Q1 2021 Shake Shack Inc Earnings Call
Greetings and welcome to the Shake Shack first quarter of 2021 earnings call. At this time all participants are in of listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press started you're on your telephone keypad at the reminder, this conference is being <unk>.
Recorded it is now my pleasure to introduce your host Rick Powell Senior Vice President of Finance and Investor Relations. Thank you Rick you may begin.
Thank you Paul Good evening, everybody joining me at the Shake checks conference call at all C E O Randy <unk> private cfo's kind of come up.
Joined today's pull the would discuss non-GAAP financial measures, which we believe can be useful evaluating a couple of months.
The presentation of this additional information should not be considered in isolation.
Whereas the substitute at the results prepared and you go into the gap.
Reconciliations to compare of we've got the measures are available at and all of that is released on the appendix at all supplemental materials.
Some of the day statements maybe forward looking at an actual results maybe different materials due to the number of risks and uncertainties income.
The the discussed in the annual report on form 10-K, followed on February the 26 2021.
Any forward looking statements represent the abuse early as of today, Let me just see no obligation to updates any forward looking statements. If all of these change.
By now you should have access to all of those course of 2021. Other names, please which can be found out investor don't shake Shack dot com and the new section.
Additionally, we have poked at all for this quote of 2021 supplemental earnings materials, which can be found in the event. Some presentation section on our site what.
Whereas the next gave at 12, a case of the quarter.
And with that I'll send the call over to Randy.
The next record good evening, everyone at.
Really happy today the shares of continued come back and forward momentum here at Shake Shack spring is offered in of great energy around the country at our hometown of New York City too with COVID-19 cases of stabilizing and more regions steadily loosening restrictions were optimistic at improving trends can continue for industry has always I'm gonna start with the shot out to our team members who worked.
Through so much hardship and now with a full year of the pandemic behind us they're still need of the way back to Ah resuming gross.
We move forward today with confidence the opportunity we see ahead.
Yeah, the first quarter of 2021, and so far through April of financial performance continues on an upward trend.
Total revenue was at $155.3 million of the first quarter of 8.5% from last year with average weekly sales improve at 64000 compared to 62 at the fourth quarter. We exited the first quarter with March average weekly sales of 68000, improving again to 69000 in physical April say.
Of Shack sales were up 5.7% of the first quarter and up 86% at physical April versus 2020.
We'll also be sharing sales comparisons for the current comp base versus 2019 at this.
This was down 40% of at 15% of fiscal March and April respectively. Suburban Jack's continue to lead a recovery with April nearly flat at just at down just 1% versus 2019.
In terms of the profitability shack level of margin was 15% for the first quarter exiting with March at just under 19%.
That's moving out to talk about our strategic Posen focus of priorities.
Cause we move through the spirit of continued sales of profit recovery and do the significant opportunity of head. Our team is focused on opening at operating great checks, we're executing on the evolution of our physical shack format and digital transformation, while maintaining of critical focus on the creation of great products and and elevate the guest experience all culminating an enhanced convenience and access for.
Guess at an expanding addressable market for shake shack.
Highlight of growth during the first quarter, we open at 10 domestic company operating checks and of open another five so far in queue too.
We open we expect to open between one and three more if at the end of this quarter for a total of 16 18, new shacks by the been your point at incredible accomplishment by the team and what is continue to be of challenging operating environment.
Because we looked at the back half of the year of the various state of permitting of construction of our 21 class. We expect the the remaining shack openings to be more weighted to the fourth quarter, assuming no unforeseen COVID-19 related delays, we're on target to open between 35 and 40 do company operating shacks of this year cross both urban and suburban markets, although more way to disobey.
Urban as we continue our market penetration strategy.
We continue to guide to an accelerated development plan of 45 to 50 Shack next year of 22.
Towards the performance of the Shack, we've opened so far this year, we're really encouraged average weekly sales for our 21 class was over 79000 in the first quarter more than 20% higher than the system average.
Some of our most recent openings of new markets I, just Boulder, Indianapolis Portland resembled the excitement previous of seen before the pandemic with lines around the block of strong sales out of the gate encouraging indicators for the robust at accelerated development that we've laid out.
Our new of Shack and fishers, Indiana, just outside at the Annapolis.
Features are second shack track drive up window, and we've also of a new shacks at Santa Monica L. A Hoboken, New Jersey and more.
Shack digital convenience leads with about a third of the class feature and walk up the windows about 10% with a drive up window and many other shack speedring curbside end or enhanced interior of pick up experiences. Additionally, we're making a big commitment to test the drive throughs now with the potential for up to eight of these plan through 2022.
We expect to open our first at the end of this year.
Turning of the recovery of growth of our license business. We currently have 16 shacks temporarily clothes do the COVID-19 impact. However, during the first quarter, we open to new international shacks in the Middle East with six additional openings in the second quarter through fiscal April mostly in Asia.
We saw improvement in total weekly sales performance throughout the first court increasing from 5.6 million of January at 6.3 in March at 6.6 and April.
The recent increases have at driven by both of our international and domestic license checks, especially at the airports that are experiencing increases at TSA traffic.
We're also thrilled at all of our baseball Stadium shacks of now reopen including our newest within the World series Champions L. A Dodger stadium.
With limited fans allowed of games, we don't expect to have a normal sales season, but we're delighted to be bringing shack burgers back to the ballpark.
So far the second quarter R. U K shacks are gradually reopening as the country. He finally ended some of the most some of the most of the lockdown restrictions for the first time at over three months of.
Shack and China have seen strong sales throughout the second quarter, so far and Ah Rican openings at Macau Beijing at Singapore continued to extend our flipper and he's key strategic reaches.
As we looked at the future at the importance of the Asia Pacific region will soon be expanding within China's southern region with our first shack plan to open at <unk> later this quarter.
We're targeting the open at between 15 and 20, New license Jackson 21 increasingly between 20th 25 of 22.
Ah license operations are at critical component and how will of scale, our business and our bread and we expect them to grow substantially over the coming years.
Moving out of the pivotal transformation of our digital business, which continues to perform well. We're intensely focused on investment that we believe have been at will be critical to of growth drive of frequency marketing opportunities, all leading towards greater convenience and accessibility to and for her guess.
During the first quarter, we fully lost the livery from our own at there'll be adding the web later this year.
Offering delivery with the R. O channels is the key step in our ongoing digital in sales growth strategy and allows us to build strong relationships with our guest and enable more personal of direct communication.
We're also working to improve Inapt communications, particularly to enhance the pick up notifications experience at.
