Shake Shack Zooms Up With Positive Third Quarter Sales

Shake Shack zooms up with positive profit and sales growth — more than the expected numbers for the third quarter.

Shake Shack, a restaurant known for its indulgent side dishes and antibiotic-free hamburgers and the restaurant founded by celebrity restaurateur Danny Meyer, said on Thursday that shares in extended trade shot up to 7 percent.

Reuters reported Shake Shack same-restaurant sales went up to 17.1 percent, effortlessly sliding past analysts' medium call for a growth of 10.6 percent, as per Consensus Metrix, a research firm.

The positive rise of the New York-based restaurant chain was boosted by its Manhattan outlets, the return of crinkle cut fries as well as advertised shakes and higher prices. Sales from 16 domestic company-operated units that were open for two years or longer also helped in reaching the numbers for the third quarter.

Shake Shack, which has a total of 75 restaurants around the globe — 46 of which are in the U.S., has leveled up its revenue forecast for 2015 from a previous $171 million to $174 million to a range of $189 million to $190 million.

Bloomberg has noted Shake Shack's expansion outside of its home market in East Coast was largely responsible for the increased sales. Its net income tripled to 10 cents per share or $1.5 million. Adjusted earnings for the third quarter were 12 cents per share higher than the of 5 cents average estimate of analysts.

The burger-and-fries restaurant chain has recently opened new stores in Austin, Texas and Chicago and has come a long way since it started in 2001, operating as a hot dog cart in Madison Square Park in Manhattan. Presently, it has successfully teamed up with local vendors to peddle products such as Glazed & Infused donuts and custard mixed with Intelligentsia coffee beans.

In addition Shake Shack plans to broaden its U.S. branches to 12 more stores and six outside of the country this 2015. The first Shake Shack restaurant in Japan is set to operate this November.

However, critics have reservations that the restaurant chain's meteoric same-store sales rise — a measure of restaurant performance — will die down as it extends outside dense urban areas.

Shake Shack executives added there are plans to hike up menu prices in January, but the company does not assume that higher product prices will totally offset higher employment costs.

Meanwhile, Bloomberg Intelligence analyst Michael Halen said, “Both core market and new stores are all doing really, really well. It’s strong across the board.”

Inc. has learned Shake Shack projects a full-year revenue of $237 million to $242 million, as well as 2.5 percent to 3 percent same-restaurant sales growth.

Tags
Shake Shack
Real Time Analytics