Q1 2024 Shake Shack Inc Earnings Call

Operator: Greetings. Welcome to Shake Shack's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Michael Oriolo, Vice President of FP&A and Investor Relations. Thank you. You may begin.

Greetings and welcome to Shake Shacks first quarter 'twenty 'twenty four earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Note. This conference is being recorded I will now turn the conference over to Mike or yellow Vice President of S. P. N E and Investor Relations. Thank you you may begin.

Michael Oriolo: Thank you and good morning, everyone. Joining me for Shake Shack's conference call is our CEO, Randy Garutti, and CFO, Katie Fogerty. During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. However, the presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release and the financial details section of our shareholder letter.

Mike: Thank you and good morning, everyone. Joining me for Shake Shacks Conference call is our CEO, Randy Rudy and CFO Katie Fogarty during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation, whereas a substitute for results were.

Mike: Paired in accordance with GAAP reconciliations to comparable GAAP measures are available in our earnings release and the financial details section of our shareholder letter.

Michael Oriolo: Some of today's statements may be forward-looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our annual report on Form 10-K, filed on February 29, 2024. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our first quarter 2024 shareholder letter, which can be found at investor.shakeshack.com. In the quarterly results section, we will add an exhibit to our 8-K for the quarter. I will now turn the call over to Randy.

Mike: Some of today's statements may be forward looking and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our annual report on Form 10-K filed on February 29th 'twenty 'twenty four any forward looking statements represent our views only as of today and we assume no obligation to update any forward looking statements.

Mike: If our views change by now you should have access to our first quarter 2024 shareholder letter, which can be found at investor Doc Shake Shack Dot com in the quarterly results section or as an exhibit to our 8-K for the quarter I will now turn the call over to Randy Thanks, Mike and good morning, everyone.

Randall J. Garutti: Thanks, Mike, and good morning, everyone. As I wind down my time as CEO of Shake Shack, I want to begin by thanking our team for another solid quarter, sustained execution of our strategic plan, and for building a strong foundation of momentum for what's ahead. This was the 13th consecutive quarter of positive Same Shack sales, the seventh straight quarter of year-over-year restaurant-level margin expansion, and our highest first-quarter restaurant margin since 2019. We achieved a record level of Q1 adjusted EBITDA overall at $35.9 million, grew total revenue by 14.7% to $290.5 million with 1.6% growth in Same Shack sales, an average weekly sales of $73,000, and a trailing 12-month AUV across our shacks at $3.9 million.

Randall J. Garutti: Wind down my time as CEO of Shake Shack I want to begin by thanking our team for another solid quarter sustained execution of our strategic plan and for building the strong foundation of momentum for what's ahead.

Randall J. Garutti: This was the 13th consecutive quarter of positive same shack sales the seventh straight quarter of year over year restaurant level margin expansion and our highest first quarter restaurant margin. Since 2019, we achieved a record level of Q1 adjusted EBITDA overall at $35 9 million grew total revenue by 14, 7% to two.

Randall J. Garutti: <unk> hundred 90.

Randall J. Garutti: $5 million with one 6% growth in same shack sales and average weekly sales of 73000.

Randall J. Garutti: Trailing 12 month <unk> across our shacks at $3 9 million.

Randall J. Garutti: We grew system-wide sales by 12.3% year over year to 443 million as we built shacks across new and existing markets. And while we faced weather headwinds in January and throughout the quarter, our trends steadily improved with each month and into the second quarter, ending fiscal April at 4.9% same shack sales with approximately flat traffic and further showing strong ongoing momentum in fiscal May to date as our sales and profitability initiatives take hold.

Randall J. Garutti: We grew system wide sales by 12, 3% year over year to $443 million as we built shacks across new and existing markets and while we faced weather headwinds in January and throughout the quarter, our trends steadily improved with each month and ended the second quarter ending fiscal April at four 9% same shack sales.

Randall J. Garutti: With approximately flat traffic and further showing strong ongoing momentum in the fiscal may to date, as our sales and profitability initiatives take hold.

Randall J. Garutti: In the quarter, we continued to improve profitability, increasing restaurant-level profit margins to 19.5%, with an expansion of 120 basis points year-over-year. We grew first quarter adjusted EBITDA by more than 30% year-over-year and improved our adjusted EBITDA margin by 150 basis points, growing from 10.9% last year to now 12.4%.

Randall J. Garutti: In the quarter, we continued to improve profitability, increasing restaurant level profit margins to 19, 5% with expansion of 120 basis points year over year, we grew first quarter adjusted EBITDA by more than 30% year over year and improved our adjusted EBITDA margin by 150 basis points growing from $10 nine.

Randall J. Garutti: Last year to now 12, 4%.

Randall J. Garutti: We also continue to grow our footprint around the globe, opening eight new shacks in the first quarter for company-operated and for licensee. We continue to expect approximately 80 shack openings this year system-wide, roughly 15% unit growth, and we are building a robust pipeline of growth for the coming years. Our licensed business grew sales by 8.1% year over year despite ongoing challenges in the Middle East and some of the macro pressures in China.

Randall J. Garutti: We also can do to continue to grow our footprint around the globe opening eight new shacks in the first quarter for company operated for license and we continue to expect approximately 80 shack opening this year system wide roughly 15% unit growth and we are building a robust pipeline of growth for the coming years.

Randall J. Garutti: Our license business grew sales by eight 1% year over year, despite ongoing challenges in the middle East and some of the macro pressures in China.

Randall J. Garutti: This is an area of our business that is asset light and highly accretive to our bottom line and one way we're confident in the long term opportunity to go deeper in existing markets as well as open new markets with our licensed partners. We opened four new shacks, so far in the second quarter and eight year to date.

Randall J. Garutti: This is an area of our business that is asset-light and highly accretive to our bottom line, and one where we're confident in the long-term opportunity to go deeper in existing markets as well as open new markets. With our licensed partners, we opened four new shacks so far in the second quarter and eighth year to date in our company-operated business. We opened four new shacks in the quarter, including two new drive-thrus, adding our first in the Greater Chicago area and our first in the Metro New York area in North Brunswick, New Jersey.

Randall J. Garutti: And our company operated business.

Randall J. Garutti: We opened four new shacks in the quarter, including two new drive throughs, adding our first in the greater Chicago area in our first in Metro New York area, and North Brunswick, New Jersey. These two sites represent a continued goal of unlocking our Tam as we utilize our multi format strategy with drive thru.

Randall J. Garutti: These two sites represent the continued goal of unlocking our TAM as we utilize our multi-format strategy with drive-thrus. Today, we have the majority of the class open or under construction as we look to open roughly 40 shacks this year at an average build cost that's approximately 10% lower than last year's level. That said, it's important to remind you that this class of 2024 will be heavily back-weighted with Q3 and Q

Randall J. Garutti: Today, we have the majority of the class open or under construction as we look to open roughly 40 shacks. This year at an average build cost thats approximately 10% lower than last year's level that said, it's important to remind you that this class of 24 will be heavily back weighted with Q3 and Q4 openings for next year, we're setting ourselves up well with a solid pipe.

Randall J. Garutti: For next year, we're setting ourselves up well with a solid pipeline into 2025 to grow openings and further lower build costs versus 2024. I'd like to give an update now on how we're tracking on our 2024 strategic priorities. Our first priority this year is delivering a consistently great guest experience with improved speed of service and standardization across all of our channels being paramount to hospitality this year. We're making solid progress on our goal to reduce wait times in our shacks, with more than half of our restaurants improving their ticket times by at least 15 seconds in the first quarter, as compared to last year, showing progress across all formats, including drive-through with strong operational focus, shack visits and assessments, and enhanced training.

Randall J. Garutti: <unk> is a 2025 to grow openings and further lower build costs versus 2024.

Randall J. Garutti: In the coming months, we're rolling out new key tools to help us improve not just wait times but also the total guest experience, including how we take orders and flow food through our kitchen. We've also shown some early improvements in our guest satisfaction scores, both in Shack and on our digital channels, and we know that there's still ample opportunity to advance all these metrics, including order accuracy, which we believe will layer up to an even better guest perception and long-term frequency opportunity. Our second priority is growing sales and strengthening our brand awareness. We're living in a competitive and often discount-based restaurant environment right now.

Randall J. Garutti: I'd like to give an update now on how we're tracking on our 2024 strategic priorities are first part of this year delivering a consistently great guest experience with improved speed of service and standardization across all of our channels being Paramount to hospitality. This year were.

Randall J. Garutti: We're making solid progress on our goal to reduce wait times in our shacks with more than half of our restaurants, improving their ticket times by at least 15 seconds in the first quarter as compared to last year, we're showing progress across all formats, including drive through with strong operational focus shack visits and assessments and enhanced training.

Randall J. Garutti: In the coming months, we are rolling out new key tools to help us improve more and not just wait times, but also the total guest experience, including how we take orders.

Randall J. Garutti: So food through our kitchen.

Randall J. Garutti: We've also shown some early improvements in our guest satisfaction scores both in shack and in our digital channels and we know that there's still ample opportunity to advance all of these metrics, including order accuracy, which we believe will layer up to an even better guest perception and long term frequency opportunity.

Randall J. Garutti: We're also growing in new markets where we have less brand awareness upon entering than we do in our core markets. We are materially stepping up our investments in marketing this year in our Shacks and in G&A to help drive brand awareness and frequency, and it's working. We have opportunities to continue to share our Brad story, to amplify the quality of our ingredients, and to communicate what makes Shake Shack so special to so many audiences.

Randall J. Garutti: Our second priority growing sales and strengthening our brand awareness, we're living in a competitive and often discount based restaurant environment right. Now. We're also growing in new markets, where we have lesser brand awareness upon entering than we do in our core markets.

Randall J. Garutti: We are materially stepping up our investments in marketing this year in our shacks and in G&A to help drive brand awareness and frequency and it's working.

Randall J. Garutti: We have opportunities to continue to share our brand story to amplify the quality of our ingredients.

Randall J. Garutti: Communicate what makes shake shack, so special to so many audiences.

Randall J. Garutti: We'll continue to do this actively in a thoughtful way that focuses on strong returns. You'll see this play out in all of our shows, including an upcoming packaging evolution in Shack Designs and throughout our brand market, a steady increase in aided brand awareness in the quarter, and we saw continued strong returns on our advertising spend in performance markets. These marketing initiatives have shown success in driving both new and existing guests to our omni-channel ecosystem.

Randall J. Garutti: To do this actively in a thoughtful way that focuses on strong returns.

Randall J. Garutti: You'll see this play out in all of our channels, including enough Canning coming packaging evolution in shack designs and throughout our brand marketing.

Randall J. Garutti: Steady increase in aided brand awareness of the quarter and saw continued strong returns on our advertising spend in performance marketing.

Randall J. Garutti: These marketing initiatives have shown success in driving both new and existing guests to our omnichannel ecosystem.

Randall J. Garutti: Through creative brand campaigns, timely offers, promotions, and focus on our best in class core menu, as well as LTO launch. The team's employing a lot of new tactics to maximize impressions, trial, and frequency across initiatives, all with an eye towards profitable sales growth. We're also investing this year in building on the data and guest recognition capabilities to allow for more personalized marketing opportunities in the coming years and to drive more conversion and consideration.

Randall J. Garutti: Through creative brand campaigns timely offers promotions and focus on our best in class core menu as well as L. T O launches the teams applying a lot of new tactics to maximize impressions trial and frequency across initiatives, all with an eye towards profitable sales growth.

Randall J. Garutti: We're also investing this year and building on the data and guest recognition capabilities to allow for more personalized marketing opportunities in the coming years and to drive more conversion in consideration. We know we're just getting started on these increased marketing initiatives and we're excited to ramp spend here looking ahead.

Randall J. Garutti: We know we're just getting started on these increased marketing initiatives, and we're excited to ramp up spend here looking ahead. We continue to drive excitement around our menu offerings with our limited-time-only menu featuring the Korean BBQ Burger, Korean Chicken Sandwich, and our Korean Fries. The Korean Chicken Sandwich was brought back after being a fan favorite in early 21, and we're excited to expand the menu to our burger offering this year, which has had a strong performance and guest reception.

Randall J. Garutti: We continue to drive excitement around our menu offerings with our limited time only menu featuring the Korean barbecue Burger Korean chicken sandwich, and our Korean fries.

Randall J. Garutti: We're looking forward now to our next round of summer LTOs as well. Our third priority is continuing to build on our wins from the last two years and make our restaurants even more profitable, with a goal now to get between 20.2% and 21% restaurant margins for this year. Katie will walk you through more of this.

