What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-29 compared with 2023-02-23 · 315 added, 353 removed, 265 unchanged (72% of the section changed)

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and, unless otherwise stated, all of its subsidiaries, including SSE Holdings.

Shake Shack serves modern, fun and elevated versions of American classics using only the best ingredients.

Unless the context otherwise requires or unless specific reference is made to our licensed business, statements in this Part I of our Annual Report on Form 10-K refer to Shake Shack's domestic Company-operated business.

Shake Shack serves modern, fun and elevated versions of American classics using only premium ingredients.

We are known for our made-to-order Angus beef burgers, crispy chicken, hand-spun milkshakes, house-made lemonades, beer, wine, and more.

With our fine dining roots and a commitment to crafting uplifting experiences, Shake Shack has become a cult-brand and created a new category, fine-casual.

Our purpose is to Stand For Something Good®, from thoughtful ingredient sourcing and employee development to inspiring designs and deep community investment.

With our fine-dining roots and a commitment to crafting uplifting experiences, Shake Shack has become a cult-brand.

Our purpose is to Stand For Something Good®, from premium ingredients and employee development to inspiring designs and community investment.

Originally founded in 2001 by Danny Meyer's Union Square Hospitality Group ("USHG"), which owns and operates some of New York City's most acclaimed and popular restaurants — such as Union Square Cafe and Gramercy Tavern, to name a few — Shake Shack began as a hot dog cart to support the rejuvenation of New York City's Madison Square Park through its Conservancy's first art installation, "I Y Taxi." The cart was an instant success, with lines forming daily throughout the summer months over the next three years.

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It soon became a gathering place for locals and visitors alike, and a beloved New York City institution, garnering significant media attention, critical acclaim and a passionately devoted following.

Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to over 400 locations system-wide, including over 260 in 32 U.S.

States and the District of Columbia, and over 140 international locations across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.

Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to 518 Shacks in operation, system-wide, of which 295 were domestic Company-operated Shacks, 39 were domestic licensed Shacks and 184 were international licensed Shacks across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.

WE STAND FOR SOMETHING GOOD

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To us, hospitality is all about taking care of our team, our guests, our communities — and bringing those groups together.

▪ We gather communities and enrich our neighborhoods — Across the globe, Shacks have been an integral part of their communities, and, we believe we have a role to play in supporting and revitalizing the neighborhoods where we work and serve.

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▪ We do the right thing and hold ourselves accountable — At Shake Shack, we've always believed in leading by example and making better possibilities come to life with our teams and community, beyond just making great food.

Our commitment to doing things differently includes a focus on exceptional career support for our teams, while creating meaningful impact in both our neighborhoods and the global industry.

▪ We are committed to environmental responsibility — We source our world-class ingredients from suppliers who share our values, including 100% antibiotic- and hormone-free proteins from ethically raised animals and non-GMO buns, and are committed to sustainable packaging, a focus on renewable energy, and assessing and managing our greenhouse gas emissions.

▪ We are committed to environmental responsibility — We source our domestic ingredients from suppliers who share our values, including antibiotic-free and no added hormone proteins from ethically raised animals and non-GMO buns, and are committed to sustainable packaging, a focus on renewable energy, and assessing and managing our greenhouse gas emissions.

▪ We empower our teams to act like entrepreneurs — At the heart of a Shake Shack experience is our teams’ personal commitment to craft and hospitality.

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HUMAN CAPITAL MANAGEMENT

Our most important asset is our people and as a result, we have remained committed to investing in our people so we can recruit, reward and retain a winning team.

Our strategy continues to be to recruit talented people who have integrity, who are warm, motivated, self-aware, and intellectually curious alongside having the competencies and skills that continue to foster our growth.

To ensure the near-term and long-term success of our business, we are focused on recruiting, rewarding and retaining a winning team to staff and support our Shacks and home office.

We recruit talented people who have integrity, who are warm, motivated, self-aware, and intellectually curious alongside having the competencies and skills that continue to foster our growth.

We train our team to understand and practice the values of Enlightened Hospitality:

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We believe this culture is fundamental to the way we operate our business, and a key driver of our ability to deliver great guest experiences, and therefore, successfully grow our footprint.

Due to the challenging macro labor environment, which is present in both our field operations and home office, we are focused on attracting and recruiting talent as much as retaining our team members to grow and move the business forward.

We are doing this in the following ways:

▪ Building a diverse winning team, staffed for success.

▪ Creating a positive, uplifting team member experience through incentivizing total rewards and cultural programs.

▪ Providing leadership opportunities through multi-faceted development programs.

▪ Prioritizing compliance for scalable growth via technology and procedural initiatives while providing operational efficiency.

▪ Creating an environment that supports cultural alignment, process improvement, and enhanced communication.

Working at Shake Shack is about more than making a great burger, it's about creating elevated and uplifting experiences for our team members and guests and getting opportunities to build a rewarding career.

We strive to make every team member at Shake Shack feel empowered to impact our Shacks and the communities around them.

We promote a family of passionate, fun-loving, and hardworking people who encourage and uplift each other.

We are committed to doing the right thing for our teams, guests and communities.

We challenge ourselves, hold each other accountable, and take care of one another.

Working at Shake Shack is about more than making a great burger;

it's about creating elevated and uplifting experiences for our team members and guests and getting opportunities to build a rewarding career.

