SHAK

A month has gone by since the last earnings report for Shake Shack (SHAK). Shares have lost about 1.3% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Shake Shack due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Shake Shack, Inc. before we dive into how investors and analysts have reacted as of late. Shake Shack reported second-quarter fiscal 2026 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line increased year over year, while adjusted earnings declined.The company reported solid demand, with same-Shack sales increasing 3.5% and traffic rising 2%. New Shack openings supported double-digit revenue growth, but record-high beef costs and higher operating expenses weighed on restaurant-level margins. For the fiscal second quarter, the company reported adjusted earnings of 43 cents per share, beating the Zacks Consensus Estimate of 31 cents by 38.71%. Adjusted earnings declined 2.3% from 44 cents per share in the prior-year quarter.Quarterly revenues of $417.6 million missed the consensus mark of $418 million by 0.04%. The top line increased 17.2% from $356.5 million reported in the year-ago quarter. In the fiscal second quarter, Shack sales increased 17.5% year over year to $403.4 million from $343.2 million. Our estimate for the metric was 412 million.Licensing revenues rose 7.1% to $14.2 million from $13.2 million. Our estimate for the metric was 13.7 million.System-wide sales advanced 13.8% to $625.8 million. Average weekly sales were approximately $78,000, unchanged from the prior-year quarter.Management estimated that the World Cup contributed approximately 90 basis points to comparable sales. In-Shack menu pricing increased 3.7%, while blended pricing across all channels rose 4.4%. Comparable app channel sales grew nearly 30% year over year, and digital sales represented almost 41% of Shack sales. In the fiscal second quarter, restaurant-level profit increased 12.8% year over year to $92.7 million from approximately $82.2 million. However, restaurant-level profit margin contracted 90 basis points to 23% of Shack sales from 23.9%.Food and paper costs increased 20.3% year over year to $116.3 million from $96.6 million. As a percentage of Shack sales, these expenses rose 60 basis points year over year to 28.8%, reflecting higher commodity costs, promotional activity and a shift toward higher-cost menu items.Beef, which represents approximately 35% of the food and paper basket, experienced mid-teens inflation. Total blended food and paper inflation was in the low-single-digit range during the quarter. Labor and related expenses increased 15% year over year to $101.2 million. Other operating expenses in the fiscal second quarter increased 24.3% year over year to $63.1 million and rose 80 basis points year over year to 15.6% of Shack sales. The increase primarily reflected higher delivery commissions. Occupancy expenses increased 17.8% year over year to $30.2 million.Operating income declined 7.3% year over year to $20.7 million. Our estimate for the metric was $23.9 million.Net income attributable to Shake Shack decreased 8.6% year over year to $15.7 million. Our estimate for the metric was $17.5 million.Adjusted EBITDA increased 3.9% year over year to $61.2 million from $58.9 million reported in the year-ago quarter. However, the adjusted EBITDA margin contracted 180 basis points year over year to 14.7%.General and administrative expenses rose 18.8% year over year to $48.3 million. Depreciation and amortization increased 15.7% year over year to $30.7 million, while preopening costs climbed 34% to $6.6 million. Shake Shack opened 16 company-operated Shacks during the quarter, up 23.1% from 13 openings in the prior-year period. This marked the company’s strongest second-quarter development performance on record and brought year-to-date company-operated openings to 33.The company opened 11 licensed Shacks, up 22.2% from nine a year earlier, and closed three locations. This resulted in eight net licensed additions.The system-wide Shack count increased 15.2% year over year to 703 from 610. Licensing sales rose 7.6% to $222.4 million from $206.7 million, supported by U.S. airports, Canada, the United Kingdom and parts of China.Continued conflict in the Middle East pressured the United Arab Emirates, historically Shake Shack’s highest-volume market in the region. The company maintained its target of 60-65 company-operated openings and 40-45 licensed openings in fiscal 2026. Shake Shack ended the quarter with $308 million in cash and cash equivalents, down 8.6% from $336.8 million a year earlier. Net cash provided by operating activities for the first half declined 32% year over year to $65.5 million.Management maintained its full-year outlook but expects adjusted EBITDA and net income to finish at the low end of their respective guidance ranges. Beef inflation, tougher comparisons and competitive intensity are expected to remain headwinds in the second half.For 2026, Shake Shack expects total revenues of $1.6 billion to $1.7 billion and licensing revenues of $57 million to $59 million. Same-Shack sales are projected to increase in the low-single-digit percentage range from 2025.The company expects a restaurant-level profit margin of 22% to 23%. General and administrative expenses are projected at 12% to 13% of total revenues. Depreciation and amortization expenses are forecast between $124 million and $128 million. Preopening costs are expected in the range of $26 million to $28 million.Shake Shack projects net income of $45 million to $55 million and adjusted EBITDA of $225 million to $235 million. Management expects both measures to finish at the low end of their respective guidance ranges. The adjusted pro forma tax rate is projected between 25% and 27%. In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -7.33% due to these changes. At this time, Shake Shack has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Shake Shack has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Shake Shack belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Yum Brands (YUM), has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Yum reported revenues of $2.17 billion in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $1.62 for the same period compares with $1.44 a year ago. Yum is expected to post earnings of $1.55 per share for the current quarter, representing a year-over-year change of -1.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Yum. Also, the stock has a VGM Score of F. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Shake Shack, Inc. (SHAK) : Free Stock Analysis Report Yum! Brands, Inc. (YUM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Shake Shack stock has pulled back over the past year, yet the valuation checks currently point to a market price that sits above what cash flow and earnings based models imply. For investors, the key question with Shake Shack now is whether that premium can be justified by future business performance or whether expectations have run ahead of what the company is currently delivering. Over the past 12 months, Shake Shack shares have fallen about 36%, which means anyone looking at the stock today is seeing it after a sizeable reset in the share price. Future growth in restaurant level profitability and cash generation can support the current share price, while any disappointment in margins or store level returns may put pressure on an already full valuation. Across a broader set of checks, including a Discounted Cash Flow (DCF) intrinsic value estimate that sits about 15% below the current price and market based multiples that also screen as rich, Shake Shack does not screen as a clear bargain, and the company is assessed as undervalued in 0 of 6 valuation checks. The issue now is whether Shake Shack's current share price leaves enough margin for error if the business delivers more measured progress rather than faster improvement in cash flows. Spot potential alternatives if Shake Shack's valuation feels stretched by scanning 50 high quality undervalued stocks with stronger pricing signals. The Discounted Cash Flow (DCF) approach estimates what Shake Shack might be worth based on the cash it is expected to generate for shareholders. For Shake Shack, the model uses a latest twelve month free cash flow of about $8.5 million in US$, then assumes that cash generation grows over time rather than staying flat or shrinking. On those assumptions, the 2 Stage Free Cash Flow to Equity model points to an intrinsic value of about $58.78 per share. That is roughly 15% below the current share price, which suggests the market is already pricing in a healthy recovery in cash flows and little room for weaker execution or slower improvement. On this DCF view, Shake Shack stock currently screens as overvalued relative to its projected cash flows. Our Discounted Cash Flow (DCF) analysis suggests Shake Shack may be overvalued by 15.0%. Discover 50 high quality undervalued stocks or create your own screener to find better value opportunities. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Shake Shack. The P/E ratio is a useful way to see what you are paying for each dollar of Shake Shack earnings. On this metric, Shake Shack trades on about 68.8x earnings, which is well above the Hospitality industry average of roughly 22.3x and also above the peer group average of about 18.7x. A fair P/E ratio that adjusts for Shake Shack size, risk profile and other fundamentals sits closer to 24.3x. That is less than half of the current multiple, which indicates that the market is putting a high price on the company relative to its recent earnings base. If you are comfortable with that premium, you are effectively accepting less room for earnings setbacks before the valuation starts to look stretched. On the P/E view, Shake Shack stock currently appears overvalued compared with both tailored fair value estimates and sector benchmarks. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the Shake Shack valuation puzzle above leaves off. They spell out which assumptions about Shake Shack's future growth, margins and earnings would need to hold for the stock to be worth materially more or less than today, and they sit on Simply Wall St's Community page. Each narrative links its number to a clear view on how growth, profitability and risks might evolve, which you can revisit as fresh information comes through. Community views on Shake Shack pull in very different directions, with one camp focused on margin recovery and growth potential while the other leans into cost and demand risks. Bull case: 15% undervalued Read the full Bull Case to see why Shake Shack could be undervalued Bear case: 13% overvalued Read the full Bear Case to see why Shake Shack could be overvalued Do you think there's more to the story for Shake Shack? Head over to our Community to see what others are saying! For Shake Shack, both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings multiple view point to an overvalued stock today. The DCF work suggests the current price already bakes in more optimistic cash flow progress, while the high P/E ratio leans heavily on sustained earnings momentum to hold up. With the broader valuation checks also screening as weak, the key question for you is whether future margin and cash flow gains can be strong and consistent enough to justify paying this kind of premium now. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SHAK. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Shake Shack stock has had a weak year, with the share price down 30% over the last 12 months, yet the main valuation checks indicate the stock is trading at a premium rather than at a discount. Both the Discounted Cash Flow (DCF) estimate of intrinsic value and the market multiple view point to Shake Shack looking expensive at the recent price of US$74.84. The 30% share price decline over the past year means recent buyers face a loss, which makes the current premium pricing more important to understand. Recent revenue growth supported by new restaurant openings and steady same store sales may support expectations for future cash flow, while pressure on margins from high beef costs can limit how much value ultimately reaches shareholders. On Simply Wall St’s broader checklist, Shake Shack does not screen as a bargain, scoring 0 out of 6 valuation checks on the valuation summary. The issue now is whether Shake Shack’s current price still leaves enough room compared with its intrinsic value estimates for new investors to feel comfortable paying this kind of premium. Find out why Shake Shack's -30.0% return over the last year is lagging behind its peers. The Discounted Cash Flow model looks at the cash Shake Shack can generate for shareholders over time and discounts it back to today. Shake Shack is working from a relatively small base, with latest twelve month free cash flow of about $8.5 million, yet the model assumes growing cash flows over the coming decade. On those projections, the 2 Stage Free Cash Flow to Equity model arrives at an estimated intrinsic value of about $58.88 per share. That compares with the recent share price of $74.84, which implies the stock trades at roughly a 27.1% premium to this intrinsic value estimate and, based on this model, appears overvalued using this method. The recent Q2 2026 report, which highlighted continued expansion and higher revenue alongside beef cost pressure on margins, helps explain why cash flow expectations improve without fully aligning with the current share price. On this Discounted Cash Flow view, Shake Shack stock currently appears overvalued relative to its projected cash generation. Our Discounted Cash Flow (DCF) analysis suggests Shake Shack may be overvalued by 27.1%. Discover 52 high quality undervalued stocks or create your own screener to find better value opportunities. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Shake Shack. The P/E ratio is a useful way to think about what you are paying today for each dollar of Shake Shack earnings. On this measure, Shake Shack trades at about 76.1x earnings, which is far above the Hospitality industry average of roughly 23.6x and also above the broader peer average of about 20.9x. The fair P/E ratio implied by Simply Wall St’s model is around 25.5x. This reflects what investors might usually pay for a company with Shake Shack’s sector, size and risk profile. Compared with the current 76.1x, this indicates the stock is pricing in a much richer earnings valuation than that model supports and screens as overvalued on this multiple. On the P/E approach, Shake Shack stock looks overvalued because the current earnings multiple sits well above both industry norms and the model’s fair ratio estimate. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Shake Shack pick up where the valuation puzzle leaves off and spell out what would need to happen with Shake Shack's growth, margins and earnings for the stock to be worth meaningfully more or less than today’s price. Rather than focusing on a single multiple or model output, each Narrative lays out the assumptions behind its view of fair value so you can compare them with the actual results as they are reported on the Community page. The community is split on Shake Shack, with one side focused on margin recovery and growth potential and the other fixated on cost pressure and execution risk. Bull case: 6% undervalued Read the full Bull Case to see why Shake Shack could be undervalued Bear case: 25% overvalued Read the full Bear Case to see why Shake Shack could be overvalued Do you think there's more to the story for Shake Shack? Head over to our Community to see what others are saying! Both the Discounted Cash Flow (DCF) estimate and the P/E multiple view indicate that Shake Shack stock appears overvalued at current levels. The intrinsic value model is below the market price, and the earnings multiple is well above sector averages. Broader valuation checks also suggest limited value support. For you, the key question is whether margin improvement and execution on growth plans can be strong enough to eventually justify paying this kind of premium. That margin path, particularly given beef cost pressure, is what really separates the bullish and bearish views on Shake Shack from here. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SHAK. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Shake Shack delivered a quarter that was well received by the market, with management pointing to sustained sales momentum and expanding digital engagement as the primary drivers. CEO Rob Lynch highlighted four consecutive quarters of positive traffic growth, attributing this to investments in menu innovation and targeted marketing. Lynch emphasized the ongoing success of Shake Shack’s app and delivery channels, which posted nearly 30% year-over-year growth in app sales, and noted that promotional activity was carefully managed to drive incremental demand while preserving the brand’s premium positioning. Is now the time to buy SHAK? Find out in our full research report (it’s free). Revenue: $417.6 million vs analyst estimates of $416.3 million (17.2% year-on-year growth, in line) Adjusted EPS: $0.43 vs analyst estimates of $0.30 (41.7% beat) Adjusted EBITDA: $61.2 million vs analyst estimates of $58.26 million (14.7% margin, 5% beat) Operating Margin: 5%, down from 6.3% in the same quarter last year Locations: 703 at quarter end, up from 610 in the same quarter last year Same-Store Sales rose 3.5% year on year (1.8% in the same quarter last year) Market Capitalization: $2.9 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Sharon Zackfia (William Blair) asked how Shake Shack plans to sustain positive traffic and evolve its marketing strategy as it laps prior promotional activity. CEO Rob Lynch explained that the company will maintain its focus on menu innovation and digital engagement, emphasizing the resilience of its premium brand. Brian Vaccaro (Raymond James) inquired about which channels are seeing the most traction from promotions and how price changes have affected digital offers. Lynch responded that most incentives are targeted through digital channels, particularly the app and delivery, to maximize traffic growth while minimizing cannibalization. Michael Tamas (Oppenheimer & Co.) questioned the company’s confidence in maintaining momentum as it faces tougher comparisons and increased competition from value-oriented burger chains. Lynch said that Shake Shack’s model is designed to withstand deep discounting and that ongoing innovation and targeted marketing will support continued growth. Stephen McManus (BNP Paribas) asked about the rationale for the Big Shack’s return and its pricing strategy. Lynch explained that the Big Shack was reintroduced due to guest demand, and its price point now aligns more closely with other premium offerings to reduce margin dilution. Lauren Silberman (Deutsche Bank) sought clarity on the cadence of comparable sales through the quarter and whether there was any deceleration exiting Q2. Both Lynch and Hook confirmed that comps accelerated in June, enhanced by World Cup-related promotions, and denied a slowdown at quarter end. As we look ahead, the StockStory team will be closely monitoring (1) the impact of persistent beef and operating cost pressures on margins, (2) the rollout and early results of Shake Shack’s loyalty platform and digital engagement initiatives, and (3) the performance of new menu offerings and expansion into existing and new markets. Continued progress on unit economics and the ability to maintain traffic growth amid a competitive landscape will also be key signposts. Shake Shack currently trades at $71.51, up from $66.22 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 8:00 a.m. ET Head of Investor Relations - Alison Sternberg Chief Executive Officer - Robert Lynch Chief Financial Officer - Michelle Hook Operator: Good morning. Welcome to Shake Shack's Second Quarter 2026 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to Alison. You may begin. Alison Sternberg: Thank you, operator, and good morning, everyone. Joining me for Shake Shack's conference call is our CEO, Rob Lynch, and our CFO, Michelle Hook. 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 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. 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 26, 2026, or other quarterly reports on Form 10-Q and our other SEC filings. 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 second quarter 2026 shareholder letter and our Q2 quarterly report on Form 10-Q, which can be found at investor.shakeshack.com in the Quarterly Results section and as an exhibit to our 8-K for the quarter. I will now turn the call over to Rob. Robert Lynch: Good morning, everyone, and thank you for joining us. Our second quarter results reflect a business that continues to execute across sales, development and profitability despite operating in one of the most challenging cost environments we have faced in many years. While we still have a lot of work to do, I'm encouraged by our performance in the quarter and the resilience of the Shake Shack model. We remain laser-focused on executing our strategic priorities throughout the remainder of the year. The quarter unfolded largely as we anticipated following the business update we provided in early June. At that time, we revised our second quarter and full year outlook to reflect several developments that emerged during the quarter, including record high beef prices, higher fuel and distribution costs and uncertainty surrounding the potential impact from the World Cup. Today's results are consistent with that updated outlook and importantly, reflect our deliberate focus on guest value, traffic generation and long-term brand health. Turning to sales performance. We continue to see encouraging momentum across the business. Our teams delivered another quarter of positive traffic growth, marking four consecutive quarters of positive traffic and extending our streak of positive comparable sales growth to 22 consecutive quarters. For the second quarter, Same-Shack sales grew 3.5%, including positive traffic of 2.0%. Comp sales, excluding any World Cup impact, landed within the range contemplated in our June update. These results reflect our ongoing investments across culinary innovation, targeted marketing and digital engagement, designed to drive guest acquisition and frequency. We continue to refine our paid media strategy to broaden awareness of the brand while also maintaining disciplined returns on our marketing spend. We will continue to make these investments to drive traffic growth in a challenging consumer sentiment environment. Our marketing strategy remains disciplined, not reliant on broad-based discounting. Promotional investments are targeted by channel, whether through our app or digital ecosystem, with the goal of driving incremental demand and long-term guest value. Our digital ecosystem continues to deliver traffic growth. Comparable app channel sales grew nearly 30% year-over-year, and these guests are visiting more often and spending more annually. Delivery partnerships are also expanding our reach in markets where we have room to build awareness and trial. And over the summer, we are able to strategically leverage these partnerships and their World Cup initiatives to drive traffic for our brand. Importantly, these channels are not just driving individual transactions. They are introducing new guests to the brand, creating lifetime value. We are building the data and capabilities to better understand guest behavior and personalized engagement opportunities at scale, which is foundational to our upcoming loyalty platform launch. In the second half of the year, we are expanding our life cycle marketing through the delivery of behavior-based communications, targeted offers and automated guest journeys designed to increase frequency, accelerate second visits and strengthen retention, all while maintaining our promotional discipline. Our 246 digital offers continue to drive app engagement and support frequency among existing guests. As I mentioned earlier, comparable app sales are up nearly 30%. Separately, our delivery channel performance improved as we continue to strategically partner with third-party providers, resulting in strong traffic gains. These channel-specific investments are designed to create value without compromising the integrity of our core menu or our premium positioning. Our strategy balances culinary innovation with digital value, widening our reach without compromising our premium positioning. Our barbecue platform illustrated by Baby Back Rib Sandwich met our expectations and resonated strongly with guests. This product line reinforced our belief that Shake Shack will continue to lead with differentiated culinary innovation that drives excitement, traffic and check growth. Looking at the second half, we're making the Big Shack a core menu item given its strong guest response. And in July, we launched a new West Coast inspired menu platform. We also brought back the Dubai Chocolate Pistachio Shake, which continues to resonate and gives us a differentiated platform for future premium shake LTOs. We are also testing new chicken offerings, building on the Korean chicken sandwiches performance and a smoked brisket platform as we continue balancing proven favorites with disciplined innovation testing. Turning to margins. This quarter's results