Randall J. Garutti: The Korea Chicken Sandwich was brought back after being a fan favorite and early 'twenty, one and we're excited to expand the menu to our Burger offering this year, which is a strong performance in guest reception and we're looking forward now to our next round of summer L. T OS.

Randall J. Garutti: As well.

Randall J. Garutti: Our third priority is continuing to build on our wins from the last two years and make our restaurants, even more profitable with the goal now to get between 22 and 21% restaurant margins for this year and can you walk through more of this we're showing clear continued progress in improving the operations of our restaurants and our flow through today is among the highest levels we have.

Randall J. Garutti: We're showing clear continued progress at improving the operations of our restaurants, and our flow through today is among the highest levels we've delivered since 2019, despite high inflationary pressures. Additionally, our teams are working on additional operational, supply chain, and cost opportunities to both build and protect our profitability while focusing on improving the guest experience. Our fourth priority this year is making improvements to how we build and open our shacks. We're pleased with the sales levels in our recent openings and believe last year's class was a high watermark in terms of cost to build as we make progress against our goal to bring down the build costs for the class of 24 by approximately 20 percent, excuse me, 10 percent.

Randall J. Garutti: Delivered since 2019, despite high inflationary pressure.

Randall J. Garutti: Our teams are working on additional operational supply chain and cost to build opportunities to both build and protect our profitability, while focusing on improving the guest experience.

Randall J. Garutti: Our fourth priority this year, making improvements on how we build and open our shacks. We're pleased with the sales levels and our recent openings I believe last year's class was a high watermark in terms of cost to bill as we make progress against our goal to bring down the build costs for the class a 24 by approximately 20% excuse me 10%.

Randall J. Garutti: We've opened eight shacks year-to-date and have 19 currently under construction as we go to approximately 40 new company-operated shack openings this year. We've generated solid wins here on lowering our build costs with structural redesigns, including steel-to-wood construction, improving the cost profile on exterior finishes and exhaust systems, as well as making meaningful improvements to interior furniture, kitchen equipment optimization, as well as signage and other opportunities. In total, we continue to improve the look and feel of our shacks while being more efficient with our level of investment.

Randall J. Garutti: We've opened eight Jack's year to date and have 19 currently under construction as we go to approximately 40, New company operated shack openings. This year we've.

Randall J. Garutti: We've generated solid wins here are lowering our build cost with structural redesigns, including steel and wood construction, improving the cost profile on exterior finishes and exhaust systems as well as making meaningful improvements to interior furniture kitchen equipment optimization as well as signage and other opportunities in total we continue to improve the look and feel of our shacks, while being more efficient.

Randall J. Garutti: With our level of investment and we're building a strong pipeline for 2025 to grow unit openings at an even lower build costs and we expect to achieve in 'twenty four.

Randall J. Garutti: We're building a strong pipeline for 2025 to grow unit openings at an even lower build cost than we expect to achieve in 2024. And we're also showing strong progress on lowering our pre-opening costs by at least opening restaurants in a more reliable manner as we have seen fewer impacts from unanticipated delays and have stronger coordination across. And finally, as you know, Shake Shack is a people-first business, and our people must always be our focus.

Randall J. Garutti: And we're also showing strong progress on lowering our preopening costs by at least 10% this year.

Randall J. Garutti: Opening restaurants in a more reliable manner as we have seen fewer impacts from unanticipated delays and a stronger coordination across the company.

Randall J. Garutti: We've made great strides to improve our turnover and increase retention. And this year, we're building on that strong foundation with strategies to support our great team members. Our team members are at the core of how we execute. We are one of 24 strategic priorities and will continue to benefit as team members stay with Shake Shack for longer. We are one of the fastest growing publicly traded restaurant companies. We offer our team members meaningful opportunities for career growth, including providing equity to our general managers and above, and constantly working on strategies to elevate our people through greater training, development, communication, and collaboration.

Randall J. Garutti: And finally as you know shake Shack is a people first business and our people must always be our focus we've made great strides to improve our turnover and increase retention and this year. We're building on that strong foundation with strategies to support our great teams. Our team members kind of at the core of how we execute our 24 strategic priorities.

Randall J. Garutti: And we will continue to benefit as team members stay with shake shack for longer.

Randall J. Garutti: One of the fastest growing public traded publicly traded restaurant companies when we offer our team members' meaningful opportunities for career growth, including providing equity to our general managers and above.

Randall J. Garutti: Constantly working on our strategies to elevate our people with greater training development communication and collaboration.

Randall J. Garutti: I'm really excited to see our strategic plan continue to drive the evolution of Shake Shack. With a string of continued improvements shining a light on our long-term opportunities for our team members and our stakeholders, I'm pleased to transition to my advisory role and hand the baton to our new CEO, Rob Lynch. I'll now hand it off to Katie to share more about the details of the quarter and expectations for the second.

Randall J. Garutti: I'm really excited to see our strategic plan to continue to drive the evolution of shake shack with a string of continued improvements shining a light on a long term opportunity for our team members and our stakeholders I'm pleased to transition to my advisor role and hand, the baton to our new CEO, Rob Lynch I'll now hand, it off to Katy to share more about the details of the quarter and expectation.

Katy: For the second quarter.

Katherine Irene Fogertey: Great, thank you, and good morning. We're off to a solid start to 2024 with another quarter of continued profitable growth. Relative to the first quarter of last year, we grew total revenue by 14.7%, expanded restaurant margins by 120 basis points, and grew adjusted EBITDA by 30.2% to 12.4% of total revenue. That's up 150 basis points versus last year. Our 2024 strategic priorities build on the tremendous success we showed last year and are designed to bring us continued improvements in our profitability and cash flow, even against macro pressures.

Katy: Great. Thank you and good morning, we're off to a solid start to 2020 with another quarter of continued profitable growth.

Katy: Relative to the first quarter of last year. We grew total revenue by 14.7% expanded restaurant margins by 120 basis points and grew adjusted EBITDA by 32% to 12, 4% of total revenue that's up 150 basis points versus last year.

Katy: Our 2024 strategic priorities build on the tremendous success. We showed last year and are designed to bring US continued improvements in our profitability and cash flow even against macro pressures and we're showing solid signs of strength. So far this year and each month, we have improved sale April got even better as we grew the same shack sales by four nine.

Katherine Irene Fogertey: And we're showing solid signs of strength so far this year, and each month we have improved sales. April got even better as we grew same check sales by 4.9% with approximately flat traffic, and we carried our momentum into fiscal May. Now onto the first quarter results.

Katy: With approximately flat traffic and we carried them anthem antithetical Matt.

Katherine Irene Fogertey: Total revenue was $290.5 million, up 14.7% versus last year, driven by strong performance in new shack openings system-wide and positive same shack sales, despite weather impacts in the quarter. We grew system-wide sales by 12.3% to a record high of $443.3 million, with a line of sight to approximately $2 billion of system-wide sales in 2024. In license, we are pleased with our strong domestic performance and continue to face macroeconomic headwinds in the Middle East and China. We grew licensing sales by 8.1% year-over-year to $162.7 million, and had a low single-digit sales headwind from foreign exchange in the quarter. We opened four license shacks, growing the global license shack count to 222.

Katy: Now onto the first quarter results total revenue was $290 5 million up 14, 7% versus last year, driven by strong performance in new shack openings system wide in positive same shack sales despite weather impacts in the quarter.

Katy: We grew system wide sales by 12, 3% to a record high at $443 3 million with a line of sight to approximately 2 billion of system wide sales in 2024.

Katy: And license we are pleased with our strong domestic performance and continue to face macroeconomic headwinds in the middle East and China.

Katy: Licensing sales by eight 1% year over year to $162 7 million and had a low single digit sales headwind from foreign exchange in the quarter.

Katy: We opened four licensed shack clearly growing the global license check out to 226.

Katherine Irene Fogertey: We grew company-operated shack sales by 14.9% year-over-year to $280.6 million with four shack openings and 1.6% year-over-year growth in same-shack sales. Weather pressured our sales and comp in the quarter, but our trends improved as weather pressures eased. We estimate that weather alone contributed to a sales loss of about $3 million that was due to impacted mobility, closures, and reduced hours. Traffic was down 2.1%, and excluding weather, we estimate traffic would have been approximately flat.

Katy: We grew company operated shacks sales by 14, 9% year over year to $286 million with four shack openings and one 6% year over year growth in same shack sales.

Katy: Whether a pressured our sales and comp in the quarter and our trends improve as weather pressures eased we estimate that weather alone contributed to a sales loss of about $3 million, that's due to impacted mobility closures and reduced hours traffic was down two 1% and excluding weather, we estimate traffic would have been approximately flat.

Katy: Yeah.

Katherine Irene Fogertey: Even with the weather pressures, though, we saw strong same-shack sales and traffic trends across most of our shacks in the quarter. We generated mid-single-digit positive traffic in the southeast. And in Florida specifically, we grew traffic by 9% year-over-year with mid-teens same-shack sales growth. Shake Shack sales and our Northeast Shacks were also strong, up 4% year over year with high single-digit comp seen in Long Island and Boston. New York City sales, however, were pressured by weather and competition.

Katy: Even with the weather pressures that we saw strong same shack sales and traffic trends across most of our shacks in the quarter, we generated mid single digit positive traffic in the southeast and in Florida, specifically, we grew traffic by 9% year over year with mid teens same shack sales growth.

Katy: Check sales and our northeast Shacks were also strong up 4% year over year with high single digit comp gain in long Island, and Boston, New York City sales, however were pressured by weather and Intel.

Katherine Irene Fogertey: We are encouraged by the building momentum in our business year to date as we've worked past these heavier headwinds earlier in the year and seen broader impacts from successful marketing initiatives that carried us into April with 4.9% same-track sales growth and approximately flat traffic. First quarter check rose low single digits, supported by mid-single-digit menu prices, partially offset by marketing strategies that drove a negative low-single-digit mix. Our IPC was

Katy: We are encouraged by the building momentum in our business year to date as we've worked past these heavier headwinds in there earlier in the year and Saab prior impacts from successful marketing initiatives that carried us into April with four 9% same shack sales growth and approximately flat traffic.

Katy: First quarter check rose low single digits supported by mid single digit menu price, partially offset by marketing strategies that drove a negative low single digit mix, our IPC was flat on.

Katherine Irene Fogertey: On pricing, to address food and wage inflationary pressures, which are particularly high in California with the move to $20 per hour for the minimum wage, we took the following steps. In January, we raised the menu price on our own delivery by 5% and maintained the 15% premium on third-party channels as compared to our own delivery. In mid-March, we raised menu prices by about 3% in total. However, this was comprised of about 7% menu prices in California to address wage pressures and about 2 to 2.5% prices in all other regions. That level of pricing is very consistent with historical pricing practices, and this netted to a mid-single-digit price in the quarter. We have no current plans to further increase prices this year.

Katy: On pricing to address food and wage and inflationary pressures, which were in particular in California with the move to $20 per hour minimum wage we took the following steps in January we raised the menu price on their own delivery by 5% and maintained that 15% premium on third party channels as compared to our own deliberate.

Katy: And in March we raised menu prices by about 3% in total. However, this was comprised at about 7% menu price in California to address the wage pressures.

Katy: About two to two 5% price in all other regions that level of pricing is very consistent with historical pricing practices.

Katy: And this netted to a mid single digit price in the quarter. We have no current plans to further increase price. This year, we're gonna be lapping about 2% price in mid may and 1% in October.

Katherine Irene Fogertey: We're going to be lapping about 2% in price in mid-May and 1% in October. And importantly, while we expect the inflationary pressures in wages and food and paper to persist, we continue to leverage our operational efficiencies as a powerful tool to help protect our profitability and our value proposition for our guests. We moved the needle more on the kiosk in the quarter, which is now our largest order channel and our most profitable and an important tool for our operators to manage the order journey and focus on delivering a great guest experience.

Katy: And importantly, while we expect the inflationary pressures and wages in food and paper to persist we continue to leverage our operational efficiencies as a powerful tool to help protect our profitability and our value proposition for our guests.

Katy: We moved the needle more on kiosk in the quarter, which is now our largest order channel and our most profitable and an important tool for our operators to manage the order journey and focus on delivering a great guest experience.

Katherine Irene Fogertey: Average order values on kiosks are at least a high teens percentage over traditional in check, with recent digital enhancements to the user experience driving even stronger upsells. Later this year, we're launching new wayfinding and other optimization work to build on our success with the strategy.