At Shake Shack, we are guided by and embrace the pillars of our Shack Pact — the set of values and behaviors necessary for us to achieve our mission.

When team members commit to upholding the Shack Pact, they contribute to our business's success and positively impact their work environment and our overall culture.

To live the Shack Pact, we lead with Enlightened Hospitality, do the right thing and hold each other accountable, uplift and take care of one another, and are optimistic and embrace ongoing learning.

We Stand For Something Good.

We have expanded our People Resources team to enable us to better navigate complex team member relations issues to prevent risk and litigation.

We've layered in predictive scheduling support to maximize Fair Workweek compliance across respective jurisdictions.

Additionally, we have aligned our safety and OSHA practices under one resource for the organization.

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We are enabling our managers to build, coach, and lead strong teams by giving them the knowledge, tools, and resources to drive strong people practices in their Shacks.

Key accomplishments include:

▪ Market Leader Training — Robust, in-person curriculum for exempt managers focused on driving compliance throughout the team member lifecycle.

▪ Predictive Scheduling Team and Tools — Built a team to cover predictive scheduling locations, multi-level audit procedures, and implemented a predictive scheduling tool.

▪ Shack Safe — Hired a dedicated OSHA and safety resource to establish a Safety Committee and programming to keep our teams safe, identify gaps, and meet statutory requirements.

Key initiatives included:

▪ Talent and Leadership Training — We have a wide variety of programming and courses for team members and management alike, including new competency-based leadership training.

Our programming is designed to support growth both personally and professionally.

We also launched our New Manager Program and piloted a high potential team member leadership program.

▪ Predictive Scheduling Team and Tools — Expanded our team and furthered our use of predictive scheduling tools that assists us with predictive scheduling compliance.

▪ Operations Talent Assessments — Management leader talent calibrations to discuss performance, capacity for growth, and succession readiness allowing for a full snapshot of where our talent resides alongside our continued growth.

With a focus on technology and automation, we are working to streamline and eliminate manual work for our teams while driving compliance and minimizing human error.

We are dedicated to the continuous improvement of technology, processes, and experiences within the Shake Shack team member journey.

In fiscal year 2022, we enabled a new recruiting platform and reporting technology that will help us continue to scale and grow.

The key accomplishments include:

▪ Building the People Resources Technology Team — Dedicated team to support growing administration needs, on-going level one people resources tech support, and more robust reporting and insights.

▪ Recruiting Platform — Implemented a new Applicant Tracking System (ATS), leveraging the strategic advantages of a fully integrated ERP.

Simplified high volume recruiting & hiring, enhanced candidate communication and experience.

Increased WOTC tax assessment rate.

▪ Messaging Capabilities — Enables Shake Shack to communicate with team members and candidates via modern communication channels.

We are dedicated to the continuous improvement of technology, processes, and experiences within the Shake Shack team member lifecycle.

In fiscal 2023, we made several improvements for our team member experience.

The key initiatives included:

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▪ Building our Employer Branding — Dedicated employer branding resource within Talent Acquisition to work cross functionally with Marketing to execute a recruitment marketing media strategy focused on brand awareness in new markets.

This included our Day in the Life of a Team Member video series and refreshed recruitment marketing collateral.

▪ Expanded Enterprise Resource Planning System (ERP) Resources — We expanded capabilities in our ERP system to deliver compliance training and increased access to information and support.

This included a new learning management system, a messaging platform to enhance candidate communication during the hiring process, and a knowledge portal with 230 help articles that was utilized over 29,000 times by team members.

▪ Employee Resources — We are developing a new team member handbook to be rolled out in 2024 that is being updated for new and current legal requirements.

Further, in fiscal 2023 we launched compliance and safety e-learning courses, which include materials tailored by location and level and automated course progress tracking.

▪ Improved Candidate and Hiring Platform — We began implementing a simple, intuitive, and mobile-friendly tool for our candidates to apply for roles and schedule interviews, with an expected rollout in early 2024.

This tool is intended to transform our candidate experience and aims to reduce hours spent by Shack managers on recruiting.

As of December 27, 2023, we had 12,196 team members, of whom 11,795 were hourly team members and Shack-level managers and 401 were home office personnel.

Recruit A Winning Team

Our largest opportunity in the performance of our current Shacks and new openings lies in fully staffing and retaining our Team Members.

Within the Talent Acquisition function, fiscal year 2022 has been a year of building a foundation to support the staffing needs of the business as well as new Shack growth.

By focusing on a framework that supports integration and automation, we are set up to tackle the competitive landscape of attracting and hiring top talent today and into 2023 with more data than ever before.

We are committed to better leveraging our external partnerships, working cross-functionally with Marketing, and utilizing analytics to deliver a strong talent acquisition strategy and employer branding presence.

With a robust candidate focused framework enabled for talent acquisition alongside an elevated employment branding effort, we look to execute a strategic vision to recruit the best and the brightest talent to our Shacks.

Taking into consideration the work we've done to stabilize our foundation, our current resources, labor environment and other competitive factors, we are focused on diversifying our talent acquisition strategy.

We will do this through a variety of recruitment media channels.

We have a full Team of Regional Talent Acquisition Partners and Coordinators supporting Operations.

We are also partnering with a new marketing media firm to leverage data and metrics to launch programmatic job advertising.

The firm will work to diversify our media and increase our network reach to include partnering on our diversity, equity and inclusion initiatives.

