Shake Shack, Inc. · NYSE:SHAK
Shake Shack — ICR Conference 2019
63 slides from Shake Shack's conference presentation, Jan 15, 2019
Slide 1: ICR Conference
ICR CONFERENCE JANUARY 15, 2019
Slide 2: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements ICR Conference 2019 This presentation 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
Slide 3: We are relentlessly focused on excellence, experience and hospitality
We are relentlessly focused on excellence, experience and hospitality. Commit to excellence in our people Cultivate a loyal and connected community Deliver a Innovate our consistently business for great experience growth Stand for Something Good 3
Slide 4: Strong momentum continues in domestic expansion
Strong momentum continues in domestic expansion Domestic company-operated Shacks (At Fiscal Year End) 2018 headlines 175 160 - 164 • Record year with 34 domestic openings NYC 150 Other • >80% of domestic Shacks are outside NYC at year end 124 125 • Entered 8 new markets including Denver, CAGR 43% 21
Slide 5: Broadening of Shack format to suit our new and existing markets
Broadening of Shack format to suit our new and existing markets URBAN EVENTS STADIUMS SHOPPING CENTER FOOD FREE STANDING AIRPORTS TRUCK PAD FOOD COURT 5
Slide 6: Shack format expanding to food trucks in Q1 '19
Shack format expanding to food trucks in Q1 ‘19 Community events, 2 food trucks go Based in NJ and Atlanta Will be staffed and festivals, private Brand marketing halo into market but will operate on a supported by parties, buyouts likely impact as part of local early Feb broader regional basis local
Slide 7: Birmingham, AL
Birmingham, AL 7
Slide 8: Aventura Mall, FL
Aventura Mall, FL
Slide 9: Charlotte, NC
Charlotte, NC
Slide 10: Denver, CO
Denver, CO
Slide 11: Seattle, WA
Seattle, WA BETTER PIC PLEASE Seattle, WA
Slide 12: Westlake Village, CA
Westlake Village, CA
Slide 13: Southdale, MN
Southdale, MN
Slide 14: West Village, NY
- West Village, NY
Slide 15: Palo Alto, California
Palo Alto, California
Slide 16: Palo Alto, California
Palo Alto, California
Slide 17: Willis Tower, Chicago, Illinois
Willis Tower, Chicago, Illinois
Slide 18: Kirkland, Washington
Kirkland, Washington — J Js
Slide 19: Little Italy, San Diego, CA
Little Italy, San Diego, CA
Slide 20: Strong international licensing expansion continues and represents an increasingly important part of the business
Strong international licensing expansion continues and represents an increasingly important part of the business 2018 headlines • Opened 15 licensed Shacks across both the US and international locations • Domestic airports gain strategic importance with openings in Atlanta and LaGuardia • Entered Ho
Slide 21: IFC, Hong Kong
IFC, Hong Kong 21
Slide 22: Licensing a key part of our continued growth strategy
Licensing a key part of our continued growth strategy Licensed Shacks (At Fiscal Year End) 2019 headlines 110 • Shacks operating across 16 countries by the end Middle East, Turkey, Russia 100 - 102 of year 100 UK 90 Japan, Korea, Hong Kong • First Mainland China Shack opening Q1 in US 84 Shanghai, a
Slide 23: Central City, Seoul, Korea
a A Central City, Seoul, Korea
Slide 24: Osaka, Japan
Osaka, Japan
Slide 25: Mansion House, London, UK
. Mansion House, London, UK _
Slide 26: Pacific Place, Hong Kong
bee Do /% wa — ¥ | ong Kono, cific Place, H
Slide 27: XinTianDi, Shanghai, China
XinTianDi, Shanghai, China
Slide 28: Central Square, Manila, Philippines
Central Square, Manila, Philippines
Slide 29: Jewel Changi Airport, Singapore
Jewel Changi Airport, Singapore
Slide 30: Resulting in consistently strong financial performance
Resulting in consistently strong financial performance Total Revenue ($M) Cash Flow from Operations ($M) CAGR 45% CAGR 53% $431 $71 $80 $359 $268 $54 $191 $41 $82 $119 $14 $13 2 '13 '14 '15 '16 '17 Q3 '18 TTM 2 '13 '14 '15 '16 '17 Q3 '18 TTM Shack System-wide Sales1 ($M) System-wide Shack Count (At
Slide 31: Strong results across all US regions
Strong results across all US regions MIDWEST NORTHEAST 12 Shacks 37 Shacks $3.8M AUV $3.7M AUV WEST 28% SLOP 25% SLOP 17 Shacks $4.7M AUV 27% SLOP TTM as of Q3 '18 107 Shacks NEW YORK CITY 20 Shacks $4.4M AUV $6.9M AUV 26% SLOP 25% SLOP SOUTHEAST 21 Shacks $3.5M AUV 26% SLOP 31