Katy: Average order values on kiosks for at least now a high teens percentage over traditional in shack with recent digital enhancements to the user experience driving even stronger upsell.

Katy: Later this year, we're launching new way finding and other optimization work to build on our success with this strategy.

Katherine Irene Fogertey: Restaurant-level profit was $54.7 million, or 19.5% of Shack sales. That's 120 basis points better versus last year as we benefited from higher sales from marketing strategies and improved operations in our Shacks. We had strong flow-through in our restaurants, which once again exceeded 2019 trends, a testament to the success of our initiative across both sales and operating costs in our Shacks. And as we continue to build on our operational performance, we were able to look at sales-driving initiatives with a wider lens than before.

Katy: [noise] restaurant level profit was $54 7 million or 19, 5% of shack sales, that's 120 basis points better versus last year as we benefited from higher sales from marketing strategies and improved operations in our shack, we had strong flow through in our restaurants, which once again exceeded 2019 trends.

Katy: A testament to the success of our initiatives across both sales and operating costs in our shacks and as we continue to build on our operational performance. We were able to look at sales driving initiatives with a wider lens than before.

Katherine Irene Fogertey: Food and paper costs were $80.3 million, or 28.6% of Shack sales, down 80 basis points versus last year and down 50 basis points versus last quarter, as menu price and supply chain strategies helped to offset inflation, weather, and other pressures. Net of our strategic actions, blended food and paper inflation rose low single digits year over year. Beef was up high single digits, and we had continued pressures on fries and buns. However, paper and packaging costs decreased by low single digits year over year.

Katy: Food and paper costs were $80 3 million or 28, 6% of shack sales down 80 basis points versus last year, and down 50 basis points versus last quarter as menu price and supply chain strategy has helped to offset inflation weather and other pressures.

Katy: Net of our strategic actions blended food and paper inflation rose low single digits year over year.

Katy: Beef was up high single digits, and we had continued pressures and fries and bonds pay.

Katy: Paper and packaging costs decreased low single digits year over year.

Katherine Irene Fogertey: Labor and related expenses were $81.5 million, or 29.1% of shack sales, down 130 basis points versus last year, despite making greater investments in our team members, as we had the benefits of price, as well as operational improvements, such as better forecasting and labor scheduling and kiosk adoption. Turnover rates remain much better than last year, which is also helping our team to be more efficient in our restaurants. We're going to continue to lean on strategies to improve operations and support our profitability while keeping an eye on the value proposition to our guests.

Katy: Labor and related expenses were $81 5 million or 29, 1% of shack sales down 130 basis points versus last year, despite making greater investments in our team members as we had the benefit of price as well as operational improvements such as better forecasting and labor scheduling and kiosk adoption.

Katy: However rates remain much better than last year, which is also helping our team to be more efficient in our restaurants.

Katy: We're going to continue to lean on strategies to improve operations and support our profitability, while keeping an eye on the value proposition to our guests.

Katherine Irene Fogertey: As an example, we've been testing a new labor model that allows us to be much more targeted in our staffing needs across our shacks, adjusting for format, menu, and channel mix, including kiosks, to provide a great guest experience. The early tests here have been encouraging, and we expect to roll it out to all of our shacks by the end of the year.

Katy: As an example, we've been testing a new labor model that allows us to be much more targeted in our staffing needs across our shacks addressing for format menu and channel mix, including kiosks to provide a great guest experience. The early tests, you had been encouraging and we expect to roll it out to all of our shacks by the end of the year.

Katherine Irene Fogertey: Other operating expenses were $41.9 million, or 14.9% of Shack sales, up 60 basis points year-over-year, as we invested more in Shack-level marketing and other expenses to support our sales strategies. Occupancy and related expenses were $22.2 million, or 7.9% of Shack sales, up 30 basis points from last year's level. All in all, we are very pleased with the level of margin improvement we delivered in the quarter as we continue to build back our profitability, which we know is vital for our long-term growth.

Katy: Other operating expenses were $41 9 million or 14, 9% of shack sales up 60 basis points year over year as we invested more in shack level marketing and other expenses to support our sales strategies.

Katy: Occupancy and related expenses were $22 2 million or seven 9% of shack sales up 30 basis points from last year's level.

Katy: All in we are very pleased with the level of margin improvement we delivered in the quarter as we continue to build back our profitability, which we know is vital for our long term growth.

Katherine Irene Fogertey: G&A was $35.9 million. Excluding $3.1 million in one-time adjustments, G&A was $32.8 million, or 11.3% of total revenue. That's 40 basis points favorable to last year and up 10.8% year-over-year compared to total revenue that grew 14.7% year-over-year. GNA, excluding advertising expenses and one-time adjustments, was up high single-digit percent year-over-year as we continue to be disciplined and run rate spend and open additional funds for sales driving strategies and marketing.

Katy: G&A was $35 9 million, excluding $3 1 million in one time adjustments G&A was $32 8 million or 11, 3% of total revenue at 40 basis points favorable to last year and up 10, 8% year over year compared to total revenue that grew 14, 7% year over year.

Katy: G&A, excluding advertising expenses and one time adjustments was up high single digit percent year over year as we continue to be disciplined and run rate spend and open additional funds for sales driving strategies and marketing.

Katherine Irene Fogertey: Pre-opening costs were $2.8 million in the quarter, down 22.6% year-over-year, with non-cash rent making up over 40% of this line item. We opened four shacks in the quarter versus six in the same quarter last year. We have targeted to reduce our pre-opening expenses per shack by at least 10% this year, and we're on a strong path to achieve this goal with enhanced reporting and coordination with finance, development, operations, and human resources.

Katy: Preopening costs were $2 8 million in the quarter down 22, 6% year over year with noncash rent, making up over 40% of this line item. We opened four shacks in the quarter versus six in the same quarter last year, we have targeted to reduce our preopening expenses per shack by at least 10% this year and we're on a strong path to achieve.

Katy: This goal with enhanced reporting and coordination with finance development operations and people resources, we see the greatest opportunity to improve on our labor expense and pre opening and we're encouraged that our strategy is already showing material improvements on this line item.

Katherine Irene Fogertey: We see the greatest opportunity to improve on our labor expense in pre-opening, and we're encouraged that our strategy is already showing material improvements on this line item. So all in, despite unfavorable weather in the quarter, continued macroeconomic pressures on the consumer, and inflation, our team's strong execution against our strategic plan was evident in the quarter, as we grew Adjusted EBITDA by more than 30% year-over-year to a first-quarter record high of $35.9 million, or 12.4% of total revenue. That's up 150 basis points from the prior year and the best first- Depreciation was $25.4 million, up 19.3% year-over-year.

Speaker Change: So to all and despite unfavorable weather in the quarter continued macroeconomic pressures to the consumer and inflation our team's strong execution against our strategic plan was evident in the quarter as we grew adjusted EBITDA by more than 30% year over year to a first quarter record high of $35 9 million or 12, 4% of total revenue.

That's up 150 basis points from the prior year and the best first quarter adjusted EBITDA margin since 2019.

Speaker Change: Depreciation was $25 4 million up 19, 3% year over year, we realized net income attributable to shake Shack, Inc of $2 million or five cents per diluted share.

Katherine Irene Fogertey: We realized net income attributable to Shake Shack Inc. of $2 million, or $0.05 per diluted share. We reported an adjusted pro forma net income of $5.6 million, or $0.13 per fully exchanged and diluted share. Our gap tax rate was 19%, and our adjusted pro forma tax rate, excluding the tax impact of equity-based compensation, was 2.8%.

Speaker Change: Reported and adjusted pro forma net income of $5 6 million or 13 cents per fully exchanged and diluted share our GAAP tax rate was 19% and our adjusted pro forma tax rate, excluding the tax impact of equity based compensation was two 8%.

Katherine Irene Fogertey: Finally, our balance sheet remains solid with $284.8 million in cash and cash equivalents and marketable securities at the end of the quarter. That's down $8.4 million versus the prior quarter as we grew operating cash flow by approximately 55% year-over-year and made investments in recent openings and the 27 shacks that we've opened this year and that are under construction. We're well on our way to achieving our target to open approximately 40 shacks this year on the company-operated side.

Speaker Change: Finally, our balance sheet remains solid with $28 $284.8 million in cash and cash equivalents and marketable securities at the end of the quarter, that's down $8 4 million versus the prior quarter. As we grew operating cash flow by approximately 55% year over year and made investments in recent openings and 27 shacks that we've currently open.

Speaker Change: This year and that are under construction, we're well on our way to execute against our target to open approximately 40 shacks. This year on the company operated side.

Katherine Irene Fogertey: Now on to guidance, which reflects the degree of uncertainty around the consumer spending outlook and inflationary headwinds. However, this range does not reflect any additional unknown delays to our development schedule or any changes to the macro landscape beyond what we're already experiencing today.

Speaker Change: Now onto guidance, which reflects the degree of uncertainty around the consumer spending outlook and inflationary headwinds. This range does not reflect any additional unknown delays to our development schedule or any changes to the macro landscape beyond what we're already experiencing today.

Katherine Irene Fogertey: For the second quarter, we got a total revenue of $308.9 million to $314.3 million. That's up 13.6% to 15.6% year-over-year, with $10.9 million to $11.3 million of licensing revenue, approximately 10 company-operated openings, 8 to 9 licensed openings, same-check sales to be up low single digits year-over-year, with a low single digit price mix. We guide second-quarter restaurant margins to be approximately 21.5 to 22%, with strength driven by operational improvements and menu prices, with blended food and paper expected to be flat to up low single digits. Beef, which is an area which we do not contract and has a higher degree of uncertainty, is expected to be up mid-single digits year over year.

Speaker Change: For the second quarter, We guide total revenue of $308 9 million to $314 3 million, that's up 13, 6% to 15, 6% year over year with $10 9 million to $11 3 million of licensing revenue approximately 10 company operated openings eight to nine license openings St.

Speaker Change: <unk> sales to be up low single digits year over year with low single digit price mix.

Speaker Change: Second quarter restaurant margins to be approximately 21, 5% to 22% with strength driven by operational improvements in menu price with blended food and paper are expected to be flat to up low single digits beef, which is an area, which we do not contract and have a higher degree of uncertainty is expected to be up mid single digits year over year.

Katherine Irene Fogertey: Our full year 2024 guidance calls for total revenue of approximately 1.22 to 1.25 billion. That's 12 to 15% year over year growth. Same-track sales to grow by low single digits year over year; we're expecting licensed revenue to reach $45 to $47 million, and restaurant margins of 20.2 to 21%, a 30 to 110 basis improvement from 2023. Reflecting the expense from the CEO transition, our 2024 G&A guidance is $142 to $146 million, and equity-based compensation expense is approximately $20 million. The GNA guidance excludes the $3.1 million in non-recurring costs that are excluded from adjusted EBITDA for the year to date.

Speaker Change: Our full year 2024, our guidance calls for total revenue of approximately one point to two to 1.25 billion, that's a 12% to 15% year over year growth.

Speaker Change: <unk> sales to grow by low single digits year over year, we're expecting license revenue to reach a 45% to $47 million restaurant margins of 22% to 21% a 30 to 110 basis improvement from 2023.

Speaker Change: Reflecting expense from the CEO transition, our 'twenty 'twenty four G&A guidance at $142 million to $146 million and equity based compensation expense is approximately $20 million. The G&A guidance excludes the $3 1 million in nonrecurring costs that are excluded from adjusted EBITDA year to date.

Katherine Irene Fogertey: Pre-opening of $17 million, depreciation of $100 to $105 million, and our adjusted pro forma tax rate, excluding the impact of equity-based compensation, we expect to be 20 to 23 percent. Our 2024 Adjusted EBITDA guidance is $160 to $170 million, representing approximately 21% to 29% growth year-over-year. That's nearly double our expected total revenue growth rate and represents a margin of 13.1 to 13.6%, at least 100 basis points higher than the prior year, and the highest Adjusted EBITDA margin since 2019.

Speaker Change: Preopening of $17 million depreciation of $100 million to $105 million and our adjusted pro forma tax rate, excluding the impact of equity based compensation, we expect to be 20% to 23%.

Speaker Change: Our 2024, adjusted EBITDA guidance is $160 million to $170 million, representing approximately 21% to 29% growth year over year, that's nearly double our expected total revenue growth rate and representing a margin of 13, 1% to 13, 6% at least 100 basis points higher than the prior year and the highest adjusted <unk>.

Speaker Change: Barge into 2019.