To keep pace with our continuing growth, we attract and hire talent by improving our employer branding landscape in alignment with our team member value proposition, and lean into new technology and development.

Within the Talent Acquisition function, fiscal 2023 has been a year of significant improvement to our applicant flow.

We achieved this by implementing and expanding automation tools to support the staffing needs of the business as well as new Shack growth.

By focusing on a framework that supports integration and automation, we have attracted and hired top talent more successfully than before, and have done so in a highly competitive labor market.

We are committed to improving relationships with external partners, collaborating cross-functionally, utilizing analytics to deliver a strong talent acquisition strategy, and enhancing our employer branding presence.

With a robust candidate focused framework placed alongside our refined employer branding message, we executed on our strategic plan to recruit the best and the brightest talent to our Shacks.

We have expanded our foundation and current resources, and remain focused on diversifying our talent acquisition strategy.

We have optimized our career site, began implementing a new mobile-friendly platform for applying and scheduling interviews to be rolled out in early 2024, and have created the framework and execution strategy to launch a college campus internship program and a new Shack recruitment guide.

The internship program will open up a new market that can consistently support our Shack staffing needs to keep pace with our growth, and our new Shack recruitment guide will establish groundwork to ensure we hire the right people to lead our new Shacks forward.

We have a full team of regional talent acquisition partners and coordinators supporting our operations.

We have partnered with a marketing media firm to focus on team member brand awareness and reach new markets for recruiting.

Reward A Winning Team

Our goal is to focus on providing highly competitive compensation and benefits to our Teams for their hard work and service.

With that we have grown our Benefits staff to enable us to have the dedicated Team to audit and improve our support processes as well as provide the care and communication to get our Teams what they need, when they need it most.

In fiscal 2023, we made great strides to improve employee retention and turnover rates.

We have evolved our value proposition for attraction and engagement to encompass a wider range of pay, benefits, and development.

We took steps to think differently about the designs and practices of our benefits, including health and well-being benefits, absence support, tipping and wages, and incentive plan evaluation.

We continue to work diligently to ensure our team members have access to benefits to support their personal and family wellness.

By unlocking opportunities in our benefits design, we provide new ways to more effectively and efficiently engage our teams.

Key initiatives included:

▪ Tipping — Our tipping availability has offered team members the opportunity for increased hourly wages and is optional if our guests are inclined to reward our teams for additional hospitality and service.

In fiscal 2023 we began running food to tables in nearly all Shacks to improve hospitality.

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Technology and education enable our Teams and management to have the best experiences for their health and welfare, and we will continue to develop our design and pay practices to reward a winning Team.

By unlocking opportunities in our design and processes, we provide new ways to more effectively and efficiently engage our Teams.

Key accomplishments include:

▪ Wellness — We initiated the first phase of a Wellness campaign through home grown communication, material curation, and partnerships to promote awareness and participation in events across a series of health and wellness topics.

▪ Shift Manager Bonus Eligibility — Beginning in fiscal 2022, Shift Managers are eligible to participate in the Shack Management Bonus Plan.

This group represents our largest Team providing supervisory support in our Shacks to both our Teams and Guests.

▪ Tipping — In 2022, we rolled out tipping at most of our Shacks across POS, App, Web, and Kiosk.

With our new tipping availability, Team Members have the opportunity to increase their hourly pay.

▪ Expanded Benefits — Expanded our health benefit offerings to include reproductive health benefits with options for family planning, coverage for pregnancy terminations, and counseling support.

▪ Team Member Recognition — Enabled consistency and ongoing recognition of team members, including standardizing the process of rewarding early career accomplishments for all team members.

We want to incentivize our Shack leaders, give them the opportunity to feel like owners and reward them for their performance.

One way we try to achieve this is by extending our equity-based compensation program to all General Managers.

As an incentive for General Manager hires, we added General Manager sign-on equity grants and created additional compensation opportunities for our General Managers.

We are not immune to the staffing challenges presented across our industry, but we are committed to building teams that drive growth for the long term.

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We are committed to delivering a strong pipeline of talent for our teams while retaining our solid performers.

Our Shacks must be fully staffed, operating at full capacity with optimized throughput to capture maximum sales potential.

We help foster an environment that attracts and welcomes diverse talent;

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and supports an engaging, and overall positive team member experience.

To solidify our culture, in 2022 we created meaningful opportunities for connection and engagement at our weeklong leadership retreat and evolved the Shack Pact core values that support our mission and brand commitments to help Team Members understand the behaviors needed to live our purpose.

We continued to lean into our team member value proposition by training managers in positive team member relations and effective people practices.

We have also established a recruiting and retention cross-functional workshop that assisted in identifying causes of our turnover and discovering possible hurdles to our retention that has allowed for several branding and engagement improvements.

We hosted regional talent meetings to get a holistic view of our operations leadership talent which included individualized talent assessments and calibration.

We plan to continue this exercise periodically to evaluate leadership gaps and potential capabilities.

We also look to broaden our continued education offerings and focus on development to further empower the frontline leaders of our business.

These practices will help drive retention, ensure compliance with existing and new regulations and establish Shake Shack as an employer of choice.

We Are All-In

To make sure every Shake Shack team member at every level has a positive experience, we strive to build an inclusive workplace, made up of diverse talent throughout the Company.

Our Diversity Equity and Inclusion (DEI) program, All-In, is part of that mission.

