What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-10-30 compared with 2020-07-31 · 278 added, 159 removed, 648 unchanged (40% of the section changed)

7 unchanged sentences

2 | Shake Shack Inc.

Table of Content

SHAKE SHACK INC.

6 unchanged sentences

Accounts receivable 7,729 9,970

Inventories, net 2,346 2,221

Inventories 2,383 2,221

Prepaid expenses and other current assets 2,636 1,877

20 unchanged sentences

Preferred stock, no par value—10,000,000 shares authorized;

none issued and outstanding as of June 24, 2020 and December 25, 2019.

none issued and outstanding as of September 23, 2020 and December 25, 2019.

Class A common stock, $0.001 par value—200,000,000 shares authorized;

38,236,538 and 34,417,302 shares issued and outstanding as of June 24, 2020 and December 25, 2019, respectively.

38,280,102 and 34,417,302 shares issued and outstanding as of September 23, 2020 and December 25, 2019, respectively.

Class B common stock, $0.001 par value—35,000,000 shares authorized;

3,117,002 and 3,145,197 shares issued and outstanding as of June 24, 2020 and December 25, 2019, respectively.

3,112,002 and 3,145,197 shares issued and outstanding as of September 23, 2020 and December 25, 2019, respectively.

Additional paid-in capital 386,011 244,410

9 unchanged sentences

Form 10-Q | 3

Table of Content

SHAKE SHACK INC.

1 unchanged sentence

(in thousands, except per share amounts)

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Shack sales $ 126,288 $ 152,366 $ 353,855 $ 428,811

12 unchanged sentences

OPERATING INCOME (LOSS) ( 6,798 ) 8,164 ( 31,660 ) 25,197

Other income (loss), net 394 447 301 1,011

Other income, net 34 248 335 1,259

Interest expense ( 143 ) ( 133 ) ( 697 ) ( 302 )

INCOME (LOSS) BEFORE INCOME TAXES ( 6,907 ) 8,279 ( 32,022 ) 26,154

Income tax expense (benefit) ( 6,092 ) 1,050 ( 6,005 ) 3,097

Benefit from income taxes ( 797 ) ( 3,144 ) ( 6,802 ) ( 47 )

NET INCOME (LOSS) ( 6,110 ) 11,423 ( 25,220 ) 26,201

10 unchanged sentences

4 | Shake Shack Inc.

Table of Content

SHAKE SHACK INC.

1 unchanged sentence

(in thousands)

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Net income (loss) $ ( 6,110 ) $ 11,423 $ ( 25,220 ) $ 26,201

7 unchanged sentences

$ ( 5,559 ) $ 10,344 $ ( 22,729 ) $ 21,920

(1) Net of tax expense of $ 0 for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.

(1) Net of tax expense of $ 0 for the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019.

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Form 10-Q | 5

Table of Content

SHAKE SHACK INC.

1 unchanged sentence

(in thousands, except share amounts)

For the Thirteen Weeks Ended June 24, 2020 and June 26, 2019

For the Thirteen Weeks Ended September 23, 2020 and September 25, 2019

Common Stock Class B

3 unchanged sentences

Shares Amount Shares Amount

BALANCE, MARCH 25, 2020 34,523,400 $ 35 3,117,002 $ 3 $ 246,970 $ 53,407 $ 3 $ 22,188 $ 322,606

BALANCE, JUNE 24, 2020 38,236,538 $ 38 3,117,002 $ 3 $ 384,338 $ 37,196 $ 3 $ 29,707 $ 451,285

Net loss ( 5,559 ) ( 551 ) ( 6,110 )

7 unchanged sentences

Distributions paid to non-controlling interest holders ( 164 ) ( 164 )

BALANCE, SEPTEMBER 23, 2020 38,280,102 $ 38 3,112,002 $ 3 $ 386,011 $ 31,637 $ 3 $ 29,070 $ 446,762

BALANCE, JUNE 26, 2019 30,557,685 $ 31 6,731,209 $ 7 $ 208,866 $ 46,116 $ — $ 45,653 $ 300,673

BALANCE, MARCH 27, 2019 29,698,228 $ 31 7,453,515 $ 7 $ 199,315 $ 37,086 $ — $ 49,299 $ 285,738

Cumulative effect of accounting changes — — —

Net income 10,344 1,079 11,423

2 unchanged sentences

Redemption of LLC Interests 231,599 — ( 231,599 ) — 1,635 ( 1,635 ) —

Effect of Gramercy Tavern Merger 2,690,263 3 ( 2,690,263 ) ( 3 ) 19,218 ( 19,218 )

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis 705 705

Distributions paid to non-controlling interest holders ( 1,558 ) ( 1,558 )

BALANCE, JUNE 26, 2019 30,557,685 $ 31 6,731,209 $ 7 $ 208,866 $ 46,116 $ — $ 45,653 $ 300,673

Distribution to non-controlling interest owners ( 39 ) ( 39 )

BALANCE, SEPTEMBER 25, 2019 33,651,950 $ 34 3,809,347 $ 4 $ 234,118 $ 56,460 $ — $ 27,679 $ 318,295

6 | Shake Shack Inc.