Katherine Irene Fogertey: Now, before I pass it back to Randy for his concluding remarks, I want to thank him for all that he's done to bring Shake Shack to where it is today. There are now more than 530 Shacks across the world, generating more than $1.7 billion in system-wide sales over the past 12 months and our eye to $2 billion in system-wide sales this year. I know this is much bigger than you'd ever dreamed it would be in the early beginnings of Shake Shack.

Speaker Change: Now before I pass it back to Randy for concluding remarks, I want to thank him for all that he has done to bring shake shack to where it is today.

Randall J. Garutti: Now more than 530 shacks across the world generating more than $1 7 billion in system wide sales over the past 12 months and our eye to $2 billion in system wide sales. This year I know this is much bigger than you ever dreamed it would be in the early beginnings of shake shack. So as a longtime new Yorker, I've marveled at Shake Shack origin story.

Katherine Irene Fogertey: So as a longtime New Yorker, I have marveled at the Shake Shack origin story, being one of our earliest fans and hanging out at the first and, at the time, the only Shack in Madison Square Park, waiting with friends in very, very long lines, standing for something really good and delicious, like cheese fries, the perfect Shack burger, the excitement around what custard and concrete flavors would be on the menu that day, like The food and hospitality were always exceptional, and the menu brought me back to my fondest memories of growing up in St. Louis.

Katherine Irene Fogertey: Now, fast forward to them being an analyst covering the stock and learning more about the business and the industry. I had such admiration for what you, Randy, and Danny, and the company that you have built, what makes this place truly special and unique and all the potential it has. And I found in the spreadsheets and the deep analysis why what you've created truly sets Shake Shack apart from the pack, and I was so excited about your long-term opportunity for growth.

Randall J. Garutti: <unk> being one of our earliest fans and hanging out at the first one at the time the only shack in Madison Square Park waiting with friends and very very long line standing for something really good and delicious accuse ray as the perfect Shack Burger excitement around what clustered in concrete flavors would be on the menu that day like pie and I and of course, our cold Checkmates J L.

Randall J. Garutti: Food and hospitality, we're always exceptional and the menu brought me back to my fondest memories growing up in St. Louis now fast forward to them being an analyst covering the stock and learning more about the business and the industry I had such admiration for what you Randy and Danny and the company that you have built what makes this place truly special and unique and all the potential it has and I found in the spreadsheets and the deepened.

Randall J. Garutti: That's why what you've created truly set shake shack apart from the pack and I was so excited about your long term opportunity for growth there.

Katherine Irene Fogertey: And then coming on as CFO three years ago and working with the great team here that you have led, it's been such a privilege to be here and to continue to expand on this story under your leadership. And we've all grown a lot. And there are many ways and KPIs to measure that growth, but at the core of it all is our teams and the culture that you help seed here. In just three years, we have grown our shack base by more than 60%. That's more than 200 shack openings system-wide.

Speaker Change: Coming on as CFO, three years ago, and working with a great team here that you have lag it's been such a privilege to be here and to continue to expand on this story under your leadership and we've all grown a lot and there are many ways and kpis to measure that growth, but at the core of it all is our teams and the culture that you help seat here in just three years, we have grown our shack base by more than 60 plus.

Speaker Change: Okay.

Speaker Change: That's more than 200 shack openings system wide we.

Katherine Irene Fogertey: We have more than doubled our trailing 12-month system-wide sales and grown our trailing 12-month adjusted EBITDA by over eight and a half times. We've also navigated some of the most challenging headwinds in the industry in the history of the restaurant sector, including a global pandemic, industry-wide staffing and supply chain pressures, and inflation.

Speaker Change: I have more than doubled our trailing trailing 12 months system wide sales and grown our trailing 12 month adjusted EBITDA by over eight and a half full.

We've also navigated some of the most challenging headwinds in the industry I'm in the history of the restaurant sector. We've had a global pandemic industry wide staffing and supply chain pressures and inflation and together everyone. Here has made automating material improvements in the business that set us up well for an exciting future, while still staying true to our roots and focusing on.

Katherine Irene Fogertey: And together, everyone here has made material improvements in the business that set us up well for an exciting future, while still staying true to our roots and focusing on taking care of our teams and our guests. Our commitment to providing a great opportunity for our people and serving guests with enlightened hospitality is what makes us all really proud to work here, and it's a true testament to your legacy and your enduring impact here.

Speaker Change: Taking care of our teams and our guests.

Speaker Change: Our commitment to providing a great opportunity for our people and serving guests with enlightened hospitality. That's what makes US all really proud to work here and it's a true Testament to your legacy and your enduring impact here.

Katherine Irene Fogertey: So I'm honored to be a part of your foundational chapter here at Shake Shack and to learn so much from you and wish you the very best in your next adventures. Your impact here is seen not just in every shack we have across the world or in our inner P&L or every great LTO. It's in all of the team members here that you have uplifted and inspired them to be great leaders and the best versions of themselves. So I know that we can all here at Shake Shack say thank you Randy and cheers to an amazing 20 plus years.

Speaker Change: So I'm honored to be a part of your foundational chapter here at shake Shack and to learn so much from you and wish you the very best in your next adventure.

Speaker Change: The impact here I see not just in every shack, we have across the world our inner P&L or every great L. T O. It's in all of the team members here that you have uplifted and inspired to be great leaders and the best version of themselves do I know that we can all here at shake Shack day, Thank you Randy and chairs to an amazing 20 plus years.

Randall J. Garutti: Well, thank you, Katie. Chewing off script here.

Speaker Change: Well, thank you Katie chewing all script there.

Speaker Change: But.

Speaker Change: Clearly you've been in them.

Randall J. Garutti: Katie, you've been an incredible CFO. You've been an amazing partner to me and everybody in this company. So, thank you to everybody on our team. I believe this call represents my 38th earnings call as CEO since we went public more than nine years ago, and what this group of people has achieved is a rare and special accomplishment.

Speaker Change: Accretable CFO, it's been an amazing partner to me and everybody in this company. So thank you to everybody on our team.

Speaker Change: I believe this call represents my 30 <unk> earnings call as CEO since we went public more than nine years ago and what this group of people has achieved.

Speaker Change: Rare and special accomplishment and it's exceeded all of our wildest ambitions.

Through it all.

Randall J. Garutti: And it's exceeded all of our wildest ambitions, and through it all, it has always been about our team. My greatest joy, and I hope our most significant impact, has been to create a place where our people could get a start, could develop, could grow, and give them a chance to do their life's best work while taking care of each other and our community. As I transition to an advisory role in the coming weeks, it's been a pleasure to get to know and welcome our new CEO, Rob Lynch.

Speaker Change: <unk> always been about our team my greatest Joy and I hope.

Our most significant impact has been to create a place where our people.

Speaker Change: Could get a start could develop could grow.

Speaker Change: Give him a chance to do their life's best work, while taking care of each other and our communities.

Speaker Change: As I transition to an advisory role in the coming weeks, it's been a pleasure to get to know and welcome our new CEO, Rob Lynch, Rob has been spending a lot of time working with me to understand our history and how we've operated.

Randall J. Garutti: Rob's been spending a lot of time working with me to understand our history and how we've operated. He's been meeting with team members at every level, leaders across the company, and learning so much about what makes us tick. This company is built upon a strong foundation, and we're ready to benefit from the next generation of leadership, and I have no doubt Rob will work with this extraordinary team to build the next set of strategies to take us to even higher heights and continue to drive Shake Shack forward.

Rob Lynch: Meeting with team members at every level leaders across the company.

Speaker Change: So much of what makes us tick.

This company is built upon a strong foundation and we're ready to benefit from the next generation of leadership and I have no doubt Rob will work with this extraordinary team to build the next set of strategies to take us through even higher heights and continue to drive shake shack forward.

Randall J. Garutti: Make no mistake, Shake Shack is something special, and this company's future is bright. I want to thank our guests, our communities, our suppliers, and all of our shareholders through the years for having confidence in me and our team along every step of this journey. And lastly, and most importantly... Thank you to every single member of this team who's ever worked with us. Hard work, creativity, and love for this company have made all the difference.

Speaker Change: Make no mistake shake Shack is something special in this company's future is bright.

Speaker Change: Want to thank our guests our communities our suppliers and all of our shareholders through the years for having the confidence in me and our team along every step of this journey.

Speaker Change: And lastly, and most important.

Speaker Change: Thank you to every single member of this team who's ever worked here.

Speaker Change: Whose hard work creativity and love for this company has made all the difference.

Randall J. Garutti: It has been the honor of my career to lead you and to be led by you. Our people are the secret in the shacks, and I trust that they will always be. With that, operator, we can go ahead and open the call for questions.

Speaker Change: It's been the honor of my career to lead you to be led by you all.

Speaker Change: Our people are the secret in the shack sauce, and I trust that they always will be.

Speaker Change: With that operator, we can go ahead and open the call for questions.

Speaker Change: Thank you.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: If he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Please limit.

Operator: Please limit to one question each. Please wait while we poll for questions. Our first question is from Sharon Zackfia with William Blair. Please proceed.

Speaker Change: It to one question each one moment, while we poll for questions.

Speaker Change: Our first question is from Sharon Zackfia with William Blair. Please proceed.

Sharon Zackfia: Hi, good morning. Randy, I got a little teary-eyed while that was being said, so I'm sure you did too. We're all going to miss you.

Sharon Zackfia: Oh, Hi, good morning, Randy I got a little teary eye, well, a well that would be flat. So you know I'm sure you are too where we're all human issue.

Randall J. Garutti: I guess I just wanted to clarify something about the kiosk lift. Did I hear correctly that you're seeing a high single digit? now versus I think it was high, I'm sorry, high teens now versus what had been high single digits in the fourth quarter. And if so, kind of what's helping drive that improvement? And I know you've got a lot of other initiatives underway at the kiosk. So what are you seeing as you pilot some of the other initiatives? I guess I'm wondering how much more people are going to add to their ticket with these kiosks.

Sharon Zackfia: I just wanted to clarify something about the kiosk left it did I hear correctly that you are seeing a high single digit.

Sharon Zackfia: Now versus I think it was high I'm, sorry high teens now versus.

Sharon Zackfia: What had been high single digit in the fourth quarter and if so kind of what what's helping drive that improvement and I know you've got a lot of other.

Sharon Zackfia: Initiatives underway at the kiosk. So what are you seeing as you pilot some of the other initiatives I guess I guess I'm wondering how much more people are going to add on to their ticket with these kiosks.

Randall J. Garutti: Great. Sharon, thanks for the question.

Speaker Change: Great Sharon Thanks for the question so.

Sharon Zackfia: So you know probably with the kiosk strategy. We have in place you know we had talked about kind of a at least a high single digit lift and now we're seeing something kind of in the high teens.

Lauren Silberman: So, you know, probably with the kiosk strategy we have in place, we talked about kind of a high single-digit lift, and now we're seeing something kind of in the high teens. And really, there are some exciting new interfaces that our digital marketing team has developed here to help guide, you know, the guests through that order experience and kind of focus more on the opportunity to trade up to a double, add bacon, you know, some of the really great ways that our guests can customize their menu items that, you know, maybe are more intuitive at the cashier, and we've brought that over to the kiosk channel.

Speaker Change: And really it's been some exciting new.

Speaker Change: Interfaces that our digital marketing team has developed here to help guide you know the guests through that order experience and kind of focus more on the opportunity to trade up to a double add bacon you know some of the really great ways that our guests can customize their their menu items that maybe are more intuitive at the cashier.

Speaker Change: And we brought that over to the kiosk channel I mean, it's now really kind of on par with where we are on our web our web offering as well. So then if I look at where where the opportunities are going forward.

Lauren Silberman: It's now really kind of on par with where we are on our web offering as well. So, then, when I look at where the opportunities are going forward, you know, we want to continue to push the envelope and learn and see, you know, what we can do from a digital merchandising standpoint to help our guests better understand, you know, our LTOs, our more premium items, and continue to drive, you know, additions to the cart.

Speaker Change: Yeah, we want to continue to push the envelope and learn and see what we can do from a digital merchandising standpoint to help our guests better understand you know where L. T OS or more premium items continue to drive him you know edition to the cart.

Lauren Silberman: But then at the same time, the work that the team is doing, you know, in development and in marketing is around making sure that we have, you know, exactly optimized wayfinding for how guests come into our shacks, making sure that they, you know, very clearly see in every instance where that kiosk is, as we want to continue to drive adoption. But, you know, just to bring it back, though, we are incredibly pleased with how the retrofit strategy on kiosks has helped not just us deliver a great guest experience, but it's helped our team members manage their order journey within the shacks, and I think it's helping our guests just understand more about what our menu is and all of the great, exciting offerings we have. Our next question is from Lauren Silberman with Deutsche Bank. Please proceed. Thanks so much, and Randy.