And within our shacks with test and Scream that communicate order readiness to our guest we've already seen guest experienced scores move higher where these initiatives have been rolled out.
As in person dining restrictions he's we're excited to see our in Shack guess return.
All while we continue to strengthen build upon and amplify the digital games, we've already made.
And finally at that time of the call, where we start to get a little bit hungry and Q1, we began the limited one of our Korean style chicken menu and this launch with really I guess, the mad at a large amount of buzz. So much so that many of our shacks actually sold out and while this led to her child menu availability in February we ended the promotion strong of March having learn a lot.
That'll help us prepare for more chicken L. T O as later this year.
Currently we're running a new avocado Bacon Burger end or chicken shack topped with freshly sliced avocado and diamond Radge Applewood smoked Bacon is at.
It'd be available for a limited time nationwide and for the first time ever. In addition of these items guess can also have freshly sliced avocado added to any of their favorite birds.
Over the past few months, we've increased focus on our shakes of cold beverage categories as well.
Alright, So our limited time offer is here of proven to be increasingly popular our spring Lemonade trio for example of featuring Strawberry salted line, Blackberry Lychee and mango passionate contributed to an increase in beverage items per check since lodging in early March the.
These are made up over a third of total cold beverage sales nearly doubling the sales contribution of previous beverage out to you at.
We've got some fun editions of these categories coming in the in the coming months and will continue to deliver an inspired L. T O calendar featuring bold flavors of modern fun versions of the classics in an effort to continue to elevate everything we do.
I don't know how the culinary front during the first quarter, we lots of new chef Collab series name now serving which features of diverse group of local shops and restaurants yours from across the United States to help US Cook up exclusive limited time menu items, we've got lots of fun running successful corner at Collabs in the past, but this year coming out of the pandemic will use these events as in the.
<unk> the feature and give back to our local restaurants strengthen our brand of more deeply engage with our communities portion of the net proceeds from each collab will go to nonprofit organizations, helping local restaurant communities.
Finally, I want to highlight originally published annual stand for something good report, which highlights many of our ESG priorities of 2020 at beyond and includes for the first time the publishing from our five year of diversity goals for our company <unk>.
The body our mission of Stanford something good bye prioritize of the wellbeing of of our team sourcing premium ingredients from like minded producers can.
Committed to responsible crass the design of our shacks and actively engaging of community support support through donations events and volunteer we know we can and must continue to do so much more to offset our impact on the world and make shake shack, a leader and creating opportunities to drive positive change I encourage you all the read at the report which can be found in the.
Besser section of our website.
Now I'll pass the call over to Tara from more detail on our financial performance.
Thanks for a day and thank you we'll send you any of this evening with all of the men can you. Just we continues to be encouraged by of Oregon recovery and the results or perform at.
That's cool just total revenue is 155.3 minutes until it <unk>.
Representing here, let me go ahead with the 8.5% of like Shack sales for 158.7 millions of it is that right here on your at like at 9.1% of the trends considering take cause it's the the little from.
Let me look at the mental breakdown of a sales performance I thought of the <unk>, we still of spell the style at some January fiscal February was heavily impacted by severe winter weather then for the <unk> much exiting the quartet with average weekly sales is $68000.
Sales continue to hold spelled with two April increasing to 69 divers the posted by the continued rebuild it didn't shake sales.
Are those the the end of the fiscal April the vast majority of about Shaq's will upgrade from what they've been dining room will be at many of them the varying levels of the past day restrictions I take it ended up in shack.
Looking at the same shack sales, which of at 5.7% you know when you're at <unk>.
From the first cool with that and 86% in April.
And the digital compare that help with the gauge our recovery at 12 2019 sales level.
When we can pay the first call at the 21 2021 of sales of our current complaint to the respective sales in the first quarter of 2019 stay with the.
That is 14.8%.
Let me do the same the fiscal April with of similar results and 15 does that compare the 2019.
When looking at all come base is important to remember the day include some of the previous they crashed volume checks of the country and the disproportionately everything I think by that performance and the extent to which they've yet to of cover with many of deeply and direct it has been sent at.
Is this the ticket and make sure at this doesn't check the cities such as the meal, the Vegas, Chicago or L. A what card performance, it's having of material impact on I'll still relatively small current day.
In fact, let me take the hundred and 26 shack at all <unk> today and remove the button the 25, performing shack of which nearly all of the other.
April come the both of 2019 improve from day in 15th at the end today, just under 3%.
Within the first of all at the same shack sales results traffic declined 12, four at 3%. It was all set the purpose of 18th at the price mix of combination of a year end price increase taken in December.
Increase the pricing room, the talking to liberate channels at roll diet of the early parts of the at and most of my a number of items the check, particularly at no digital channel.
A quick notes before we need the on as it relates to the same shake sales at.
It was at nine and any supplemental materials last quarter in order to normalize for the 53rd week in 2020, Okay pet period at the 2020 and 2019 has been shifted for the week from the physical care of of the in order to show of more like the light comparison.
We've included some detail around the based on the supplemental materials taste at earlier. This afternoon just out of the clarify.
We continue to experience recovery across the at the the ninth at the at the market. However, many major other knock at such as a matter of happy remained materially the line pre COVID-19 level, while office event of tourism traffic or 10.
The spirits between the into the other checks as well as by region can be found on page of seven and eight of all supplemental materials will you'll see suburban checks nearly fast 2019 levels and fiscal much end April and a slight increase in the recent speed of recovery of New York City.
When compared to 2019 O urban checks within 25 to send some physical much of 27% in April with some of our highest volume checks and the most dense urban or tourism related areas such as the state is new of D. C. Chicago at L. A each of which will take some time to fully recover.
Despite the cost of momentum in the business at remains challenging to provider accurate at look on sales. However, based on the current operating environment. We believe total revenue in the second quarter is likely to day in the range of of 174 and $183 million with shack sales between 170 and 178 million.
This the same continued general recovery across the country together with the benefit from the Sharrock opening.
We expect the same shack sales to increase in the midst <unk> mid forties to 50 per cent range for the same period.
We're anticipating the license to have the needs to be between four and $5 million based on the recent trends continued volatility across the onset the international recovery climates.
After the evident in the strength of of of digital sales over the last year digital transformation has been and will continue to be critical to upgrade.
It's still thousand extra main stroll in the first quarter of 60% of sales the.
Decreasing to 51% of April and then check sales increase.
Even with the increase in and check sales the rest tennis at about this the sales levels of been impressed at with nine take the Senate routines. When we can past escalate the two a digital sales periods of physical January.
In addition, let me analyze off that of course, the digital sales the equate to the digital Amy a Z of $2 million.
