shak shakeshack nov 2015 investor presentaiton
DESCRIPTION
SHAK Shakeshack Nov 2015 Investor PresentaitonTRANSCRIPT
Investor PresentationNovember 2015
2
Disclaimer
Forward-Looking Information
This presentation contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements other than
statements of historical fact included in this presentation are forward-looking statements, including, but not limited to, expected financial outlook for fiscal year 2015, preliminary outlook for fiscal
year 2016, target Shack-onomics, expected Shack openings, expected same-Shack sales growth and trends in the Company’s operations. Forward-looking statements discuss our current
expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact
that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "outlook," "potential,"
"project," "projection," "plan," "intend," "seek," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar expressions. All forward-looking
statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different. All forward-looking statements are
expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties
disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission ("SEC") on March 27, 2015,
subsequent Quarterly Reports on Form 10-Q, prospectus filed on August 13, 2015 and Registration Statement on Form S-1 filed with the SEC on October 8, 2015. All of the Company's SEC
filings are available online at www.sec.gov, www.shakeshake.com or upon request from Shake Shack Inc. The forward-looking statements included in this press release are made only as of
the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required
by law.
Non-GAAP Financial Information
This presentation contains non-GAAP financial measures, including but not limited to, EBITDA, Adjusted EBITDA, Shack-level operating profit and Shack-level operating profit margin. Shack-
level operating profit and Shack-level operating profit margin are not required by, or presented in accordance with, GAAP. Shack-level operating profit is a supplemental measure of operating
performance and our calculations thereof may not be comparable to similar measures reported by other companies. Shack-level operating profit margin has limitations as an analytical tool and
should not be considered as a substitute for analysis of our results as reported under GAAP. Management believes that Shack-level operating profit and Shack-level operating profit margin are
important measures to evaluate the performance and profitability of each Shack, individually and in the aggregate. The Company uses Shack-level operating profit margin information to
benchmark their performance versus their competitors. EBITDA and Adjusted EBITDA are non-GAAP supplemental measures of operating performance that do not represent and should not
be considered alternatives to net income (loss) or cash flow from operations, as determined by GAAP. EBITDA and Adjusted EBITDA are used by management to measure the operating
performance of their business, excluding specifically identified items that management believes do not directly reflect their core operations. The Company believes that these non-GAAP
financial measures, when used in conjunction with GAAP financial measures, provide useful information about operating results, enhance the overall understanding of past financial
performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The presentation of this
financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The non-
GAAP measures used by the Company are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. Reconciliations of the non-
GAAP financial measures included in this presentation to the most directly comparable GAAP measure are included in the Financial Appendix.
Key Shack Leaders
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Randy GaruttiChief Executive Officer
Jeff UttzChief Financial Officer
Danny MeyerFounder & Chairman of the Board
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Where in the world is Shake Shack?
79 Shacks worldwide (as of Nov ‘15)
43 domestic company-operated
31 international licensed
5 domestic licensed
US (48)
West (3) Midwest (3)
NYC (14)
Mid-Atlantic (9)
Southeast (6)Texas (2)
Northeast (11)
Europe (9)
London (2) Moscow (3)
Istanbul (4) Middle East
(21)
Kuwait (7)
Qatar (1)
UAE (10)
Saudi Arabia (1)
Lebanon
(2)
Japan (1)
Asia (1)
Openings: Summerlin
(NV) & Woodbury
Commons (NY)
Operational Accomplishments in 2015
Scottsdale, AZ 2016
opening announced
Chick’nShack test
launch in BrooklynInt’l Opening: first
Japan Shack in
Tokyo (Gaien)
LA 2016 opening
announced
Openings: Bridgewater,
NJ & Austin, TX
Madison Square Park flagship
reopened
Opening: CAA (Chicago, IL)
Int’l Openings: Stratford UK &
Moscow, Russia
4th Great American Shake
Sale raised $500K
JulyJuneApril May
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Openings: I-Drive,
(Orlando, FL) & the
Domain (Austin, TX)
August
Openings: Old
Orchard (Skokie, IL) &
New Hyde Park (Long
Island, NY)
September October November
Culinary Innovation
Chick’nShack
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ShackMeister Burger Roadside Shack
Lockhart Link Burger ParkBurger Surf n’ Shack
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Strong Growth Trajectory
59
1321
31
41
23
3
4
5
5
2
5
15
27
29
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Q3 2015
Domestic company-operated
Domestic licensed
International licensed
Total Shacks
$19
$39
$57
$82
$119
$174
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 LTM(10/30/15)
Total revenue ($mm)
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New Market Successes
Successfully entered two new markets in 2015—Maryland (Baltimore) and Texas (Austin)
Strong volume and operating performance in new markets underscore the portability of the concept
Plans to enter Los Angeles, CA and Phoenix, AZ in 2016
Las Vegas, NV Chicago, IL Baltimore, MD Austin, TX
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Most Recent Quarter Results
Q3 2014 Q3 2015
Δ
2014 v 2015
Total revenue $31.8M $53.3M $21.5M
Same-Shack sales
growth1.2% 17.1% 1,590 bps
Adjusted EBITDA
margin*18.0% 24.5% 650 bps
Shake-level operating
profit margin*25.1% 30.4% 530 bps
** Non-GAAP financial measure. See “Financial Appendix” for a reconciliation of the most directly comparable GAAP measure.
5 7 8 8 9 10 12 13 13 16 16# of Shacks
0.8%
5.9%
8.2%
6.8%
3.9%
4.5%
1.2%
7.2%
11.7%
12.9%
17.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Line 1
Domestic company-operated Shacks open for 24 months or longer*
Same Shack Sales Overview
Strong same-Shack sales
in 3Q 2015 driven by:
8.1% increase in traffic
9.0% increase in ticket
(price and mix)
3Q 2015 YTD same-Shack
sales of 14.3% driven by:
5.2% increase in traffic
9.1% increase in ticket
(price and mix)
Commentary
* Excludes 53rd week in fiscal 2014
14
15
$156,080
$219,754
3Q '14 YTD 3Q '15 YTD
$83,758
$139,531
3Q' 14 YTD 3Q '15 YTD
$ in thousands
* System-wide sales represents the combined sales from all of our domestic company-operated Shacks and both our domestic and international licensed Shacks. Our total revenue is limited to Shack sales
from our domestic company-operated Shacks and licensing revenue from our domestic and international licensed Shacks.
** Non-GAAP financial measure. See “Financial Appendix” for a reconciliation of the most directly comparable GAAP measure.
Revenue System-wide sales*
2015 YTD Key Metrics
Shack-level operating profit** Adjusted EBITDA**
$19,475
$38,983
3Q '14 YTD 3Q '15 YTD
$14,063
$31,256
3Q '14 YTD 3Q '15 YTD
22.4%16.8%29.1%24.7%
% Shack-level operating profit margin % adjusted EBITDA margin
Updated 2015 GuidanceFor the fiscal year ending December 30, 2015, the Company provides the following
guidance:
Total revenue between $189 million and $190 million
Same-Shack sales growth between 11% and 12%
12 new domestic company-operated Shacks opened in 2015 which has already
been executed
At least 6 international licensed Shacks to be opened under the Company's
current license agreements in the U.K., Middle East and Japan.
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2016 GuidanceFor the fiscal year ending December 28, 2016, the Company provides the following
guidance:
Total revenue between $237 million and $242 million
Same-Shack sales growth between 2.5% and 3.0%
At least 14 new domestic company-operated Shack openings
Eight international licensed Shack openings
2016 openings expected to have average annual sales volumes of at least
$3.3 million and average Shack-level operating profit margins of at least 22%
Long-term guidance for 2017 and beyond remains at $2.8 to 3.2 million
and 18% to 22%
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2016 COGS Guidance
2016 COGS: expected to be flat to slightly higher on a
sequential quarterly basis
Beef
• Approximately 1/3 of market basket
• Contract on supply, not price
• Long-term: No significant reduction until 2017
Labor Outlook Largest headwind facing entire restaurant industry
Expect deleveraging on the labor and related expenses line
Our Philosophy: Invest in our team
First Step: DC Market - $12/hour in July ’15 (Minimum Wage: $10.50/hr)
Starting Wages by State
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$11.00
$12.00
$13.00
GA PA FL NV NJ MD CT TX IL MA VA DC NY NYC
2016 2017 Current
Menu Pricing Strategy
One pricing tier
No regional pricing
Minimal 1-2% price increase
in 2016
West Hollywood, CA
Scottsdale, AZ
Dallas, TX
Tokyo, Japan
Tokyo, Japan
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Non-GAAP Reconciliation
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 24,
2014
September 30,
2015
September 24,
2014
September 30,
2015
Shack-level operating profit 7,577$ 15,588$ 19,475$ 38,983$
Add:
Licensing revenue 1,660 1,998 4,770 5,626
Less:
General and administrative expense 5,200 5,728 12,192 30,165
Depreciation expense 1,502 2,636 4,067 7,274
Pre-opening costs 1,766 1,401 3,828 4,054
Loss on disposal of property and equipment 10 17 28 17
Operating income 759$ 7,804$ 4,130$ 3,099$
Total revenue 31,825$ 53,273$ 83,758$ 139,531$
Less: Licensing revenue 1,660 1,998 4,770 5,626
Shack sales 30,165$ 51,275$ 78,988$ 133,905$
Shack-level operating profit margin 25.1% 30.4% 24.7% 29.1%
Reconciliation of Shack-level Operating Profit to Operating Income
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(1) Represents non-cash equity-based compensation expense. For the thirteen and thirty-nine weeks ended September 30, 2015, amounts relate solely to stock options granted in connection with the IPO. (2) Amount relates to a bonus
agreement the Company entered into with an employee. (3) Non-capital expenditures associated with opening new Shacks exclusive of deferred rent incurred prior to opening. (4) Reflects the extent to which rent expense is greater than
or less than cash rent payments. (5) Includes the loss on disposal of property and equipment in the ordinary course of business. (6) Non-recurring compensation expense incurred in connection with the IPO, including expense recognized
in settlement of outstanding awards under the Company's Unit Appreciation Rights Plan, the related employer withholding taxes and the accelerated vesting of outstanding restricted Class B units. (7) Costs incurred in connection with the
Company's IPO, including legal, accounting and other related expenses. (8) For periods presented, represents non-cash charges related to certain employee benefits.
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 24,
2014
September 30,
2015
September 24,
2014
September 30,
2015
Net income 504$ 6,193$ 3,545$ 78$
Depreciation expense 1,502 2,636 4,067 7,274
Interest expense, net 128 83 219 245
Income tax expense 127 1,528 366 2,776
EBITDA 2,261 10,440 8,197 10,373
Equity-based compensation(1)41 1,172 124 3,142
Deferred compensation expense(2)(43) — — —
Pre-opening costs(3)1,039 1,051 2,260 2,933
Deferred rent(4)924 369 1,934 1,338
Loss on disposal of property and equipment (5)10 17 28 17
Non-recurring compensation expenses related to the IPO (6)— — — 12,818
IPO-related expenses(7)1,495 — 1,495 635
Other non-cash items(8)(11) — 25 —
Adjusted EBITDA 5,716$ 13,049$ 14,063$ 31,256$
Reconciliation of Adjusted EBITDA to Net Income
Non-GAAP Reconciliation