Shake Shack's Q1 same-store sales tumble 12.8% amid global pandemic

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Shake Shack’s (SHAK) first-quarter earnings beat expectations, but sales fell short of estimates. Shares were down 2.5% in early trade Tuesday.

Here were the main numbers for Shake Shack’s first quarter, compared to Bloomberg-compiled estimates:

  • Revenue: $143.2 million vs. $145.1 million expected

  • Adj. EPS: 2 cents vs. loss of <1 cent expected and 13 cents YoY

  • Same-store sales: -12.8% vs. +3.6% YoY

“I've had the privilege of leading this company through many challenging and incredible moments, but I think we'd all agree that this has been an unprecedented test for our world, and for our teams,” CEO Randy Garutti said in a statement.

“It’s difficult to predict when and how quickly we will fully rebound once stay-at-home regulations are lifted, but our first priority will continue to be to keep our teams and our guests safe, as we carefully re-open Shacks,” Garutti said. “Given the actions we’ve taken to bolster our balance sheet, we are in a strong position to resume execution of our long-term strategic growth plan as we continue to come through the other side of COVID-19.”

Domestic stores have started to see sales trends improve over the past few weeks, according to the company. Shake Shack took its biggest hit towards the end of March when same-store sales tanked 73% for the week ending March 25. The following week ending April 1, same-store sales plunged 72%. Sales have since steadily increased, and in the week ending April 29, same-store sales were down 45%.

WASHINGTON, DC - JANUARY 28 :  Shown is the ShackBurger and fries at the Shake Shack on January 28, 2015 in Washington, D.C. The burger chain is expecting its IPO later this week. (Photo by Ricky Carioti/The Washington Post via Getty Images)
WASHINGTON, DC - JANUARY 28 : Shown is the ShackBurger and fries at the Shake Shack on January 28, 2015 in Washington, D.C. (Photo by Ricky Carioti/The Washington Post via Getty Images)

As of April 29, 17 domestic company-operated stores and 61 of its 120 licensed stores were temporarily closed. Shake Shack withdrew fiscal 2020 guidance due to uncertainty surrounding COVID-19.

Digital sales grew significantly during the quarter. As of the week ending April 29, digital sales accounted 80% of total sales.

The U.S. meat industry has been facing some trouble in recent weeks as large processors such as Tyson Foods (TSN), Smithfield and JBS have had to close some plants due to COVID-19. While Shake Shack doesn’t expect any supply chain disruptions at the moment, the company said on the call that it was starting to see higher beef prices.

“We are happy to say that at the moment, we've had zero supply challenges in getting our beef. The plants that we use have not been impacted. Although many plants you've seen across the country are working at reduced schedules,” Garutti said.

“We're expecting much higher costs on the beef market at the moment, and we don't expect that to be a long term problem. But I think, as is the moment right now, nobody knows exactly on all these issues. So, watching closely, we believe our supplies intact, and we believe it's going to be more expensive,” he added.