Shake Shack, Inc. · NYSE:SHAK
Shake Shack — Q2 2020 Earnings Presentation
29 slides from Shake Shack's earnings presentation, Jul 30, 2020
Slide 1: Second Quarter 2020 Earnings Supplemental
SECOND QUARTER 2020 EARNINGS SUPPLEMENTAL JULY 30, 2020 Strategic Plan Update Board of Directors Meeting| Q1 2020
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 its financial position, results of operations, plans, objectives, statements, with
Slide 3: Commitment to Look After Our Team, Guests and Communities
C O M M I T M E N T TO L O O K A F T E R O U R T E A M , G U E S T S A N D COMMUNITIES SUPPORTING SHACK TEAMS: • Enhanced safety procedures to protect the health of all Shack teams • 10% premium pay to all hourly team members continues into third quarter • Guaranteed bonuses for Shack managers als
Slide 4: Q2 2020 Financial Highlights
Q2 2020 FINANCIAL HIGHLIGHTS -49% YoY $91.8M $123.8M Decrease in Total revenue Shack system-wide sales2 same-Shack sales1 -40% YoY -45% YoY -$8.8M 5 $1.9M Adjusted EBITDA3 New domestic Shack-level operating profit4 -134% YoY company-operated and licensed 2.2% of Shack sales Shacks opened in Q2 1. "S
Slide 5: Business Highlights
BUSINESS HIGHLIGHTS Total digital sales more than Average weekly sales in The company has opened doubled in Q2 versus Q1; Q2 sales fiscal July increased more 9 company-operated Shacks in company digital channels (web than 2.3x the lowest weekly and 11 net licensed Shacks and app combined) tripled ve
Slide 6: Fiscal July Snapshot
F I S C A L J U LY 2 0 2 0 S N A P S H O T -39% YoY +2.3X +2.3X Decrease in Increase of licensed weekly sales2 Increase of average weekly sales same-Shack sales1 compared to fiscal April versus lowest AWS point in fiscal March +800K +90% First time app & web purchasers Of digital sales3 retained fro
Slide 7: Average Weekly Sales Increased to 2.3x COVID-19 Low Point
AV E R A G E W E E K LY S A L E S I N C R E A S E D TO 2 . 3 X C O V I D - 1 9 L O W P O I N T Average weekly sales1 continue to improve sequentially since fiscal April and have returned to levels consistent with fiscal March as digital sales remain strong and in-Shack ordering gradually resumes Ave
Slide 8: Over 90% of Digital Sales Retained as In-Shack Sales Gradually Return
O V E R 9 0 % O F D I G I TA L S A L E S R E TA I N E D A S I N - S H A C K S A L E S G R A D U A L LY R E T U R N 1 Q2 2020 digital sales2 more than doubled compared to Q1 2020; native channels (app and web) sales more than tripled compared to the same period last year Digital sales made up 75% of
Slide 9: Accelerated Digital Investment Lays Foundation for Enhanced Guest Experience
A C C E L E R AT E D D I G I TA L I N V E S T M E N T L AY S T H E F O U N D AT I O N F O R E N H A N C E D G U E S T E X P E R I E N C E • Acquired over 800,000 first time purchasers via app and web channels since early March; nearly four times higher than the same period last year • Curbside picku
Slide 10: Q2 Same-Shack Sales: NYC, Particularly Manhattan, Had Outsized Impact
Q 2 S A M E - S H A C K S A L E S : N Y C , PA R T I C U L A R LY M A N H AT TA N , H A D O U T S I Z E D I M PA C T O N OVERALL PERFORMANCE SECOND QUARTER 2020 VS PRIOR YEAR NYC (including Manhattan) -64% Manhattan -69% Northeast -41% Southeast -41% Midwest -47% Prior Year Same-Shack Sales $ Curren
Slide 11: Fiscal July Same-Shack Sales: All Regions Improved Yet NYC Lagged
F I S C A L J U LY S A M E - S H A C K S A L E S : A L L R E G I O N S I M P R O V E D Y E T N Y C , D R I V E N B Y M A N H AT TA N , C O N T I N U E D T O L A G R E S T O F T H E BUSINESS FISCAL JULY 2020 VS PRIOR YEAR NYC (including Manhattan) -56% Manhattan -65% Northeast -25% Southeast -36% Mid
Slide 12: Suburban Locations Outperforming Urban and Recovering Faster
S U B U R B A N L O C AT I O N S O U T P E R F O R M I N G U R B A N A N D R E C O V E R I N G FA S T E R Urban footprint impacting overall performance given significant impact of COVID-19 on dense office, tourist, and high-traffic locations. Urban Shacks make up half of the units in comp base but ~
Slide 13: Weekly Licensed Shack Sales Increased to 2.3x of COVID-19 Low Point
W E E K LY L I C E N S E D S H A C K S A L E S I N C R E A S E D TO 2 . 3 X O F C O V I D - 1 9 L O W P O I N T Weekly Licensed Sales 13% Total year-over-year Licensed sales growth (decline) (32%) (47%) (58%) (65%) Weekly Licensed $4.6M $2.0M $2.4M $3.5M $4.6M Sales Number of 96 56 59 91 98 Shacks O
Slide 14: Over 80% of Licensed Shacks Currently Open
O V E R 8 0 % O F L I C E N S E D S H A C K S C U R R E N T LY O P E N Domestic licensed Shacks remain heavily affected by COVID-19 impact on airports, stadiums and travel plazas Licensed Shacks Temporarily Closed Nearly all of Asia has now reopened Licensed Shacks Open 4 aside from one airport loca
Slide 15: 2020 Domestic Development Restarting After Pause Due to COVID-19
2 0 2 0 D O M E S T I C D E V E L O P M E N T R E S TA R T I N G A F T E R PA U S E D U E TO C O V I D - 1 9 Domestic company-operated Shacks (At Fiscal Year End) 178-183 163 124 90 Expecting to open 15 to 20 total new company-operated Shacks 64 in 2020 as construction and development restarts; COVI
Slide 16: Shack Track Additions Planned for At Least Eight Existing Shacks in 2020
“ S H A C K T R A C K ” A D D I T I O N S P L A N N E D F O R AT L E A S T EIGHT EXISTING SHACKS IN 2020 The “Shack Track” experience is an enhanced digital order and pickup solution that includes the ability to order via app or web and pick up via drive-up window, curbside, walk-up window, or in-Sh
Slide 17: Launching New Drive-Thru Experience in 2021
LAUNCHING NEW DRIVE-THRU EXPERIENCE IN 2021; P L A N TO A C T I V E LY TA R G E T A D D I T I O N A L S I T E S Goal is to increase the addressable market opportunity for Shake Shack, while driving strong AUVs and investment returns Design will retain the experience of the great community gathering
Slide 18: Drive-Thru Design Maintains Experience of Community Gathering Place
D R I V E - T H R U D E S I G N M A I N TA I N S E X P E R I E N C E O F C O M M U N I T Y G AT H E R I N G P L A C E Opportunistically looking to test drive-thru locations in suburban high-traffic areas Experience meets convenience however guests want their Shack Note: Renderings for illustration p
Slide 19: Financial Details
FINANCIAL DETAILS Strategic Plan Update Board of Directors Meeting| Q1 2020
Slide 20: Definitions
DEFINITIONS “Adjusted EBITDA,” a non-GAAP measure”, is defined as EBITDA (as defined below), "Shack-level operating profit," a non-GAAP measure, is defined as Shack sales less excluding equity-based compensation expense, deferred lease costs, impairment and loss Shack-level operating expenses includ
Slide 21: Income Statement
I N C O M E S TAT E M E N T Thirteen Weeks Ended Twenty-Seven Weeks Ended June 24, 2020 June 26, 2019 June 24, 2020 June 26, 2019 Shack sales $ 89,519 97.5% $ 147,876 96.8% $ 227,567 96.9% $ 276,445 96.9% Licensing revenue 2,267 2.5% 4,837 3.2% 7,389 3.1% 8,877 3.1% TOTAL REVENUE 91,786 100.0% 152,7
Slide 22: 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 Limitations of the Usefulness of this Measure Shack-level operating profit is defined as Shack sales less Shack-level operating Shack-level operating profit and Shack-level operating profit margin m
Slide 23: 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 Twenty-Six Weeks Ended (dollar amount in thousands) June 24, 2020 June 26, 2019 June 24, 2020 June 26, 2019 Operating income (loss) $ (24,075) $ 11,871 $ (24,862) $ 17,033 Less: Licensing revenue 2,267 4,837 7,389 8,877 Add: Gen
Slide 24: Adjusted EBITDA Definitions
ADJUSTED EBITDA DEFINITIONS EBITDA and Adjusted EBITDA Limitations of the Usefulness of These Measures EBITDA is defined as net income (loss) before interest expense (net of interest EBITDA and adjusted EBITDA may differ from similarly titled measures used by income), income tax expense and deprecia
Slide 25: Adjusted EBITDA
ADJUSTED EBITDA Thirteen Weeks Ended Twenty-Six Weeks Ended (dollar amounts in thousands) June 24, 2020 June 26, 2019 June 24, 2020 June 26, 2019 Net income (loss) $ (18,031) $ 11,171 $ (19,110) $ 14,778 (1) Represents amortization of capitalized implementation costs related to Depreciation expense
Slide 26: CARES Act and Tax Impact
C A R E S A C T A N D TA X I M PA C T During the fiscal second quarter, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted, which provides for a number of favorable tax provisions, among other stimulus measures Technical Correction of Qualified Significant Cash Tax Savin
Slide 27: 2020 Adjusted Pro Forma Effective Tax Rate
2 0 2 0 A D J U S T E D P R O F O R M A E F F E C T I V E TA X R AT E Thirteed Weeks Ended Twenty Six Weeks Ended June 24, 2020 June 24, 2020 Income Tax Income Before Effective Tax Income Tax Income Before Effective (Dollar amounts in thousands) Expense Income Taxes Rate Expense Income Taxes Tax Rat
Slide 28: 2019 Adjusted Pro Forma Effective Tax Rate
2 0 1 9 A D J U S T E D P R O F O R M A E F F E C T I V E TA X R AT E Thirteen Weeks Ended Twenty-Six Weeks Ended June 26, 2019 June 26, 2019 Income Tax Income Before Effective Tax Income Tax Income Before Effective Tax (Dollar amounts in thousands) Expense Income Taxes Rate Expense Income Taxes Rat
Slide 29: Contact Information
C O N TA C T I N F O R M AT I O N 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 Strategic Plan Update Board of Directors Meeting| Q1 2020 29