and administrative expenses to be $125 million to $128
million1, 2,
- Equity-based compensation of approximately $16 million,
- Depreciation and amortization expense of $88 million to $93
million,
- Pre-opening costs of $17 million to $19 million,
- Adjusted EBITDA3 of $125 million to $130 million, representing
approximately 70% to 80% growth year-over-year,
- Adjusted pro forma tax rate of 16% to 18%,
- Approximately 40 domestic Company-operated openings,
- Approximately 40 licensed openings.
- G&A includes approximately $14 million of the approximately
$16 million total Equity-based compensation.
- G&A guidance excludes $1.6 million of legal and
professional fees from 1Q23, $1.7 million of professional fees from
2Q23, and $0.2 million of severance from 3Q23. Including these
expenses, G&A guidance would be $128.5 million to $131.5
million.
- Adjusted EBITDA is a non-GAAP measure. A reconciliation to the
most directly comparable financial measure presented in accordance
with GAAP is set forth in the financial details section of the Q3
2023 Shake Shack Shareholder Letter. The Company is not able to
reconcile guided non-GAAP estimates to the most directly comparable
GAAP financial measure without unreasonable effort because it is
unable to predict, forecast or determine the probable significance
of various reconciling items with a reasonable degree of accuracy.
Accordingly, the most directly comparable guided GAAP estimate is
not provided.
Fiscal fourth quarter and fiscal year 2023 guidance is derived
from preliminary, unaudited results, based on information currently
available to the Company, including an assumption of a degree of
pressure on the consumer spending landscape and ongoing
inflationary headwinds and does not reflect any additional unknown
development delays. While the Company believes these estimates are
meaningful, they could differ from the actual results that the
Company ultimately reports in its Annual Report on Form 10-K for
the fiscal year ending December 27, 2023. One should not attribute
undue certainty to these projections, and we undertake no
obligation to revise or update any forward-looking information,
except as required by law.
About Shake Shack
Shake Shack serves elevated versions of American classics using
only the best ingredients. It’s known for its delicious
made-to-order Angus beef burgers, crispy chicken, hand-spun
milkshakes, house-made lemonades, beer, wine, and more. With its
high-quality food at a great value, warm hospitality, and a
commitment to crafting uplifting experiences, Shake Shack quickly
became a cult-brand with widespread appeal. Shake Shack’s purpose
is to Stand For Something Good®, from its premium ingredients and
employee development, to its inspiring designs and deep community
investment. Since the original Shack opened in 2004 in NYC’s
Madison Square Park, the Company has expanded to over 500 locations
system-wide, including over 325 in 33 U.S. States and the District
of Columbia, and 180 international locations across London, Hong
Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo,
Seoul and more.
Skip the line with the Shack App, a mobile ordering app
that lets you save time by ordering ahead! Guests can select their
location, pick their food, choose a pickup time and their meal will
be cooked-to-order and timed to arrival. Available on iOS and
Android.
Learn more: shakeshack.com | IG: @shakeshack | t: @shakeshack |
facebook.com/shakeshack
Forward-Looking Statements
This press release contains forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of 1995
("PSLRA"), which are subject to known and unknown risks,
uncertainties and other important factors that may cause actual
results to be materially different from the statements made herein.
All statements other than statements of historical fact included
herein are forward-looking statements, including, but not limited
to, the guidance provided for the fourth quarter of 2023 and the
full 2023 fiscal year.
All forward-looking statements are expressly qualified in their
entirety by these cautionary statements. Some of the factors which
could cause results to differ materially from the Company's
expectations include the continuing impact of the COVID-19
pandemic, including the potential impact of any COVID-19 variants,
the Company's ability to develop and open new Shacks on a timely
basis, increased costs or shortages or interruptions in the supply
and delivery of our products, increased labor costs or shortages,
inflationary pressures, the Company's management of its digital
capabilities and expansion into new channels, including drive-thru
and multiple format investments, the Company’s ability to maintain
and grow sales at its existing Shacks, and risks relating to the
restaurant industry generally. You should evaluate all
forward-looking statements made herein in the context of the risks
and uncertainties disclosed in the Company’s Annual Report on Form
10-K for the fiscal year ended December 28, 2022 as filed with the
Securities and Exchange Commission.
Definitions
The following definitions apply to these terms as used in this
release:
"Shack sales" is defined as the aggregate sales of food,
beverages, gift card breakage income and Shake Shack branded
merchandise at domestic Company-operated Shacks and excludes sales
from licensed Shacks.
"Same-Shack sales" represents Shack sales for the comparable
Shack base, which is defined as the number of domestic
Company-operated Shacks open for 24 full fiscal months or longer.
For consecutive days that Shacks were temporarily closed, the
comparative period was also adjusted.
"Shack-level operating profit margin," a non-GAAP measure, also
referred to as restaurant margin, 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 as a percentage of Shack sales.
“EBITDA,” a non-GAAP measure, is defined as Net income (loss)
before interest expense (net of interest income), Income tax
expense (benefit), and Depreciation and amortization expense.
“Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as
defined above), excluding equity-based compensation expense,
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.
"Adjusted pro forma net income," a non-GAAP measure, represents
Net income (loss) attributable to Shake Shack Inc. assuming the
full exchange of all outstanding SSE Holdings, LLC membership
interests ("LLC Interests") for shares of Class A common stock,
adjusted for certain non-recurring and other items that the Company
does not believe directly reflect its core operations and may not
be indicative of the Company's recurring business operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231211295611/en/
Media: Meg Davis, Shake Shack
mcastranova@shakeshack.com
Investor Relations: Melissa Calandruccio, ICR Michelle
Michalski, ICR (844) SHACK-04 (844-742-2504)
investor@shakeshack.com
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