Our diversity, equity and inclusion program, All-In, is part of that mission.

With the support of executive leaders, All-In works to ensure Shake Shack provides equal opportunities for all, and removes obstacles or barriers to success, while also fostering a culture of inclusion and belonging.

Our All-In program's initiatives include:

▪ 5-Year Diversity Targets — We set time-based goals that help to focus attention, clarify accountabilities, and demonstrate our commitment to increase the diversity within our Shack and home office leadership Teams.

Our 5-year diversity targets were set based on analysis of our industry, demographics of the workforce at large and the changing landscape of this country, and the reality of whom we employ today.

We have focused our attention on women and people of color specifically, as we look to match the demographics of our workforce and the country at large.

▪ Employee Resource Groups (ERG) — We strive to foster a strong internal community and awareness for diverse groups and cultures through our ERGs.

▪ Workforce Diversity — We aim to be as diverse as the communities we serve.

Women make up 48%, and people of color comprise 76% of our total workforce.

Having diverse representation across all functions and levels of our business is key to our success and future growth.

Our team is committed to a continued focus on diversity and gender parity across all leadership roles.

▪ Employee Resource Groups (ERG) — We strive to empower our team members and strengthen the Shake Shack community through our ERGs.

Our current ERGs focus on women, Black, Hispanic, Asian, and LGBTQ+ identifying team members.

These are voluntary, Team Member led groups of people who gather based on common interests, backgrounds or demographics such as gender, race or ethnicity.

Led by volunteers and sponsored by members of our executive team, our ERGs actively work to educate the broader Company on their demographic group;

support each other through mentoring, networking, and professional development;

and provide their unique perspective on business initiatives.

We also host a Stand Together Series forum to discuss ongoing social issues.

It is an internal storytelling platform used to educate, connect, and inspire our team members to take action to create a more equitable and inclusive world.

Through the series, we have amplified the stories, experiences, and voices of diverse team members.

These groups support both personal and professional development while helping to foster an inclusive workplace.

▪ Diversity, Equity & Inclusion (DEI) Curriculum — All team members participate in our foundational DEI course which aims to help them understand what DEI means and why it’s important to Shake Shack.

In fiscal 2023, we improved our unconscious bias learning modules for leaders to better help them recognize bias and provide them with tools to address its harmful impacts in the workplace.

▪ External Recognition — For the fifth year in a row, we are proud to be recognized as a "Best Place to Work for LGBTQ+ Equality" by the Human Rights Campaign, earning a 100% score on their Corporate Equality Index for our support of the LGBTQ+ community in the workplace.

In addition, we were honored by Newsweek's America's Greatest

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▪ Diversity, Equity & Inclusion (DEI) Curriculum — We are building a DEI curriculum to raise awareness and educate our Team Members on how to foster a strong work environment.

The curriculum is aligned to our leadership and talent development framework, and provides a common framework for what DEI means and why it matters at Shake Shack.

All home office and operations Team Members participate in the course, including all new hires.

The curriculum plan also provides for unconscious bias and courageous leadership teachings.

▪ Stand Together Series — We host a Stand Together Series forum to discuss on-going social issues.

The Company-wide sessions served as an open forum and safe space for sharing personal stories to help deepen the collective understanding of diversity issues in the U.S.

while strengthening our community and Team.

In 2022, we hosted live sessions on topics such as women in leadership, Black-owned businesses, Asian and Pacific Islander heritage, LGBTQ inclusion, and more.

▪ External Recognition — We were proud to be named one of the "Best places to work for LGBTQ+ Equality" for the fourth year in a row earning a 100% score on the Human Rights Campaign's Corporate Equality Index for our support of the LGBTQ+ community in the workplace.

This designation highlights the core of our Enlightened Hospitality ethos and our commitment to a great workplace for all.

One of the ways we embrace Enlightened Hospitality internally is through the administration of our own HUG (Help Us Give) Fund, a 501(c)(3) organization available for all our Team Members.

The HUG Fund provides an opportunity for all Shake Shack Team Members to take care of each other through tax-deductible payroll and other one-time contributions.

The HUG Fund provides timely financial assistance to Team Members impacted by financially devastating circumstances far beyond their control and their means.

During fiscal 2022, we provided 41 Team Members with financial grants to help alleviate financial burdens caused by catastrophic events.

Workplaces series for Greatest Workplaces for Diversity, and Greatest Workplaces for Job Starters.

These designations highlight the core of our Enlightened Hospitality ethos and our commitment to a great workplace for all.

▪ LGBTQ+ Inclusion — We are committed to creating welcoming spaces for our team members and guests and continue to do so by educating our team members on how to be an ally through our LGBTQ+ ally guide and our new transgender ally guide.

In addition, we encourage our team members to share their pronouns and gender identity beyond binary classifications within our internal human capital system and wear patches on their work attire in our Shacks.

We address gender identity and sexual orientation discrimination as part of required anti-harassment training and work towards classifying more single-stall restroom facilities as gender inclusive in our Shacks.

One of the ways we embrace Enlightened Hospitality internally is through the administration of our own Help Us Give (HUG) Fund, a 501(c)(3) organization funded by and available for our team members.

The HUG Fund was created to support the values in our Shack Pact by providing timely financial assistance to team members impacted by emergency circumstances beyond their control and means.

Since launching in 2017, the HUG Fund has provided over 170 grants to help team members dealing with hardships such as loss of income due to major medical setbacks, homelessness or housing insecurity, and other family emergencies.