For the Twenty-Six Weeks Ended June 24, 2020 and June 26, 2019

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For the Thirty-Nine Weeks Ended September 23, 2020 and September 25, 2019

Common Stock Class B

13 unchanged sentences

Distributions paid to non-controlling interest holders ( 478 ) ( 478 )

BALANCE, JUNE 24, 2020 38,236,538 $ 38 3,117,002 $ 3 $ 384,338 $ 37,196 $ 3 $ 29,707 $ 451,285

BALANCE, SEPTEMBER 23, 2020 38,280,102 $ 38 3,112,002 $ 3 $ 386,011 $ 31,637 $ 3 $ 29,070 $ 446,762

BALANCE, DECEMBER 26, 2018 29,520,833 $ 30 7,557,347 $ 8 $ 195,633 $ 30,404 $ — $ 47,380 $ 273,455

4 unchanged sentences

Redemption of LLC Interests 1,057,737 1 ( 1,057,737 ) ( 1 ) 7,115 ( 7,115 ) —

Effect of Gramercy Tavern Merger 2,690,263 3 ( 2,690,263 ) ( 3 ) 19,218 ( 19,218 ) —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis 3,516 3,516

Distributions paid to non-controlling interest holders ( 1,706 ) ( 1,706 )

BALANCE, JUNE 26, 2019 30,557,685 $ 31 6,731,209 $ 7 $ 208,866 $ 46,116 $ — $ 45,653 $ 300,673

BALANCE, SEPTEMBER 25, 2019 33,651,950 $ 34 3,809,347 $ 4 $ 234,118 $ 56,460 $ — $ 27,679 $ 318,295

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Form 10-Q | 7

Table of Content

SHAKE SHACK INC.

1 unchanged sentence

(in thousands)

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

2020 September 25

OPERATING ACTIVITIES

44 unchanged sentences

8 | Shake Shack Inc.

Table of Content

SHAKE SHACK INC.

14 unchanged sentences

Form 10-Q | 9

Table of Content

NATURE OF OPERATIONS

3 unchanged sentences

As a result, we consolidate the financial results of SSE Holdings and report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings.

As of June 24, 2020 we owned 92.5 % of SSE Holdings.

As of September 23, 2020 we owned 92.5 % of SSE Holdings.

Unless the context otherwise requires, "we," "us," "our," "Shake Shack," the "Company" and other similar references, refer to Shake Shack Inc.

1 unchanged sentence

We operate and license Shake Shack restaurants ("Shacks"), which serve hamburgers, hot dogs, chicken, crinkle-cut fries, shakes, frozen custard, beer, wine and more.

As of June 24, 2020, there were 292 Shacks in operation, system-wide, of which 171 were domestic company-operated Shacks, 22 were domestic licensed Shacks and 99 were international licensed Shacks.

As of June 24, 2020, 8 domestic company-operated Shacks and 27 licensed Shacks were temporarily closed due to COVID-19.

As of September 23, 2020, there were 298 Shacks in operation, system-wide, of which 175 were domestic Company-operated Shacks, 22 were domestic licensed Shacks and 101 were international licensed Shacks.

As of September 23, 2020, 8 domestic Company-operated Shacks and 18 licensed Shacks were temporarily closed primarily due to COVID-19.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

13 unchanged sentences

The assets and liabilities of SSE Holdings represent substantially all of our consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement.

As of June 24, 2020 and December 25, 2019, the net assets of SSE Holdings were $ 394,424 and $ 270,542 , respectively.

As of September 23, 2020 and December 25, 2019, the net assets of SSE Holdings were $ 388,789 and $ 270,542 , respectively.

The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreement.

See Note 8 for more information.

See Note 8, Debt, for more information.

We operate on a 52/53 week fiscal year ending on the last Wednesday in December.

3 unchanged sentences

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period.

Actual results could differ from those estimates.

10 | Shake Shack Inc.

Table of Content

date of the financial statements, and the reported amounts of sales and expenses during the reporting period.

Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements

14 unchanged sentences

(ASU 2019-12)

This standard removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.

It also adds guidance in certain areas, including the recognition of franchise taxes, recognition of deferred taxes for tax goodwill, allocation of taxes to members of a consolidated group, computation of annual effective tax rates related to enacted changes in tax laws, and minor improvements related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.

We are currently evaluating the impact this standard will have on our consolidated financial statements.

This standard simplifies various aspects related to accounting for income taxes by removing certain exceptions to the general principles in ASC 740, “Income Taxes” (“ASC 740”), and clarifying certain aspects of the current guidance to promote consistency among reporting entities.

The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

December 31, 2020

13 unchanged sentences

The performance obligations are satisfied over time, starting when a Shack opens, through the end of the term of the license granted to the Shack.

Because we are transferring licenses to access our intellectual property during a contractual term, revenue is recognized on a straight-line basis over the license term.

Generally, payment for the initial territory fee is received upon execution of the licensing agreement,

Because we are transferring licenses to access our intellectual property during a contractual term, revenue is recognized on a straight-line

Shake Shack Inc.

Form 10-Q | 11

and payment for the restaurant opening fees are received either in advance of or upon opening the related restaurant.

Table of Content

basis over the license term.

Generally, payment for the initial territory fee is received upon execution of the licensing agreement, and payment for the restaurant opening fees are received either in advance of or upon opening the related restaurant.

These payments are initially deferred and recognized as revenue as the performance obligations are satisfied, which occurs over a long-term period.

Revenue from sales-based royalties is recognized as the related sales occur.

Revenue recognized during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019, disaggregated by type is as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Revenue recognized during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019, disaggregated by type is as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Shack sales $ 126,288 $ 152,366 $ 353,855 $ 428,811

3 unchanged sentences

Total revenue $ 130,401 $ 157,762 $ 365,357 $ 443,084

The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of June 24, 2020 was $ 15,794 .

The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of September 23, 2020 was $ 17,048 .