The claim measure of of the strength and interactive digital across the visit.
And although we expect of digital sales mixed to come day as in check sales beaten we feel confident in the ability to retain in the quiet and you get three of these digital channel with welcome at home is two and a half minute of new touch the three of these channels at mid lots of <expletive> and whether through all of new digitally enabled order of head options such as curbside.
Would you living at available to all right at the channels of three things to be effective at the acquisition and the tension vehicles or with digital day, continuing to demonstrate high end that what was at the frequency and spent well.
<unk> continues to build on the straw foundation with the other enhancements to the digital guest experience evolving and improving milk thing to a new product launches such as the website of new unemployed at still to come.
Moving on to profitability shack level of operating margin, that's 15% of the first quarter of hundred basis point decrease those at the fourth quarter, which is benefit there's no one time I'll keep it at the credit as well as the impact of the 50 said week.
First quarter shack level of operating profit margin strengthened into fiscal much ending the courtroom just on the 19th at the center will be at positively impacted by the 13th week, but a stronger selling for a loan seventh at I'd hate to continue of recovery towards pre COVID-19 levels of profitability.
Or whether the timing of scale of all margin recovery remains highly dependent on the previous day Christ William checks the name of covering supply of sales level.
Okay. We can pay the code from the first quarter with 29.6% of Shack sales of decrease from 50.1% of the fourth quarter, driven primarily by bank of year end of the policy delivery marketplace price increases, possibly all set by some peace inflation in the second help with Dakota, which we expect to continue 322.
Overall, we expect they'll total food and pay the cost line to slightly increase in queue to the sneeze dynamics continue.
Name of across from if that is cool water with the at 8.8% the shack sales compared to set the 0.3 per cent of the fourth of Georgia, driven by annual wage increases high of payroll taxes at the state level and the building back of our team to support a continued sales recovery at.
Privacy sheds, we expect 2021 wage inflation to be in the mid single digit range and do you know of expect to see leverage in this area in the short term.
Other operating expenses remain elevated at 15.4% of shack sales in the first quarter, an increase of 14.7% of the fourth quarter Jewish the additional costs associated with the up racing drink of it and there are a ton of and check sales with the fourth quarter Olson, having the benefits of the 53rd week.
I'll keep it at the cost of the first quarter of at 9.2% of Shack sales a slight increase from the fourth quarter, which benefited from the one time adjustments due to the pleasure of of Penn Station Shack. In addition to the 15th of it's basically a week in the fourth quarter.
Yeah I'll keep at at the line continues to be impacted by sales deleverage the chicken at eight in the previous day high volume of insurance.
Given recent trends in the <unk> look across the various shack level coastline at shack sales of between 170 end of $178 million in the second coach at we would expect of shack level up I can margin to improve to between 15 and 17%.
G&A expense in the first quarter of is $19.6 million, accusing 1.9 minute of equity based compensation and other known cash item is.
Cause we invest across the business plan to open our largest classes of shack. This year at into 2022, we expect fully at 2021 G N a to be between 83, and 86 million consistent with previous the Guy did level.
Preopening expense and the first question of 3.6 million an increase of 2.8 minute of the fourth quarter due to the increased 2021 development pipeline on the first of 2021, new shack opening we.
We continue to expect fully at 2021 quick thing the expense to be between 14th at 50 million consistent with bright of guidance.
On the just the probably formed the basis, we reported a net gain of $1.8 million or four cents. The funny exchange of that I need to check which benefits at from low at Texas related to option exercises Chavez thing during the quarter. We received the tax deduction from the value of our employees received the phone option exercise was Chavez thing.
Excluding the text and packed at the Stoke based compensation or just the first of all the tax rate during the first quarter was 29.4%.
And that's the usual the full of reconciliation of our tax rates can be found in the appendix of all supplemental materials.
Given the continued on the second day around the at that for the rest of this year in particular, the timing it full sales recovery and the resulting in fact, the little taxable income we're not issuing specific 2021 tax rate guidance at this time.
However, in the normal operating environment or adjusted price of all the tax rate excluding the impact of dark based compensation is expected to be between 26 and 28% in line with 2020 level.
Moving the balance sheet, when an incredible position of strength cause we look forward to the growth of opportunity ahead of the with our cash and marketable security at <unk> at the end of the first call at your at 460 million a significant increase falling at 250 million can best of all of that issue. It. So we completed the much for.
For the purposes of calculating diluted EPS of Shack and it just seems at this day and since the lid comes at the two equity resulting in an immaterial incremental addition of approximately 450000 chess chalks the date that I need to check at.
And much we can paint at an amendment to a revolving credit but the other day in order to update comes to reflect the convertible day issue at and can extend the maturity of of the credit facility, which remains of June.
The connection with the amendment to include a one time interest expense from the first quarter of approximately $320000 primarily related to the rights off of previously Capitalised for both of the cost.
We will send kept lots of books and the name of them and 10000 to the first financing costs will advertise these as of the two of them. If there was all of them.
And finally as we shed previous day Tomorrow is my last day at Shake Shack amongst the end of the period of my career that I will look back on with extreme pride and Tuesday of affection I'd like to thank Randy My friend and partner in the entire shake shack firmly put incredible four years I am so proud of everything we fill.
Together and excite just the old but like the head of Shake Shack continues to take the world by store.
This is of Great company for the amazing people and one of them I will very much at <unk>.
On what I'm looking forward to sharing on you at three six day.
And on that I will send you back to Randy.
Thanks, So much store and is charges magic Tomorrow is gonna be her last day here at the Shack. She begins a new chapter has the C. E O of of private life Sciences company and I want to take this opportunity to just once again, thank Tara for huge contribution over this past four years. She leaves us in such a strong position.
And I'm thrilled to see her take off the euro and I'm gonna be ready for her every success, we will Miss <unk>, but know that you are always part of the shack Sam.
Our search process is well underway and we look forward of strengthening our executive team through this transition in the interim chars responsibilities will be well transition to other existing members of our shake Shack leadership team.
We still have a considerable way to go until we reach full recovery, but every day, we're seeing the positive sides and increased confidence and shake shack opportunity moving forward to you and your family's day safe and stay healthy and with that operator. Please go ahead and open up the call for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask the question. Please press store one on your telephone keypad the confirmation tone on the case. So your line isn't the question can you give me the press store too if you would like to remove your question from the queue for participants using the speaker of equipment and may be necessary to pick up your handset before pressing the sarkies.
And the the interest of time, we asked the participants limit themselves. The only one question.
One moment, please while we pull for question.