Speaker Change: But then at the same time the work that the team is doing in development and in marketing is around making sure that we have you know exactly the optimized way finding for how guests come into our shacks make sure that they you know very clearly see and in every instance, where that kiosk is.

Speaker Change: We want to continue to drive adoption, but you know just to bring it back though we are incredibly pleased with how the retrofit strategy on kiosks has helped not just.

Speaker Change: I have to deliver a great guest experience that helps our team members manage their order journey within the shacks and I think it's helping our guests just to understand you know more about what our menu is in all of the great exciting offerings, we have.

Randall J. Garutti: Yeah, thanks, Lauren. I appreciate that. I'd say broadly a few things. Look, we know the industry has traffic pressure. We're not immune to that, and there's certain places where we see that as well.

Lauren Silberman: Our next question is from Lauren Silberman with Deutsche Bank. Please proceed.

Speaker Change: Our next question is from Lauren Silberman with Deutsche Bank. Please proceed.

Lauren Silberman: Thanks, So much and Randy my congrats involved and great to see what you felt I wanted to ask about the comp great momentum in April into May the rest of the industry slowing with negative traffic what do you see as the most meaningful driver of relative outperformance and are you guys seeing any differences across the region. Thank you.

Randall J. Garutti: Yeah. Thanks, Lauren appreciate that I'd say broadly a few things look we know the industry has dropped Russia, we're not immune to that and there are certain places, where we see that as well I think what we've done though and we've talked a lot about this is we continue to employ more and more marketing.

Randall J. Garutti: I think what we've done, though, and we've talked a lot about this, is we've continued to employ more and more marketing, LTO, menu, and guest experience strategies that have really ticked up. So, January was the low point, as we talked about, kind of flat, but with each successive month, we got better. Comm got better, April even better, and sustained so far into May; we feel really good about that. And we've just done a lot of fun brand campaigns. If you look at our Chicken Sundays campaign, it's particularly impactful in the month of April.

Randall J. Garutti: L T O menu and guest experience strategies that have really picked up so January was a low point as we talked about kind of flat, but with each successive month, we got better comps got better April even better and sustaining so far into may we feel really good about that and we've just done a lot of fun brand campaigns. If you look at our chicken.

Randall J. Garutti: Sunday's campaigns, which is particularly impactful in the month of April we've got some cool promos, we've done a lot more day parting opportunities to drive people and I think there's just kind of those strategies are the ones that are offsetting what we what has no question a little bit more of a pressure in the industry right now so Joe really proud of.

Randall J. Garutti: We've done some cool promos. We've done a lot more day-parting opportunities to drive people, and I think there's just kind of a – those strategies are the ones that are offsetting what is, no question, a little bit more of a pressure in the industry right now. So, I feel really proud of the entire team for how we've been reacting and driving, and it feels good for the momentum. We also have a little bit of an easier comparison in the second quarter and are moving on in the third quarter as well. In the first quarter, we had a tough compare.

Randall J. Garutti: The entire team for how we've been reacting in driving and it feels good for the momentum. We also have you know a little bit of an easier compare in second quarter and moving on in third quarter as well the first quarter, we had a tough compare of over 10% golf last year. So that was some of the pressure on a two year basis, but we feel good about how that's been going so.

Randall J. Garutti: Momentum feels really solid in the company right now so lots of good work.

Randall J. Garutti: Excellent.

Randall J. Garutti: We were over 10% comp last year, so that was some of the pressure on a two-year basis, but we feel good about how that's been going. So, momentum feels really solid in the company right now. So, lots of good work. Our next question is from Brian Vaccaro with Raymond James. Please proceed. Thanks and good morning and congrats on all your success in growing the business to Randy over the years. So, on labor, can I just ask a question there? You saw some that were very strong.

Randall J. Garutti: Our next question is from Brian Vaccaro with Raymond James. Please proceed.

Brian Michael Vaccaro: Our next question is from Brian Vaccaro with Raymond James. Please proceed. Thanks, and good morning.

Brian Michael Vaccaro: Oh, Thanks, and good morning, and congrats on all your success on won't be as you've grown the business to Randy over the years.

Brian Michael Vaccaro: So on labor can I just ask some question. There you saw some very strong leverage in that line and I think you said youre rolling phase two changes through the year could you just elaborate on the changes that you're making there and maybe how the savings on savings to compare to phase one and did you embed in.

Brian Michael Vaccaro: I guess, how much did you embed on phase two savings within your annual store margin guidance.

Randall J. Garutti: Great, Brian, thanks for the question. So first of all, on labor, you know, we did show some pretty good leverage on that line in the quarter. And a lot of that, though, just, you know, just to remind everybody, in 4Q 2022, we had about 22 new shack openings. And really, that carried into the first quarter of 2023. And as you know, when we open up a new shack, it takes a while for that shack to work its way to kind of full profitability levels.

Speaker Change: Great Brian Thanks for the question. So first of all on Labor you know, we did show some pretty good leverage on that line in the quarter.

Brian Michael Vaccaro: And a lot of that though just you know just to remind everybody.

Brian Michael Vaccaro: And for Q2 thousand 22, we had about 22, new shack openings.

Brian Michael Vaccaro: And really that carried into the first quarter of 2023 and as you know you know when we open up a new shack. It takes a while for that check to work its way to kind of full profitability levels. We just had a very heavy.

Brian Michael Vaccaro: Weighted.

Brian Michael Vaccaro: Opening schedule in the fourth quarter that kind of had a hangover in the first quarter and also you know last year, we talked about the rollout of kind of improved forecasting and I'm working closely with our operators and some strategies there to help them bring in and labor and kind of optimize spread that current model that we have in place.

Brian Michael Vaccaro: And that really took hold kind of at the very end of the first quarter into the second quarter and going forward last year. So I think that's a lot of what you're seeing on that side now as far as the new labor model that we're running here and we're testing them just as a reminder.

Randall J. Garutti: So I think that's a lot of what you're seeing on that side. Now, as far as the new labor model that we're running here and we're testing, just as a reminder, you know, what this does is it really helps us to optimize for the different menu mix, the different channel mix, and the different daypart peaks across all of our restaurants in the system to kind of provide a more bespoke, tailored recommendation for deployment. We haven't embedded any of that in guidance at this point, and we'll continue to update you as that rolls out through the rest of the year.

Brian Michael Vaccaro: What this does is it really helps us to optimize for the different menu mix the different channel mix and a different day part peaks across all of our restaurants in the system to kind of provide a more bespoke tailored recommendations for deployment.

Brian Michael Vaccaro: And we started testing that are really you know at the end of last year and into this year and a handful of shacks, you're not really seeing it in the numbers. It hasn't been you know it didn't really move the needle on first quarter, just given the overall size of the base there.

Brian Michael Vaccaro: But we're really pleased with the results that we saw from the tests, we're taking it a step further and where we've committed to rolling it out to all of the shacks company operated shacks by the end of the year we.

Brian Michael Vaccaro: We haven't embedded any of that in guidance at this point.

Brian Michael Vaccaro: We will continue to update you as that rolls out through the rest of the year.

Brian Michael Vaccaro: Yes.

Brian Hugh Mullan: Our next question is from Brian Mullan with Piper Sandler. Please proceed.

Brian Michael Vaccaro: Our next question is from Brian Mullan with Piper Sandler. Please proceed.

Brian Hugh Mullan: Hey, thanks. I just want to echo Randy's sentiment.

Brian Hugh Mullan: Hey, Thanks, just want to Echo Randy Congrats on everything you've accomplished with the brand. It's amazing story wish you wish you the best.

Randall J. Garutti: Congratulations on everything you've accomplished with the brand. You know, it's an amazing story. I wish you the best. Just a question on the advertising opportunity. The letter references an idea you need to learn and grow into a larger marketing budget over time. I thought that was interesting.

Brian Hugh Mullan: Question on the advertising opportunity.

Brian Hugh Mullan: Letter references maybe you need to learn and grow into a larger marketing budget over time, but that was interesting. My question is just on the organizational side do you feel like you have the full team in place to take advantage of the size of this opportunity over the long term or maybe are there some hires or televisions you Wanna make from here and I know the incoming CEO of.

Randall J. Garutti: My question is just on the organizational side. Do you feel like you have the full team in place to take advantage of the size of this opportunity over the long term? Or maybe there are some hires or talent additions you want to make from here? And I know the incoming CEO has a marketing background that would be helpful, but I kind of mean once he gets there over the long term. Any assessment? Yeah.

Brian Hugh Mullan: As a marketing background that would be helpful, but I kind of mean once he gets there over the over the long term.

Randall J. Garutti: Any assessment? Yeah, thanks.

Speaker Change: Any assessment yeah. Thanks, Josh.

Randall J. Garutti: Look, I think there is, as we've said for a little while, we've really been a brand that has done most of our work for 20 years on just being a great brand, and we've spent little to no advertising over those years, and it's new for us to be ramping it up. We're super excited about the current marketing team at every level and how they're interacting with the entire company to drive some really cool new things, and you're seeing that progress happen this last year, and we fully expect to continue to double down on that.

Speaker Change: Look I think there is as we've said now for a little while we've really been a brand that has done most of our work for 20 years on just being a great brand and we've spent little to no advertising over those years and it's new for us to be ramping up we're super excited about the current marketing team at every level.

Speaker Change: And how they're interacting with the entire company to drive some really cool new things and Youre seeing that progress happen. They slashed a year and we fully expect to continue to double down on that and I'll listen I think.

Randall J. Garutti: Now, listen. I think Rob Lynch, who will be coming in, has certainly got a strong background in marketing. I think the company is really excited to benefit from how he's thought about that, and I certainly won't speak for him, but I have no doubt he's going to have a keen eye for the best opportunities, and our team does these things with discipline, with a focus on strong returns and being accretive to our margins.

Speaker Change: Rob Lynch.

Speaker Change: She will be coming in is certainly got a strong background in marketing and I think the company is really excited to benefit from how he thought about that and I won't I certainly won't speak for him, but I have.

Speaker Change: No doubt he's going to have a keen eye for the best opportunities and our team does these things with.

Speaker Change: With discipline with a focus on strong returns and being accretive to our margins. So everything you've seen in this in this last six months is increasing our brand awareness is increasing kind of our brand health.

Randall J. Garutti: Everything you've seen in these last six months is increasing our brand awareness, it's increasing kind of our brand health, and it's also part of our strategy, which gets a little bit off topic here, but on real estate, of going deeper into certain markets. We've increased, let's just take one market like Texas. We've increased our footprint in Texas by more than 30% in the last year. That helps with brand awareness, that helps when we do marketing, that helps whenever we want to do anything in a single region. So, I'm super excited about the opportunities that we can employ from here.

Speaker Change: And itself its also part of our.

Speaker Change: Our strategy it gets into a little bit off topic here, but on the real estate of going deeper into certain markets.

Speaker Change: We've increased it let's just take one market like Texas, we've increased our footprint in Texas by more than 30% in the last year that helps with brand awareness that helps when we do marketing that helps them whenever we want to execute anything in a single region. So super excited about the opportunities that we can employ it from here.

Michael Oriolo: Our next question is from Michael Thomas with Oppenheimer and Company. Please proceed.

Speaker Change: Our next question is from Michael Tamas with Oppenheimer and company. Please proceed.

Randall J. Garutti: Hi, good morning. Randy, congrats on your success with Shack, and I hope you get to enjoy some more free time going forward. One of the questions we've heard most often recently is about the margin path going forward. Obviously, I understand I'm asking you to speak for Rob a little bit here, but his background is with much larger companies that have greater scale and bigger budgets than Shake Shack. Obviously, that can be a benefit, as you just mentioned before, but how does a company, including the board, think about the need for potential investments beyond this year that might limit margins beyond 24. I know there's no formal guidance beyond this year, but just any qualitative commentary would be helpful. Thank y'all.

Michael A. Tamas: Good morning, Randy Congrats on a successful shocking and hope you get to enjoy some more free time going forward.

Michael A. Tamas: One of the questions. We've heard most often recently is about the margin path going forward, obviously, I understand I'm asking to speak for Rob a little bit here, but his background with much larger companies that have greater scale and bigger budgets and sure check does and you know what.