We expect to recognize this amount as revenue over a long-term period, as the license term for each Shack ranges from 5 to 20 years.

8 unchanged sentences

Deferred revenue, long-term 12,144 11,310

Revenue recognized during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 that was included in their respective liability balances at the beginning of the period is as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Revenue recognized during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019 that was included in their respective liability balances at the beginning of the period is as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Gift card liability $ 91 $ 84 $ 436 $ 467

2 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis as of June 24, 2020 and December 25, 2019, and indicate the classification within the fair value hierarchy.

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis as of September 23, 2020 and December 25, 2019, and indicate the classification within the fair value hierarchy.

Shake Shack Inc.

Form 10-Q | 12

Table of Content

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of June 24, 2020 and December 25, 2019:

June 24, 2020

The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of September 23, 2020 and December 25, 2019:

September 23, 2020

Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities

9 unchanged sentences

Total $ 73,535 $ 72 $ — $ 73,607 $ 37,099 $ 36,508

A summary of other income (loss) from equity securities recognized during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 is as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

A summary of other income (loss) from equity securities recognized during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019 is as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Equity securities:

3 unchanged sentences

Total $ 40 $ 254 $ 347 $ 1,250

A summary of equity securities sold and gross realized gains and losses recognized during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 is as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

A summary of equity securities sold and gross realized gains and losses recognized during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019 is as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Equity securities:

4 unchanged sentences

Realized gains and losses are determined on a specific identification method and are included in other income, net on the Condensed Consolidated Statements of Income (Loss).

As of June 24, 2020 and December 25, 2019, there was no decline in the market value of our marketable securities investment portfolio.

As of September 23, 2020 and December 25, 2019, there was no decline in the market value of our marketable securities investment portfolio.

Shake Shack Inc.

Form 10-Q | 13

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Other Financial Instruments

The carrying value of our other financial instruments, including accounts receivable, accounts payable, and accrued expenses as of June 24, 2020 and December 25, 2019 approximated their fair value due to the short-term nature of these financial instruments.

The carrying value of our other financial instruments, including accounts receivable, accounts payable, and accrued expenses as of September 23, 2020 and December 25, 2019 approximated their fair value due to the short-term nature of these financial instruments.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Assets and liabilities that are measured at fair value on a non-recurring basis include our long-lived assets, operating lease right-of-use assets and indefinite-lived intangible assets.

During the twenty-six weeks ended June 24, 2020, we recognized an impairment charge of $ 1,132 at one location.

During the thirty-nine weeks ended September 23, 2020, we recognized an impairment charge of $ 1,132 at one location.

Of the total impairment charge, $ 736 was attributed to property and equipment held and used, $ 383 was attributed to operating lease right-of-use assets, and $ 13 was attributed to finance lease right-of-use assets.

2 unchanged sentences

Significant inputs include projections of future cash flows, discount rates, Shack sales and profitability.

There were no impairment charges recognized during the thirteen weeks ended June 24, 2020.

There were no impairment charges recognized during the thirteen weeks ended September 23, 2020, and the thirteen and thirty-nine weeks ended September 25, 2019.

Inventories are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis.

We make adjustments to our inventory reserves for inventories that are deemed to be obsolete or slow moving.

As of June 24, 2020 and December 25, 2019, no adjustment was deemed necessary to reduce inventory to net realizable value due to the rapid turnover and high utilization of inventory.

Inventories as of June 24, 2020 and December 25, 2019 consisted of the following:

As of September 23, 2020 and December 25, 2019, no adjustment was deemed necessary to reduce inventory to net realizable value.

Inventories as of September 23, 2020 and December 25, 2019 consisted of the following:

2020 December 25

5 unchanged sentences

PROPERTY AND EQUIPMENT

Property and equipment as of June 24, 2020 and December 25, 2019 consisted of the following:

Property and equipment as of September 23, 2020 and December 25, 2019 consisted of the following:

2020 December 25

9 unchanged sentences

14 | Shake Shack Inc.

Table of Content

SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of other current liabilities as of June 24, 2020 and December 25, 2019 are as follows:

The components of other current liabilities as of September 23, 2020 and December 25, 2019 are as follows:

2020 December 25

5 unchanged sentences

Other current liabilities $ 12,580 $ 19,499

The components of other long-term liabilities as of June 24, 2020 and December 25, 2019 are as follows:

The components of other long-term liabilities as of September 23, 2020 and December 25, 2019 are as follows:

2020 December 25

1 unchanged sentence

Long-term portion of financing equipment lease liabilities 3,492 3,643

Other 350 375

Other long-term liabilities $ 21,828 $ 15,328

(1) As of September 23, 2020, Other included $ 3,388 of deferred lease incentive liabilities related to leases with variable lease cost as well as $ 2,461 of deferred social security taxes associated with the CARES Act.

For further information relating to the CARES Act, see Note 12, Income Taxes.

Revolving Credit Facility

16 unchanged sentences

and prohibits us, with certain exceptions, from engaging in any line of business not related to our current line of business.

As of June 24, 2020, we were in compliance with all covenants.

In May 2020, we entered into a first amendment to the Revolving Credit Facility ("First Amendment"), which, among other things, provides for modified financial covenant compliance requirements for a period of time.

The First Amendment requires us to maintain minimum liquidity of $ 25,000 through July 1, 2021 and outstanding borrowings during the applicable period covered by

As of September 23, 2020, we were in compliance with all covenants.

Shake Shack Inc.