During fiscal 2023, we provided over 40 team members with grants to help alleviate financial hardships or emergency circumstances.

Leadership & Talent Development

We are dedicated to producing the human capabilities the Company needs to accomplish its business objectives, and to provide modern content and experiences that develop and retain Team Members.

As our learning culture continues to evolve, we have made consistent strides in creating a foundational footprint in various learning opportunities throughout the year.

We are focused on understanding who our leaders are, what their personal and professional developmental needs may be, and how to meet them where they are with scalable development opportunities.

In 2022, our leadership and talent development offerings were impactful in various ways.

From crafting and delivering our core leadership competency courses to coaching and preparing leaders to teach at the Leadership Retreat, we are in the beginning stages of laying an understructure of content, programs, and approaches essential to scale and grow alongside our people and business.

During 2022, development focus areas included:

We are dedicated to cultivating the human capabilities the Company needs to accomplish its business objectives, and to provide modern content and experiences that develop and retain team members.

At Shake Shack, we continue to rethink how we provide career growth opportunities with lattice mobility replacing the traditional promotion ladder to ensure team members continue to succeed in a market that is rapidly changing.

To help develop our Shack leaders, we created a library of content, programs, and approaches essential to scale and grow alongside our people and business.

During fiscal 2023, development focus areas included:

▪ Providing effective feedback

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▪ The culture of Shake Shack

▪ Train the trainer orientation practices

▪ Essential communication methods

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▪ Managing a team and delivering results

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Our Leadership Retreat was held in Tucson, AZ with the theme of Evolve Together.

Over the course of the week, nearly 1,000 Shake Shack leaders, licensed partners, and sponsors gathered from all over the world to connect, learn, and grow.

The event featured inspirational speakers, leadership development sessions, and the recognition of Team Members who contribute to Shake Shack’s success.

▪ New learning management system for trainings and measurement of completion and engagement

On-going Leadership Programs

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As our team continues to grow, we believe that our culture of Enlightened Hospitality helps us deliver a consistent Shack experience, and to develop future leaders from within.

One such program is The Shacksperience — a functional growth model and overall employment experience for Shake Shack Team Members.

A key element of The Shacksperience is the Steppin' Up Model, which defines the steps in the employment life cycle, from Team Member to General Manager.

It clarifies the eligibility requirements and training necessary for each position, outlines the growth opportunities at all levels of the organization and furthers our philosophy of "leaders training future leaders."

Through the Steppin' Up Model, Team Members are provided the opportunity to surpass the national average hourly wage through training roles and promotion to manager roles.

Efforts such as this allow us to continue to attract and retain the best restaurant talent, while recognizing the importance of our Team — the heartbeat of Shake Shack — to ensure current and future Team Members feel cared for and have opportunities for sustainable career growth.

We care about our Team and we're committed to setting them up for success, at Shake Shack and in their future careers.

In 2022, we promoted 2,604 people throughout our Company, 55% of whom were women and 77% were under-represented minorities.

In fiscal 2023, the learning and talent development team focused on our mission to promote, support, and enable people capabilities.

Shake Shack offers a wide variety of programs and courses that are designed to support growth and development including:

▪ Executive Education — In fiscal 2023, we launched a 14-week customized leadership course including a 360 degree assessment survey and a capstone project.

The course focused on upskilling leaders in key competencies and resulted in 15 high potential leaders receiving Columbia Business School certificates and a 95% satisfaction rate.

▪ Women's Leadership — In fiscal 2023, we hosted our largest gathering focused on women's leadership in Shake Shack history, with 88 attendees from all functions present for speakers featuring leaders as teachers covering topics such as advocacy, work-life balance, and finding personal purpose.

We focused on developing women leaders with facilitated dialogues with influential women leaders.

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▪ New Manager Leadership Program — Our New Manager Leadership Program within the home office provides new people managers with the tools needed to lead others effectively.

The six-week program covers key topics such as building the right team culture, providing critical feedback, and coaching for performance.

▪ Shift Up — The Shift Up program is our leadership development program for early career managers providing training to help improve their skill sets and grow their confidence to become senior leaders in our Shacks.

This 16-week classroom-style program aligns to our organizational competencies and supports the transfer of learning between graduates through cohort mentoring, business integration and real-world Shack experience.

During fiscal 2023, the Shift Up program had 88 participants, of which 14 were promoted into Manager-In-Training, Manager or California Non-Exempt Manager roles.

▪ Competency Development — We leaned into our competency development program, launching additional courses in fiscal 2023 and achieving 100% of our core competencies developed and over 50% of our leadership competencies developed.

We look forward to continuing to build out our library of courses, including leadership competencies and strategic competencies.

We care about our team and are committed to setting them up for success at Shake Shack and in their future careers.

In fiscal 2023, we promoted 3,234 people throughout our Company, 52% of whom were women and 76% were people of color.

We are proud of our leaders who graduate from hourly roles to managers, managers to General Managers and General Managers to regional leadership.

This year, 72% of our new General Managers and 58% of new Area Directors were promoted from within.

Another part of our long-term investment in our people is the Shift Up program, which is our development program that provides an avenue for mid-level managers to improve their skill set and ability to move to the next level of management.

In partnership with Food Education Fund, a nonprofit organization specializing in culinary arts, we developed a curriculum and program to help bridge the gap between Shift Managers and Exempt Managers by offering and teaching the skills necessary to enable the confidence that can lead to career growth.

