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A Shake Shack location in NYC, where sales are down 58% Shake Shack
New York City Shake Shacks hurt most by pandemic.

Double whammy: Protests and pandemic hurt Shake Shack sales

The chain reported a 60.1% drop in traffic for the second quarter; some reopened dining rooms are closing again ‘for safety reasons’

Shake Shack, which has started to reboot unit growth, said second quarter same-store sales dropped 49% driven by volatility tied to the coronavirus pandemic and nationwide protests in June.

The company, in a business report released Tuesday, said sales for the quarter ended June 24 were negatively impacted by about $3.2 million in June as stores were forced to temporarily close or operate with reduced hours due to curfews enacted to curb civil unrest in key markets.  Overall, the company experienced a 60.1% drop in traffic for the quarter.

New York City, where the chain operates its highest volume stores, is expected to have a longer recovery time, the company said. For the week ended July 1, same-store sales at New York City locations were down 58%. The region, in the previous quarter, accounted for 20% of same-store sales. Systemwide same-store sales declined 39% for the week ended July 1. 

Like many restaurants across the United States, Shake Shack has reclosed some stores as health officials report a spike in COVID-19 cases. At the end of the second quarter, 60% of its restaurants were operating dining rooms with limited capacity. 

“However, in recent days, some of these interior and patio dining rooms have once again closed for safety reasons,” the company said.

Despite the challenges, the New York City-based chain said it has extended a 10% premium pay raise to all hourly employees. The wage increase is expected to continue through at least July 22.

“As always, and especially during this recovery period, our priority remains the safety of our team and our communities,” CEO Randy Garutti said in a statement.

The company, as previously reported in late June, recently opened four new domestic restaurants in Sacramento, Los Angeles, Charlotte, N.C., and St. Louis, Mo. Each opened with “encouraging levels of sales,” the company said.

“Amidst our gradual sales recovery, we've started to open new Shacks again and are looking to the significant growth opportunity that we believe lies ahead for Shake Shack,” Garutti stated. “I am so proud of the resilience of our teams in the Shacks, the innovation across our operating model and our relentless efforts to continue to safely serve our guests. I want to thank our entire Shack family for their hard work and commitment to leading with hospitality during these difficult times.”

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Contact Nancy Luna at [email protected] 

Follow her on Twitter: @fastfoodmaven

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