Shake Shack Sees Same-Store Sales Dip

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Shake Shack, once the darling of better-burger brands, continues to show signs of struggle in the sector as it reported a same-store sales decline this week.

Comps decreased 0.7% for the quarter ended Sept. 26, while total revenue rose 26.5% and sales increased 27.2%.
Shake Shack stock prices tumbled more than 11% on the news early Friday.
During the quarter, Shake Shack opened seven company-operated stores and two licensed units.

The brand expects to launch its largest number of new stores in history in 2019, with plans to open 36 to 40 units, executives said during a call with analysts Thursday.
The company drew concern from investors following its announcement in August that it was suffering from a logjam in unit expansion, stalling growth until the later part of 2018.

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Shake Shack Returns to its Roots

Karl Marx will have to wait; the machines will not yet replace us.  The fully-automated ordering system Shake Shack put in place at it’s newish Astor Place location is being terminated to bring back people and cash.

On the most recent earnings call, CEO Randy Garutti discussed the feedback that the chain has received about this unit in particular.  Voices came in clearly via Twitter, Yelp, and direct feedback: guests want the option to pay in cash and want to place their orders with a person.

When Shake Shack opened the Astor Place location in 2017, it was touted as the company’s first foray into self-service kiosks and cashless operations.  The benefits of both are obvious–less labor, lower risk of theft, less waste, and more-accurate ordering.

However, the backlash came in hard and fast from guests who didn’t want to wait on the kiosks and who were inconvenienced by the credit-only policy.  Shake Shack is reinstating a cashier for all open hours and will begin accepting cash with said cashier.  The kiosks will be rolling out to other locations–but not in replacement of the cashiers.

Shake Shack has consistently be posting huge growth.  In 2016, average unit volumes were 3.5x the burger-segment median, at $4.5m.  However, net income was only 6.2%–a far cry from industry elder McDonald’s 20%.

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