This 18-week classroom-style program aligns to our organizational competencies and supports the transfer of learning between graduates through cohort mentoring, business integration and real-world Shack experience.

During fiscal year 2022, the Shift Up program had 86 participants.

Additionally, the program had a 88% completion rate and 91% retention rate for fiscal year 2022.

Of the 86 participants, 31 Team Members were promoted into Manager-In-Training, Manager or California Non-Exempt Manager roles.

GUEST EXPERIENCE

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We achieve this through innovations in service, trendsetting culinary innovation, and the design of warm community gathering places.

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Digital Evolution

The focus of our digital strategy is to deliver Enlightened Hospitality to our guests across multiple channels.

Through modern platforms, we continuously strive to build more frictionless ways to deliver the unique Shake Shack experience with convenience and accessibility.

Through modern platforms, we continuously strive to build more frictionless ways to deliver the tailored Shake Shack experience with convenience and accessibility.

Our digital initiatives are defined by each of the following themes:

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▪ Smarter Every Day — Building and refining our data platform and overall digital approach so we may drive return on investment on marketing campaigns and technology spending and improve our ability to make smart decisions that fuel growth.

As we have evolved our Shack design to serve our guests more efficiently, the continued development of our digital ordering tools has also been essential.

The COVID-19 pandemic accelerated those plans, as we used those tools to connect with our guests directly, more frequently, and safely while focusing on a return to growth in the process.

Our Company-owned web and app channels continue to grow in the number of web sessions and app users on a year-on-year basis, driven by our ongoing focus on acquiring and converting users across our digital ecosystem.

In 2022, we focused on leveraging growth in guests visiting us on web as a lead funnel to our mobile apps, which offer a better guest experience and drive higher frequency.

As a result, we saw meaningful increases in our mobile orders year over year, further enabled by ongoing investments in our guest experiences.

In fiscal 2022, we continued to improve our digital guest experience by enhancing our digital offerings.

We improved and expanded our ability to interact with guests before and after purchases by implementing new lifecycle marketing and customer support solutions.

We continued to improve the guest order experience as well, by adding kiosks to a number of Shacks, launching new gift card capabilities, the introduction of pick-up tipping, an all-new Android app, and iterating on 2021’s web redesign with a streamlined order creation flow.

We are focused on driving traffic to our Company-owned web and app channels, including growing the number of web and app sessions by acquiring and converting users across our digital ecosystem.

Our mobile apps drive higher frequency and offer a better guest experience, which we will continue to invest in.

We also continue to offer third-party delivery through Uber Eats, DoorDash, Grubhub and other third-party delivery providers.

Lifecycle Marketing:

To enhance our ability to drive frequency across digital channels, we integrated Braze as a lifecycle marketing and automation tool.

Through Braze, we elevated the guest onboarding experience into our marketing funnel by automating this process, providing information about our brand relevant to guest preferences and behavior, and re-enforced how we Stand for Something Good in everything we do.

We also introduced more timely, personalized content and targeted digital offers, and are using these tools to drive guest frequency.

We have unlocked the capability to personalize and test multichannel campaigns, with digital touchpoints across email, push notifications, and in-app messaging, by a guest’s location and digital ordering behavior which has led to an incremental lift in users who visit our website and mobile apps.

With a better sense of guest behavior and real-time targeting, we’re able to provide our digital guests with a better experience inclusive of targeted offers and app exclusive items.

These efforts have led to meaningful growth in our marketable digital audiences with email subscription and push notification subscription both increasing since the launch of Braze in June 2022.

Overall, we’re seeing an incremental lift in digital sessions as a direct result of the campaign targeting we rolled out with Braze this year.

Android Modernization

In February 2022, version 2.0 of the Android Shack app launched which delivered new capabilities and a better guest experience while bringing development control of the platform in house.

This release saw dozens of under the hood improvements, including making the app more stable and faster to launch, but primarily focused on a few marquee feature introductions.

Specifically, we introduced new order modes to Android including delivery, curbside, and walk-up that made it easier for guests to experience

Content Cards

Last year, we completed an integration with Braze to unlock new abilities to drive frequency across our digital channels including push notifications and email targeting.

In fiscal 2023, we continued the investment here by integrating more of Braze’s product

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Shake Shack however they preferred.

Additionally, we made it easier for guests to transact on the Shack app by introducing Google Pay, which streamlines numerous steps in the checkout process.

Since launching in February, we’ve continued to iterate on the Android app through improvements to the order experience.

This Fall, we made it even easier to start building an order from the app’s home screen, increasing the number of guests who add an item to their bag.

offerings across our own digital channels.

Specifically, we implemented Braze’s Content Cards to present personalized offers across our app and web channels.

Guests can now see and receive personalized offers and content on our app and web home screens, as well as in their personalized notification center.

These features are still in the early adoption phase, but we have already seen incremental sales driven by redemptions of offers on our app and web channels.

Kiosk Product Customization

In September 2023, we introduced a new functionality on our kiosks that highlights a prescribed customization to many of our menu items in order to increase visibility of attachment and modification options to our guests.

Since the launch, we continue to refine this feature to ensure our kiosk experience enables us to deliver Enlightened Hospitality to our guests on this channel.

We have seen strong adoption from our guests, as we are seeing prescribed customization attachment rates on par or higher than attach rates on our digital platforms.

