Shake Shack, Inc. · NYSE:SHAK
Shake Shack — 2020 ICR Conference
65 slides from Shake Shack's conference presentation, Jan 14, 2020
Slide 1: 2020 ICR Conference Presentation
2020 ICR CONFERENCE PRESENTATION
Slide 2: Cautionary Note on Forward-Looking Statements
C A U T I O N A RY N O T E O N F O RWA R D - L O O K I N G S TAT E M E N T S This presentation contains forward-looking Forward-looking statements discuss the Company's current expectations and projections relating to their financial position, results of operations, plans, objectives, statements, wi
Slide 3: Stand For Something Good
S TA N D F O R S O M E T H I N G G O O D We gather We serve We enrich We use our business communities the best food the lives of others to create a better world
Slide 4: 2019 Accomplishments
2019 ACCOMPLISHMENTS Domestic Licensed Digital Menu Growth Business Focus Innovation 49 new US Shacks China Convenience Chick’n Bites Multi-format Mexico Strengthened team Monthly shakes 7 new markets Philippines Delivery partnership Chef collabs Singapore Airports
Slide 5: 2019 Accomplishments
2019 ACCOMPLISHMENTS Domestic Licensed Digital Menu Growth Business Focus Innovation 49 new US Shacks China Convenience Chick’n Bites Multi-format Mexico Strengthened team Monthly shakes 7 new markets Philippines Delivery partnership Chef collabs Singapore Airports
Slide 6: Domestic Growth
DOMESTIC GROWTH 173 39 domestic company ~80% of company 10 operated Shacks & 10 operated openings licensed openings in existing markets 126 2 93 3 ~85% of US Shacks Expanding 163 Shack formats 66 are outside of NYC 2 124 44 90 64 New markets included Brand strength enables Columbus, New Orleans prem
Slide 7: Manhattan, NY: Urban, Hudson Yards
M A N H AT TA N , N Y: U R B A N H U D S O N YA R D S © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 7
Slide 8: Boston, MA: Urban, Downtown Crossing
B O S TO N , M A : U R B A N DOWNTOWN CROSSING Downtown Crossing, Boston, MA © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 8
Slide 9: San Diego, CA: Shopping/Lifestyle Center
SAN DIEGO, CA: SHOPPING/LIFESTYLE CENTER DEL MAR © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 9
Slide 10: Columbus, OH: Shopping/Lifestyle Center
COLUMBUS, OH: SHOPPING/LIFESTYLE CENTER EASTON TOWN CENTER © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 10
Slide 11: Princeton, NJ: Freestanding Pad
P R I N C E TO N , N J : F R E E S TA N D I N G PA D BRUNSWICK PIKE © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 11
Slide 12: 2019 Accomplishments
2019 ACCOMPLISHMENTS Domestic Licensed Digital Menu Growth Business Focus Innovation 49 new US Shacks China Convenience Chick’n Bites Multi-format Mexico Strengthened team Monthly shakes 7 new markets Philippines Delivery partnership Chef collabs Singapore Airports
Slide 13: Licensed Business: Global
LICENSED BUSINESS: GLOBAL Launched in Opened First international Brand office opened in 4 new 28, net strength international Hong Kong licensed continues markets locations
Slide 14: Shake Shack
= . SHAKE &3 SHACK
Slide 15: Shanghai, China
SHANGHAI, CHINA KERRY CENTRE © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 15
Slide 16: Manila, Philippines
MANILA, PHILIPPINES CENTRAL SQUARE © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 16
Slide 17: Mexico City, Mexico
= — MEXICO CITY, MEXICO REFORMA
Slide 18: Mexico City, Mexico
M E X I C O C I T Y, M E X I C O ARCOS BOSQUES © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 18
Slide 19: Licensed Business: Domestic
