Higher sales and lower commodity costs offset increased labor costs at Shake Shack Inc. in the second quarter, the company said Wednesday.
Total revenue in the quarter ended June 29 rose 37.2 percent, to $66.5 million, from $48.5 million the previous year, due to the chain’s continued development and same-store sales growth in the quarter of 4.5 percent.
The sales results are a steep slowdown from previous quarters, including 9.9-percent growth in the first quarter. Investors hammered Shake Shack on Wall Street Wednesday, with the company’s stock was down 9 percent in after-hours trading.
Still, Shake Shack’s higher sales, along with lower commodity costs this year, helped offset an increase in labor costs brought about by the New York-based company’s decision this year to give its workers raises.
Operating profit in the quarter increased 40.6 percent, to $19.9 million, or 30.8 percent of restaurant sales.
“We continue to execute on our growth strategy while delivering industry-leading [average unit volumes],” Shake Shack CEO Randy Garutti said in a statement. He noted that the operating profit margin set a new record for the chain.
The company increased its expectations for opening new locations this year, and expects to open 18 locations in 2016, rising from an expected 16 units, due to what Garutti called “more favorable development tailwinds.” Shake Shack expects to open its 100th global location next week.
The company increased its outlook for revenue on the year to a range of $253 million to $256 million, from a range of $245 million to $249 million.