Digital Hospitality:

As our guests have become more accustomed to our digital channels, it’s increasingly important for our Hospitality team to be able to meet the guest wherever and whenever they prefer.

To help us reach guests faster and on more channels, we implemented Gladly as a new customer engagement platform.

Through Gladly, our Hospitality team is able to deliver Enlightened Hospitality beyond the in-Shack experience by improving the speed and effectiveness by which we resolve guest contacts.

Since launching in August, we’ve seen an improvement in hospitality case resolution time for our guests.

Prior to 2022, guests were unable to redeem gift cards on any digital channel.

Gift cards are a key pillar in our guest experience strategy, as it’s one of the best ways for guests to share Shake Shack with their friends and loved ones.

To make sure guests get the full utility of their gift cards, we migrated to a new gift card partner and introduced digital redemption in the fourth quarter of 2022 across web, iOS, and Android.

We also took this opportunity to improve the purchase experience for both in-Shack and digital gift cards as well, introducing a new digital portal for purchases, and a streamlined in-Shack experience.

Our new gift card partner also unlocks the opportunity for B2B sales of Shake Shack gift cards which we look forward to exploring in early 2023.

Tipping on all non-delivery order modes

We’ve heard from guests that they would like the opportunity to tip our team members.

In 2022, we introduced the ability to tip on all order modes across all digital channels and in our Shacks.

Guests who are dining in-Shack or taking their order to-go can show appreciation to Shack team members by tipping.

Website optimization

We continued to evolve our web experience in 2022 by focusing on making the ability to start and complete an order more intuitive.

We made foundational changes to the way guests start an order on our website by moving to a traditional e-commerce “bag” as the core shopping component while streamlining the interactions for adding items to that bag.

As our guests have become more accustomed to our digital channels, it is increasingly important for our hospitality team to be able to meet the guest wherever and whenever they prefer.

We expanded our customer engagement platform with the launch of a chat feature on our website that allows guests to engage live with our hospitality team to remediate any order issues they encountered.

This investment continues to empower our hospitality team to deliver Enlightened Hospitality beyond the in-Shack experience by improving the speed and effectiveness by which we resolve guest contacts.

We have heard from guests that they would like an easier way to order multiple items at once.

In response, we introduced large order boxes in the first quarter of 2023, which allows guests to purchase 12 ShackBurgers and 12 servings of crinkle cut fries.

Since then, we have expanded the menu items available in large order boxes to include Chicken Shack, Veggie Shack, ‘Shroom Burgers, Cheese Burgers, and Hamburgers.

Location Selection on iOS

We took fiscal 2023 as an opportunity to modernize the location selection experience on our iOS app and introduced a new, map-centric flow that allows guests to seamlessly select a Shack during their order building experience.

Engaging the Community

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Our Shacks are so much more than a place to get burgers, fries and shakes;

they’re places for the community to safely gather.

We place a high premium on connecting with our communities whether through the physical design of our Shacks or by the local causes we support.

Although more of our guests are enjoying us through our omnichannel experience, including our digital options, in-Shack dining remains a good opportunity for the long term growth of our business.

they’re places for the community to gather.

We place a high premium on connecting with our communities through the physical design of our Shacks or by the local causes we support.

We provide the option of an omnichannel experience to suit the needs of our guests wherever and however they want their Shack today.

We remain laser focused on delivering a great guest experience both digitally and in-Shack with elevated offerings reflective of our fine-dining culinary roots.

In fiscal 2022, our same-Shack sales grew 7.8% year over year driven by 4.9% traffic growth.

This strength was led mostly by a consistent return to in-Shack dining, a trend we like to see.

With more guests wanting to gather, there is an increased energy felt across our Shacks which remains a competitive advantage for us and part of our strategy to provide a great guest experience no matter how our guests prefer to order.

No matter the format or region, each Shack is specifically designed to be of its place and connect with its community.

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large, distinctive menu boards;

and comfortable, distinctive furniture that advances our sustainability initiatives.

and comfortable furniture that advances our sustainability initiatives.

We believe these identifiers are key components to the expression of the brand and the Shake Shack experience.

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The overall atmosphere of our Shacks evokes our original upbeat and relaxed park ambiance, combined with the fine-dining experience that has become part of our brand's DNA.

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Additionally, whenever possible, our Shacks feature either outdoor seating or easy access to a park or green space.

We are actively focused on creating standardization and prototypes to bring down build costs over the long term while still maintaining the relaxed atmosphere of Shake Shack's design.

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Each Shack is designed to convey a consistent brand message while also tailoring marketing efforts to its specific region.

We offer menu items that feature ingredients and beers specific to each Shack's community, and we often team up with local chefs and restaurants to offer our guests unique, collaborative menu items.

We may offer menu items that feature ingredients and beers specific to each Shack's community, and we often team up with local chefs and restaurants to offer our guests unique, collaborative menu items.

We also collaborate with local artists and designers to bring beautiful artwork and installations to our Shacks.

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In addition to special events, we regularly serve our communities in a variety of ways including 25% Donation Days to show support for local schools and organizations.

Supporters who participate in these fundraisers have a portion of their order totals donated to a local nonprofit.

Guests can support by mentioning the fundraiser when checking out in-Shack or using a fundraiser code on the Shack app for pick-up or delivery.

