Shake Shack Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the thirteen-week period ended April 1, 2026. Shake Shack Inc. operates and licenses "Shacks" serving burgers, chicken, and shakes. As of the period end, the system comprised 679 locations (390 company-operated, 289 licensed). The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $366.7 million | $320.9 million |
| Shack Sales | $354.0 million | $309.8 million |
| Net Income (Loss) | $(0.3) million | $4.5 million |
| Net Income Attributable to Shake Shack Inc. | $(0.3) million | $4.2 million |
| EPS (Diluted) | $(0.01) | $0.10 |
| Operating Cash Flow | $8.5 million | $31.2 million |
| Capital Expenditures | $(47.2) million | $(29.4) million |
| Cash and Equivalents (End of Period) | $313.7 million | $312.9 million |
| Long-Term Debt | $248.0 million | $247.7 million |
| Restaurant-Level Profit Margin | 21.2% | 20.7% |
| Adjusted EBITDA Margin | 10.1% | 12.7% |
Material Changes vs. Prior Period
- Profitability Decline: The company reported a net loss of $0.3 million compared to net income of $4.5 million in the prior year. Operating income turned negative at $(2.6) million from $2.8 million.
- Revenue Growth: Total revenue increased 14.3% year-over-year, driven by the opening of 58 new company-operated Shacks and increased menu prices.
- Expense Increases: General and administrative expenses rose 31.9% due to investments in marketing and technology. Pre-opening costs surged 113.5% to $6.9 million due to a larger development pipeline.
- Cash Flow Contraction: Operating cash flow decreased significantly to $8.5 million from $31.2 million, primarily due to changes in working capital and timing of payments.
- Capital Deployment: Investing cash outflows increased to $47.2 million, reflecting higher capital expenditures for new unit development.
Outlook, Risks, and Commentary
- Operational Performance: Same-Shack sales increased 4.6%, driven by a 3.2% price mix increase and 1.4% traffic growth. Digital sales grew 19.6% to $141.1 million, representing 39.9% of Shack sales.
- Development: The company opened 22 new Shacks (17 company-operated, 5 licensed) during the quarter.
- Liquidity: Management believes existing cash and operating cash flows are sufficient to fund operations and obligations for the next 12 months. The company has $250 million in Convertible Notes due 2028 and a $50 million Revolving Credit Facility with no outstanding borrowings.
- Tax Receivable Agreement (TRA): Obligations under the TRA totaled $246.0 million. Payments are contingent on future taxable income.
- Risks: Forward-looking statements are subject to risks including supply chain interruptions, labor costs, inflation, tariffs, and the ability to open new Shacks on time. The filing notes no material changes to risk factors from the 2025 10-K.
Investor Verification Checklist
- Expense Trajectory: Verify if the 31.9% increase in G&A and 113.5% increase in pre-opening costs are sustainable or one-time impacts of the current expansion pace.
- Cash Flow Sustainability: Assess the drivers behind the $22.7 million drop in operating cash flow and the impact of working capital changes.
- Unit Economics: Confirm that the 21.2% Restaurant-Level Profit Margin can be maintained as new units ramp up and pre-opening costs normalize.
- TRA Liability: Review the assumptions regarding future taxable income required to fund the $246 million Tax Receivable Agreement obligation.
- Debt Conversion: Monitor the stock price relative to the $170.42 conversion price of the 2028 Convertible Notes to assess potential dilution.