Thank you. Our first question comes from Nicole Miller with Piper Sandler. Please proceed with your question.
Thank you. Good afternoon appreciate the update and certainly you know of look at how things are going currently I wanted to understand the pipeline in terms of how store at the half half open. So I want to reflect on pre pandemic levels I think open at the record revenues they'd honeymoon and probably very little.
Disruptive or just started the comp and I wanted to understand how the stores of open during the past year of during the pandemic and I'm wondering you know stay open at more maybe call at normalized maybe you could share of percentage or on a V day open at or percentage of mature volume because I'm starting to think maybe the enter the coffee.
And produce the comp left and well. This is how we spent about dollar sales crowd. It seems like this could turn into a comp sorry is there anything you can shop at.
Yeah. Thanks for the call you know some of the the numbers we shared in the first quarter just taking those those 10 plus that we've open since you know we're opening at the at 79000, a week average and you know that's an over 4 million dollar of U V right really sure sorry, if you look at going back it's called.
18 months or a little bit last maybe you know pandemic entries, it's been mixed right. We've talked a little bit about of generally are shacks of all of them pretty strong, but obviously nowhere near what they would have done pre pandemic. Joe Smith as you think about that yeah, certainly could be something down the road that we expect at.
All of the shacks, both new and current to be growing well out of this I mean, you see us over 80% cough and the cop base versus last year, which was the hardest hit time.
We also are copying against 19, whereas interestingly the at the beginning of the 19th of some of those new shacks entering the base, where some pretty busy shack. He had opened our first in the San Francisco area near Stanford Palo Alto There was a really big start that now open at that now comes into the call base in Q1. So so it's just the.
Another [laughter], it's hard to talk a lot about this but the comp base from shake Shack has always been you know of small relative to everything else going out of the company. It's always been something that we watch, but you have to understand at and we call that out specifically at.
As we talked about some of the 2019 compares if you look at you know, it's a small amount of shacks that are causing the negative when you really look at it and I can tell you walking around New York City myself today, we had of collab today with a great Chef Madison Square Park Shake Shack was packed itself the incredible but if you.
Walk over to the Theatre District of Herald square of two of our busy of shacks. We've ever had they are a fraction of themselves still two day or Grand Central Shack, one of the best we've ever had you still closed still close you know these are shack and that will absolutely come back. It's just a matter of time and when their call.
Nothing against the 2019 strikes, it's pretty noisy that's part of why we wanted to share the 2019 and I hope everybody understand what that looks like so long long way back to your question. We're really excited about the shacks we've opened.
You know the first one of the appointment area as well as Indianapolis Hoboken. Some superstar. So we're really excited about it.
That's a lot to think about end dicast and appreciate it and of course Tareq. Congratulations to you you'll be missed the back me as well that the blackout there. Thanks.
Thank you <unk>.
Thank you. Our next question comes from Jared Garver with Goldman Sachs. Please proceed with your question.
Alright. Thanks, so much for the question I wanted to get a sense of if you can give any color on the on the labor environment, what you're saying there obviously, we've heard about that the supply of challenges on the hiring side than I ever even noticed anecdote away from from restaurant concepts from there in the area of work, where you're kind of throttling the in store.
Dining of going back and forth from having open restaurants, and and just doing digital on the order of so just wanted to get a sense of what you're saying there and how your at your viewing away from work at right now.
Yeah. Thanks chaired yeah, that'd be no I'll I'll walk around my own neighborhood and I'll see some restaurants and it'll have you know closing early do the staffing you know that's something you you you rarely saw of the World. You look you can read any article today and understand what that pressure looks like it's it's obvious it's clear we were not immune to that let's shake.
Jack has is challenging staffing has always been part of the restaurant business always will be but we're we're certainly at a particular moment, where it's it's hard right. It's hard I think our tubes of done extraordinary at work and hiring keeping and developing so many people and of leadership positions, but it's not an easy time that's.
For sure.
We've not seen.
The material impact in any way, but there's moments, where we certainly <unk> at the end of certain shacks to this is not a countrywide every region from time to time, you'll have moments, where you you know you you'd like to hire a few more people and make sure that we were fully fully staffed up. So look we we gave the majority of our shacks raises last year at the entry level.
Wages the throughout the country. Most places that's part of the pressure on our labor line that you see the that we are proud to invest in our team and there's no doubt you know there's there's a lot of call for great people right. Now so we'll be we'll be looking at a keep strengthen our teams of yeah it'll be a challenge.
Thanks, I appreciate that and just one more quick one is there anything that we should think about in terms of the the urban shocks decelerating on the two your trend from March April the would seem at minimum at what he did it looks to be getting better and a lot of these urban environment. So just curious wires, maybe you're saying the celebration there well there's a couple of things the first of all of the minor.
Right I mean, if you look at the the numbers there nearly the same right because when you look March April but slight deceleration. The this is Jared why I'm gonna keep saying how small the bases and how wildly impacted at is uhm. So like let me give you a great example.
When you look versus 2019, you might have Las Vegas strip, one of the video shacks in the world.
Is is actually not in the Twenty-twenty calm base because at this time in 2020 at was close okay. So it's not helping us where it should be at.
<unk> versus 2019, it's hurting us because it was super busy is one of the 19th and at one shack has the opportunity to balance of things around and you got to understand and this is where.
Where we ask for sure holders and you all the really understand how how impacted it can be by just a few shacks uhm, there's all sorts of spring break movement and those March numbers and versus 19 is another thing that inbox at but like I think as we look at it we are excited by the year over year compares we've got work.
To do and it's very clear I've said, there's a couple of times I'll use this language again, when we look at the shack that are down we ask ourselves does it make sense that they're down and.
And you say, yeah, I understand why the theatre district of New York is way down and impacting us the like the Jackson at her up he says it makes sense of their up and we say yeah no at for the most part of the dust and that's where we are encouraged by the signs and we know we've got a lot of work to do and we need book, we need offices, the fill back up we need the <unk>.
It is to fill back up we need Broadway and and other things like at events of games and all of the things that will be energetic. We're on the right track. We will continue the went through to prove I think and you know we will be impact at a little bit versus 19 individuals from time to time.
Okay, I just added to it.
Just out of it round at just said that they said the the space spring break fell in the in a different month between the two years, which is which at the noise of handmade. It takes at felon at April of 2019 of March 20th and the last 2021, so at creating a bit of noise. When you look at such a short time period between just two single month.
Thanks, I really appreciate your color of their.
Thank you. Our next question comes from Lauren's Doberman with Credit Suisse. Please proceed with your question.