Michael A. Tamas: Obviously that can be a benefit as you just mentioned before about how the company, including the board thinking about the need for potential investments or different sales strategies beyond this year that might limit margins beyond 'twenty four I know of no formal guidance beyond this year, but just any qualitative commentary would be helpful. Thanks.

Peter Mokhlis Saleh: Yeah, look, to be fair to Rob and the team moving forward, I don't think we want to give any guidance other than what we've done today. I think everybody here has seen that look, we've, this has been a strong company for decades. We have sustained, and we talked about that today on purpose, to say, you know, many, many quarters in a row of sustained improvement in our margins, along with our sales, along with our cash flow as a company.

Speaker Change: Yeah look to be fair to Rob and the team moving forward I don't think we want to give any guidance other than what we've done today I think everybody here has seen look we this has been a strong company for decades, we have sustained and we talked about that today on purpose to say you know many many quarters in a row of sustained improvement in our margins.

Speaker Change: Along with our sales along with our cash flow as a company all of that is just in the right direction, which with our with shrink.

Peter Mokhlis Saleh: All of that is just in the right direction with strength. You know, I fully expect Bob's going to get in and decide how he wants to take it, but I think we've got a great team that has a firm strategic plan for 24 and is already looking at a strong pipeline for 25. So everything you've heard us do, you've seen a strong guide in picking that up, and at the guidance we've given this year, we remain one of the best and most profitable restaurant companies in the space. So we're really proud of where we're at.

Speaker Change: We expect well I was going to get it in and decide how he wants to take it but I think we've got a great team that has the firm's strategic plan for 'twenty four and already is on our strong pipeline for 25, so everything you've heard us do as you've seen a strong guide and picking that up and that's the guidance. We've given this year we remain.

Speaker Change: One of the best and most profitable restaurant companies in the space. So we're really proud of where we're at.

Randall J. Garutti: Our next question is from Peter Saleh with BTIG. Please proceed.

Speaker Change: Our next question is from Peter say with B T. I T. Please proceed.

Speaker Change: Yes.

Peter: Great. Thanks, Randy its been a pleasure working with you and best of luck to you.

Peter Mokhlis Saleh: I did want to ask about the kiosk commentary real quick. The high teens increase, and yes, it was pretty substantial versus last quarter. Do you think that that is the end point, or do you think there's more upside to check growth going forward? I guess there is more growth within the kiosk here? And then also, can you put that in the context of the negative low single-digit, if I had that correct, menu mix? Just trying to understand how you can have such a large increase in the kiosk check and still see some of that menu mix decline. Thanks. Yep.

Speaker Change: Future.

Peter: I did want to ask about the kiosk commentary real quick.

Peter: Hi, James increase yes, it was pretty substantial versus last quarter. Do you think that that is the end point or do you think there's more upside to the check growth.

Speaker Change: Going forward.

Speaker Change: Is there more.

James: Within the kiosk here and then also can you put that in the context of the negative low single digits, if I had that correct.

James: Menu mix just trying to understand how you can have such a large increase in the kiosk.

Speaker Change: Check and still see some of that menu mix decline. Thanks.

Randall J. Garutti: Great. So, first of all, on kiosks. You know, we still believe we're in the early stages of what kiosks can do for our business. And, you know, certainly the first step of retrofitting all of our shacks with kiosks, making sure that they're available for our guests, that was, you know, a key foundational thing for last year. And now, really, what we're doing is leveraging the talents of our digital merchandising team to optimize how the guest goes through that order journey.

Speaker Change: Great. So first of all on chaos, we still believe we're in the early stages of what kiosks can do to our business and certainly the first step of of retrofitting all of our shacks with kiosk, making sure that they're available for our cast that was key foundational thing for last year and now really you know.

Speaker Change: What we're doing is leveraging the talent on our digital merchandising team to optimize for how the gas goes through that order journey.

Randall J. Garutti: The key thing here, you know, is what you're pointing out with mixed trends, you know, what we had in the quarter. Yes, well, we're continuing to see some great benefits from, you know, the kiosk upsell opportunity, and IPC was flat overall for the company.

Speaker Change: The key thing here is what you're pointing out with with mixed trends.

Speaker Change: What we had in the quarter, yes, well you know, we're continuing to see some great benefits from but you know.

Speaker Change: The kiosk upsell opportunity.

Randall J. Garutti: We took some targeted opportunities in marketing, which did have a little bit of a mixed headwind, but it had a positive traffic benefit on the back of it and really grew sales. And we did this in a way that grew our profitability. And so we talked about that last quarter kind of being embedded in the guide. And when we talk about, you know, our guidance for a low single-digit check this year, we anticipate to have more of that going forward. But, you know, overall, both things. We're really excited by what we're producing here for both our top line and our profitability.

Speaker Change: ITC was flat overall of the company, we took some targeted opportunities in marketing, which did have a little bit of a mixed headwind. However had a positive traffic benefit on the back of it and really grew sales and we did this in a way that grew our profitability and.

Speaker Change: And so we talked about that last quarter kind of being embedded in the guide and when we talk about our guidance for a low single digit shack. This year, we anticipate to have more of that going forward.

Speaker Change: But you know overall, both things, where we're really excited by what they're producing here for both our top line and our profitability.

Sara Harkavy Senatore: Our next question is from Sara Senatore with Bank of America. Please proceed.

Speaker Change: Our next question is from Sarah Senatore with Bank of America. Please proceed.

Sara Harkavy Senatore: Thank you. I have a clarification and a question, so hopefully that counts as one. But first, obviously, also congratulations, Randy, on your next steps.

Sara Harkavy Senatore: Thank you I have a clarification and a question to hopefully that.

Sara Harkavy Senatore: That counts as one but the first obviously also congratulations Randy on your next steps I wanted to ask about the at the April the clarification is so I'm trying to understand the sequential acceleration I know you talked about easier compares although April I think was a pretty tough compare.

Katherine Irene Fogertey: I wanted to ask about April. The clarification is – so I'm trying to understand the sequential acceleration. I know you talked about easier compares, although April, I think, was a pretty tough compare as of 2Q. But you have, I think, more price than you did in the first quarter, my understanding is, and you have less negative mix. I'm trying to understand if the delta is – because you said flattish traffic, so I'm trying to understand where the delta is, if you're seeing less of a negative mix, or if it's just an improvement over the higher pricing that you have for the quarter. So that's the clarification.

Sara Harkavy Senatore: Two Q, but you have I think more price.

Sara Harkavy Senatore: Than you did in the first quarter is my understanding and you had less negative makes I'm trying to understand that the delta is because you said flattish traffic. So I'm trying to understand where the delta is if you're seeing less of a negative mix or if it's just the improvement or the higher pricing that youre that you have on the quarter. So that's a clarification and then just.

Katherine Irene Fogertey: And then, just on the margins, obviously, very good food and labor. I was wondering about the third line item and just sort of perhaps the opportunities you have there in other OPECs. It's not something that I think has been talked about too much. I know there's probably some of that dragged from new stores, but anything you can say there, thanks.

Sara Harkavy Senatore: On the margins.

Speaker Change: You know obviously very good.

Speaker Change: Food and labor I was wondering about.

Sara Harkavy Senatore: Third line item and just sort of perhaps the opportunities you have there in other opex, it's not something that I think has been talked about too much I know, there's probably some of that drag from new stores, but anything you can say there. Thanks.

Katherine Irene Fogertey: Sure. So, I'll take the other OPEX point first and then we'll go back to your question in April. So, on other OPEX, you know, we are, we've talked about this, we are investing more in marketing, both at our store level and also at the company and G&A level. And, you know, that is kind of where the sales driving strategies, a lot of those costs are born in the restaurant P&L. And our guidance reflects our expectations for that strategy going forward.

Speaker Change: Sure. So I'll take the other Opex 0.1st and then we'll go back to your question on April So on the other Opex. You know we are we just talking about that we are investing more in marketing both at our store level and also at the company and G&A level and you know that is kind of where the sales driving strategies a lot of those costs are born.

Speaker Change: In a restaurant P&L.

Speaker Change: And our guidance reflects our expectations for that strategy going forward. You know again I think it's important to emphasize that you know while we're investing more in marketing right now to learn and grow and we're excited about the sales that we're driving on the back of it. We're also doing that in a margin accretive way. So you might see a little bit of a tick up on that.

Katherine Irene Fogertey: You know, again, I think it's important to emphasize that, while we're investing more in marketing right now to learn and grow, and we're excited about the sales that we're driving on the back of it, we're also doing this in a margin-accretive way. So, you might see a little bit of a tick up on that other OPEX line, but overall, the sales are accretive to our profitability And then on your question about April, you know, overall, what I would say is we had, you know, some improvements in traffic.

Speaker Change: The Opex line, but overall the sales are accretive to our profitability.

Speaker Change: And then on your question on April.

Speaker Change: Overall, what I would say is we had some improvements in traffic we were running at about kind of a 7% to 8% price as you recall, we're gonna be working off of about 2% price in may so that will come down.

Katherine Irene Fogertey: We were running at about a 7% to 8% price. As you recall, we're going to be working off of about 2% price in May, so that will come down. And then we had a couple of, you know, really exciting marketing initiatives in April, in particular Chicken Sunday, where we offered a free chicken shack with a $10 minimum spend every Sunday. So that, you know, had a little bit of an impact on our mix, but nothing too out of the ordinary versus what we've been seeing.

Speaker Change: And then we had a couple of really exciting marketing initiatives in April in particular, the chicken Sunday, where we have offered a free chicken shack with a 10 dollar minimum spend.

Speaker Change: Every Sunday, so that had a little bit of an impact on our mix, but nothing too out of the ordinary versus what we've been seeing.

Speaker Change: Yes.

Jake Rowland Bartlett: Our next question is from Jake Bartlett with Truist Securities. Please proceed.

Speaker Change: Our next question is from Jake Bartlett with true Securities. Please proceed.

Jake Rowland Bartlett: Great, thanks for taking the question, and my congratulations to you, Randy, as well. It's been great working with you.

Jake Rowland Bartlett: Great. Thanks for taking the question and my congrats to you Randy as well.

Jake Rowland Bartlett: Great working with you Mike.

Katherine Irene Fogertey: My question is on the margin guidance for 24, and it's nice that, obviously, you've seen improvement, and that's encouraging. But my question is that it seems a little conservative. I mean, my math is that pricing is going to be about mid-single digits, I think you said low-single digits, labor inflation, and flat to low-single digits food costs. That alone should get us, I think, to the high end of your guidance. You also have the impact of kiosks and other labor scheduling that you've done over the last year that's been an improvement. So am I missing anything, or is there a level of conservatism built into that?

Jake Rowland Bartlett: My question is on the margin guidance for 'twenty, four and it's nice to obviously, you've seen improvement and that's encouraging. My question is is that it seems a little conservative I mean, my math is that pricing is going to be about mid single digits. Since you said low single digits on labor inflation flat to low single digit food cost.

Jake Rowland Bartlett: That alone should get us.

Jake Rowland Bartlett: To the high end of your guidance you also have the impact of kiosks.

Jake Rowland Bartlett: Other labor scheduling that you've done over the last few years, it's been an improvement.

Jake Rowland Bartlett: Am I missing anything or is there a level of conservatism built into this guidance.

Katherine Irene Fogertey: Yeah, so I think you've outlined a lot of the key points there for the fiscal 2024 guide on, you know, kind of the top and the bottom and range there. Look, you know, we were very clear about this in our remarks and also, you know, in the shareholder letter. Beef remains a big uncertainty, and we are watching it through the rest of this year. And, you know, that being that's an area of the basket that we do not contract and we're not locked in there, we're going to be kind of subject to what the macro does on that side.

Speaker Change: Yeah. So I think you've outlined a lot of the the key points there for the fiscal 2024 guide.

Speaker Change: On you know kind of the top and the bottom and the range. There look you know we were very clear about this kind of in our remarks and also you know in the shareholder letter you know beef remains a big uncertainty and we are watching it through the rest of this year.

Jake Rowland Bartlett: And you know that that you know.

Jake Rowland Bartlett: That's an area of the basket that we do not contract and we're not locked in there we're gonna be kind of subject to what the what the macro does on that side and then you know.

Katherine Irene Fogertey: And then, you know, just depending on the degree of success that we're having around our marketing strategies to offset what Randy had alluded to is clearly, you know, a softening of the overall, you know, backdrop. So those are the things that I would look at on that side.