Form 10-Q | 15

the First Amendment bear interest at either:

Table of Content

The First Amendment requires us to maintain minimum liquidity of $ 25,000 through July 1, 2021 and outstanding borrowings during the applicable period covered by the First Amendment bear interest at either:

(i) LIBOR plus a percentage ranging from 1.0 % to 2.5 % or (ii) the base rate plus a percentage ranging from 0.0 % to 1.50 %, in each case depending on our net lease adjusted leverage ratio.

1 unchanged sentence

We repaid this amount in full, plus interest, in June 2020.

Total interest costs incurred were $ 442 and $ 554 for the thirteen and twenty-six weeks ended June 24, 2020, respectively, and $ 97 and $ 169 for the thirteen and twenty-six weeks ended June 26, 2019, respectively.

No amounts were capitalized into property and equipment for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.

Total interest costs incurred were $ 143 and $ 697 for the thirteen and thirty-nine weeks ended September 23, 2020, respectively, and $ 133 and $ 302 for the thirteen and thirty-nine weeks ended September 25, 2019, respectively.

Paycheck Protection Program

13 unchanged sentences

For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date we take possession of the leased property.

Lease expense incurred before a Shack opens is recorded in pre-opening costs.

Lease expense incurred before a Shack opens is recorded in Pre-opening costs on the Condensed Consolidated Statements of Income (Loss).

Once a domestic Company-operated Shack opens, we record the straight-line lease expense and any contingent rent, if applicable, in occupancy and related expenses on the Condensed Consolidated Statements of Income (Loss).

2 unchanged sentences

The discount rate used to measure the lease liability at the transition date was derived from the average of the yield curves obtained from using the notching method and the recovery rate method.

The most significant assumption in calculating the incremental borrowing rate is our credit rating and subject to judgment.

The most significant assumption in calculating the incremental borrowing rate is our credit rating and is subject to judgment.

We determined our credit rating based on a comparison of the financial information of SSE Holdings to other public companies and then used their respective credit ratings to develop our own.

1 unchanged sentence

Generally, a portion of the leasehold improvements and building costs are reimbursed by our landlords as landlord incentives pursuant to agreed-upon terms in our lease agreements.

If obtained, landlord incentives usually take the form of cash, full or partial credits against our future minimum or contingent rents otherwise payable by us, or a combination thereof.

In most cases, landlord incentives are received after we take possession of the property, as we meet required milestones during the construction of the property.

We include these

If obtained, landlord incentives usually take the form of cash, full or partial credits against our future minimum

16 | Shake Shack Inc.

amounts in the measurement of the initial operating lease liability, which are also reflected as a reduction to the initial measurement of the right-of-use asset.

A summary of finance and operating lease right-of-use assets and liabilities as of June 24, 2020 and December 25, 2019 is as follows:

Classification June 24

Table of Content

or contingent rents otherwise payable by us, or a combination thereof.

In most cases, landlord incentives are received after we take possession of the property, as we meet required milestones during the construction of the property.

We include these amounts in the measurement of the initial operating lease liability, which are also reflected as a reduction to the initial measurement of the right-of-use asset.

A summary of finance and operating lease right-of-use assets and liabilities as of September 23, 2020 and December 25, 2019 is as follows:

Classification September 23

2020 December 25

9 unchanged sentences

Total lease liabilities $ 376,241 $ 340,432

The components of lease expense for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 was as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

The components of lease expense for the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019 was as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Finance lease cost:

5 unchanged sentences

Short-term lease cost Occupancy and related expenses 138 279 331 313

Variable lease cost Occupancy and related expenses

Variable lease cost Other operating expenses

Occupancy and related expenses

General and administrative expenses

3 unchanged sentences

Form 10-Q | 17

As of June 24, 2020, future minimum lease payments for finance and operating leases consisted of the following:

Table of Content

As of September 23, 2020, future minimum lease payments for finance and operating leases consisted of the following:

Finance Leases Operating Leases

8 unchanged sentences

Total lease liabilities $ 5,233 $ 371,008

As of June 24, 2020 we had additional operating lease commitments of $ 53,952 for non-cancelable leases without a possession date, which will begin to commence in 2020.

These lease commitments are consistent with the leases that we have executed thus far and include a number of real estate leases where we are involved in the construction and design.

A summary of lease terms and discount rates for finance and operating leases as of June 24, 2020 and December 25, 2019 is as follows:

As of September 23, 2020 we had additional operating lease commitments of $ 45,605 for non-cancelable leases without a possession date, which will begin to commence in 2020.

These lease commitments are consistent with the leases that we have executed thus far.

A summary of lease terms and discount rates for finance and operating leases as of September 23, 2020 and December 25, 2019 is as follows:

2020 December 25

5 unchanged sentences

Operating leases 3.8 % 5.4 %

Supplemental cash flow information related to leases for the twenty-six weeks ended June 24, 2020 and June 26, 2019 is as follows:

Twenty-Six Weeks Ended

Supplemental cash flow information related to leases for the thirty-nine weeks ended September 23, 2020 and September 25, 2019 is as follows:

Thirty-Nine Weeks Ended

2020 September 25

Cash paid for amounts included in the measurement of lease liabilities:

12 unchanged sentences

Form 10-Q | 18

Table of Content

exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in SSE Holdings.

6 unchanged sentences

The proceeds were used to purchase newly-issued LLC Interests.

The following table summarizes the ownership interest in SSE Holdings as of June 24, 2020 and December 25, 2019.

June 24, 2020 December 25, 2019

The following table summarizes the ownership interest in SSE Holdings as of September 23, 2020 and December 25, 2019.