reflect the underlying strength of our model. As we discussed in June, beef inflation accelerated throughout the quarter and peaked in June, exceeding our original expectations and driving a majority of restaurant-level margin pressure that we saw. Rather than fully offsetting those costs through pricing, we chose to preserve our value positioning and guest proposition. At the same time, our teams made real progress operationally, continuing to optimize our labor model, maximizing labor attainment and using our technology to run efficient restaurants, while enhancing the guest and team member experience. Running better operations to improve the experience in our restaurants will always be job #1. We are also continuing to pursue supply chain opportunities that maintain or improve product quality, capture more competitive pricing, drive efficiencies across our business and mitigate commodity and distribution pressures over time. Together, these efforts allowed us to deliver healthy restaurant level margins despite a backdrop of significantly elevated beef costs. On the development side, we continue to grow our footprint. During the quarter, we opened 16 new company-operated Shacks, bringing us to 33 openings year-to-date as of the end of the quarter, and we remain on track to open 60 to 65 company-operated Shacks this year, sustaining our strong development momentum. This quarter's openings were all in existing markets, reflecting the meaningful white space we continue to see across our current footprint. Our build costs remain consistent with the levels expected. Our confidence in the long-term opportunity to expand our footprint remains unchanged, and we are encouraged by the productivity of our newer Shacks as they track towards our expected cash-on-cash return targets. Our licensed business also continued to perform well despite a challenged global environment. We opened 8 net new licensed Shacks in the quarter, led by strength in U.S.A. airports and Canada. Total licensing sales grew 7.6% year-over-year to $222.4 million and licensing revenue grew 7.1% to $14.2 million. The ongoing conflict in the Middle East continued to weigh most heavily on the UAE, historically our highest volume market in the region and one that has been especially dependent on tourism, partially offset by strong performance in markets such as Canada, the United Kingdom and parts of China. Our license pipeline remains on track to deliver 40 to 45 new Shacks this year. Before I conclude, I would like to briefly touch on technology and our long-term strategic capabilities. Project Catalyst remains our foundation for scaling efficiently while improving the guest and team member experience, spanning our POS rollout, loyalty platform development and the integration of AI-enabled capabilities across the business. We are also evolving our unified data and analytics platform, bringing together operational performance and guest behavior, supporting faster, more accurate service, more personalized guest experiences and continued expansion of our AI capabilities at scale. These investments are not just technology projects. They are foundational to our growth strategy, decision-making and guest connection, which we anticipate will support our path to G&A leverage moving forward. Before turning the call over to Michelle, I want to reinforce how we are thinking about the balance of the year. We know the back half carries real headwinds, tougher comparisons, beef inflation that we expect to remain elevated, continued competitive intensity and uncertain macro environment. We remain a premium brand with a proven unit economic model, positive traffic momentum, disciplined operators and structural margin resilience that has held up through one of the toughest input cost environments that we have seen. We are focused on our ability to deliver sustainable long-term growth, and we will continue to execute against our strategic priorities throughout the remainder of the year. Finally, I would like to take a moment to welcome Michelle to our first earnings call as Chief Financial Officer. Since joining the company, Michelle has quickly established credibility across the organization. She has immersed herself in every aspect of the business, built strong relationships throughout the leadership team and finance organization and has already become a valuable contributor to our strategic and operational decision-making. We are thrilled to have Michelle on the team and excited about the leadership and perspective she brings to Shake Shack. With that, I'll turn the call over to Michelle. Michelle Hook: Thank you, Rob, and good morning, everyone. Before I get into the quarter, I want to say how thrilled I am to be here for my first earnings call at Shake Shack. Since joining, I have spent my time immersing myself in every part of this business and my enthusiasm for the opportunity ahead has only grown. What drew me to Shake Shack is clear, an iconic premium brand with a tremendous runway for growth, a proven unit economic model and a culture rooted in the enlightened hospitality that the company was built upon. Having spent the majority of my career in the restaurant industry, I have a deep appreciation for how rare this combination is, and it gives me great confidence in the future of this brand. I want to thank Rob and the entire team for the warm welcome, and I look forward to speaking with many of you in the quarters ahead. Now turning to our results. Our second quarter results reflect the underlying strength of our business despite ongoing macro and cost pressures. We are encouraged by the top line momentum we have seen with four consecutive quarters of positive traffic and our 22nd consecutive quarter of positive Same-Shack sales growth, while executing on our growth plan. On June 2, we provided a business update, revising our second quarter and full year guidance to reflect incremental information at that point in the quarter. As Rob noted, this included escalating beef prices, higher fuel and distribution costs and uncertainty surrounding the potential impact from the World Cup. Our second quarter results delivered within the revised ranges we provided. Second quarter total revenue was $417.6 million, up 17.2% year-over-year, driven primarily by the opening of new company-operated Shacks and new licensed Shacks and 3.5% Same-Shack sales growth. Licensing revenue was $14.2 million in the quarter, with licensing sales of $222.4 million, up 7.6% year-over-year. Despite continued conflict in the Middle East, we saw strong sales in U.S. airports, Canada, the United Kingdom and parts of China. In our company-operated business, we grew Shack sales 17.5% year-over-year to $403.4 million. We generated roughly $78,000 in average weekly sales flat year-over-year. We delivered 3.5% Same-Shack sales growth comprised of 2% positive traffic and 1.5% price mix. Growth was driven by strength in our app and delivery channels, as Rob discussed, plus the June boost from the World Cup. Our estimated World Cup impact is approximately 90 basis points. In-Shack menu prices for the second quarter came in at 3.7%, while blended pricing across all channels increased 4.4%. This includes approximately 1% price taken in June, continuing our track record of driving positive Same-Shack sales with less reliance on price than in prior years. Our promotional offers weighed on pricing, but were a deliberate driver for traffic gains we saw, particularly in our highest lifetime value channels. For pricing in the back half of the year, we have approximately 2% of pricing that rolls off in August and an additional 1.4% that rolls off in December. We will continue to evaluate the need for additional pricing this year as our cost structure continues to evolve. We delivered our strongest second quarter of unit growth on record with 16 new company-operated Shacks versus 13 in Q2 of last year. We are on pace towards 60 to 65 new company-operated Shacks planned for 2026. We will continue to invest in accelerating development. Our strong cash-on-cash returns are driven by low-cost builds, strong margins and our high AUVs. Second quarter restaurant level profit was $92.7 million or 23% of Shack sales. Our margins declined 90 basis points versus the prior year quarter, driven by higher food and paper costs and increased operating expenses, partially offset by the benefits from our continued labor management strategies. The higher food and paper costs in Q2 reflect the record high beef costs we discussed in our June business update. We remain disciplined in our pricing approach to offset some of our cost pressures and are focused on driving continued traffic into our Shacks. In the second quarter, food and paper costs were $116.3 million or 28.8% of Shack sales, 60 basis points higher than last year. The increase year-over-year was mainly driven by higher commodity costs, primarily beef, promotional activity during the quarter and a shift in menu mix to higher cost items. Blended food and paper inflation was up low single digits in the second quarter with beef costs up mid-teens. Through proactive procurement and cost mitigation initiatives, our teams meaningfully offset continued beef inflation. In the second half of the year, we expect continued inflation from beef to pressure our restaurant level profit. Labor and related expenses were $101.2 million, representing 25.1% of Shack sales and improving 60 basis points compared to last year, while continuing to uphold guest satisfaction metrics. By this time last year, we had fully rolled out our labor model supported by our performance scorecard, which provides Shack level visibility into labor performance. Since then, we have continued to refine our labor management approach, helping drive the efficiencies we achieved this quarter. Other operating expenses were $63.1 million or 15.6% of Shack sales, 80 basis points higher versus last year, primarily driven by increased delivery commissions as we continue to leverage that channel to expand our reach, build awareness and grow engagement. Our digital sales mix increased to nearly 41% in the second quarter. The year-over-year increase also reflects higher professional service fees as well as travel and training costs associated with our elevated pace of new Shack openings. Occupancy and related expenses were $30.2 million or 7.5% of Shack sales, flat year-over-year. Second quarter G&A totaled $48.3 million or 11.6% of total revenue. While our marketing plan for 2026 is more evenly distributed across the year, in Q2, we realized favorability versus Q1, primarily from lower equity-based compensation related to performance-based awards and forfeitures as well as lower short-term incentives. We continue to expect total G&A to fall within our guidance of 12% to 13% for the year. Our marketing spend in 2026 across G&A and restaurant-level profit is expected to remain in the 2% to 3% range of total revenue. Equity-based compensation was $3.9 million, 24.7% lower year-over-year with $3.2 million hitting G&A. Preopening costs were $6.6 million, which was $1.7 million or 34% higher than the prior year, driven by the increased number of new Shacks opened during the quarter and our growing pipeline to support future growth. Adjusted EBITDA of $61.2 million or 14.7% of revenue increased 3.9% year-over-year, resulting primarily from higher restaurant level profit, partially offset by higher G&A and preopening expenses. Depreciation was $30.7 million. The increase in depreciation year-over-year is a result of more new company-operated openings, coupled with new technology investments. Net income attributable to Shake Shack, Inc. was $15.7 million, a decrease of $1.5 million or 8.6% versus prior year quarter. Our GAAP tax rate was 25.9% and our adjusted pro forma tax rate, excluding the tax impact of equity-based compensation, was 25%. We ended the quarter with $308 million in cash and cash equivalents on the balance sheet, including $250 million in convertible notes outstanding and have full availability under our revolving credit facility, leaving us well capitalized to fund our growth. Before we discuss our outlook, I want to share a change to our guidance practice going forward. After reviewing our approach relative to the broader restaurant industry, we have made the decision to move away from providing quarterly guidance while continuing to provide annual guidance. We believe an annual outlook better reflects how we manage the business for the long term, aligns us with best-in-class practices across our industry and keeps the focus on the multiyear value we are building rather than quarter-to-quarter volatility. We remain committed to transparency, and we'll continue to provide