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Shake Shack (SHAK) reported mostly in-line earnings for the quarter on Thursday, slightly beating estimates on its top and bottom line. Earnings per share showed a loss of 6 cents, it came in better than Wall Street expectations. During the quarter, Shake Shack brought in $229.9 million in revenue from company-operated locations, while licensed locations brought in $8.6 million. The company posted an operating loss of $6.3 million due to inflation, with a total net loss for the quarter of $11.1 million.
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The company raised menu prices in October by mid to high single digits to offset food and paper inflation. Cost pressures were led by higher prices for fries, dairy, paper, and packaging. Beef prices are also in focus as Shake Shack looks to rebuild its margin profile over the long term by improving profitability through sales, higher margin channels, and efficiencies.
Why it matters
Amid rising food prices due to inflation, fast-food giants have emerged as the winner in the United States in terms of earnings. A pattern has been seen in the food industry, with fast-food chains appealing to a broader section of customers rather than casual-dining ones or pricier restaurants. McDonald’s, for instance, saw its U.S. same-store sales jump 10.3%, aided in part by low-income consumers returning more regularly than in the previous two quarters.