September 23, 2020 December 25, 2019

LLC Interests Ownership% LLC Interests Ownership %

5 unchanged sentences

and the non-controlling interest holders.

The non-controlling interest holders' weighted average ownership percentage for the thirteen and twenty-six weeks ended June 24, 2020 was 7.7 % and 8.0 %, respectively.

The non-controlling interest holders' weighted average ownership percentage for the thirteen and twenty-six weeks ended June 26, 2019 was 19.0 % and 19.7 %, respectively.

The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.

The non-controlling interest holders' weighted average ownership percentage for the thirteen and thirty-nine weeks ended September 23, 2020 was 7.5 % and 7.9 %, respectively.

The non-controlling interest holders' weighted average ownership percentage for the thirteen and thirty-nine weeks ended September 25, 2019 was 14.4 % and 17.9 %, respectively.

Shake Shack Inc.

Form 10-Q | 19

Thirteen Weeks Ended Twenty-Six Weeks Ended

Table of Content

The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Net income (loss) attributable to Shake Shack Inc.

2 unchanged sentences

Increase in additional paid-in capital as a result of the redemption of LLC Interests 44 1,634 239 7,115

Increase in additional paid-in-capital as a result of the GTC Merger — 19,218 — 19,218

Increase (decrease) in additional paid-in capital as a result of activity under stock compensation plans and the related income tax effect 367 1,789 627 2,718

2 unchanged sentences

$ ( 5,148 ) $ 32,985 $ 113,854 $ 50,971

The following table summarizes redemptions of LLC Interests activity during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.

Thirteen Weeks Ended Twenty-Six Weeks Ended

The following table summarizes redemptions of LLC Interests activity during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Redemption and acquisition of LLC Interests

Number of LLC Interests redeemed by non-controlling interest holders 5,000 231,599 33,195 1,057,737

Number of LLC Interests acquired in connection with the Gramercy Tavern Merger — 2,690,263 — 2,690,263

Number of LLC Interests received by Shake Shack Inc.

2 unchanged sentences

Shares of Class A common stock issued in connection with redemptions of LLC Interests 5,000 231,599 33,195 1,057,737

Shares of Class A common stock issued in connection with the Gramercy Tavern Merger — 2,690,263 — 2,690,263

Cancellation of Class B common stock

Shares of Class B common stock surrendered and canceled 5,000 231,599 33,195 1,057,737

During the thirteen and twenty-six weeks ended June 24, 2020, we received an aggregate of 63,601 and 141,504 LLC Interests, respectively, in connection with the activity under our stock compensation plan and 137,151 and 210,714 LLC Interests, respectively, during the thirteen and twenty-six weeks ended June 26, 2019.

Shares of Class B common stock surrendered and canceled in connection with the Gramercy Tavern Merger — 2,690,263 — 2,690,263

During the thirteen and thirty-nine weeks ended September 23, 2020, we received an aggregate of 38,564 and 180,068 LLC Interests, respectively, in connection with the activity under our stock compensation plan and 172,403 and 383,117 LLC Interests, respectively, during the thirteen and thirty-nine weeks ended September 25, 2019.

Pursuant to a Stockholders Agreement, dated as of February 4, 2015, as amended, by and among Daniel H.

Meyer, the Daniel H.

Meyer 2012 Gift Trust dtd 10/31/12 (the "Gift Trust"), other affiliates (collectively, the "Meyer Stockholders") and other parties thereto, the Meyer Stockholders had the right to cause all of the shares of Gramercy Tavern Corp.

("GTC") to be exchanged for shares of our Class A common stock pursuant to a tax-free reorganization.

In August 2019, the Meyer Stockholders exercised their right with respect to GTC (the "GTC Merger").

To effect the GTC Merger, a newly-formed wholly-owned subsidiary of Shake Shack Inc.

merged with and into GTC, with GTC as the surviving entity, which was then merged with and into Shake Shack Inc.

Prior to the GTC Merger, GTC owned 2,690,263 LLC Interests and an equivalent number of shares of our Class B common stock.

The stockholders of GTC, received on a one-for-one basis, 2,690,263 shares of Class A common stock based upon the amount of shares of GTC held by the stockholders;

all of the shares of Class B common stock held by GTC were cancelled;

and all of the LLC Interests held by GTC were transferred to us.

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EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 is as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

A summary of equity-based compensation expense recognized during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019 is as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Stock options $ 14 $ 637 $ 301 $ 1,974

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Total income tax benefit recognized related to equity-based compensation $ 60 $ 48 $ 135 $ 141

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Equity-based compensation expense is included in general and administrative expenses and labor and related expenses on the Condensed Consolidated Statements of Income (Loss) during the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019 as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Equity-based compensation expense is included in general and administrative expenses and labor and related expenses on the Condensed Consolidated Statements of Income (Loss) during the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019 as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

General and administrative expenses $ 1,199 $ 1,795 $ 3,681 $ 5,521

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We are also subject to withholding taxes in foreign jurisdictions.

Income Tax Expense

A reconciliation of income tax expense computed at the U.S.

federal statutory income tax rate to the recognized income tax expense is as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

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Income Tax Expense (Benefit)

A reconciliation of income tax expense (benefit) computed at the U.S.

federal statutory income tax rate to the recognized income tax expense (benefit) is as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Expected U.S.