Thanks, so much entire congrats on the role you'll certainly the net on the 10th of here just a quick one comp guide of made for you from time to set you up at that can you also the understand what that implies the average weekly sales and of where the recovery relative at the 29th Uhm just get in all of the noise and the Comcast.
No <unk> I mean learn we're not breaking at at any further at this point in May of things to fight the day as we said in the prepared remarks, it's really hard to.
Did you get any kind of forward looking guidance right now at total with with a high degree of confidence so no breaking it down any further than that range right now and we'll we'll keep you up today, if we see any major changes or none of that no no, giving AWS guy.
And Laura I Wanna add to the in addition of the examples already gave which are challenging do you have the <unk>. We went through in Q2 of last year numerous at various closures from time to time, whether they're of protest at the city where of Shack had clothes and then comes out of the car base of end the bouncing back and forth.
Of that just you know very hard for you the model certainly, but it was all it's it's all baked into that 45 to 50 per cent comp expectation that we have.
Alright, Uhm appreciate that and then design digit all pertaining 90% of January day itself out it looks like that at all weekly thousands of be running in line or about what you stop at most of the 2020 at this point together at all the enhancements at Napier digital acres at them as their expectation that you'll be able to hold on to where you're going grounded at a weekly.
<unk> is on from its going to need to rebuild understanding the next night come down alright, it looks at the tail.
Yeah, I think it's really hard to say I'm, sorry, I take care of that answer.
And the the yeah right now I think <unk>, we know how important is still has been through at the last 12 months. We knew had the show how important district was gonna be at show up at this for the long term and yes, we're really encouraged by some of the matrix at we're sharing I think we do expect the so lake and send the mix to to continue to come.
[noise] down as an shack comes back, but as I mentioned in the real pet remarks were also really punished the right digital as an acquisition too as of frequency to wasn't engagement. So so I think yeah without being able to get specifics most of the week contrails levels of mixed numbers digital is gonna stay a very important part of our business and it will continue to be to be investing in the <unk>.
And the marketing tools to continue to use what's really just a foundation at this point in terms of some of these relatively new the the which products.
Alright, Thank you guys very much.
You're welcome.
Thank you. Our next question comes from Michael Tomas with Oppenheimer and company. Please proceed with your question.
Alright. Thanks Hope you guys are are doing well you know your average weekly sales in April of are a little bit about what you saw on March, but you're you're guidance for margin for the second quarter of 15% to 17% is well below the 19% extra range.
You guys were talking about from Marshall can maybe walk through with the changing between March and what you were expecting for the second quarter, and then I know you're not providing guidance on the second corner of does that a good space to think about as we build through the rest of the year and what are some of the things that we should be keeping in mind either tie the Windsor tailwind instead of those numbers. Thanks.
Hey, Mike and it's it's really care of yeah, I can take the I can take the margin question. So yeah as as Tom mentioned, the grounded [laughter] forget the month to we were of Q1, who about 15% in terms of all shack level of margin and we exited pretty strongly uhm at 19% of of shuttle of margin of the box so that could.
The seat a bit of confidence sort of going forward at that we could get back to the sort of pre cause the level of of margin, but having said that the <unk> I think so the either the answer to your question line. That's that's the a huge amount of maybe part.
Within the <unk> you know the various line items Tal into a bunch of them, but I'll cover a few of them uhm getting on the here Uhm. One you know because some yeah. We we got the sinusitis I'm from Beech inflation and then the second half of of the tough quarter with we're starting the stuff up quite restarted stuff up the the the the ongoing.
The child's recovery, particularly of the and check the dining room. Okay. Those types of things Uhm I'd I think of also yeah. The headwinds around you know some of the the the large you know checks that we've we've got the the ready you know the the the sort of of juice level of installed the that that would be really good like on the.
With the recovered before we can put a couple of expertise types of March at so I think I think there's a lot of good finds in terms of highway highway so of managing the cost of the business as as the as the the sales of color, but there's a bit of of a lack of you know we want to store probably gonna be prepared you want to give that gives the great experience. When they can look at the shack until the stopping of slug in advance of at it sounds almost but I think you know as I.
Hey that that's really what's driving the 15 to 17, the scent, which would still be at improvement on at Q1 level of which was the about the 50% range. So I think <unk> with the comfortable with where the margin. The line right. Now we're pleased with the accident, 19% of March Uhm continued manage that and very very closely as we move through the next quarter and the rest of the at.
And then if you've been one of the second part of your question Michael That'd be helpful. Sorry.
No that was at you entered at and the second half of the year. So I appreciate it. Thank you very much.
Alright. Thanks.
Thank you. Our next question comes from John Glass with Morgan Stanley. Please proceed with your question.
Hi, there entire congratulations and best of luck of them will Miss Yeah for sure.
Uhm.
<unk>, just kind of reflecting on your suburban shack performance in March and April of that I don't want to beat this but almost every restaurant is seen at pretty massive acceleration and I was the most restaurants are seeing sales levels well above 19 levels of stimulus spending there's pent up demand, there's just a lot of reasons.
Why do you think that's not the case for Shack then.
Because I would think that you would get the same benefits.
Well if you look at me John of if you look at at do we're basically flat so uhm, given where we been if you followed out at the trend line that is certainly an improvement certainly an upward of trajectory that we have been on so now I won't speak to other more casual dies, but again I'll keep speaking to the the.
The small and volatile cop basis is Helena calm base of half of our restaurants issue a little bit over that and we've gotten to basically flat in the suburban versus 19. So what can we certainly think we've benefited of bed.
I'm from stimulus, it's hard to always quantify exactly how much and how that works, but we just probably be good for us to but look where we're we're continuing to rebuild we've got we're in a lot of places whether suburban or otherwise that don't act like anyone else in your coverage booked the just that's just what it is.
Is if you look at the shake shack locations, even the suburbans. They are generally put in places where people gather and you know that's taken time to come back people are gathering differently and again, if you look at everything is continuing on the upper trajectory. It's good news and we want to get it further and will be will.
The working on that but we used to we definitely need the patterns of how people move.
You know to keep improving yeah, just a note of suburban average weekly sales also continue to increase overtime. So that's a good sign as well.
Okay, Alright, the only think of it at a couple of things at to add to that is one you know we mentioned at the bottom twenty-five performing checks. The I mean, they were mostly uhm other than that the the awesome suburban of Masimov sort of shopping malls and things. The the that are getting hurt sort of equally as hard. So I think I think the appointment uhm within you know some pretty really strong performances on this about the inside of things like like.
Randy said and they all go on the on the AWS basis, but uhm yeah on the on the call basic spend run into the flat.