Slide 32: We are relentlessly focused on excellence, experience and hospitality
We are relentlessly focused on excellence, experience and hospitality. Commit to excellence in our people Cultivate a loyal and connected Deliver a community Innovate our consistently business for great experience growth Stand for Something Good
Slide 33: Digital Innovation: Building deeper levels of engagement with our guests
Digital Innovation: Building deeper levels of engagement with our guests • Key area of ongoing growth opportunity • Listen, learn and better serve our guests’ needs • Broaden the definition of the Shake Shack experience • In early days yet encouraged by all key metrics including typically higher ave
Slide 34: Digital Innovation: In-Shack kiosks
Digital Innovation: In-Shack kiosks • Testing self-order kiosks in 16 Shack locations, retrofit, and hybrid environment • Goals include enhancement of the guest experience and provide an opportunity to partially offset increasing labor costs while optimizing sales potential • High satisfaction ratin
Slide 35: Digital Innovation: App refresh
Digital Innovation: App refresh Personalized Content Developing dynamic content based on guest journey to deliver the right message, at the right moment Updated Visual Design New look and feel feature menu items and drive engagement Forward Looking Designed for future state to include personalized a
Slide 36: Digital Innovation: Online ordering
Digital Innovation: Online ordering • The most recent addition to our digital ordering suite of products: desktop and mobile web • Tested in select Shacks end of Q3 ‘18 with full rollout Jan ‘19 • Experience mirrors the app with order ahead functionality and higher category order limits • Unlike app
Slide 37: Digital Innovation: Delivery
Digital Innovation: Delivery • ~18 months of testing delivery through integrated pilots with various partners • Consistent, strong demand from our guests for Shake Shack to be delivered • Multiple criteria for longer-term partnership viability being assessed • Evolution of packaging is one area of f
Slide 38: Connecting with our guests through strategic partnerships
Connecting with our guests through strategic partnerships
Slide 39: Connecting with our guests in the community
Connecting with our guests in the community 39
Slide 40: Influencers as Shack fans
Influencers as Shack fans 4 a] brielarson 19m foFace Filter - Try it
Slide 41: We are relentlessly focused on excellence, experience and hospitality
We are relentlessly focused on excellence, experience and hospitality. Commit to excellence in our people Cultivate a loyal and connected community Deliver a Innovate our consistently business for great experience growth Stand for Something Good
Slide 42: Investment in ERP upgrade – Project Concrete
Investment in ERP upgrade – Project Concrete Data Quality & Decision Making Robust & Globalization Standardized Processes and Controls Foundation Take Admin Operational Cost Efficiency for the future out of the Shacks Organization Risk Control Agility Stakeholder Experience
Slide 43: Menu Innovation
Menu Innovation • Co-located with West Village Shack and new Home Office • First dedicated space for culinary team to innovate and test around both existing core menu and new items
Slide 44: Chick'n Bites
Chick’n Bites • Hand battered, crisp-fried to order, all natural & antibiotic-free • Test launched in Q3 '18 • Full LTO roll-out early February '19
Slide 45: Veggie Shack
Veggie Shack • Our own recipe made from brown rice, black bean, and beets • Launched in Q1 '18 • Currently testing in 20+ locations in New York, California and Texas
Slide 46: Tiramisu Shake
Tiramisu Shake • Mascarpone, coffee and vanilla frozen custard topped with amaretti cookie crumbs and a dusting of cocoa powder • Continuing to innovate in custard, testing smaller sizes • LTO available now through the end of the month
Slide 47: Montlake Double Cut – Local
Montlake Double Cut – Local Burger only in Seattle • Working with a community run, hormone-free farm as the beef supplier • A Washington State all-natural beef double cheeseburger topped with Beecher’s Just Jack cheese, caramelized onions, and grainy mustard mayo on a Macrina Bakery bun