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Tax credits ( 701 ) 10.1 % ( 2,874 ) ( 34.7 ) % ( 1,128 ) 3.5 % ( 4,697 ) ( 18.0 ) %

Return to provision adjustment 132 ( 1.9 ) % ( 153 ) ( 1.8 ) % 132 ( 0.4 ) % ( 153 ) ( 0.6 ) %

Non-controlling interest ( 11 ) 0.2 % ( 346 ) ( 4.2 ) % 411 ( 1.3 ) % ( 1,291 ) ( 4.9 ) %

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Other — — % ( 82 ) ( 1.0 ) % 17 — % ( 82 ) ( 0.3 ) %

Income tax expense $ ( 6,092 ) 25.3 % $ 1,050 8.6 % $ ( 6,005 ) 23.9 % $ 3,097 17.3 %

Our effective income tax rates for the thirteen weeks ended June 24, 2020 and June 26, 2019 were 25.3 % and 8.6 %, respectively.

Income tax benefit $ ( 797 ) 11.5 % $ ( 3,144 ) ( 38.0 ) % $ ( 6,802 ) 21.2 % $ ( 47 ) ( 0.2 ) %

Our effective income tax rates for the thirteen weeks ended September 23, 2020 and September 25, 2019 were 11.5 % and ( 38.0 )%, respectively.

The increase was primarily driven by lower pre-tax book income resulting in a loss, causing the tax credits to have an increasing effect on the tax rate, as well as the recognition of a valuation allowance against foreign tax credits that are not expected to be realized before the expiration of the carryforward period.

Additionally, an increase in our ownership interest in SSE Holdings increases our share of the taxable income (loss) of SSE Holdings.

Our weighted-average ownership interest in SSE Holdings was 92.3 % and 81.0 % for the thirteen weeks ended June 24, 2020 and June 26, 2019, respectively.

Our effective income tax rates for the twenty-six weeks ended June 24, 2020 and June 26, 2019 were 23.9 % and 17.3 %, respectively.

Our weighted-average ownership interest in SSE Holdings was 92.5 % and 85.6 % for the thirteen weeks ended September 23, 2020 and September 25, 2019, respectively.

Our effective income tax rates for the thirty-nine weeks ended September 23, 2020 and September 25, 2019 were 21.2 % and ( 0.2 )%, respectively.

These were partially offset by a reduction in the tax effect of changes related to the adoption of new accounting standards, for which there were none during the twenty-six weeks

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ended June 24, 2020.

These were partially offset by a reduction in the tax effect of changes related to the adoption of new accounting standards, for which there were none during the thirty-nine weeks ended September 23, 2020.

Additionally, as noted above, an increase in our ownership interest in SSE Holdings increases our share of the taxable income (loss) of SSE Holdings.

Our weighted-average ownership interest in SSE Holdings was 92.0 % and 80.3 % for the twenty-six weeks ended June 24, 2020 and June 26, 2019, respectively.

Our weighted-average ownership interest in SSE Holdings was 92.1 % and 82.1 % for the thirty-nine weeks ended September 23, 2020 and September 25, 2019, respectively.

Deferred Tax Assets and Liabilities

During the twenty-six weeks ended June 24, 2020, we acquired an aggregate of 169,699 LLC Interests in connection with the redemption of LLC Interests, activity relating to our stock compensation plan, and in connection with the second quarter equity offering.

During the thirty-nine weeks ended September 23, 2020, we acquired an aggregate of 213,263 LLC Interests in connection with the redemption of LLC Interests, activity relating to our stock compensation plan, and in connection with the second quarter equity offering.

We recognized a deferred tax asset in the amount of $ 1,562 associated with the basis difference in our investment in SSE Holdings upon acquisition of these LLC Interests.

As of June 24, 2020, the total deferred tax asset related to the basis difference in our investment in SSE Holdings was $ 172,350 .

As of September 23, 2020, the total deferred tax asset related to the basis difference in our investment in SSE Holdings was $ 175,320 .

However, a portion of the total basis difference will only reverse upon the eventual sale of our interest in SSE Holdings, which we expect would result in a capital loss.

As of June 24, 2020, the total valuation allowance established against the deferred tax asset to which this portion relates was $ 104 .

During the twenty-six weeks ended June 24, 2020, we also recognized $ 88 of deferred tax assets related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement and related deductions for imputed interest on such payments.

See "—Tax Receivable Agreement" for more information.

During the thirty-nine weeks ended September 23, 2020, we also recognized $ 116 of deferred tax assets related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement and related deductions for imputed interest on such payments.

See "Tax Receivable Agreement," herein for more information.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized.

As of June 24, 2020, we concluded, based on the weight of all available positive and negative evidence, that all of our deferred tax assets (except for those deferred tax assets described above relating to basis differences that are expected to result in a capital loss upon the eventual sale of our interest in SSE Holdings and New York City UBT and certain foreign tax credits) are more likely than not to be realized.

As such, an additional valuation allowance of $ 749 was recognized on certain foreign tax credits not expected to be realized before the expiration of the carryforward period.

As of September 23, 2020, we concluded, based on the weight of all available positive and negative evidence, that all of our deferred tax assets (except for those deferred tax assets related to New York City UBT and certain foreign tax credits) are more likely than not to be realized.

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additional valuation allowance of $ 1,221 was recognized on certain foreign tax credits not expected to be realized before the expiration of the carryforward period.

Uncertain Tax Positions

No uncertain tax positions existed as of June 24, 2020.

No uncertain tax positions existed as of September 23, 2020.

Shake Shack Inc.

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The rights of each member of SSE Holdings, that is a party to the Tax Receivable Agreement, are assignable to transferees of their respective LLC Interests.