Okay. Thank you very much.
Thank you. Our next question comes from Jeffery Bernstein with Barclays. Please proceed with your question.
Great. Thank you very much at one question I'm just quick follow up the question. Randy just cause you think about 21 of 22 unit openings, primarily I guess U S company offer at but [noise] ramping up next year at a 45 to 50 [laughter] now you're approaching I guess, one of the week, which would still be I guess, 20% or more unit growth year on year.
So I'm just wondering if you can or for some confidence in terms of the people. The real estate people are talking about the slow down in terms of getting of people, who actually build the site. So I'm just wondering your confidence and the accelerating in the system being able to handle that level of gross on what is now becoming a larger and larger base and then I had one follow up the.
That's a great question I think it's at we have a lot of confidence of that the sites are there we.
Romain at Premier brand and tenants for developers and all kinds of side. So the sites. We are very confident in the openings of the people. That's what we're working right as we said earlier none of that is easy it's never been easy and it certainly won't be easy, but we feel really good about our company in our team the ability.
The to meet those targets the.
That is something that is something that we have continued to do over the years. The other thing we will be watching a little bit is cost of build right of you you know you're seeing this in the lumber steel prices, we know that as we look ahead at contracts that are moving ahead into later this year at of next year, there will be billed will probably.
Some cost inflation of no some of those raw materials of the overall build cause the hard to say whether that will stick. We all know you know you could see lumber.
Steele are just up dramatically, we got a bill the build things right. So of that cost real money. So we're calling from we got built but we're we're watching that as we as we take a look to to keep an eye on the overall investment that we check the pick up a bit and we'll we'll talk to that more later as we start to see those prices start to come in hasn't really hit us yet.
But we expect it to come.
Gotcha and interest the on the follow up and it kind of ties in with my congratulations to Tara, but I just think about the search for the fulfilling the role Tar. Obviously now of CFO end President. It seemed like you gave her the president rolled give you more time to focus on the future gross and vision of the branch of I'm, just wondering whether you're thinking about.
Hiring of CFO in a separate president or whether there are other opportunities to expand and the C suite or whether you think one person might be at a fill that void. Thank you.
That's a great question, it's at you know.
We're gonna higher grade person.
And that person is then gonna fit their skill set into who we are as the company is an executive team of the leadership team. We have some incredible candidates that are at I Wanna be here at this time, we're not assuming we will feel of the president roll of Tar grew into overtime and she did amazing work at that role and in the mean.
[noise] time, she also lifted her team and she lifted the entire executive chair to the point, where we're really operating well as of leadership team of this company right now and we want to bring in the C. F O b focus on those tasks, mostly and contribute to every bit of the the strategy. So we're excited to you know.
Eventually fine and and hire the the next right person will keep you posted when that happens.
Great Best of luck to her.
Thank you.
Thank you. Our next question comes from Andrew Andrew Charles with Cowan. Please proceed with your question.
Great and taught our best of luck of your next role you know I'm sure. The tough decision, but you know which of the best in and good luck two questions for me just I I know there's been a lot of questions from the underlying marched day performance, but if I look at the overall check you got it doesn't apply underlying trends decelerate further in the combined mainstream period, and just kind of get a better sense.
[noise] of why that is I know the reopening it's something that we're all pretty excited about but but why you know why does the guy with some type of it more of deceleration looking forward.
Hey, Andrea yes at his racket.
Yeah, it's yeah, yeah yeah.
Yeah. So I mean, I think the <unk> at least be guided between the we've got at four three Q2 with some is jeopardy of relatively <unk> yeah uhm.
Seasonal period, when you take so the the the last for the part of the the first call from the second quarter with please you with with with with focused on driving average with yourselves up into the right uhm, but that's spelled this the law of uncertainty of the and so I think with we've taken what I think of right approach, which at a cautious approach to the outlook at this point.
In time, even though you know it was run the started screaming and there's some of the spring of being I should at the New York Tracy Uhm.
It's the law of recovery that we need out of the things out of checks and so we we we want to be you know cautious to that fact of at this point.
Okay, Great and then follow up question was at a few years ago. The concept of tests at breakfast and it was pretty popular and travel centers in right. Now obviously those are as you mentioned this with the high volume locations. Their clothes. Given transit is is obviously down significantly but you know looking ahead, just with the reopening is breakfast something you're looking to look more into I know it's.
The offered at Madison Square Park location is is this something you guys are taking other look at take advantage of increased mobility for a day part that's probably the most sensitive to mobility.
Well you know, it's not of focus today, Andrew but one of the exciting things that we look at when we start talking about drive thru drive ups and shack track Windows and that's at Curbside convenience is it starts open up that question a little bit more right. If you look traditionally of check sites at a certain ones that could could certainly is it certainly would be great for breakfast opportunity.
<unk>, but but we think that functionality of the format shift for the longterm could create a better of functionality for moments like that so something we're looking at not an immediate focus of our media focuses you know most of the the shacks at serve breakfast or the airports in transit centers that are either clothes are still trying to figure out their sales. So we'll get it.
We will get back to that for sure we're actually gonna be testing some new breakfast at items not too far from now at some of those airport shack learning a little bit and we'll see but you know so it's definitely something we've got our eyes on for something down the road not in the media focus.
Thanks Randy.
Thank you. Our next question comes from David Tarantino with Bird. Please proceed with your question.
Hi, good afternoon, and congrats Tara on your new role very exciting on the issue.
<unk> on the my <unk> at first I of a clarification question on on how you're viewing the sales trends that I just I Wanna, maybe is Q4 as the starting point and if I look at what you're running in March and April of.
On that kind of to your car.
It doesn't look like there's been a lot of progress on the recovery and.
And specifically you know again looking at at some of the suburban sites of looks like it actually took down a little bit. So I guess the clarification question of are you, saying that that is the function of what's happening underneath the surface on the carpet or is there something else in in your mind, that's maybe at causing that trying to stall out of bed.
Yeah, it's a little bit of of of mixed I mean at again, it's in the it's it's not it is it is sort of straightforward, but if you look at some of the shack somebody's you jacks.
You know, it's hard to improve I'm gonna keep using the theater does she is a perfect example of a large swinging shack versus 19. So yeah. I mean, we're we've got recovery to go. It is it is our numbers and the comp of base are wildly swung by large urban restaurants.
And that's why you know we're looking at average weekly sales to focus on that is continue to see an upward trend not percentages and and we know the desk part of it and we know that some of the noise there and yeah. We're looking forward to that continuing to improve overtime.
Okay got it and then my real question, Randy you have over $400 million in cash on the balance sheet now which is.