meaningful color on the trends we are seeing as we move throughout the year. For the full year 2026, our current outlook assumes no adjustments for our previously disclosed full year guidance. However, we do expect the back half of the year to look different from the first half with tougher comparisons and beef inflation that we expect to remain elevated above prior year levels. Given the continued headwinds in our cost structure, we do expect our adjusted EBITDA and net income to be at the low end of our ranges. We remain encouraged by the momentum in the business, a strong pipeline that's delivering returns, a robust innovation calendar, maturing marketing efficiency and our loyalty platform and Project Catalyst both progressing on schedule, and we remain focused on the long-term value that we are building. Thank you for your time. And with that, I'll turn it back to Rob. Robert Lynch: Thank you, Michelle. I want to thank our teams again for their hard work and passion for Shake Shack, which is the engine behind our ability to achieve our long-term goals. Thank you to everyone on the call today and for your interest in our company. And with that, operator, please open up the call for questions. Operator: [Operator Instructions] Our first question is from Sharon Zackfia with William Blair. Sharon Zackfia: Rob, I think a lot of investors are wondering about the strategy as we enter the second half of the year. Clearly, some of the work you've done on menu innovation and marketing really resonated over the past year. We're starting to lap that now you alluded to some of this in your prepared comments. How do we think about your strategy kind of evolving as we move forward, particularly in marketing? And how do you frame kind of your ability to sustain positive traffic over the longer term? Robert Lynch: Thanks for the question, Sharon. We continue to believe that delivering delicious premium quality burgers, fries and shakes with unwavering hospitality is the way that we will continue to thrive. I mean this is four straight quarters since we started investing marketing at scale, where we've delivered positive traffic growth in a tough traffic environment in the industry. So our strategy really isn't going to change. We're going to continue to bring great menu innovation that reinforces the premium nature of our food and our brand. We have stayed totally committed despite a lot of cost pressure to the quality of the ingredients. And we've stayed -- we've professionalized a lot of our operations so that we can make sure that we're delivering the best hospitality -- the best hospitable experience in the industry. So that's all going to stay in place. And we're balancing that with the right strategies, specific strategies and value orientation in each of the channels in which we compete. So we have a lot of continued momentum in our app despite going from 135 to 246. We continue to grow our digital components of our business. And we're going to continue opening great new Shacks that bring in a lot of new customers. And 17% revenue growth, the vast majority of that is new Shack growth. And every time we open up a new Shack and we're able to maintain our high AUV, that means that we are growing guests into the Shake Shack brand. So we feel great about the momentum on the business despite some of these challenges that we have continued to persevere through in 2026. So back half is going to be a lot more of the same, but we're going to continue to get better at execution and continue to improve the returns on every investment we make, whether it's technology or marketing. Sharon Zackfia: And do you have any update on the timing of loyalty? Robert Lynch: So we are still committed to the launch of loyalty in 2026. But as I've stated in the past, that -- the expectation should not be that, that's going to be a big contributor to revenue in 2026. There's going to be obviously a period where we're going to test and learn, and we're going to continue to optimize so that we can make sure that our loyalty platform is not just a points-based discounting program. It is really a representation of our commitment to enlightened hospitality across our digital platforms. Operator: Our next question is from Brian Vaccaro with Raymond James. Brian Vaccaro: Rob, I've got kind of a similar follow-up as Sharon there to start. But you obviously continue to see strong growth in digital, and you noted some successful promotions in the period. Can you provide a little more color on where you're seeing the most traction on some of those promotions, whether it be in-Shack or in delivery channels? And maybe touch on how the 246 is performing after raising the price there? Robert Lynch: Yes. I mean we're continuing to strike the right balance between traffic growth and margin maintenance as we continue to move through these headwinds that we're facing on the cost side. So the ability to deliver 23% restaurant margins while continuing to invest in incentives that drive new guests and increase our frequency is really working for us, and we're going to continue to do that. And the majority of our incentives are deployed across our digital footprint, both in the delivery channel as well as in our app, less so in our kiosks and in-Shack. So that's really worked for us. It provides us with traffic growth with minimized cannibalization. So that's going to continue to be our strategy. In regards to the LTOs and the culinary promotions, we're seeing demand across every channel. It's obviously something that we want to make sure shows up with the hospitality in-Shack, but we also are seeing a high rate of guest satisfaction when we're delivering both our LTOs and our core menu through our digital platforms. Brian Vaccaro: All right. That's helpful. And then a quick follow-up. Michelle, just a question on the store margins. Can you provide more color on some of the moving pieces within your second half outlook? Maybe just what are you expecting in terms of commodity inflation, sources of leverage, maybe labor, there might be some leverage, but offsets maybe in the other OpEx line. Can you just kind of walk us through that second half after, obviously, the second half margins were down, followed by up margins in Q1. Just curious if you could provide more color there. Michelle Hook: Yes. No problem, Brian. So we definitely saw the pronounced beef inflation in the first half. We're still going to see inflation in the back half in beef year-over-year, but it's going to -- it will be a little bit less pronounced, but we do expect that to continue to pressure the P&L when you look at year-over-year. I think from a labor standpoint, I think we've talked about the efficiencies that we drove over the last 18-plus months. And so we continue to get as efficient as we can, but I don't look at labor as a significant margin benefit as we move forward. But again, we're always looking for opportunities to continue to refine our labor strategies. But I think we will continue to see a little bit of pressure on the commodity side, labor up a little bit when you look at the low single-digit labor inflation that we saw in the first half of the year. I expect that, that's going to continue at the same clip in the back half of the year. But yes, we still expect to have pressures in both the food area as well as I mentioned, operating expenses, Brian, on the broader call, we expect that to still be a little bit of pressure as well. Operator: Our next question is from Michael Tamas with Oppenheimer & Company. Michael Tamas: Your second quarter same-store sales were pretty solid, considering everything that went down during the quarter, I mean, mid-2% comp when you take out the World Cup benefit, you talked about solid momentum in the business. So as you mentioned and as we can all see, your comparisons do tough in the back half of the year. So can you maybe help us understand how you're thinking about the shape of the rest of the year? Maybe touch on the confidence you have in those strategies as it seems like some of your burger peers may be getting more aggressive on the value side. Robert Lynch: Yes. I mean I think our burger peers have been aggressive for the last 18 months. We've battled up against some really deep discounting, $5 meal deals and what have you. So we feel like our business model has been able to be resilient in the face of some of that competitive activity. As I've mentioned in the past, our footprint insulates us a little bit from the segments of the marketplace that have decreased their spending the most. We're a premium positioned brand. And so we have been able to deliver the right types of incentives and promotions to our target guests and still drive traffic despite a lot of that competitive activity. So as I look to the back half of the year, we're going to continue to launch great new culinary innovation. We're going to continue to get even better at executing against our marketing initiatives. And the fact that we're lapping in Q3, we're already lapping the onset of kind of our $1 drink promotion last year in our app, which was our first big scaled price pointed promotion, and we're encouraged by what we're seeing there to date. So we feel confident that we're going to be able to continue to focus on driving traffic with the right promotions and the right incentives, while maintaining restaurant margins despite some of the cost headwinds. Michael Tamas: And then my follow-up is on the 3-year targets through 2027 that were not in this quarter's press release. You hinted that those were under review before. So can you just help us understand maybe how you're thinking about that outlook, particularly like the prior goals for at least 50 basis points of restaurant margin expansion and that low teens unit growth? Michelle Hook: Yes, absolutely, Michael. And so we're continuing to review those long-term targets. As you know, that guidance is out there -- has been out there for the time period of 2025 to 2027. So as we go into our planning process for 2027, we're going to look at those targets. And any updates that we have, we'll provide those to you. But for now, there's no updates to that as we sit here today. But again, as we said before, we're going to continue to assess those and review those as part of the process moving into next year. Operator: Our next question is from Margaret-May Binshtok with Wolfe Research. Margaret-May Binshtok: I just wanted to ask, I know you guys mentioned just being a little bit more insulated from the broader QSR environment, but are you seeing anything to call out in terms of either frequency or check management between the different income cohorts? And then I just wanted to follow up as well on the Good Fit Menu. Are you guys seeing any -- you've been out for a while now, like strong uptick. And are you seeing that kind of helping you navigate the uptick in GLP-1s that we're seeing out there? Robert Lynch: Yes. I would tell you that the growth of our digital channels, particularly our app has definitely improved our frequency. We have -- our team has done a really good job of delivering targeted incentives to bring our guests back more often and making sure that we're delivering a great value equation on our premium items. So our frequency has been really healthy, has been a contributor to our traffic growth, and we expect that to continue, and we expect that to get even better as we optimize our loyalty platform heading into 2027. In terms of the Good Fit Menu, we've been able to sustain that business. We haven't made a huge marketing push on the Good Fit Menu. We've been focused on barbecue and Korean so far this year, but that's definitely a great option for us to make sure that we can deliver lower calorie options with a lot of high-quality protein, which is what a lot of those -- the guests who look for those options. We feel like we can deliver them as well as anybody. Operator: Our next question is from Steve McManus with BNP Paribas. Stephen McManus: So on the innovation calendar, it looks like Big checks Shack's back. Can you just walk us through the rationale? How do we think about like the potential cannibalization? And how will that be priced just given the check drag when it was previously at $9.99? Robert Lynch: Yes. So Big Shack is already back. It's on the menu, and we did decide to price it more consistent with our doubles. If you recall back in Q4 of last year, we were excited about launching a great value at a $10 Big Shack burger with 8 ounces of high-quality beef. We did see some cannibalization of our doubles business, which was a bit revenue and margin dilutive. So we have priced it more consistently with our Doubles platform. We still anticipate getting some