During the twenty-six weeks ended June 24, 2020, we acquired an aggregate of 28,195 LLC Interests in connection with the redemption of LLC Interests, which resulted in an increase in the tax basis of our investment in SSE Holdings subject to the

22 | Shake Shack Inc.

provisions of the Tax Receivable Agreement.

During the thirty-nine weeks ended September 23, 2020, we acquired an aggregate of 33,195 LLC Interests in connection with the redemption of LLC Interests, which resulted in an increase in the tax basis of our investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement.

We recognized an additional liability in the amount of $ 414 for the TRA Payments due to the redeeming members, representing 85 % of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemption of LLC Interests, after concluding it was probable that such TRA Payments would be paid based on our estimates of future taxable income.

During the twenty-six weeks ended June 24, 2020 and June 26, 2019, payments of $ 6,643 and $ 707 , inclusive of interest, were made to the parties to the Tax Receivable Agreement, respectively.

As of June 24, 2020, the total amount of TRA Payments due under the Tax Receivable Agreement, was $ 228,096 , of which $ 0 was included in other current liabilities on the Condensed Consolidated Balance Sheet.

See Note 15 for more information relating to our liabilities under the Tax Receivable Agreement.

During the thirty-nine weeks ended September 23, 2020 and September 25, 2019, payments of $ 6,643 and $ 707 , inclusive of interest, were made to the parties to the Tax Receivable Agreement, respectively.

As of September 23, 2020, the total amount of TRA Payments due under the Tax Receivable Agreement, was $ 228,197 , of which no amount was included in other current liabilities on the Condensed Consolidated Balance Sheet.

See Note 15, Commitments and Contingencies, for more information relating to our liabilities under the Tax Receivable Agreement.

On March 27, 2020, the U.S.

2 unchanged sentences

We are currently estimating the amount of accelerated tax depreciation deductions as a result of the technical amendments made by the CARES Act to qualified improvement property.

During the thirteen weeks ended June 24, 2020, we recognized accelerated tax depreciation deductions of $ 171 related to assets placed in service in fiscal 2020, and are recorded as components within our deferred income taxes, net on the Condensed Consolidated Balance Sheets.

The impact of assets placed into service during fiscal 2018 and fiscal 2019 will be reflected in our third quarter provision.

During the thirty-nine weeks ended September 23, 2020, we recognized accelerated tax depreciation deductions of $ 446 related to assets placed in service in fiscal 2020, and are recorded as components within our deferred income taxes, net on the Condensed Consolidated Balance Sheets.

In addition, subsequent to the second quarter of 2020, we began deferring the employer-paid portion of social security taxes as permitted by the CARES Act.

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EARNINGS (LOSS) PER SHARE

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by the weighted-average number of shares of Class A common stock outstanding during the period.

Diluted earnings (loss) (loss) per share of Class A common stock is computed by dividing net income (loss) attributable to Shake Shack Inc.

Diluted earnings (loss) per share of Class A common stock is computed by dividing net income (loss) attributable to Shake Shack Inc.

by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) (loss) per share of Class A common stock for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.

Thirteen Weeks Ended Twenty-Six Weeks Ended

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) per share of Class A common stock for the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Net income (loss) $ ( 6,110 ) $ 11,423 $ ( 25,220 ) $ 26,201

10 unchanged sentences

Earnings (loss) per share of Class A common stock—diluted $ ( 0.15 ) $ 0.31 $ ( 0.62 ) $ 0.70

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Shares of our Class B common stock do not share in the earnings or losses of Shake Shack and are therefore not participating securities.

As such, separate presentation of basic and diluted earnings (loss) per share of Class B common stock under the two-class method has not been presented.

The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted earnings (loss) per share of Class A common stock for the thirteen and twenty-six weeks ended June 24, 2020 and June 26, 2019.

Thirteen Weeks Ended Twenty-Six Weeks Ended

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The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted earnings (loss) per share of Class A common stock for the thirteen and thirty-nine weeks ended September 23, 2020 and September 25, 2019.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2020 September 25

2019 September 23

2020 September 25

Stock options 764,902 (1) — 764,902 (1) —

7 unchanged sentences

SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information for the twenty-six weeks ended June 24, 2020 and June 26, 2019:

Twenty-Six Weeks Ended

The following table sets forth supplemental cash flow information for the thirty-nine weeks ended September 23, 2020 and September 25, 2019:

Thirty-Nine Weeks Ended

2020 September 25

Cash paid for:

6 unchanged sentences

Class A common stock issued in connection with the redemption of LLC Interests — 1

Class A common stock issued in connection with the GTC merger — 3

Cancellation of Class B common stock in connection with the redemption of LLC Interests — ( 1 )

Cancellation of Class B common stock in connection with the GTC Merger — (3)

Establishment of liabilities under tax receivable agreement 414 20,027

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Table of Content

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

See Note 9, Leases.

As security under the terms of one of our leases, we are obligated under a letter of credit totaling $ 130 as of June 24, 2020, which expires in February 2026.

As security under the terms of one of our leases, we are obligated under a letter of credit totaling $ 130 as of September 23, 2020, which expires in February 2026.

Additionally, in September 2017, we entered into a letter of credit in conjunction with our new home office lease in the amount of $ 603 , which expires in August 2021 and renews automatically for one-year periods through January 31, 2034.

6 unchanged sentences

At a mediation between the parties, we agreed to settle the matter with the plaintiff and all other California employees who elect to participate in the settlement for $ 1,200 .

As of June 24, 2020, an accrual in the amount of $ 1,200 was recorded for this matter and related expenses.