Probably more than you'll ever needed to to grow the business I guess, what what are your thoughts on why you're you're having or sort of having that much cash on the balance sheet and what are your specific thoughts on on how you deploy at including whether you would be interested in making an acquisition or something more.
[noise] transformational yeah, well there were two critical fund-raising moments that happened. This year end you know what we're really thankful for them. If you go way back last year. It was at a moment, where no company was unthinkable and we wanted to make sure we insured our future we did that with an equity transaction and that was the brought it in a significant sum.
And then you know we were we were prepared as we saw the convertible debt market, reaching incredible opportunities you just to be clear for every one of those or no.
We were able to do issue that from $250 billion at a zero percent coupon for seven years, we may never see at numbers like that in our lifetime. So we took that opportunity and we took the opportunity to fortresses balance sheet and the way that we've never had at shake shack and very few restaurants companies or.
Of companies of our type have at so what I'm gonna do with at we're Gonna open more restaurants, we're going to accelerate growth. As we told you were going to look to make digital investments and people investments that allow for growth of the <unk>.
Take take a look at our actual size.
Verses anyone else in your coverage universe can you see the opportunity and how big an end huge it can be when we get things going at that's what the our plan has been to invest in digital drive through other opportunities at accelerating open that that funnel. We are we are wide open to other things but.
It is not our focus today and where will look at at you know we're gonna look at things that are exciting end can continue to drive this company forward and we're thrilled to have that basis of cash and do that gives us a really internet uhm playbook and end mindset with which we can operate.
Thank you very much.
Thank you. Our next question comes from Peter solid with B T. I G. Please proceed with your question [laughter].
[noise], great. Thank you and Tara best of luck to you and in the future I want to come back at that last question, maybe at in a different way of capital of allocation Randy and how are you thinking about maybe development cost per unit as we go through this year at Internet sure given all of the inflation on.
Labor and building materials is there an opportunity for you maybe the deploy.
More of that capital on a per unit basis, and I don't recall, how much T. I allowances you guys receive but is there an opportunity to maybe reduce those allowances, a little bit and and take a little bit of of of lower France on an hour basis, Yeah, you with each shack and I mentioned this just a few moments ago, but we.
Definitely do think there's gonna be some cost pressure on the total cost of billed for some period of time, it's really beginning now you're seeing at Lumbers deal and other build out cause some some labor costs as well depending on the market. So we do expect that that overall cost to build a shack will increase for some period of time, we'll see you know nobody knows.
As of this will be a long or short term deal. There's obviously a lot of demand for growth and limited supply of some of these items. So we feel prepared for that we feel ready and at the same time, we do in every in every bills look at T. I. We're we're fortunate from a lot of landlords, we get some very significant T I add uhm.
We do measure with each time, whether it's best to have the cash or to have potentially lower red and the with each one we calculated with each one we think about for that site. What makes the most sense from and Roy perspective, and we look at our our IRR an M. P V and every decision on that and try to make the best possible.
Approach to hit our long term targets and we do that as of class Alright, We look at the 40 shacks as of class and say, how do we want of balance that out uhm. So you know and then again as we do more with the bigger form of especially in the early days of drive through we're gonna <unk>, We're gonna invest money to drive through some of these formats pad sites that we think will be a lot of our.
Future, they're gonna require initially at least an additional investment and will balance that out with some easier to build such as the food court that might be lesser of the bill of until the very strong return. Some other balance you know urban and core format shack. So we want to do a little bit of everything we believe now's the time the to wrap that up.
And we've got our eyes on the cost.
Great and then just lastly, how're you guys thinking about commodity inflation I I don't recall hearing of commodity of inflation number the expectation for the year.
Yeah, we did we didn't give the we didn't get the full of commodity inflation number what we did say was the we've seen from recent inflation on the beef the side of things nothing to the the pay the full of in the middle of last Yeah of course, that's something of a monitored closely and sort of <unk> waiting to see some of it.
Exactly how about the pans out from the time in perspective, we didn't actually we didn't actually get an update the commodity uhm of.
Got into the the at.
The Bill we do but we didn't expect that'd be from flashing inflation is likely to take care of it will take you to to some degree of <unk>.
May have may have a bit of an uptake on that date line as a result.
Understood. Thank you very much.
Thank you. Our next question comes from Brett Levi with M. K M Partners. Please proceed with your question.
For taking my call and Tara.
Enjoyed the time the best of luck to you.
For any of you just mentioned drive through so I guess I'll I'll just continue on.
Your store base if.
If you think about what you're seeing now with all your different iterations on shack track what kind of learnings are you are you seeing in terms of sales margins make up the the transaction how your consumer or differing just all of the call of the insight that you might have.
From the different iterations of the track.
Any color on that would really be appreciated. Thanks.
Yeah. There is so much learning and it's so fast and exciting you know I did a tour with our team. This week in New Jersey, right and we were looking at all types of sites both current and.
And future <unk>.
Drive thru drive up at Shack track all end end some that are more urban and it's really exciting I think what we love about at is creating a new level of convenience and ease of use for the guest you know with each one day present different opportunities. So some might really learn at leaving the curbside yeah, they're shack swear.
Curbside delivery has really taken off and it's great.
There are shacks, where it's you know we just open at Indiana for instance, with our first or second excuse me Shack track drive up and people are choosing at people are of figuring it out at all ready to go into our App. They know the can preordered. They know they can choose hey, I don't have to get out of my car two of them I go around a margin look at at.
Marches are noisy right now given the recovery period, so hard to answer that our goal with all of this is to drive average check.
We believe we can do that with these formats with digital especially to drive ultimately stronger you visa Sean strong profits that is our goal were on that road to rebuilding that and we've got a lot to learn and a lot to build and and that's why we're doing these formats. We think each one of them in their own way will 0.2 different ways to to catch.
Or something of that opportunity.
Thank you. Our next question comes from Jim Sanderson with North Coast Research. Please proceed with your question.
Hey, Thanks for the question and the terror Congratulations on your new opportunity wish you Rosa you pursue that the I wanted to ask a little bit more about the some of the pain points you received from margin recovery going forward and won't understand is at primarily just recapturing.
And could you maybe give us a sense of how those twenty-five bought in performing stores are impacting of pulling down store margin of operating margin to give us a sense of perhaps with the margins could look like hey, we exclude the cave I think we lost you for a couple of.
Second of I think you are asking correct me if I'm wrong, a couple of things one about some of the pressures of sit on the margin line.
Yes, that's right and I'm afraid of that.
Yeah, and how the bottom twenty-five shack sent of impacted that that's right yeah.