LICENSED BUSINESS: DOMESTIC
Slide 20: Phoenix Sky Harbor International Airport
P H O E N I X S K Y H A R B O R I N T E R N AT I O N A L A I R P O R T TERMINAL 3 © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 20
Slide 21: Philadelphia, PA: Citizens Bank Park
P H I L A D E L P H I A , PA C I T I Z E N S B A N K PA R K © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 21
Slide 22: Monmouth, NJ
MONMOUTH, NJ G A R D E N S TAT E PA R K W AY
Slide 23: 2019 Accomplishments
2019 ACCOMPLISHMENTS Domestic Licensed Digital Menu Growth Business Focus Innovation 49 new US Shacks China Convenience Chick’n Bites Multi-format Mexico Strengthened team Monthly shakes 7 new markets Philippines Delivery partnership Chef collabs Singapore Airports
Slide 24: Digital & Technology Focus
D I G I TA L & T E C H N O L O G Y F O C U S Formalized Kiosks in place Implemented delivery at ~1/3 of Shacks new ERP partnership “Project Concrete”
Slide 25: Delivery Update
D E L I V E RY U P D AT E POS integration with Grub completed Phased transition to single partner approaching ~40% of Shacks Joint marketing initiatives Guest data retention & insights Focus on guest experience Platform for growth with sustainable economics
Slide 26: 2019 Accomplishments
2019 ACCOMPLISHMENTS Domestic Licensed Digital Menu Growth Business Focus Innovation 49 new US Shacks China Convenience Chick’n Bites Multi-format Mexico Strengthened team Monthly shakes 7 new markets Philippines Delivery partnership Chef collabs Singapore Airports
Slide 27: Menu Innovation
M E N U I N N O VAT I O N Chick’n Hand battered, never frozen, crisp-fried to order All natural & antibiotic-free Bites Improving cost profile Positive guest feedback, core menu test ongoing 27
Slide 28: Consistent Strong Financial Performance
CONSISTENT STRONG FINANCIAL PERFORMANCE Total Revenue System-wide Sales $567 $839 $459 $672 $359 $532 $268 $403 $191 $295 2015 2016 2017 2018 Q3 ’19 TTM 2015 2016 2017 2018 Q3 ’19 TTM System-wide Shack Count Cash Flow from Operations 275 $96 $85 208 $71 159 $54 114 84 $41 2015 2016 2017 2018 2019 20
Slide 29: 2019 Key Financial Drivers
2019 KEY FINANCIAL DRIVERS Total Revenue • Strong development year November Guidance: $592M - $597M • Continued digital growth ~29% - 30% growth • International expansion • Food cost headwind from Chick'n Bites launch in H1 Shack-level operating margin • Recent inflation in beef prices November Guid
Slide 30: 2020 Strategic Growth Plan
2 0 2 0 S T R AT E G I C G R O W T H P L A N People Product Experience Licensing Attracting Guest acquisition New formats Capital light Retaining Frequency Community Cash flow Developing Buzz Omnichannel Global brand
Slide 31: 2020 Strategic Growth Plan
2 0 2 0 S T R AT E G I C G R O W T H P L A N People Product Experience Licensing Attracting Guest acquisition New formats Capital light Retaining Frequency Community Cash flow Developing Buzz Omnichannel Global brand
Slide 32: People
PEOPLE Culture at our core Development & career progression 4-day work week Commitment to diversity & inclusion
Slide 33: 2020 Strategic Growth Plan
2 0 2 0 S T R AT E G I C G R O W T H P L A N People Product Development Licensing Attracting Guest acquisition New formats Capital light Retaining Frequency Community Cash flow Developing Buzz Omnichannel Global brand
Slide 34: Product: Buzz-worthy LTOs
PRODUCT Buzz-worthy Innovation New LTOs around the core categories
Slide 35: Buzzworthy: LTOs, ShackMeister Burger