As of September 23, 2020, an accrual in the amount of $ 1,180 was recorded for this matter and related expenses.

We are subject to various legal proceedings, claims and liabilities, such as employment-related claims and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance.

As of June 24, 2020, the amount of the ultimate liability with respect to these matters was not material.

As of September 23, 2020, the amount of the ultimate liability with respect to these matters was not material.

Liabilities under Tax Receivable Agreement

As described in Note 12, we are a party to the Tax Receivable Agreement under which we are contractually committed to pay certain of the members of SSE Holdings 85 % of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions.

As described in Note 12, Income Taxes, we are a party to the Tax Receivable Agreement under which we are contractually committed to pay certain of the members of SSE Holdings 85 % of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions.

We are not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized.

1 unchanged sentence

If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then we would not be required to make the related TRA Payments.

During the twenty-six weeks ended June 24, 2020 and June 26, 2019, we recognized liabilities totaling $ 313 and $ 1,636 , respectively, relating to our obligations under the Tax Receivable Agreement, after concluding that it was probable that we would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits.

As of June 24, 2020 and December 25, 2019, our total obligations under the Tax Receivable Agreement were $ 228,096 and $ 234,426 , respectively.

During the thirty-nine weeks ended September 23, 2020 and September 25, 2019, we recognized liabilities totaling $ 414 and $ 20,027 , respectively, relating to our obligations under the Tax Receivable Agreement, after concluding that it was probable that we would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits.

As of September 23, 2020 and December 25, 2019, our total obligations under the Tax Receivable Agreement were $ 228,197 and $ 234,426 , respectively.

There were no transactions subject to the Tax Receivable Agreement for which we did not recognize the related liability, as we concluded that we would have sufficient future taxable income to utilize all of the related tax benefits.

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RELATED PARTY TRANSACTIONS

8 unchanged sentences

HYC also pays us a percentage of profits on sales of branded beverages, as defined in the MLA.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts received from HYC Licensing revenue $ 26 $ 250 $ 60 $ 401

Classification June 24

Classification September 23

2020 December 25

2 unchanged sentences

The Chairman of our Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which we have a license agreement and pay license fees to operate our Madison Square Park Shack.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts paid to MSP Conservancy Occupancy and related expenses $ 173 $ 138 $ 392 $ 692

Classification June 24

Classification September 23

2020 December 25

Amounts due to MSP Conservancy Accrued expenses $ 249 $ 53

Share Our Strength

The Chairman of our Board of Directors serves as a director of Share Our Strength, for which Shake Shack holds the "Great American Shake Sale" to raise money and awareness for childhood hunger.

During the Great American Shake Sale, we encourage guests to donate money to Share Our Strength's No Kid Hungry campaign in exchange for a coupon for a free shake.

All of the guest donations we collect go directly to Share Our Strength.

Amounts raised through donations during the thirteen weeks ended September 25, 2019, were payable to Share Our Strength as of September 25, 2019.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts raised through donations — $ — $ 190 $ — $ 190

Costs incurred for free shakes redeemed General and administrative expenses $ — $ 30 $ — $ 30

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The Chairman of our Board of Directors serves as a director of Olo, Inc.

(formerly known as "Mobo Systems, Inc."), a platform we use in connection with our mobile ordering application.

No amounts were due to Olo as of June 24, 2020 and December 25, 2019, respectively.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

No amounts were due to Olo as of September 23, 2020 and December 25, 2019, respectively.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts paid to Olo Other operating expenses $ 75 $ 44 $ 169 $ 122

Our Chief Executive Officer is a member of the Board of Directors of Square, Inc.

We currently use certain point-of-sale applications, payment processing services, hardware and other enterprise platform services in connection with the

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processing of a limited amount of sales at certain of our locations, sales for certain off-site events and in connection with our kiosk technology.

No amounts were due to Square as of June 24, 2020 and December 25, 2019, respectively.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

We currently use certain point-of-sale applications, payment processing services, hardware and other enterprise platform services in connection with the processing of a limited amount of sales at certain of our locations, sales for certain off-site events and in connection with our kiosk technology.

No amounts were due to Square as of September 23, 2020 and December 25, 2019, respectively.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts paid to Square Other operating expenses $ 419 $ 487 $ 1,208 $ 1,195

Tax Receivable Agreement

As described in Note 12, we entered into a tax receivable agreement with certain members of SSE Holdings that provides for the payment by us of 85 % of the amount of tax benefits, if any, that Shake Shack actually realizes or in some cases is deemed to realize as a result of certain transactions.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

As described in Note 12, Income Taxes, we entered into a tax receivable agreement with certain members of SSE Holdings that provides for the payment by us of 85 % of the amount of tax benefits, if any, that Shake Shack actually realizes or in some cases is deemed to realize as a result of certain transactions.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts paid to members (inclusive of interest) Other current liabilities $ — $ — $ 6,643 $ 707

Classification June 24

Classification September 23

2020 December 25

3 unchanged sentences

Under the terms of the SSE Holdings LLC Agreement, SSE Holdings is obligated to make tax distributions to its members.

No tax distributions were payable to non-controlling interest holders as of June 24, 2020 and December 25, 2019, respectively.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 24

No tax distributions were payable to non-controlling interest holders as of September 23, 2020 and December 25, 2019, respectively.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 23

2020 September 25

2019 September 23

2020 September 25

Amounts paid to non-controlling interest holders Net income attributable to non-controlling interests $ 164 $ 39 $ 478 $ 1,706

1 unchanged sentence

Form 10-Q | 28

Table of Content

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements