Shake Shack, Inc. · NYSE:SHAK
Shake Shack — ICR Conference 2023
43 slides from Shake Shack's conference presentation, Jan 10, 2023
Slide 1: ICR Conference January 10, 2023
ICR CONFERENCE JANUARY 10, 2023
Slide 2: Cautionary Note on Forward-Looking Statements
C AUT IO NA RY N OT E O N FO RWARD -LOO KIN G S TAT EM EN T S This presentation contains forward-looking statements, Company’s expectations include the impact of the COVID-19 pandemic, our ability to develop and open new Shacks on a timely basis, the management of our digital capabilities and expans
Slide 3: At Shake Shack We Stand for Something Good
AT S HA KE S HAC K W E S TA ND FO R S O M E T H IN G G O O D Brand Culture Leadership Menu Growth Over the past two decades, We “Stand for Something Our Leadership Team Bringing a fine-dining We look ahead towards an we have built an Good“ and continue to collectively boasts decades mindset and elev
Slide 4: Shake Shack 4Q22 Snapshot
S H A K E S H AC K 4 Q 2 2 S N A PS H OT P R E L I M I N A RY U N AU D I T E D R E S U LT S 1 4Q22 OPENINGS Total Revenue: Licensing Revenue: 22 Company-operated Shack Openings Shack Sales: 13 Licensed Shack Openings $238.5M $229.9M $8.6M 35 Total System-wide Shacks Average Weekly Sales: System-wide
Slide 5: Shake Shack FY22 Snapshot
S H A K E S H AC K F Y 2 2 S N A PS H OT P R E L I M I N A RY U N AU D I T E D R E S U LT S 1 2022 OPENINGS Total Revenue: Shack Sales: Licensing Revenue: 36 Company-operated Shack Openings 33 Licensed Shack Openings 5 $900M $869M $31M 69 Total System-wide Shacks Average Weekly Sales: System-wide Sa
Slide 6: 2023 Strategic Priorities
2023 S T R AT EG IC P R IO R I T IE S Recruit, Reward Relentless Focus Targeted Invest with Improve & Retain a on the Guest Development Discipline for Shack Margins Winning Team Experience Strategy Strong Returns • We put our people • Create crave-able • Expand in new • Constant focus on • Measured
Slide 7: Recruit, Reward & Retain a Winning Team
Recruit, Reward & Retain a Winning Team 7
Slide 8: A Winning Team: Working at Shake Shack
A WINNING TEAM We put our people first! Leading the way with WORKING AT SHAKE SHACK hospitality. Earned a 100% Provide Shift Up score on Human leadership Rights Campaign’s competency training Corporate Equality and mentorship Index. programs to develop our team. Increased starting wages by ~20% sinc
Slide 9: Relentless Focus on the Guest Experience
Relentless Focus on the Guest Experience 9
Slide 10: Guest Experience: Culinary Innovation
GUEST EXPERIENCE Our culinary team develops exciting collaborations and limited time offerings at our NYC Innovation Kitchen. Our menu drives new and CULINARY INNOVATION existing guest traffic in digital and in-shack channels, and highlights the premium brand position Shake Shack has earned. Hot One
Slide 11: Coming This Quarter
White Truffle ‘Shroom C O M I N G T H I S Q UA RT E R White Truffle Fries White Truffle Burger with crispy shallots 11
Slide 12: Guest Experience: Digital Evolution
GUEST EXPERIENCE Our digital innovation in the Shack, the Shack App, and website offer our DIGITAL EVOLUTION guests a true omnichannel and personalized experience. The above marketing promotions were launched in 2022 and may not be currently offered. 12
Slide 13: Guest Experience: Kiosk Strategy
GUEST EXPERIENCE Kiosks allow us to better optimize labor to other parts of the guest journey and provide our operators more flexibility during peak traffic and staffing KIOSK STRATEGY challenges. Kiosk is our highest In Shacks where we Shake Shack is adding margin channel. have kiosks, kiosks in ne
Slide 14: Guest Experience: Exclusive Events
GUEST EXPERIENCE We’re creating unique, memorable experiences for our guests in EXCLUSIVE EVENTS their cities and neighborhoods, which only Shake Shack can offer. 14 Enrique Olvera Collaboration Tacos y Birria La Unica at EEEEEATSCON Shake Shack Pickleball Club Lollapalooza
Slide 15: Targeted Development Strategy
Targeted Development Strategy 15
Slide 16: Development Strategy: Our Growth Story
DEVELOPMENT STRATEGY Shaking up the industry for two decades, Shake Shack has a OUR GROWTH STORY long runway of expansion ahead. Founding & IPO Today Total Opportunity • Founded as a hot dog cart to • 430+ Shacks globally, in 32 states • Digital, drive-thru, and Multiple benefit a NYC park in 2004.