B U Z Z W O R T H Y: LTO s ShackMeister Burger Return of a classic Crispy shallots and ShackSauce on a 100% Angus beef cheeseburger January - March across the US
Slide 36: Buzzworthy: Innovation Kitchen
B U Z Z W O R T H Y: I N N O VAT I O N K I T C H E N
Slide 37: Innovation Around the Core: Chicken Category
I N N O VAT I O N A R O U N D T H E C O R E : C H I C K E N C AT E G O RY Hot Chick’n & Hot Chick’n Bites PLANNED FOR MID-YEAR
Slide 38: Menu Expansion: Veggie ShackBurger
M E N U E X PA N S I O N Veggie ShackBurger Created with 13 vegetables, herbs & grains Innovation Kitchen test Limited market test later in 2020
Slide 39: 2020 Strategic Growth Plan
2 0 2 0 S T R AT E G I C G R O W T H P L A N People Product Experience Licensing Attracting Guest acquisition New formats Capital light Retaining Frequency Community Cash flow Developing Buzz Omnichannel Global brand
Slide 40: Early Stage of Domestic Expansion Plan
E A R LY S TA G E O F D O M E S T I C E X PA N S I O N P L A N REGIONAL FOOTPRINT states with more than 5 Shacks
Slide 41: Early Stage of Domestic Expansion Plan
E A R LY S TA G E O F D O M E S T I C E X PA N S I O N P L A N REGIONAL FOOTPRINT states with more than 5 Shacks states with less than 5 Shacks
Slide 42: Age of Domestic Company-Operated Base
E A R LY S TA G E O F D O M E S T I C E X PA N S I O N P L A N A G E O F D O M E S T I C C O M PA N Y- O P E R AT E D S H A C K B A S E 27% 24% 60% 2.9 years of Shacks are average age of 12% 21% < 3 years old company-operated 16% Shacks Less than or equal to 12 months 13 to 24 months 25 to 36 months
Slide 43: Continued Expansion of Formats
C O N T I N U E D E X PA N S I O N O F S H A C K F O R M AT S FREE STANDING PAD AIRPORTS EVENTS FOOD TRUCK DIGITAL FOCUSED URBAN STADIUM SHOPPING CENTER MALL FOOD COURT ROADSIDE
Slide 44: Seattle, WA: University Village
S E AT T L E , WA UNIVERSITY VILLAGE © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 44
Slide 45: Nashville, TN: Franklin
NASHVILLE, TN FRANKLIN © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 45
Slide 46: Los Angeles, CA: Santa Monica
LOS ANGELES, CA S A N TA M O N I C A © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 46
Slide 47: Design Evolving for the Digital Journey
S H A C K D E S I G N E V O LV I N G F O R T H E D I G I TA L J O U R N E Y Digital and in-Shack experiences converging Front of house flow increasingly separating order-ahead channels Further kiosk rollout planned Iterative design & renovation process © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L
Slide 48: Hospitality Meets Convenience
H O S P I TA L I T Y M E E T S C O V E N I E N C E Ongoing app, kiosk and web enhancements Redesigning web experience Building towards a single view of the guest Expanding personalized marketing-focused capabilities Delivery through own channels over time © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A
Slide 49: 2020 Strategic Growth Plan
2 0 2 0 S T R AT E G I C G R O W T H P L A N People Product Experience Licensing Attracting Guest acquisition New formats Capital light Retaining Frequency Community Cash flow Developing Buzz Omnichannel Global brand
Slide 50: Licensing Business
LICENSING BUSINESS Increasing penetration within existing markets Growth in mainland China with entry to Beijing mid-year Increasing brand awareness through airport, stadium & roadside locations in US Significant global whitespace High margin, cash accretive operating model © 2 0 0 4 - 2 0 2 0 S H A
Slide 51: Significant Global Opportunity
