Shake Shack Inc.’s revenue growth has largely been tied to increasing store locations, but the company announced during its second-quarter earnings call that new store opening slowed for the first half of the year.
On Thursday, the company reported net income increased 29.2% to $10.6 million, total revenue grew 27.3% to $116.3 million and same-store sales increased by 1.1%.
On those delayed openings Randall Garutti, CEO of the New York-based company, said, “Way more than we expected of our Shacks are going to open in the third and fourth quarter with the vast majority of those in the fourth quarter with the majority of those in December. So, it'll be a big push for us at the end of the year.”
“There has just been some questions, some issues on permitting taking longer, construction on both landlords work to deliver to us — and then sometimes our own permits getting ready. And it has just been delayed from what we expected. So that's the unfortunate reality."
After the news, shares of the chain fell nearly 11 percent, as of midmorning on Friday. It was a rare stumble for the company.
Still, the company expects to reach 122 to 125 domestic company-operated locations by the end of the year. Currently, Shake Shack has more than 180 locations in the U.S. and the District of Columbia, including 70 international location. International development expanded this quarter and included openings in London, Japan and Hong Kong.
Executives touted growth in app ordering and delivery and excitement around menu innovations released this quarter, including a limited-time offer barbecue lineup and a veggie burger, which was tested at select locations. As many restaurants and chains have done over the past few months, Shake Shack announced that it planned to eliminate plastic straws from domestic locations.
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