Slide 17: Development Strategy: Core Format
DEVELOPMENT STRATEGY Core Shack formats are the classic example of what we've built all around the globe, tailored to the market, with a history of CORE FORMAT strong AUVs, returns and profitability. 17 Derby Street, Massachusetts
Slide 18: Development Strategy: Small Format
DEVELOPMENT STRATEGY Small Shack formats are under 3000 sq. feet and allow us to target lower build costs in various formats, like dense urban environments, SMALL FORMAT premium food courts and higher traffic suburban locations, allowing us to go deeper in markets. 18 Fashion Mall at Keystone, India
Slide 19: Development Strategy: Drive-Thru Format
DEVELOPMENT STRATEGY We are investing in building a drive-thru business model that adds to DRIVE-THRU FORMAT our overall returns and addressable market opportunity long term. • Currently 11 drive-thrus open, 9 of which opened in 2022. • Expecting 10 to 15 more in 2023. • Target drive-thru economics
Slide 20: Development Strategy: Drive Thru Case Study
DEVELOPMENT STRATEGY Since 2021, we opened two Shacks in Orlando less than a mile apart - a drive-thru in Vineland Pointe and a food court in Orlando DRIVE THRU CASE STUDY Premium Outlets. Our ability to open different format Shacks increases our addressable market. Vineland Pointe 5 min Vineland Po
Slide 21: Development Strategy: Licensed Expansion
DEVELOPMENT STRATEGY We ended 2022 with 182 licensed Shacks globally across 16 LICENSED EXPANSION countries and expect 25-30 openings in 2023. United Kingdom 11 SHACKS South Korea US Licensed 24 SHACKS Turkey 33 SHACKS 6 SHACKS Mainland China & Hong Kong Japan Bahamas 32 SHACKS 13 SHACKS Coming 2023
Slide 22: Licensed Business: Asia
DEVELOPMENT STRATEGY As of year-end 2022, we had 32 Shacks in China (incl. Hong Kong and Macau) with new openings in Nanjing, Guangzhou, LICENSED BUSINESS: ASIA Chengdu and Suzhou. 22 Suzhou Center, Suzhou, China
Slide 23: Licensed Business: Asia
DEVELOPMENT STRATEGY We are thrilled to announce that our Shack in Wuhan, China LICENSED BUSINESS: ASIA was our first opening in fiscal 2023! 23 Wuhan MixC, Wuhan, China
Slide 24: Licensed Business: Asia
DEVELOPMENT STRATEGY This year, we were excited to open our 13th Shack in Japan, in Osaka’s Universal Studios, our first opening in the country since 2019. LICENSED BUSINESS: ASIA We also continued growth in Korea with 4 new Shacks in 2022! 24 Universal Studios Japan, Osaka, Japan Bucheon, Gyeonggi,
Slide 25: Licensed Business: Growth
DEVELOPMENT STRATEGY We also will say Sawasdee! to a new market, Thailand, in LICENSED BUSINESS: GROWTH 2023. 25 Central World, Bangkok, Thailand
Slide 26: Licensed Business: Airports
DEVELOPMENT STRATEGY Margarita… On the Rockies? Our Denver bar location serves hungry travelers with our traditional menu plus new LICENSED BUSINESS: AIRPORTS and exciting cocktails. We now have 23 airport Shacks open worldwide. 26 Denver International Airport, Colorado, USA
Slide 27: Licensed Business: Roadside
DEVELOPMENT STRATEGY Stop by for a burger at one of our 4 roadside travel LICENSED BUSINESS: ROADSIDE plaza Shacks with 3-5 expected openings in 2023! 27 Vince Lombardi Travel Plaza, New Jersey, USA
Slide 28: Licensed Business: New Format Opportunity
DEVELOPMENT STRATEGY This year, we will open our first licensed Shake LICENSED BUSINESS: Shack with a resort partner in the Bahamas, at the Atlantis Resort. NEW FORMAT OPPORTUNITY 28 Atlantis Bahamas, Paradise Island, Bahamas
Slide 29: Improve Shack Margins
Improve Shack Margins 29
Slide 30: Improve Shack Margins: SLOP Margin Initiatives
IMPROVE SHACK MARGINS We are committed to improving our profitability, an essential ingredient to our long-term growth. SLOP MARGIN INITIATIVES Shack-Level Operating Profit by Expenses1 We are growing sales – with a focus on our highest margin channels - and managing our Shack-level expenses. 22.3%