SIGNIFICANT GLOBAL OPPORTUNITY United Kingdom 12 SHACKS South Korea 11 SHACKS North America Turkey 22 SHACKS Japan 3 SHACKS 14 SHACKS Shanghai 3 SHACKS Mexico Hong Kong 2 SHACKS 5 SHACKS Philippines Middle East 2 SHACKS 40 SHACKS Singapore 1 SHACK
Slide 52: Beijing, China
BEIJING, CHINA SANLITUN 52 © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 52
Slide 53: Seoul, Korea
SEOUL, KOREA I - PA R K © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 53
Slide 54: Istanbul, Turkey
I S TA N B U L , T U R K E Y METROPOL MALL © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 54
Slide 55: Singapore
SINGAPORE NEIL ROAD © 2 0 0 4 - 2 0 2 0 S H A K E S H A C K . A L L R I G H T S R E S E R V E D . 55
Slide 56: 2020 Total Unit Guidance
2 0 2 0 TO TA L U N I T G U I D A N C E 335 to 342 275 132 to 137 203 112 154 79 108 64 203 to 205 75 44 163 31 124 90 64 Licensed Shacks 44 Domestic company-operated Shacks 2015 2016 2017 2018 2019 2020E
Slide 57: 2020 Key Financial Drivers
2020 KEY FINANCIAL DRIVERS Total Revenue • Development focus on expansion of existing markets November Unit Guidance: 40-42 company-operated • Digital product and menu innovation 20-25, net licensed • Delivery partnership transition • Continued broad international licensed development • Focus on con
Slide 58: Thank You
THANK YOU For more info: investor.shakeshack.com investor@shakeshack.com
Slide 59: Definitions
DEFINITIONS “Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, deferred lease costs, losses on the disposal of property and equipment, amortization of cloud-based software implementation assets, as well as certain non-recurrin
Slide 60: Income Statement
I N C O M E S TAT E M E N T Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25, 2019 September 26, 2018 September 25, 2019 September 26, 2018 Shack sales $ 152,366 96.6% $ 115,882 96.9% $ 428,811 96.8% $ 324,869 97.0% Licensing revenue 5,396 3.4% 3,765 3.1% 14,273 3.2% 10,176 3.0% TOTAL REVEN
Slide 61: Shack-Level Operating Profit Definitions
S H A C K - L E V E L O P E R AT I N G P R O F I T D E F I N I T I O N S Shack-Level Operating Profit Shack-level operating profit 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 rel
Slide 62: Shack-Level Operating Profit
S H A C K - L E V E L O P E R AT I N G P R O F I T Thirteen Weeks Ended Thirty-Nine Weeks Ended (dollar amount in thousands) September 25, 2019 September 26, 2018 September 25, 2019 September 26, 2018 Operating income $ 8,164 $ 9,343 $ 25,197 $ 28,875 Less: Licensing revenue 5,396 3,765 14,273 10,17
Slide 63: Adjusted EBITDA Definitions
ADJUSTED EBITDA DEFINITIONS EBITDA and Adjusted EBITDA EBITDA is defined as net income before interest expense (net of interest income), income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA (as defined above) excluding equity-based compensation expense,
Slide 64: Adjusted EBITDA
ADJUSTED EBITDA Thirteen Weeks Ended Thirty-Nine Weeks Ended (dollar amounts in thousands) September 25, 2019 September 26, 2018 September 25, 2019 September 26, 2018 Net income $ 11,423 $ 6,946 $ 26,201 $ 22,496 Depreciation expense 10,474 7,439 29,239 20,905 Interest expense, net 133 591 302 1,762
Slide 65: Adjusted EBITDA
ADJUSTED EBITDA Thirteen Weeks Ended Thirty-Nine Weeks Ended (dollar amounts in thousands) September 25, 2019 September 26, 2018 September 25, 2019 September 26, 2018 Net income $ 11,423 $ 6,946 $ 26,201 $ 22,496 Depreciation expense 10,474 7,439 29,239 20,905 Interest expense, net 133 591 302 1,762