trade-up from singles, but now when people trade over from doubles or other premium burgers, we won't see as much revenue or margin dilution. And the reason why we brought it back is because guests were -- it was in high demand. Guests were asking for it. We were -- we're very attentive to listening to guest requests and guest feedback on our social and guest response channels, and that was one of the items that folks were really excited about us bringing back. So we decided to do that. Stephen McManus: Got it. And I had a follow-up. Looking at the regional comps, the New York market was flat kind of in line with last quarter. I would have expected some uplift from the World Cup. So should we interpret that as like underlying trends in the market are deteriorating or compares anything on that front would be helpful. Robert Lynch: Yes, I wouldn't say they're deteriorating. I mean even when you take out the World Cup benefit, kind of the run rate has improved year-over-year in New York City. It's still not a significant driver of the growth on the business, as you would expect, it's a more mature market with a lot of competitors coming into metro New York area. But we're excited about the restaurants there. As I've said in the past, they're not huge comp growth restaurants, but they are huge restaurants. I mean a large number of our highest AUV -- highest sales restaurants are located in this market, and they deliver both high revenue and high margin. So they're great restaurants. We'll continue to support. We even continue to develop here when we find great real estate that we think makes sense and minimizes cannibalization. But the comp growth is coming from other markets where we have not been there quite as long. And we have lower AUVs in every other market. And so there's just more upside potential on a comp basis and in places like Florida and Texas and the Southeast and even in California, where we've seen a lot of strong growth over the last six months. So New York will always be super important to us and deliver a lot of strategic value even if it's not growing at the comp rate that the balance of our newer markets are growing at. Operator: Our next question is from Gregory Francfort with Guggenheim Securities. Gregory Francfort: I just maybe want to touch on unit growth. I know you guys are going through the long-term planning process. But -- and I don't know if the question is for Rob or Michelle, but just as you kind of take a look at new store productivity this year and just returns, I think you spoke pretty confidently in the prepared remarks, but do you think unit growth needs to come down at all as you look in the process? Robert Lynch: Yes. I don't think it needs to come down. In fact, we have every intention of maintaining kind of the rate of growth, which will imply even a higher number of units on an ever-growing base. We've been really happy with our development. I mean if you're a long-term investor and you're underwriting this business, that's the biggest value creation opportunity. Obviously, comps are really important, and we're really proud of our comps. But we are getting a great return on our invested capital from our new units. And we delivered 16 this quarter. It's the highest Q2 number. Last quarter was 17, which was by far the highest Q1 number. So we are really committed to delivering the 60 to 65 this year and anticipate that number continuing to grow in 2027. Michelle Hook: Yes. And Greg, I'll just add on. We're happy with the returns that we're generating with our new -- recent new classes of Shacks, over 30% cash-on-cash returns. And when we talk about assessing the long-term guidance, just to be clear, getting back to the point we made earlier, it's not as much the unit growth. So right now, we're saying in the long-term guidance, unit growth is going to be in the low teens with low teens revenue growth. So that's not the issue with the long-term guidance. It's more the assessment of the restaurant level margins and growing that by 50 basis points a year. So to Rob's point, to be clear, we're happy with the returns that we're generating on the new units. And there's no anticipation that as part of that long-term algorithm that, that's going to change the growth that we've talked about historically or the growth that we plan to do moving forward. Robert Lynch: Yes. And I would also say something we don't talk about very often that I'm excited about is the performance of our license business and the units that aren't company-owned. Obviously, this is a challenging year with some of the dynamics in the global environment, and we anticipated having a bit more of a holistic challenging year on our license business, but we've seen so much success in some of these markets. I would call out Canada -- the performance of our partners there has just been amazing as they open up great Shacks with great operations. So I definitely see the license business also becoming an EBITDA, not as much a revenue growth, obviously, as our core business, but definitely becoming kind of an EBITDA growth accelerator as we continue to increase the number of licensed units in markets that we open up globally. Operator: Our next question is from Lauren Silberman with Deutsche Bank. Lauren Silberman: I guess this is on the comp side. Can you talk about the cadence of comps as you move through the quarter? And I know you guys want to move away from quarter-to-date commentary, and I understand, but there's concern amongst the investment community that the business materially slowed exiting the quarter into July. So can you just help like level set qualitatively even whether you see changes in consumer behavior or momentum? Robert Lynch: Yes. So I mean, I can speak directly to Q2. I mean I think everyone is aware that April was a minus 0.6% on comp. So we delivered 3.5%. So that -- whatever that assessment is of a decelerating comp is actually completely inaccurate. I don't know where that data is coming from. We saw June is our best period in the quarter. So we had just the opposite, accelerating comps. And now as we disclosed in our comments in the script, we had -- definitely had some tailwind from the World Cup, which we called out as something that was an opportunity for us early on in the quarter. In fact, when we delivered the May earnings -- May 7 earnings, we called that out. And so we had really strong acceleration throughout the quarter. And we're not obviously giving in-quarter updates at this point. But I can tell you that we're -- that in Q3, we're also continuing to work on all the things that drove the strong Q2 results that we delivered. Michelle Hook: And Lauren, the only thing I'd add is even when you take out the World Cup benefit in June, to Rob's point, June would have been the highest comp period within Q2 even when you pull out World Cup. So the idea that we decelerated exiting the quarter to Rob's point, is not correct. Lauren Silberman: Great. I appreciate that color. And then if I could just touch on like the menu innovation. And can you just talk about the performance of the new menu innovation items relative to expectations, whether it's bringing in new guests, driving incremental transactions with existing guests? And do you see similar performance across markets? Robert Lynch: Yes. I wouldn't say that we have a huge disparity across markets on the mix that LTOs and innovation represents. It's relatively consistent. And obviously, you have some markets that perform a little bit better and some maybe a little bit worse. But on the whole, we don't really talk about a big disparity and the pickup on the innovation. And I can tell you that the innovation that we had last quarter around the barbecue menu, I mean, we started off extremely strong on the Baby Back Rib sandwich. And we had some concerns around our ability to even supply Baby Back Rib throughout the planned period. And we were able to meet those demands and meet our expectations on the performance of that LTO. And our LTOs, it depends on what the strategic intention is behind the LTO, right? We have LTOs that we launch. Mac & Cheese is one where -- it's not going to be a traffic driver, maybe a frequency driver long term as we have a lot of guests who love it, but it really is a check builder. And when we launched $13.99 Barbecue Baby Back Rib sandwich, that's going to drive some initial traffic and trial, but it's also a check builder. Those super premium LTOs are definitely -- there's intentionality around trading guests up from either single or double cheeseburgers into those LTOs. So every innovation that we have, the true goal is just to deliver guest satisfaction. The financial goals, whether it be traffic or check will be driven by the strategic intention of that specific LTO. Operator: Our next question is from Jim Sanderson with Northcoast Research. James Sanderson: I wanted to go back to your comment about life cycle marketing. If you could provide a little bit more color on how that's going to be used, if that includes pricing and discounts, and how that's going to roll out in the second half? And then I have a quick follow-up on adjusted EBITDA forecast. Robert Lynch: Yes. The life cycle marketing is really around kind of just how we're managing our relationships with our guests, right? We have had a lot of new guest acquisition. We've also had a pretty significant increase in frequency. And so as we grow our digital channels disproportionately and as we build the data analytics capabilities that are going to support our loyalty platform, we're going to be able to leverage those capabilities in an even bigger way to make sure that we are driving frequency. We want to -- we're grounded in enlightened hospitality. We believe that when folks come to our Shacks, they're going to get a fast casual experience that they really can't get anywhere else. We aspire to deliver that in our digital channels as well and know our guests better than anybody and be able to deliver the right incentives at the right times to trigger the highest level of response, which will bring our guests back more and drive frequency ongoing. James Sanderson: All right. And I just had a quick follow-up on your EBITDA guidance. I think you went to the lower range of the $225 million to $235 million, and that was back in June. So what's changed to get you more comfortable with the lower range of the $225 million to $235 million since June? Robert Lynch: Yes. I mean I think that stayed consistent. It's still the low range of $225 million to $235 million. And once again, that we're opening up the number of restaurants that we want to open up. We're seeing the results that we want with those restaurants. And when you look at the first half of the year, first 6 months, about a 4% comp. That's actually better than we thought we were going to do in the first half of the year. So the revenue generation on this business is as good or better than we had anticipated. The challenge, obviously, is the cost structure that we didn't anticipate. We had seen some relief in beef at this point in the year, which -- we forecasted relief in beef at this point in the year, which we have not realized. We also have seen higher utility and distribution costs as a function of the cost of energy. So some of those cost inputs have driven some of the EBITDA and margin discussions that we've had. So very confident, very excited about our revenues, just trying to be very transparent and very -- and transparent on the cost side of the business. Operator: Our next question is from Sara Senatore with Bank of America. Sara Senatore: I wanted to ask about the digital sales mix. You mentioned, I think, 41%. I'm not sure if you have or if you could share kind of app-based sales, but maybe directionally, what share of the total they account for? And I guess I asked because you said comparable app sales were up 30%. So I'm just trying to understand kind of what they might have contributed, in particular, the incrementality. I understand that those are high lifetime value channels and you get higher frequency there. But as I think about kind of the app-based sales and maybe having a little bit more of those attractive price points associated with them, thinking about, again, the sort of incrementality from a sales and margin perspective. And then I do have a quick follow-up, please. Michelle Hook: Yes. When you think about our channel mix, Sara, so the digital channels include delivery, app and web. And so app is just over -- our total channel mix. It's going to be just over 10% of our total channel mix. So that should give you a sense of how that mix is in. But just -- again, our digital channels are going to be delivery app and web, but app is just