Slide 48: Stand for Something Good
Stand for Something Good Eliminating plastic straws (Q2 '19) Cage free eggs only Eliminating high fructose corn syrup (H2 '19) Proactive sourcing from local suppliers + ranchers Charitable donations via local and national partnerships
Slide 49: We are relentlessly focused on excellence, experience and hospitality
We are relentlessly focused on excellence, experience and hospitality. Commit to excellence in our people Cultivate a loyal and connected community Deliver a Innovate our consistently business for great experience growth Stand for Something Good
Slide 50: Committed to the development of our leaders
Committed to the development of our leaders • People are our most valuable asset and are critical to a great Shack experience • Macro employment environment challenging with rising hourly wages & salaries, regulation and low unemployment • Shack provides opportunity for growth and development for ou
Slide 51: Committed to the development of our leaders
Committed to the development of our leaders Created nearly 2,000 jobs around the country, and promoted 1,151 people throughout our company
Slide 52: 2019…
2019… Record year of domestic Shack openings, back- end weighted similar to 2018 International expansion continues with Asia as a major focus; Mainland China will be a significant milestone Strength of culture and growth opportunities differentiate our teams; equity program will be expanded to GMs D
Slide 53: 53
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Slide 54: Appendix
Appendix INCLUDING GAAP & NON-GAAP MEASURES
Slide 55: Definitions
Definitions “Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA excluding equity-based compensation expense, deferred rent expense, losses on the disposal of property and equipment, as well as certain non-recurring items that the Company does not believe directly reflect its core operations
Slide 56: Income Statement
Income Statement Third Quarter and YTD 2018 Thirteen Weeks Ended Thirty-Nine Weeks Ended September 26, 2018 September 27, 2017 September 26, 2018 September 27, 2017 Shack sales $ 115,882 96.9% $ 91,100 96.3% $ 324,869 97.0% $ 253,258 96.4% Licensing revenue 3,765 3.1% 3,509 3.7% 10,176 3.0% 9,416 3.
Slide 57: Shack-Level Operating Profit Definition
Shack-Level Operating Profit Definition Third Quarter and YTD 2018 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 related e
Slide 58: Shack-Level Operating Profit
Shack-Level Operating Profit Third Quarter and YTD 2018 Thirteen Weeks Ended Thirty-Nine Weeks Ended (dollar amounts in thousands) September 26, 2018 September 27, 2017 September 26, 2018 September 27, 2017 Operating income $ 9,343 $ 10,610 $ 28,875 $ 27,975 Less: Licensing revenue 3,765 3,509 10,17
Slide 59: Shack-Level Operating Profit Region
Shack-Level Operating Profit Region Third Quarter and YTD 2018 Total Company Domestic Company-operated Shacks By Region(1), Q3 '18 TTM Trailing Twelve Corporate / (dollar amounts in thousands) Q4 2017 Q1 2018 Q2 2018 Q3 2018 Months NYC Northeast Southeast Midwest West Other (2) Domestic Company-oper
Slide 60: Adjusted EBITDA Definition
Adjusted EBITDA Definition Third Quarter and YTD 2018 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-ba
Slide 61: Adjusted EBITDA
Adjusted EBITDA Third Quarter and YTD 2018 Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) September 26, 2018 September 27, 2017 September 26, 2018 September 27, 2017 Net income $ 6,946 $ 7,870 $ 22,496 $ 19,916 Depreciation expense 7,439 5,604 20,905 15,610 Interest expense, net 591 456
Slide 62: Full Year 2018 Guidance & 2019 Headlines
Full Year 2018 Guidance & 2019 Headlines FY 2018 FY 2019 Guidance FY 2018 Guidance Headlines November 1, August 2, 2018 November 1, 2018 2018 Revenue $446M to $450M $450M to $452M * Same-Shack sales growth 0.0% to 1.0% 0.0% to 1.0% * AUV $4.1M to $4.2M $4.2M to $4.3M * Domestic company- 32 to 35 33
Slide 63: Investor Contact
Investor Contact: Melissa Calandruccio, ICR Michelle Michalski, ICR (844) SHACK-04 (844-742-2504) investor@shakeshack.com Media Contact: Kristyn Clark, Shake Shack 646-747-8776 kclark@shakeshack.com 63