Slide 31: Improve Shack Margins: Sales Growth
IMPROVE SHACK MARGINS We are investing to drive more sales into our higher margin channels, where we can provide a better, personalized SALES GROWTH guest experience. We are investing in Digital, Marketing, and Culinary to drive continued sales growth. Kiosk, traditional in-Shack, Shack App, and Web
Slide 32: Improve Shack Margins: Labor Strategies & Efficiencies
IMPROVE SHACK MARGINS We are actively addressing staffing and retention LABOR STRATEGIES & EFFICIENCIES to unlock sales volumes and throughput. Industry-wide staffing challenges have pressured our sales, our hours of operation, our throughput, and our profitability. We are focused on retention by pr
Slide 33: Improve Shack Margins: Off-Premise Profitability
IMPROVE SHACK MARGINS We are rolling out margin driving initiatives in our off-premise OFF-PREMISE PROFITABILITY channels to improve profitability. Off-premise orders have lower margins than in- Shack, driven by delivery expenses and higher packaging. Initiatives and Opportunities: • Marketing initi
Slide 34: Improve Shack Margins: Strategic Menu Pricing & Supply Chain
IMPROVE SHACK MARGINS We continue to see higher items per check and strong demand for STRATEGIC MENU PRICING & our premium LTOs against higher menu prices. SUPPLY CHAIN INITIATIVES Commodity inflationary pressures have impacted our profitability. Initiatives and Opportunities: • Food and paper infla
Slide 35: Invest with Discipline for Strong Returns
Invest with Discipline for Strong Returns 35
Slide 36: Invest for Strong Returns: Development Long-Term Targets
INVEST FOR STRONG RETURNS As we scale, we are focused on improving our profitability and lowering build costs to improve DEVELOPMENT LONG-TERM TARGETS1 our historically strong returns. Average Unit Shack-level Operating Shack Net Build Cash-on-cash Volumes Profit Margins Costs Returns3 Currently exc
Slide 37: Invest for Strong Returns: Digital Strategic Framework
INVEST FOR STRONG RETURNS This year, we will refine, optimize, and personalize our app, web, and kiosk channels and improve the infrastructure to DIGITAL STRATEGIC FRAMEWORK drive acquisition, frequency, conversion, and retention. Digital Scale Digital and Kiosk Sales up +330% since 2019 1 • Digital
Slide 38: Financial Update
Financial Update 38
Slide 39: 2022 Guidance & Preliminary Unaudited Results
2 022 G UIDA N C E & P R EL IM INA RY UNAUD I T ED R E S ULT S 1 Q4 2022 PRELIMINARY RESULTS Total revenue $238.5m Shack sales $229.9m Licensing revenue $8.6m Same-Shack sales versus 2021 +5.1% Shack-level operating profit margin Approximately 19% FY 2022 Guidance Domestic Company-operated openings
Slide 40: Initial Preliminary Q1 & FY 2023 Guidance
INI T IA L P R EL IM INA RY Q 1 & F Y 2023 G UIDA N C E Q1 2023 Guidance This initial guidance does not assume any new and unknown pressures, Total revenue $234.5M - $243M including COVID disruptions or macro-economic shifts. Given the Shack sales $227M - $235M heightened uncertainty in the operatin
Slide 41: Thank You
THANK YOU 41 Board of Directors Meeting| Q1 2020 41 41
Slide 42: Definitions – Shack-Level Operating Profit
D E FINI T IO NS – S HAC K-L E V EL O P ER AT IN G P RO FI T Shack-Level Operating Profit investors to evaluate the Company's performance relative to peers of various sizes and maturities and Shack-level operating profit, a non-GAAP measure, is defined as Shack sales less Shack-level provides greate
Slide 43: Contact Information
C O N TAC T INFO R M AT ION INVESTOR CONTACT Melissa Calandruccio, ICR Michelle Michalski, ICR (844) Shack-04 (844-742-2504) investor@shakeshack.com MEDIA CONTACT Kristyn Clark, Shake Shack kclark@shakeshack.com 43