over 10% of our channel mix. Robert Lynch: Yes. And I can tell you, from an incrementality standpoint, that is the largest driver of frequency and new guest acquisition. So that's where we are seeing a lot of the growth in the traffic is coming from the app channel. So that is highly incremental to our core business and our run rate of our base business. Michelle Hook: And it's also our fastest-growing channel presently. So to Rob's point, the frequency there is higher than any other channel. Sara Senatore: Okay. Got it. And then the follow-up is just as you think about the margin pressure, obviously, beef was some of it, but you've done, I think, a good job of offsetting that with supply chain. I think the bigger piece maybe is some of these sharp price points. I mean mix was pretty negative, I think, in the quarter. Do you envision kind of lapping that as you maybe -- as you anniversary some of the app-based value menu? I guess, is there a scenario where a quarter or two from now, some of that pressure moderates on the mix and the COGS perspective? Robert Lynch: Yes. I mean we're already lapping some of those initiatives from last year. So when you look at the things that we are lapping and the question marks around the ability to comp the comp and lap these things, I mean, we're lapping the labor model change that we made in 2025. And so we've continued to be able to drive more productivity with better execution. The model isn't changing. We're just getting better at executing it. I would say that, that is the same model that we aspire to on the revenue side. We are -- we learn every day how to get better at delivering incentives, that deliver traffic growth with less margin dilution or cannibalization of other sales items. So we look at the back half of this year as an opportunity to continue to leverage app even though we're lapping it. And then obviously, as we look to 2027, the loyalty platform should give us a whole another -- an entirely additional tool for us to get even better at delivering targeted incentives that allow us to drive the rate of traffic growth that we aspire to with less mix degradation. Operator: Our next question is from Andrew Charles with TD Cowen. Andrew Charles: Michelle, you left the door open to future price increases in 2026. And I'm curious what you're monitoring for around potential contemplation of future pricing. If I heard you right, you believe that beef prices have peaked, but it remain high. Labor inflation is expected to remain consistent in the back half. But any other key items that you're monitoring for on the price? Michelle Hook: Yes. Definitely, Andrew, beef as we head into July continues to be elevated in the month of July. So we're continuing to monitor that. Obviously, as we've talked at length about traffic and us continuing to focus on traffic-driving initiatives within our business, we're monitoring that as well. And as we think about future price increases, definitely taking a surgical approach to what the competition is doing, how that looks like within each of our markets and pricing tiers. So we're going to be mindful of all that, but looking at primarily the cost structure, what that's going to do and then traffic as well and what we're seeing in our different channels. So those are the two primary things we'll be monitoring. Andrew Charles: Okay. And then, Rob, you talked about digital sales up 30%. You talked about the in-app promotions. But you also mentioned there was going to be -- there was some strategic partnership with third-party providers that led to some traffic gains in the quarter. Can you talk more about that? Robert Lynch: Yes. I mean we had great strategic alignment with our delivery partners. Obviously, they have access to a huge audience, and they leverage their platforms to drive a lot of excitement around delivery and the World Cup. I mean a lot of -- when we talk about the World Cup earlier in the year, we talked about our markets and the markets that were hosting the World Cup games and the infusion of incremental traffic into those markets as a result of those games. But we also coupled that with strategic partnerships with our delivery partners so that we could leverage the World Cup excitement across all of our markets even if there weren't games being held in those markets. So it was really a holistic go-to-market strategy. And that was very beneficial. And we saw, as we already mentioned, June and into July with the World Cup, we partnered with those delivery partners to drive strong traffic growth. Operator: Our Next question is from Brian Mullan with Piper Sandler. Brian Mullan: Back to development, just wanted to get your current assessment of the go-forward drive-thru opportunity. Do you feel like that you have that format fully figured out in terms of the right layout and the right operating model, or maybe are there still a few things the team is trying to sort out with the existing assets before you really want to ramp up the drive-thru component of your development moving forward? Just would love to get your current assessment. Robert Lynch: Yes. I mean I think drive-thru presents an opportunity for us when we have great real estate that supports a great drive-thru restaurant. I would tell you strategically, we have done a lot to optimize the drive-thrus. We have significantly improved the flow in our restaurants. We've improved the ordering process. We've improved a lot at the drive-thru. The fact that we make all of our food fresh to order, it creates kind of a cap on how fast we can get. And at Shake Shack, we're about delivering premium quality food with great hospitality. And so I don't know that drive-thru is going to ever be the primary format for Shake Shack. I think there are opportunities for us to -- there's a huge amount of real estate for us to go out and build great restaurants that allow us to deliver a great digital experience and an even better in-Shack experience. And so I just want to make sure like we don't aspire to be fast food. We don't aspire to be QSR. So we will have drive-thrus or pickup windows, but that is not kind of the big strategic push for us over the next 3 to 5 years. Obviously, we can execute it. And when we find great real estate, we can do it. But we want to make sure that our enlightened hospitality comes through in the most compelling and differentiating way possible. Operator: Our next question is from Rahul Krotthapalli with JPMorgan. Rahul Krotthapalli: Rob, I wanted to ask about how you are thinking about the square footage growth relative to the overall development or unit growth. I'm trying to reconcile the comments you talked about the digital sales, which I understand includes kiosks, but even excluding that, the app and third-party channels seem to be growing a lot faster. Is there an opportunity to reduce the new build square footage and perhaps less in-store seating and more pickup and delivery areas as we go forward? Robert Lynch: I do think that, that's an opportunity. I think as we come next year, and we work to deliver our long-term strategic plan, I do think there's an opportunity for us to talk about how we can continue to grow by leveraging different formats. We just answered a question on drive-thru. I do think that there's an opportunity for us to explore some smaller formats with less seating, less build cost, potentially different labor model, even more of a streamlined menu so that we can maintain margins even if we -- those formats have lower rate of sales. So the different formats provide us access to different real estate. When we talk about our TAM of 1,500 company restaurants, that can be 1,500 core units, that can be 1,500 units of varying formats. And I think the more we prove out the different formats, the more TAM opportunity we have. So I do believe there's an opportunity for us to explore markets that might not support some of our big footprint, big Shacks that we could go into and put a smaller Shack with a different operating model that can still deliver great returns with lower cost structure and great margins. Rahul Krotthapalli: That's helpful. The follow-up is on the traffic and mix. Like as I look into -- from 1Q to 2Q and into back half, we see a dip in traffic and mix combined. How should we think about the dynamic in second half versus first half in the year? Robert Lynch: Yes. I mean the back half of last year was the first couple of quarters where we were investing to drive traffic with marketing. And so we employed a lot of different levers, and we were really successful in both quarters in leveraging different models. In Q3, we had dollar beverages only in the app. In Q4, we had 135. We also did different marketing investments in media across different channels and different markets. So there's a lot of things that happened in the back half of last year, but I believe that we are much smarter and much better at understanding how our activities impact our business than we were a year ago. So obviously, our objective is to continue to drive traffic while maintaining strong margins. And so that's -- even though we're lapping some higher comp quarters in the back half, we believe that we have the appropriate amount of investment. We have the right product innovation, to deliver -- the work to deliver strong comp growth. Now I will point to the fact that we had reiterated our single digit -- low single digits for the year. So we're not taking that guide up. We obviously recognize that we have tougher comparables in the back half, but our aspiration is to continue to drive positive traffic. Operator: Thank you. We have reached the end of our question-and-answer session. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. Before you buy stock in Shake Shack, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Shake Shack wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Shake Shack (SHAK) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Shake Shack, Inc.? Here are five stocks we like better. Strong sales growth continued: Second-quarter revenue rose 17.2% to $417.6 million, while same-Shack sales increased 3.5%, supported by positive traffic, pricing and mix. Digital sales reached nearly 41% of sales, with comparable app sales up nearly 30%. Profitability faced cost pressure: Restaurant-level margin fell 90 basis points to 23% as record beef prices, promotions, delivery commissions and other operating costs increased. Shake Shack maintained its full-year outlook but expects adjusted EBITDA and net income at the low end of guidance. Expansion remains a key growth driver: The company opened 16 company-operated locations in the quarter and reaffirmed plans for 60–65 openings in 2026, alongside 40–45 licensed openings. Management also expects a higher pace of company-operated openings in 2027. Investors Are Buying Into Sweetgreen Again—Should They? Shake Shack (NYSE:SHAK) reported second-quarter 2026 revenue growth of 17.2% as new restaurant openings, positive comparable sales and licensing gains offset pressure from elevated beef, distribution and operating costs. Total revenue rose to $417.6 million, while company-operated Shack sales increased 17.5% to $403.4 million. Same-Shack sales grew 3.5%, consisting of 2% traffic growth and 1.5% price and mix. The company estimated that World Cup-related activity contributed roughly 90 basis points to comparable sales during the quarter. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling MarketBeat Week in Review – 05/11 - 05/15 CEO Rob Lynch said the company delivered its fourth consecutive quarter of positive traffic growth and its 22nd straight quarter of positive comparable sales growth. He said Shake Shack’s approach remains focused on culinary innovation, targeted marketing and digital engagement rather than broad discounting. Digital sales represented nearly 41% of sales in the second quarter. Comparable app sales increased nearly 30% year over year, according to Lynch, while the app accounted for just over 10% of total channel mix, CFO Michelle Hook said. Management said app customers visit more frequently and spend more annually, and characterized the channel as its fastest-growing and most incremental source of traffic. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Shake Shack Stock Gets Shaken After Earnings Miss The company has used targeted offers across its app and delivery channels to drive customer acquisition and repeat visits. Lynch said incentives are concentrated in digital channels, where Shake Shack sees less cannibalization than with broader promotions. The company plans to expand lifecycle marketing in the second half through behavior-based communications, targeted offers and automated customer journeys. Shake Shack remains committed to launching its loyalty platform in 2026, though Lynch said it is not expected to be a meaningful revenue contributor this year because the company will initially test and refine the program. Management said it intends for loyalty to extend its “enlightened hospitality” strategy rather than operate solely as a points-based discount program. → No Hangover: Revisiting Microsoft One Week After Earnings On the menu, the barbecue platform featuring the Baby Back Rib Sandwich met expectations, Lynch said. The company has also made the Big Shack a core menu item after strong customer demand, though it has repriced the burger more consistently with its double-burger platform. Lynch said the prior $9.99 price point led to some trade-down from double burgers and created revenue and margin dilution. Shake Shack introduced a West Coast-inspired menu platform in July, returned the Dubai Chocolate Pistachio Shake and is testing additional chicken and smoked brisket offerings. Management said limited-time offerings can serve different objectives, including traffic generation, trial or higher average checks. Restaurant-level profit totaled $92.7 million, or 23% of Shack sales, down 90 basis points from the prior-year period. Food and paper costs rose 60 basis points to 28.8% of Shack sales, largely reflecting record-high beef prices, promotional activity and a mix shift toward higher-cost menu items. Blended food and paper inflation was in the low single digits, while beef costs rose by the mid-teens, Hook said. Labor and related expenses improved 60 basis points to 25.1% of Shack sales, aided by labor-management initiatives and operating efficiencies. Other operating expenses increased 80 basis points to 15.6% of Shack sales, driven primarily by delivery commissions, professional-service fees and travel and training associated with the higher pace of openings. Management expects beef inflation to remain elevated in the second half, though Hook said it should be less pronounced than in the first half. The company also expects continued low-single-digit labor inflation and ongoing pressure from food and operating expenses. Adjusted EBITDA rose 3.9% year over year to $61.2 million, or 14.7% of revenue. Net income attributable to Shake Shack was $15.7 million, down 8.6% from the prior-year quarter. The company ended the quarter with $308 million in cash and cash equivalents, $250 million of convertible notes outstanding and full availability under its revolving credit facility. Shake Shack opened 16 company-operated locations during the quarter, bringing year-to-date openings to 33. The company reiterated its plan to open 60 to 65 company-operated Shacks in 2026. The second-quarter openings were all in existing markets, where management said it continues to see significant whitespace. Hook said recent new classes of Shacks have generated cash-on-cash returns above 30%. Lynch said the company intends to maintain its development pace and anticipates an even higher number of openings in 2027 as the store base expands. The licensed business added eight net new Shacks during the quarter. Licensing sales rose 7.6% to $222.4 million and licensing revenue increased 7.1% to $14.2 million. Performance was strong in U.S. airports, Canada, the United Kingdom and parts of China, partially offsetting continued weakness in the United Arab Emirates amid conflict in the Middle East. Shake Shack continues to expect 40 to 45 licensed openings this year. Management also said it is evaluating additional restaurant formats, including smaller locations with less seating and potentially lower build costs. Lynch said drive-thru locations can work in select real estate opportunities, but are not expected to become the company’s primary development format because Shake Shack is focused on premium food and in-Shack hospitality. Shake Shack said it is maintaining its previously disclosed full-year guidance but expects adjusted EBITDA and net income to land at the low end of their respective ranges, reflecting persistent cost headwinds. During the question-and-answer session, management referenced adjusted EBITDA guidance of $225 million to $235 million. The company expects tougher sales comparisons in the second half, as it laps marketing and value initiatives introduced in the back half of 2025. Still, management reiterated its goal of low-single-digit same-Shack sales growth for the full year and said it remains focused on sustaining positive traffic through marketing, digital engagement and menu innovation. Going forward, Shake Shack will stop issuing quarterly guidance and instead provide annual guidance, Hook said. The company said the change is intended to emphasize long-term management and multi-year value creation over quarterly volatility. Shake Shack, Inc (NYSE: SHAK) is a publicly traded hospitality company known for its modern take on the classic American roadside burger stand. The company operates a chain of quick-casual restaurants offering premium hamburgers, hot dogs, crinkle-cut fries, frozen custard, milkshakes and a curated selection of beer and wine. Shake Shack emphasizes high-quality ingredients, including 100% all-natural Angus beef with no hormones or antibiotics, and works with local suppliers where possible to maintain its commitment to fresh, responsibly sourced food. Shake Shack traces its origins to a hot dog cart opened in New York City's Madison Square Park in 2001 by Danny Meyer's Union Square Hospitality Group. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Shake Shack Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved 22 consecutive quarters of positive comparable sales growth, driven by a deliberate balance of premium culinary innovation and targeted digital engagement. Maintained positive traffic for four straight quarters despite a challenging consumer environment, attributing success to disciplined marketing rather than broad-based discounting. Experienced significant restaurant-level margin pressure due to record-high beef prices, which peaked in June and exceeded initial management expectations. Chose to preserve value positioning and guest proposition by not fully offsetting commodity inflation through aggressive pricing, prioritizing long-term brand health. Optimized the labor model through technology and performance scorecards, which helped mitigate some of the impact from elevated food and distribution costs. Expanded the digital ecosystem with app-based sales growing nearly 30% year-over-year, serving as a primary engine for new guest acquisition and increased frequency. Reinforced premium positioning through successful LTOs like the Baby Back Rib sandwich, which met demand expectations despite complex supply chain requirements. Anticipates continued margin pressure in the second half of 2026 as beef inflation is expected to remain elevated above prior-year levels. Maintains full-year guidance for 60 to 65 new company-operated Shacks, focusing on existing markets to capture remaining white space and drive cash-on-cash returns. Plans to launch a loyalty platform in late 2026, intended as a tool for personalized engagement and enlightened hospitality rather than a pure discounting program. Expects adjusted EBITDA and net income to land at the low end of provided ranges due to persistent headwinds in the cost structure and tougher year-over-year comparisons. Shifting guidance practices to provide annual outlooks only, moving away from quarterly guidance to focus on long-term value creation over short-term volatility. Geopolitical conflict in the Middle East continues to weigh on the UAE market, historically the highest volume licensed region, due to its dependence on tourism. World Cup activities provided a 90 basis point tailwind to comparable sales in the second quarter, particularly through strategic delivery partnerships. Project Catalyst remains the foundational technology initiative for scaling operations, integrating AI-enabled capabilities, and driving future G&A leverage. Increased professional service fees and training costs associated with an elevated pace of new Shack openings impacted other operating expenses. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expressed confidence in sustaining traffic by refining paid media strategies and leveraging the growing digital footprint to minimize cannibalization. The strategy remains focused on premium innovation, such as making the Big Shack a core menu item, to differentiate from QSR competitors' deep discounting. Management is taking a surgical approach to pricing, monitoring competitor moves and specific market tiers as 3.4% of pricing rolls off by year-end. Additional pricing actions remain under evaluation, balanced against the primary goal of maintaining traffic gains. Drive-thrus will not be the primary growth format as the company prioritizes enlightened hospitality and fresh-to-order quality over QSR-style speed. Management is exploring smaller formats with lower build costs and streamlined menus to expand the total addressable market in diverse real estate environments. The company is currently reviewing its 2027 long-term targets, specifically the goal of 50 basis points of annual restaurant margin expansion. While unit growth targets remain firm, the margin algorithm is being reassessed as part of the upcoming annual planning process.

Shake Shack Inc. SHAK reported second-quarter fiscal 2026 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line increased year over year, while adjusted earnings declined.The company reported solid demand, with same-Shack sales increasing 3.5% and traffic rising 2%. New Shack openings supported double-digit revenue growth, but record-high beef costs and higher operating expenses weighed on restaurant-level margins. For the fiscal second quarter, the company reported adjusted earnings of 43 cents per share, beating the Zacks Consensus Estimate of 31 cents by 38.71%. Adjusted earnings declined 2.3% from 44 cents per share in the prior-year quarter. Shake Shack, Inc. price-consensus-eps-surprise-chart | Shake Shack, Inc. Quote Quarterly revenues of $417.6 million missed the consensus mark of $418 million by 0.04%. The top line increased 17.2% from $356.5 million reported in the year-ago quarter. In the fiscal second quarter, Shack sales increased 17.5% year over year to $403.4 million from $343.2 million. Our estimate for the metric was 412 million.Licensing revenues rose 7.1% to $14.2 million from $13.2 million. Our estimate for the metric was 13.7 million.System-wide sales advanced 13.8% to $625.8 million. Average weekly sales were approximately $78,000, unchanged from the prior-year quarter.Management estimated that the World Cup contributed approximately 90 basis points to comparable sales. In-Shack menu pricing increased 3.7%, while blended pricing across all channels rose 4.4%. Comparable app channel sales grew nearly 30% year over year, and digital sales represented almost 41% of Shack sales. In the fiscal second quarter, restaurant-level profit increased 12.8% year over year to $92.7 million from approximately $82.2 million. However, restaurant-level profit margin contracted 90 basis points to 23% of Shack sales from 23.9%.Food and paper costs increased 20.3% year over year to $116.3 million from $96.6 million. As a percentage of Shack sales, these expenses rose 60 basis points year over year to 28.8%, reflecting higher commodity costs, promotional activity and a shift toward higher-cost menu items.Beef, which represents approximately 35% of the food and paper basket, experienced mid-teens inflation. Total blended food and paper inflation was in the low-single-digit range during the quarter. Labor and related expenses increased 15% year over year to $101.2 million. Other operating expenses in the fiscal second quarter increased 24.3% year over year to $63.1 million and rose 80 basis points year over year to 15.6% of Shack sales. The increase primarily reflected higher delivery commissions. Occupancy expenses increased 17.8% year over year to $30.2 million.Operating income declined 7.3% year over year to $20.7 million. Our estimate for the metric was $23.9 million.Net income attributable to Shake Shack decreased 8.6% year over year to $15.7 million. Our estimate for the metric was $17.5 million.Adjusted EBITDA increased 3.9% year over year to $61.2 million from $58.9 million reported in the year-ago quarter. However, the adjusted EBITDA margin contracted 180 basis points year over year to 14.7%.General and administrative expenses rose 18.8% year over year to $48.3 million. Depreciation and amortization increased 15.7% year over year to $30.7 million, while preopening costs climbed 34% to $6.6 million. Shake Shack opened 16 