Jake Rowland Bartlett: Depending on the degree of success that we're having around our marketing strategies to offset what Randy had alluded to it is clearly you know a softening of the overall backdrop. So those are the things that I would look at it on that side I will say that you know we're we're incredibly proud of the work that our teams have been doing to get after.

Andrew Michael Charles: I will say that, you know, we're incredibly proud of the work that our teams have been doing to make all of the improvements that we've been talking about across our total cost of service across our supply chain. All the things we've talked about in our restaurants about labor and other ways that we're still providing a great guest experience, but doing it in a way that is translating to the strongest flow through that we've had, you know, even before the Cobit.

Jake Rowland Bartlett: All of the improvements that we've been talking about across our total cost to serve across our supply chain. All the things we've talked about in our restaurants with labor and other ways that we're still providing a great guest experience, but doing it in a way that is translating to the strongest flow through that we've had you know even pre COVID-19.

Andrew Michael Charles: So, you know, we're excited by where we're headed and the guidance today is for twenty point two to twenty one percent. That is a thirty to a hundred and ten basis point improvement versus last year. Our next question is from Andrew Charles with Callen & Company. Please proceed. Great, thank you. Randy, congratulations on building the Shake Shack brand to what it is today and best wishes in your next chapter.

Jake Rowland Bartlett: So we're excited about where we're headed and the guidance you know today is for 'twenty two to 'twenty, 1%.

Jake Rowland Bartlett: That is at 30 to 110 basis point improvement versus last year.

Andrew Michael Charles: Our next question is from Andrew Charles with Callen & Company. Please proceed.

Jake Rowland Bartlett: Our next question is from Andrew Charles with Cowen and company. Please proceed.

Andrew Michael Charles: Great. Thank you Randy Congrats on building the shake Shack brand to what it is today and best wishes on your next chapter it's no secret that we're going to see intensified burger value activity in the coming months and I'm curious if you believe your digital value tactics that you've utilized so far in 2024 around chicken Sundays repriced Fridays Burger shakes during the shoulder periods.

Andrew Michael Charles: Federer or enough what do you believe more is needed to protect traffic amongst lower income consumers.

Randall J. Garutti: Yeah, it's a great question. There's no question we live in, whether it's us or the largest online companies who are all seeing a consumer who's seeking value, a consumer who's seeking discounts in a lot of cases, promotions, you know, we, you've seen a lot in our industry. Shake Shack needs to continue to retain its premium brand position. This is what has set us apart from the beginning. Our ingredients, our hospitality, our designs, everything about the Shake Shack experience transcends the traditional fast food burger experience.

Randall J. Garutti: Yeah, It's a great question and there's no question, we're living in whether it's us or the largest online companies who are all seeing a consumer who is seeking value consumers seeking discounts and a lot of cases promotions.

Speaker Change: You've seen a lot in our industry.

Andrew Michael Charles: Shake shack needs to continue to retain its premium brand positioning. This is what has set us apart from the beginning our ingredients or hospitality or designs everything about the shake shack experience.

Andrew Michael Charles: Transcends the traditional fast food Burger experience, we're going to continue to do that and if every everything we've done has has hit those launch. So when you see us doing things there almost entirely added value. We want to give you something extra want you to feel the value. We want you to understand the quality of what youre doing so well.

Randall J. Garutti: We're going to continue to do that, and everything we've done has hit those lines. So, when you see us doing things, they're almost entirely added value. We want to give you something extra. We want you to feel the value. We want you to understand the quality of what you're doing, app, web, and delivery.

Andrew Michael Charles: And we do things like our chicken Sundays.

Andrew Michael Charles: That hits our channels it hits, our interiors you can come in and use those so it's not just digital.

Andrew Michael Charles: Its omnichannel truly in shack in our kiosks in check.

Randall J. Garutti: And I think the strategies that the team is just beginning to employ have been so, our learning is just so fast, furious, and fun. I mean, we're really enjoying the process of opening up these budgets a little bit, trying some more things to see what hits in our guess, see what hits regionally. Sometimes something hits very differently in New York than it does in California or Texas.

Andrew Michael Charles: App web and delivery and I think the strategies. The team is just beginning to employ have been so or learning is just so fast <unk> furious and fun I mean, we're really hum.

Andrew Michael Charles: Enjoying the process of opening up these budgets a little bit trying some more things to see what hits in our guests what hits regionally, sometimes something hits very different in New York and a dozen in California or Texas.

Randall J. Garutti: And we're learning all that, and I think as you build an engine that's based on the data that we now have as we grow over these years, we can take greater insights into our strategies. And that's really the foundation that the team has been working on to build. So, we're super excited. We have a lot more arrows in our quiver as we move forward, regardless of whatever the economic opportunities are going to be. And you've seen that. You've seen that in the trend of continuing sales growth every month and getting better so far this year.

Andrew Michael Charles: And we're learning all of that and I think as you build an engine that's based in the data that we now have as we're growing over these years, we can take greater insights into our strategy. So that's really the foundation that the team has been working on to build so we're super excited we have a lot more arrows in our quiver as we move forward.

Andrew Michael Charles: Regardless against whatever the economic opportunities are gonna be and you've seen that you've seen that in the in the trend of continuing sales growth every month getting better so far this year.

Andrew Michael Charles: Yes.

David E. Tarantino: Our next question is from David Tarantino with Baird. Please proceed.

Andrew Michael Charles: Our next question is from David Tarantino with Baird. Please proceed.

David E. Tarantino: Hi, good morning, Randy. Congratulations from me as well on a fantastic career at Shake Shack.

David E. Tarantino: Hi, good morning, Randy Congrats.

David E. Tarantino: For me as well on a fantastic career.

Randall J. Garutti: So I wanted to kind of follow up on your commentary, Randy, since you've been sort of the inventor of this very premium brand and successful brand. And I wanted to ask, you know, a lot of the advertising has been, you know, focused on promotional activity. And that's certainly understandable in this environment. But I wanted to get your perspective on how you're balancing the offers that you're making with the need to, you know, protect the premium nature of the brand positioning and specifically how you're monitoring whether some of the things you're doing are having an influence on consumer perceptions and that, you know, related to the brand.

David E. Tarantino: A check so.

David E. Tarantino: Wanted to kind of follow up on your commentary Randy I'm sure you've been sort of the inventor of this very premium brand and successful brand and I wanted to ask.

David E. Tarantino: A lot of the advertising has been.

David E. Tarantino: Focused on our promotional activity and that's certainly understandable in this environment, but.

Speaker Change: Wanted to get your perspective on how you're balancing.

Speaker Change: The offers that you're making with the need to.

Speaker Change: Protect the premium nature of the brand positioning and specifically, how you're how you're monitoring or whether some of the things. We're doing are having an influence on the fun consumer perceptions and that.

Randall Garutti: Related to the brand.

Randall J. Garutti: Yeah, those are great questions. It's something we think a lot about. I think the strength of the Shack brand and its ability that we just have always punched so far above our weight is a strength for us. But as I've said in previous calls, what's also fascinating as we've grown pretty far, pretty fast globally and around this country is that there are still a lot of people who don't really know Shake Shack. So we start everything with the education of who we are.

Speaker Change: Yeah. Those are great questions. It's something we think a lot about I think this is the strength of the shack brand and its ability to just have always punched so far above our weight.

Randall J. Garutti: That's been a strength for us and but as I've said in previous calls what's also fascinating as we've grown pretty far pretty fast globally and around this country. As you know there's still a lot of people, who don't really know shake shack. So we start everything with the education of who we are our brand pillars are really about helping people.

Randall J. Garutti: Our brand pillars are really about helping people understand the quality of our ingredients, that we're cooking to order, and that we're spinning our shakes fresh by hand. These things are paramount. Then, what we do as we think about whether it's a promo or a, you know, afternoon shake opportunity, or sometimes we'll do free Fridays, whatever these things are, they're all based on added value. They're all based on ensuring that we continue to keep that brand position. I don't expect you're going to see us do a dollar menu type of promo. That's just never been Shake Shack's thing.

Speaker Change: I understand the quality of our ingredients that we're cooking to order that we're spinning our shakes fresh by hand. These things are Paramount then.

Speaker Change: What we do as we think about whether it's a promo.

Speaker Change: You know our afternoon shake opportunity or sometimes will do free Fridays whatever these things are they are all based in added value. They're all based in ensuring that we continue to keep that brand positioning I don't expect youre going to see.

Randall J. Garutti: Ah Stewart dollar menu type of promo that just never been shake Shack thing, where we certainly understand there's a there's a great place for traditional fast food and.

Randall J. Garutti: We certainly understand there's a great place for traditional fast food, and we may not get those consumers as often as traditional fast food does at that price point, but we feel like our value is strong. And everything you're going to see and have seen from us is about continuing to help people understand, hey, you know, when you choose to eat a burger or chicken sandwich or have a shake, you should choose Shake Shack, and here's why.

Randall J. Garutti: We may not get those consumers as often as traditional fast food does at that price point.

Randall J. Garutti: But we feel like our value is strong and everything youre going to see and have seen from US is about continuing to help people understand hey, you know when you choose to eat a burger chicken sandwich or have a shake you should choose shake shack and here's why.

Randall J. Garutti: And that's what we did. That's what I expect we'll continue to do. Our next question is from Andy Barish with Jeffreys. Please proceed. Yeah, hey, Randy. It's always nice to see a Jersey boy do well. So congrats.

Randall J. Garutti: That's what we've done is what I expect will continue to do.

Andrew Marc Barish: Our next question is from Andy Barish with Jeffreys. Please proceed.

Randall J. Garutti: Our next question is from Andy Barish with Jefferies. Please proceed.

Andrew Marc Barish: Yeah, Hey, Randy it's always nice to see a Jersey boy do well so congrats.

Andrew Marc Barish: Hi.

Andrew Marc Barish: Okay.

Andrew Marc Barish: Just Katy quick.

Andrew Marc Barish: Clarification, and sorry, if I missed it.

Andrew Marc Barish: <unk> same store sales guide of low single digits, when you're starting out mid single digits can you give us kind of a little color about sort of why you know why it doesn't continue in that range.

Katherine Irene Fogertey: Sure. So, in May, we're going to be rolling off about 2% of price. We're expecting our trends to kind of, you know, continue to be solid, but, you know, rolling off price and just normal seasonality, that's what gets us to our guidance for a low single-digit comp in the second quarter.

Andrew Marc Barish: Sure.

Andrew Marc Barish: And in May we're gonna be rolling off about 2% price.

Katherine Irene Fogertey: We're expecting you are trying to kind of be.

Katherine Irene Fogertey: Because you need to be solid, but you know rolling off price and just normal.

Katherine Irene Fogertey: Seasonality you know, that's what gets us to our guidance for a low single digit comp in the second quarter.

Katherine Irene Fogertey: Okay.

Jeffrey Daniel Farmer: Our next question is from Jeff Farmer with Gordon Haskett. Please proceed. Uh, great.

Jeffrey Daniel Farmer: Our next question is from Jeff Farmer with Gordon Haskett. Please. Great. Thanks, and congratulations to Randy. I'm definitely looking forward to seeing what you pursue.

Katherine Irene Fogertey: Our next question is from Jeff Farmer with Gordon Haskett. Please proceed.

Jeffrey Daniel Farmer: Great. Thanks, and congratulations Randy definitely looking forward to seeing what you are you pursue next.

Jeffrey Daniel Farmer: I just wanted to touch on was the consumer backdrop. So my question for you guys is did.

Jeffrey Daniel Farmer: Did you see the consumer demand headwinds.

Jeffrey Daniel Farmer: Stabilizing or or sort of further building a further intensifying in coming quarters.

Jeffrey Daniel Farmer: So that's the first part of it and how is that demand backdrop impact.

Jeffrey Daniel Farmer: Impacted shake shack.

Randall J. Garutti: Yeah, look, it's hard to say where it's going to go from here. I think what we've said has been consistent with what we've said for probably about a year. You know, you definitely see some of that consumer pressure. We've said and shared, and we see this today, some of our lower-income consumers are probably trading down from time to time. We may lose a little bit of that. We may lose some of the middle-distance consumer in some of our urban centers.

Jeffrey Daniel Farmer: Yeah.

Jeffrey Daniel Farmer: It's hard to say, where it's going to go from here I think what we've said is been consistent what we said for probably about a year. We you definitely see some of that consumer pressure, we've we've said and shared and we see this today some of our lower income consumer probably traded down from time to time, we may lose a little bit about all of that we may lose some of the mid.

