Overall, Shake Shack continues to face a sidewinding landscape. The chain’s Q4 performance outpaced historical seasonality, with average weekly sales of $74,000 compared to $72,000 in Q3 2021. Same-store sales climbed 2.2 percent over 2019 levels, improving from negative 7.3 percent in Q3.
A key split being the brand’s urban business exited 2021 down just 4 percent over 2019. Suburban was up 9 percent.
However, Garutti said, the brand’s operating hours dropped in the last week of the fiscal year, and the first two of the current one, due to a “sharp increase” in COVID cases stemming from the omicron variant.
“As around the world and in every service industry, we’ve had a lot of limited hours, a lot of closed restaurants, and limited staffing,” he said. “And we certainty have not been able to optimize sales in the last few weeks.”
“That is frustrating,” Garutti added. “But we very optimistic given the fourth [quarter] look of how things will rebound and get going later on in the year.”
Q4 revenue increased 29 percent to $203.3 million year-over-year as the company opened net 19 systemwide stores (13 domestic corporate units and six licensed restaurants). The company expects store-level operating profit margin to be about 16 percent of sales. For the full year, Shake Shack, which has a long-goal of 450 U.S. stores, opened 58 net venues (35 corporate, one closure, and 23 licensed, three closures). It closed Q4 with 218 company-run domestic venues and 151 global licensed Shake Shacks compared to 183 and 128, respectively, versus the prior year.
Speaking further to Shake Shack’s digital growth, CFO Katie Fogertey said an area of emphasis for the chain in 2022 will be to continue funneling users into native channels. It’s part of why the drive-thru and Shack Track initiatives are so vital—they present the brand’s off-premises capabilities in a branded and controlled format.
Shake Shack launched a new website last year and continues to invest “to build this true omnichannel guest experience,” Fogertey says.
“And we really want our own digital channels to be the preferred channels for our guests. We’re building personalized marketing opportunities to help drive frequency and guest connection. We just know and we continue to see it, when we bring a guest into our digital ecosystem, we see igher frequency, we see higher checks. There’s a better guest experience associated with that. We just think they understand who we are and the value that we offer more.”
Making sure operators have the tools to best handle Shake Shack’s ballooning digital business is a critical element of all of this, she adds, from the store prototypes to the backend updates.
As part of the new website launch, Shake Shack refreshed graphics to help drive guests through the ordering process. Also, it’s been “a great tool” to fuel app downloads, Fogertey said. Guests are immediately pushed to download Shake Shack’s app. The company updated that platform as well, including dynamic prep time. “We found that some of the larger issues that our guests have flagged before is an unknown wait time,” she said. “They go to Shake Shack and they just don’t know how long it will take.” This investment communicates that process with guests. Add in Shake Track and all of the new channels available, and Shake Shack can direct consumers to the most convenient format, whether it’s the pickup window or shelf.
“We’re seeing good early success there,” Fogertey said.
With kiosks, Shake Shack will further rollout going into 2022. When guests have the ability to access one, the brand sees higher checks, as well as a better understanding of the menu, she added. They’re more likely to add-on items like shakes.
“It’s just something that we want to continue to integrate and bring into our fold,” Fogertey said.