company-operated Shacks during the quarter, up 23.1% from 13 openings in the prior-year period. This marked the company’s strongest second-quarter development performance on record and brought year-to-date company-operated openings to 33.The company opened 11 licensed Shacks, up 22.2% from nine a year earlier, and closed three locations. This resulted in eight net licensed additions.The system-wide Shack count increased 15.2% year over year to 703 from 610. Licensing sales rose 7.6% to $222.4 million from $206.7 million, supported by U.S. airports, Canada, the United Kingdom and parts of China.Continued conflict in the Middle East pressured the United Arab Emirates, historically Shake Shack’s highest-volume market in the region. The company maintained its target of 60-65 company-operated openings and 40-45 licensed openings in fiscal 2026. Shake Shack ended the quarter with $308 million in cash and cash equivalents, down 8.6% from $336.8 million a year earlier. Net cash provided by operating activities for the first half declined 32% year over year to $65.5 million.Management maintained its full-year outlook but expects adjusted EBITDA and net income to finish at the low end of their respective guidance ranges. Beef inflation, tougher comparisons and competitive intensity are expected to remain headwinds in the second half.For 2026, Shake Shack expects total revenues of $1.6 billion to $1.7 billion and licensing revenues of $57 million to $59 million. Same-Shack sales are projected to increase in the low-single-digit percentage range from 2025.The company expects a restaurant-level profit margin of 22% to 23%. General and administrative expenses are projected at 12% to 13% of total revenues. Depreciation and amortization expenses are forecast between $124 million and $128 million. Preopening costs are expected in the range of $26 million to $28 million.Shake Shack projects net income of $45 million to $55 million and adjusted EBITDA of $225 million to $235 million. Management expects both measures to finish at the low end of their respective guidance ranges. The adjusted pro forma tax rate is projected between 25% and 27%. Shake Shack currently has a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the Zacks Retail-Wholesale sector: BJ's Restaurants, Inc. BJRI currently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 127.9%, on average. BJRI stock has risen 54.9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for BJ's Restaurants’ 2026 sales and EPS indicates year-over-year growth of 4% each, respectively.Five Below, Inc. FIVE presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 70.1%, on average. FIVE stock has gained 7% in the past six months. The Zacks Consensus Estimate for Five Below’s 2027 sales and EPS indicates growth of 23.9% and 36.1%, respectively, from the year-ago period’s levels. FIGS, Inc. FIGS has a Zacks Rank #2 at present. The company delivered a trailing four-quarter earnings surprise of 212.5%, on average. FIGS stock has inched up 1.7% in the past six months. The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 15.5% and 36.8%, respectively, from the prior-year levels. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Shake Shack, Inc. (SHAK) : Free Stock Analysis Report BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report Five Below, Inc. (FIVE) : Free Stock Analysis Report FIGS, Inc. (FIGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Total Revenue: $417.6 million, up 17.2% year over year. Same-Shack Sales: Grew 3.5%, including positive traffic of 2.0% and price-mix of 1.5%. Company-Operated Shack Sales: $403.4 million, up 17.5% year over year. Licensing Revenue: $14.2 million, up 7.1% year over year. Licensing Sales: $222.4 million, up 7.6% year over year. Restaurant-Level Profit: $92.7 million, or 23% of Shack sales, down 90 basis points year over year. Food and Paper Costs: $116.3 million, or 28.8% of Shack sales, 60 basis points higher than last year. Labor and Related Expenses: $101.2 million, or 25.1% of Shack sales, improving 60 basis points compared to last year. Other Operating Expenses: $63.1 million, or 15.6% of Shack sales, 80 basis points higher versus last year. Occupancy and Related Expenses: $30.2 million, or 7.5% of Shack sales, flat year over year. G&A: $48.3 million, or 11.6% of total revenue. Adjusted EBITDA: $61.2 million, or 14.7% of revenue, increased 3.9% year over year. Net Income: $15.7 million, a decrease of $1.5 million or 8.6% versus prior year quarter. Cash and Cash Equivalents: $308 million at end of quarter. Store Openings: 16 new company-operated Shacks in Q2, bringing total to 33 year-to-date; 8 net new licensed Shacks opened in the quarter. Average Weekly Sales: Roughly $78,000, flat year over year. Digital Sales Mix: Increased to nearly 41% in the second quarter. Comparable App Channel Sales: Grew nearly 30% year over year. World Cup Impact: Estimated approximately 90 basis points on same-Shack sales. Warning! GuruFocus has detected 7 Warning Signs with ADX:ADNOCDIST. Is SHAK fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Shake Shack Inc (NYSE:SHAK) delivered its 22nd consecutive quarter of positive same-Shack sales growth, with a 3.5% increase and 2.0% positive traffic, marking four straight quarters of traffic growth. The company's digital ecosystem is thriving, with comparable app channel sales up nearly 30% year-over-year, and digital sales mix reaching nearly 41% of total sales. Shake Shack Inc (NYSE:SHAK) continues to expand its footprint aggressively, opening 16 new company-operated Shacks in Q2, the highest Q2 count on record, and remains on track for 60-65 openings this year. The company's labor management strategies are paying off, with labor and related expenses improving 60 basis points as a percentage of Shack sales year-over-year. Shake Shack Inc (NYSE:SHAK) is making strategic progress on technology and innovation, including the upcoming loyalty platform launch and Project Catalyst, which are expected to drive long-term growth and efficiency. The company's licensing business showed resilience, with licensing sales growing 7.6% year-over-year, driven by strong performance in markets like Canada, the UK, and parts of China. Shake Shack Inc (NYSE:SHAK) faced significant cost pressures in Q2, including record-high beef prices (up mid-teens), higher fuel and distribution costs, which pressured restaurant-level margins down 90 basis points. The company's restaurant-level profit margin declined to 23% of Shack sales, down from the prior year, due to elevated food and paper costs and increased operating expenses. Shake Shack Inc (NYSE:SHAK) expects continued headwinds in the back half of 2026, including tougher comparisons, elevated beef inflation, and competitive intensity, leading to adjusted EBITDA and net income at the low end of guidance. The ongoing conflict in the Middle East continues to weigh on the company's licensing business, particularly in the UAE, which is historically a high-volume market. The company's promotional activities, such as the $2, $4, $6 digital offers, weighed on pricing and mix, contributing to margin pressure despite driving traffic. Shake Shack Inc (NYSE:SHAK) is facing uncertainty around the impact of the World Cup, which provided a 90 basis point boost to comps in Q2 but may not be repeatable, and the company is lapping strong promotional comparisons from the prior year. Q: Can you provide more color on the cadence of comps through the quarter, as there is concern the business materially slowed exiting the quarter into July?A: CEO Rob Lynch refuted the notion of a decelerating comp, stating that April was a minus 0.6% comp, yet the quarter delivered 3.5% growth, with June being the best period. CFO Michelle Hook added that even excluding the World Cup benefit, June would have been the highest comp period in Q2, confirming the business accelerated rather than slowed through the quarter. Q: How are you thinking about the shape of the rest of the year given tougher comparisons and increased value competition from burger peers?A: CEO Rob Lynch noted that burger peers have been aggressive with deep discounting for 18 months, yet Shake Shack's premium positioning and footprint have insulated it. He expressed confidence in the back half, citing continued culinary innovation, improved marketing execution, and the fact that they are already lapping last year's promotional activity, allowing them to drive traffic while maintaining restaurant margins. Q: Can you provide an update on the long-term targets through 2027, specifically the prior goals for at least 50 basis points of restaurant margin expansion and low-teens unit growth?A: CFO Michelle Hook stated that the company is continuing to review the long-term targets and will provide updates as part of the 2027 planning process. She clarified that the unit growth target of low-teens is not the issue, as new Shacks are generating over 30% cash-on-cash returns. The review is more focused on the assessment of restaurant-level margin expansion given the current cost environment. Q: Can you provide more color on the moving pieces within the second-half outlook for store margins, including commodity inflation and labor leverage?A: CFO Michelle Hook explained that while beef inflation will be less pronounced in the back half, it will still pressure the P&L year over year. She noted that labor efficiencies have been largely realized, so labor is not expected to be a significant margin benefit, but will see low single-digit inflation. Other operating expenses, including delivery commissions, will also continue to be a slight pressure point. Q: What is the rationale for bringing back the Big Shack, and how will it be priced given the check drag when it was previously at $9.99?A: CEO Rob Lynch explained that the Big Shack was brought back due to high guest demand. It has been repriced more consistently with the doubles platform to avoid the revenue and margin dilution seen previously. While they still anticipate trade-up from singles, the new pricing minimizes cannibalization from doubles and other premium burgers. Q: Are you seeing any changes in consumer behavior between different income cohorts, and is the Good Fit menu helping navigate the uptick in GLP-1 usage?A: CEO Rob Lynch stated that growth in digital channels, particularly the app, has improved frequency through targeted incentives. The Good Fit menu has been sustained without a major marketing push, but it remains a great option for delivering lower-calorie, high-protein choices to guests seeking those options. Q: Can you talk about the performance of new menu innovation items relative to expectations and whether performance is consistent across markets?A: CEO Rob Lynch noted that there is no huge disparity across markets regarding LTO mix. He highlighted the barbecue platform, specifically the Baby Back Rib Sandwich, which started extremely strong and met supply expectations. He explained that LTOs have different strategic intentionssome drive traffic and trial, while others, like super-premium items, are designed to build check by trading guests up from core burgers. Q: What is your current assessment of the go-forward drive-through opportunity, and do you have the format fully figured out?A: CEO Rob Lynch stated that drive-thru presents an opportunity when great real estate supports it, but it will never be the primary format for Shake Shack. He emphasized that the company does not aspire to be QSR, and while they can execute drive-thrus or pickup windows, the focus remains on delivering enlightened hospitality through the core in-Shack experience over the next three to five years. Q: Is there an opportunity to reduce new build square footage with less in-store seating and more pickup/delivery areas given the growth in digital channels?A: CEO Rob Lynch confirmed that exploring smaller formats with less seating, lower build costs, and potentially different labor models is an opportunity. He noted that different formats provide access to different real estate and expand the total addressable market, allowing the company to enter markets that might not support the larger footprint Shacks. Q: Can you provide more color on the strategic partnerships with third-party delivery providers that led to traffic gains in the quarter?A: CEO Rob Lynch explained that the company had great strategic alignment with delivery partners, leveraging their platforms to drive excitement around the World Cup across all markets, not just those hosting games. This holistic go-to-market strategy was very beneficial and drove strong traffic growth in June and into July. For the complete transcript of the earnings call, please refer to the full earnings call transcript.