Randall J. Garutti: Will distance consumer and some of our urban centers, we've talked about that a little bit but generally those trends have remained similar for about a year right now and we kind of expect those to be where they're at for now so how that impacts us is as we've driven traffic through other strategies and through building great rest.

Randall J. Garutti: We've talked about that a little bit, but generally, those trends have remained similar for about a year right now, and we kind of expect them to be where they are for now. So how that impacts us is that we've driven traffic through other strategies and through building great restaurants and great places and continuing to build our brand. And that's what you've heard us consistently say, and that's what we've done against that backdrop, and it's been successful for us.

Randall J. Garutti: Franz in Great places and continuing to build our brand and that that's what you've heard us consistently say and that's what we've done against that backdrop and it's been successful for us.

Randall J. Garutti: Yes.

Jeffrey Andrew Bernstein: Our next question is from Jeffrey Bernstein with Barclays. Please proceed.

Jeffrey Andrew Bernstein: Our next question is from Jeffrey Bernstein with Barclays. Please proceed. Hi, good morning. This is Product On for Jeff, and I'd echo the same. Congratulations, Randy, on all you've achieved. It's been great partnering with you, and I wish you the best of luck. My question is on store level margins.

Randall J. Garutti: Our next question is from Jeffrey Bernstein with Barclays. Please proceed.

Product On: Hi, Good morning, this is product on for Jeff.

Product On: Congrats R&D on all you've achieved so it's been great working with you and I wish you the best of luck.

Jeffrey Andrew Bernstein: My question is on store level margin.

Product On: This year youre going to get back to the low 20%.

Speaker Change: That's relative to your long term framework of 18 to 20.

Product On: Do you see an opportunity to expand margins materially higher from here on out, especially with all the great work, you're doing with operational efficiency.

Product On: Taking costs out of the model or is that really kind of offset by more muted <unk> growth going forward and just a higher cost environment that makes return to former peak quarter. Thank you.

Katherine Irene Fogertey: Great. Thanks for the question.

Speaker Change: Great. Thanks for the question you know, we're not providing any outlooks here beyond our guidance for 2024.

Katherine Irene Fogertey: You know, we're not providing any outlooks here beyond our guidance for 2024. But what I will say is that, you know, the team has continuously delivered profitable growth here. We have been steadily improving our margin every quarter. And certainly, our guidance for this year calls for another year of restaurant margin expansion. Look, we have a number of pressures that are not too unique to us.

Speaker Change: But what I will say is that you know the team has continuously delivered profitable growth here, we have been steadily improving our margin.

Katherine Irene Fogertey: Every quarter.

Katherine Irene Fogertey: And certainly our guidance for this year calls for another year of a.

Katherine Irene Fogertey: Restaurant margin expansion look we have a number of pressures that you know we're not you know two unique to us we have wage inflationary pressures our supply chain remains.

Katherine Irene Fogertey: We have wage inflationary pressures, and the supply chain remains broadly inflationary. If you take out kind of the benefits that we're seeing here from the work that our team is doing on strategic cost savings. So that's kind of how I would view the opportunities here.

Katherine Irene Fogertey: You know broadly inflationary if you take out kind of the benefits that we're seeing here.

Katherine Irene Fogertey: From the work that our team is doing on strategic cost savings.

Katherine Irene Fogertey: So that's kind of how I would I would view the opportunities here and we're really proud and excited by the work that our team has been doing to address opportunities in total cost of serve you know as we get denser in market as we kind of grow our footprint, we're able to leverage more suppliers were able to optimize freight we're able to do things that guests really doesn't.

Katherine Irene Fogertey: And we're really proud and excited by the work that our team has been doing to address opportunities and total cost to serve. You know, as we get denser in markets, as we kind of grow our footprint, we're able to leverage more suppliers. We're able to optimize freight. We're able to do things that a guest really doesn't see the impact of, but it does help us be more efficient in running our restaurants.

Katherine Irene Fogertey: See the impact of but it does help us be more efficient in running our restaurants.

Katherine Irene Fogertey: On the labor side, too, you know, it's been a combination of several things, both things that we've done internally to help improve turnover trends and keep our team members for longer. It just helps them be more efficient, as well as all of the work that the finance team and operations have done to partner together and really be much tighter on how we're operating our restaurants. And then, if I look forward to, you know, kind of the next level here with having even just a more bespoke and optimized scheduling tool for operators, you know, I think that that continues to provide a great opportunity for us to navigate inflationary pressures in a way that allows us to also kind of maintain the value for our guests.

Katherine Irene Fogertey: On the labor side too you know it's been a combination of several things so things that we've done internally to help improve turnover trends and keep our team members for a longer it just helps them be more efficient as well as all of the work that the finance team and operations have done to partner together and really paid much tighter on how we're operating.

Katherine Irene Fogertey: Our restaurants, and then if I look forward to you know kind of the next level here with having even just a more bespoke to optimize scheduling tool for our operators. You know I think that that continues to provide great opportunity for us to navigate inflationary pressures in a way that allows us to also kind of maintain the value for our guests. So.

Katherine Irene Fogertey: So, you know, no long-term guidance, but that's the overall framework that we think about here at Shake Shack. Our next question is from James Sanderson with North Coast Research. Please proceed. Hey, thanks for the question, and Randy, congratulations on all your accomplishments over the years at Shake Shack. I wanted to talk a little bit about unit growth and unit development.

Katherine Irene Fogertey: No long term guidance, but that's the overall framework that you know that we think about him here at shake shack.

James Jon Sanderson: Our next question is from James Sanderson with North Coast Research. Please proceed.

Katherine Irene Fogertey: Our next question is from James Sanderson with Northcoast Research. Please proceed.

James Jon Sanderson: Hey, Thanks for the question and Randy Congratulations on all your accomplishments over the use of shake Shack I wanted to talk a little bit about unit growth and unit development on the international front I'm wondering how confident you are that the brand can sustain the 40 units.

James Jon Sanderson: <unk> achieved this year, given the macroeconomic headwinds and the geopolitical issues, we're seeing overseas and then in the U S. If you're leaning into any specific regions or states that you believe really are much better fit for the shake shack brand than maybe in the past years. Thank you.

James Jon Sanderson: Jim, thanks. Two great questions there. Internationally, we feel very strongly about the 40 Shack Guide. Look, it's a big world out there.

James Jon Sanderson: Jim Thanks to great questions there.

James Jon Sanderson: Internationally, we feel very strong about the 40 Shack guide and look it's a big world out there, let's remember too we've had amazing success.

Randall J. Garutti: Let's remember, too, that we've had amazing success in so many places that we've gone. So, yes, we acknowledge, and a lot of companies say this, there are pressures in certain parts of China right now. Generally, our Asia business has done quite well. But we're also focused on our domestic license business here in the U.S. Our airports are growing. A lot of our roadsides, which have been a really good new model for us, stadiums, and other opportunities that we feel are non-traditional opportunities.

Randall J. Garutti: And so many places that we'd gone so yes, we acknowledge and there are lots of them as soon as there's pressures in and put certain parts of China right now generally our Asia business has gone quite well.

Randall J. Garutti: But we're also focused on our domestic license business here in the U S. Our airports, we're growing a lot of our roadsides, which had been a really good new.

Randall J. Garutti: New model for us.

Randall J. Garutti: Stadiums and other opportunities. So we feel non traditional opportunities we've done some museums and things like that to where we think there's a really exciting opportunity we haven't even hit western Europe at all other than.

Randall J. Garutti: We've done some museums, things like that, where we think there's really exciting opportunity. We haven't even hit Western Europe at all, other than the U.K. We haven't even really hit anything. We haven't even hit anything south of Mexico.

Randall J. Garutti: The U K, we haven't even really had anything so we have not had anything south of Mexico.

Randall J. Garutti: The opportunities for us are really strong, and that is such a critical, important part of our business. And I think it's undervalued and underappreciated. So it's something I definitely keep an eye on as we go. We really appreciate that part of the business. And then, in terms of the domestic opportunities, we really want to balance it out.

Randall J. Garutti: The opportunities for us.

Randall J. Garutti: A really strong and that is such an important part of our business.

Randall J. Garutti: I think undervalued underappreciated, so it's something.

Randall J. Garutti: Definitely keep an eye on as we go we really appreciate that part of the business and then in terms of the domestic opportunities, we really want to balance it out we want to go deeper in our current markets Youre going to continue to see us do things in the major markets that we're in the North East, Texas, California, The Midwest, where we're going.

Randall J. Garutti: We want to go deeper in our current markets. You're going to continue to see us do things in the major markets that we're in, like Northeast Texas, California, the Midwest. We're going to do a few new markets this year, but they're not too far afield. Pittsburgh is going to be our next big market opening. And by the way, just to jump back to international, we're opening in Canada later this year for our first one in Canada. That's a tremendous opportunity for us. So I think at 300 roughly, domestically company operated, and just over a couple hundred internationally and licensed.

Randall J. Garutti: To do a few new markets this year, but they're not too far a field Pittsburgh is going to be our next big market opening by the way just to jump back to international we're opening in Canada. Later this year for our first one that's a tremendous opportunity for us So I think.

Randall J. Garutti: You know 300, roughly domestic company operated in just over a couple of hundred internationally and license like.

Raul Crow: There's a big opportunity for this company in our growth. Our next question is from Raul Crow with J.P. Morgan. Please. Good morning guys and thanks for the update. Randy, I wish you the best going forward, and I'll keep up with your social media updates here.

Randall J. Garutti: There's a big opportunity for this company and our growth.

Raul Crow: Our next question is from Raul Crow with J.P. Morgan. Please proceed. Good morning, guys.

Raul Crow: Our next question is from Russell Crowe with J P. Morgan. Please proceed.

Raul Crow: Good morning, guys, sometimes dubbed it.

Raul Crow: But maybe we should have the best going forward and I'll keep up with your social media updates here.

Speaker Change: But all of them.

Raul Crow: Can you talk about the speed and pace of competition growth are dead on how do you think the landscape is changing there are a lot of new upcoming concepts with national aspiration and also competing locally as well I. Appreciate your thoughts here, however, you'd like to describe on a regional basis at an odd one whats the suburb on business.

Randall J. Garutti: I think there's always going to be great competition. We didn't invent the cheeseburger, and we won't be the last people to create a great one. We've always fit ourselves into a very special place, though, that sits well above traditional fast food and our quality and our experience and below casual dining, and I think that's been a good home for us.

Speaker Change: It does.

Raul Crow: I think there's always going to be great competition, we didn't invent the cheeseburger and we won't be the last people to create a great one.

Randall J. Garutti: We've always fit ourselves into a very special place, though that sits well above traditional fast food and our quality and our experience and below casual dining and I think that's been a good home for US I expect that's where it will continue to go.

Randall J. Garutti: I expect that's where we'll continue to go but that it does require us to continue with re-event, and reinvent. We've got to get better. We've got to have better products, have exciting LTOs, have exciting menu evolutions over the years, and I think we've done that. So when you really think about our ability to compete, we're watching, and we're learning. There are lots of great restaurants out there that we certainly compete with, and we think at our best, when Shake Shack does what it was built to do, we can be a winner in a lot of places. That's what we've done for 20 years now.

Randall J. Garutti: But that does require us to continually reinvent reinvent we gotta get better are we got to have better products have exciting L. T OS have exciting menu evolution over the years and we I think we've done that so when you really think about our ability to compete.

Randall J. Garutti: We're watching and we're learning there's lots of great restaurants out there that we certainly compete with.

Randall J. Garutti: And we think at our best when Shake Shack does what shake Shack was built to do.

Randall J. Garutti: We can be a winner and a lot of places and that's what we've shown for 20 years or so.

Randall J. Garutti: Yes.

Operator: Thank you. We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments.

Speaker Change: Thank you we have reached the end of our question and answer session I would like to turn the conference back over to management for closing comments.

Randall J. Garutti: I'll just close it out, and if anyone's still listening, a lot of people said some very nice things to me, but I hope everybody goes into a Shake Shack and says those nice things to the employee who's working hard day after day to be a team member of this restaurant and make it what it is, because it's certainly been them that have made this all happen. So thanks, everybody, and we look forward to seeing you for a Shackburger soon.

Speaker Change: I'll just close it out and if anyone still listening.

Randall J. Garutti: Just a lot of people said, some very nice things to me, but I hope everybody goes into a shake shack can says those nice things to the employee who's working hard day after day to be a team member of this restaurant and make it what it is because it's certainly been them.

Randall J. Garutti: That has made this all happened so thanks, everybody and we look forward to seeing you first shack Burger soon.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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