Ah talk of covered the the the number of the on the prepared for something we've touched on a few of them, but I think.
You know from module flight of Qm's of 50 of the second week in the exited the quarter was March of 19 will be at that had the benefit of the 13th week Uhm.
Some of the pressures of one of the we had taken right uhm, which we want to be fully stuff from pretty prepared for the service recovery right. So what we're starting up in advance of that we want to make sure of the checks at Ah ready for people to come in and and and and enjoy the food. So there's a bit of sort of preempting the sales recovery of making shop at.
With correctly soft I think of the other side of the things that you had the awesome headwinds that've been around three COVID-19 uhm, such as the the Liberty level right Uhm uhm the delivery levels around the the elevated so the never knows the this into at that which opiate isn't shack is coming back from your attention has been height.
And at the trunk, which would be really really pleased about.
From a commodity perspective, we've touched on beef, which we've seen in the second <unk> yeah. The second half of the first quarter because of the line of sites that in the expect that to be uhm slight inflated to the second quarter Uhm and then I think you know as we look at the cost of the 25 checks.
I.
I mean, they they tend to be in the the high cost then of higher than areas right Uhm a day of the did the shack that dry pretty high leverage of course, you know of course that cost space. So.
You know the <unk> the route to sales recovery is going to be dependent on the checks in the mood to up for margin recovery is also gonna be dependent to a degree on those checks uhm uhm, well square sort of maintaining of ready managing call. Sarah the the remainder of the check the the full name well so a number of things the number of the a lot of.
And all of that sort of moving parts of cancel one of those the line items, which would you take the amount of you want it on visual basis Uhm at.
To make sure wouldn't make at the right decisions.
It's still it's still tough you know operating and the the restaurant right now you know in terms of.
Just complained and those types of things in the school some cost at at the end of eighth at around P. P. But it's still it's still of thing so at <unk> with a bunch of any of those in the cost of cutting into the shack and moving out of the shack and we make the decision trying very Catholic each step of the way.
Understood and just a quick of follow up question as you've seen your digital sales slightly slip is there any noticeable change of mixed meeting or pick up orders would be more rapidly the delivery anything that would change that mix between the consumers picking up versus using the delivery service.
Yeah.
We don't like to think of it as digital slipping [laughter] the make the changing but we're maintaining a lot of those digital sales alright, but we've we've not broken down that at that level, we know of <unk> customers move between all of the channels I I'll get the mood between one of my channel. So we don't manage it sort of Ghana channel by channel basis, We Wanna make sure the.
The all of our channels of sort of receptive to the customer depending on the need for that particular day.
Alright, thank you.
Thank you. Our next question comes from Chris Oh Cool with the Stifel. Please proceed with your question.
Thanks. Good evening. This is actually at Alec of straw the on for Chris.
Looking at the regional break out at the same shack sales the southeast was the only region. The cop positively in April relative to 19, presumably with dining store depressed.
Should the off premise volumes, they're kind of remain the sticky do you have a sense of how much higher of those aves could be in the region and does that make it at increased focal point for future development plans.
Yeah, sorry, I, just trying to just from I'm looking at the.
The suburban opportunity there I mean, we've got every region got better on that chart. As you look at at and you know versus 19 as you said southeast stores. The pop up I was we look at development plans. We took every region has great opportunity, including are hardest hit which includes Manhattan and.
In New York City, but.
But if you look at it you know versus 2020 every region of significantly [laughter].
Alright trajectory, including our hardest at including Manhattan. So when was the reason about development we really.
I think we can be everywhere you know I mean, we've got a big opportunity here and every one of those major regions of the United States. We're obviously pretty focused on California. Some of the other major regions in the northeast that we've we've been strong, but we're not going to let the pandemic dictate the the gross plan.
Solely at is there's a lot of learning that's happened this year and we're gonna add that to our already robust development plan.
Thank you. Our next question comes from Brian Vaccaro with Raymond James. Please proceed with your question.
Hi, Thanks for good evening of I appreciate the AWS disclosures of it really helps cut through the cop noise and the other one year of the two year at taken into account of the the relatively small base of the calm base, but yeah, I guess I was hoping to get beyond the cafes, and maybe think about the hundred and 92 company units in total and could you.
Give us a sense of average weekly sales and suburban versus urban markets sort of including all class years, and the portfolio and maybe comment on the store margins cut across the same lines.
Yeah that that's don't pay right now.
Alright, Oh, the yeah, yeah, sorry about the no. That's that's something we haven't you know we have disclosed the <unk> you know the the.
The the the reason for that those of I mean, those are gonna change significantly at the time right as as at.
You know a guest move of moving around the country. So at around that sort of environment in between the citizens end and then we'll suburban area. So that's the that's all the information with the we've we've we've we've shed at this point.
Okay, and and maybe we could take a step back sticking with average weekly sales I guess I wanted to ask the question what does the full recovery an average weekly sales look like in your view you know I guess I'm trying to level of set expectations versus where you were pre COVID-19.
I think my arm at Youre doing something just under 80000, a week in 19, but they're sort of this natural decline an average weekly sales as you layer of new units cause of reasonable recovery get you back to maybe the load of milk seven days, just just curious given all of the moving pieces.
Pre and post COVID-19 yeah.
Yeah, it's not a number right now we've that we've got into obviously, it's certainly going to continue to go up from here on average four weekly sales you know as you said we had the we had about of 4 million dollar of U V roughly pretty COVID-19, a little bit over that I think at and that and that the 80000 dollar range, let's call at.
And you know as we've open at a lot of Shack says we've said, we expect that number to come down slightly I was we add these classes and the 3 million dollar Shack average range. So I think we all of the to see COVID-19 check out a little bit in the world come back to a little bit more of a normal operating environment, where where all of our shack sort of settlement to where they belong does.
Not a number of we've given we expect it to continue to go up over time from where it is today, though.
Alright, fair enough and and the last one if I could I'm sorry, if I missed it how many company unit openings do you expect in the third quarter and fourthquarter. Thank you.
Well, we didn't do we have between 16 and 18 and the first half we've got into 35 to 44 the year. When we do think that'll be heavily fourthquarter weighted so the third quarter of your of lighter development quarter as as was the second quarter. So you know most of the development this year.
I was gonna be at the first and then the fourth quarter.
Great. Thank you.
Q.
Thank you there are no further questions at this time I would like to turn the floor back over to Randy for any closing comment.
Thanks, everybody really appreciate everyone in the Garden Tonight and thanks for following US look forward to see you soon at a shack. Thank you.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation have a wonderful evening.