Guests who participate in these fundraisers have a portion of their order totals donated to a local nonprofit by mentioning the fundraiser when checking out in-Shack or using a fundraiser code on the Shack app for pick-up or delivery.

Additionally, we provide a Donation Day flyer for the local school or organization to use as an invitation to the community.

For all new Shack openings, we partner with local charities for opening day.

In some markets, we have existing tenured partnerships with organizations, like Food Bank of the Rockies in Colorado, and in others we are building new relationships in our local communities with every Shack we open.

In 2022, we matched $1 for every sandwich purchased at every new Shack opening day back to our chosen local nonprofit partner.

As we continue to grow our footprint across the U.S., our opening day charitable partners are a great example of how we continue to drive home our Stand for Something Good mission.

We listen to our communities and seek opportunities to get involved, whether it is charity events or disaster relief, we are on the ground helping.

For certain new Shack openings, we partner with local charities for opening day.

In some markets, we have existing tenured partnerships with organizations, like Food Bank of the Rockies in Colorado, and in other markets we are building new relationships in our local communities with Shacks we open.

At select new Shack openings in fiscal 2023, we donated $1 from each designated menu item sold on opening day to the chosen local nonprofit partner.

As we continue to grow our footprint across the U.S., our opening day charitable partners are an example of how we continue to drive home our Stand for Something Good mission.

We listen to our communities and seek opportunities to get involved;

whether it is charity events or disaster relief, we are on the ground helping.

We regularly donate cash, food and gift cards to support dozens of local nonprofit organizations, schools, and hospitals around the country.

For example, in 2022, we donated $10,000 to Children’s Hospital Los Angeles as part of their annual Make March Matter campaign.

We find ways to support charity events and often serve food such as our involvement this year at the Hilarity for Charity Annual Gala, Ping Pong for a Purpose, Taste of Asia, Hole in the Wall Gala, and so many more.

For example, in fiscal 2023, we donated approximately $8,000 to local children's hospitals as part of Child Health Day and made donations to local food banks, parks, and youth sports through our Shake Shack Pickleball Club event series.

We find ways to support charity events such as serving food at Taste of the Cowboys, Alex's Lemonade Stand, Southern Smoke Festival, DC Commanders Holiday Charity Bowling, Love Rocks NYC and so many more.

Engaging with our Guests

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Through our social media presence, we bring Enlightened Hospitality to new audiences by mirroring the in-person experience a guest has when they visit a Shack.

We interact with fans across Facebook, Instagram, Twitter, TikTok and more by sharing engaging content, comments, replies and the use of user-generated content;

We interact with fans across Instagram, TikTok, X (formerly Twitter), Facebook, and more by sharing engaging content, comments, replies and the use of user-generated content;

a quick search of "#shakeshack" on Instagram reveals over 1.1 million organic posts from our fans.

This year, we doubled down on our creator partnerships, expanded our brand storytelling with new types of content and even ventured into gaming by building a Shake Shack in The Sims 4.

This year, we doubled down on our creator partnerships, expanded our brand storytelling with new types of content and introduced several timely partnerships from Spirit Halloween to Universal Pictures.

In addition to social media, we also connect with our guests through our email marketing program via targeted menu item alerts, local event invites, new Shack opening information and other relevant Shake Shack news.

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Media, Product Placement and Influencers

Shake Shack’s unique positioning has helped us garner robust media coverage across food, lifestyle, business and trade publications.

We have also been featured across various media outlets, allowing us to increase brand awareness and be a key voice of leadership in the industry.

Shake Shack’s popularity and cultural relevance are reflected in our countless celebrity and influencer fans across Hollywood, music, fashion, sports and more.

We have also been featured across various media outlets, allowing us to increase brand awareness.

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Shack’s popularity and cultural relevance are reflected in our many celebrity and influencer fans across Hollywood, music, fashion, sports and more leading to Shake Shack showing up organically outside of larger brand initiatives.

Campaigns, Promotions and Events

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Some notable campaigns, promotions and events included:

▪ Enrique Olvera x Shake Shack — We teamed up with world renowned chef Enrique Olvera to bring a taste of Mexico City to our West Village and Santa Monica Shacks.

Over the course of the four nights across two cities, over 200 guests, more than 40 influencers and media enjoyed a unique Shack dining experience starring the Ant Burger among vibrant greenery, live music and smoky palo santo.

▪ Apotheke x Shake Shack Candle Duo — We launched a candle duo with Apotheke, a NYC-based luxury home fragrance brand.

We worked closely with Apotheke to create two unique scents, Burger in the Park and Shake & Fries, that celebrate the spirit of NYC, our love of innovation and creating warm spaces that are welcoming to all.

Fans proved to be excited about the collab because the candles sold out in less than two days.

▪ EEEEEATSCON with the Infatuation — This year, we headlined NYC and LA EEEEEATSCON.

In New York, we teamed up with Hoppers, a Sri Lankan restaurant in London, to create the Lankan Shack.

Originally created for our London Shacks, the Lankan Shack is a cheeseburger topped with curry-braised short rib, coriander chutney mayo, mustard cream, pickled red onion, fresh coriander and green chilli served on a toasted potato bun.

In LA, we partnered with Tacos y Birria La Unica, a beloved family-owned LA food truck, to create the Birria Shack:

a Jack cheeseburger, Birra de rez, hand-made corn tortilla, onion, cilantro, and Shack Sauce, served on a birria-buttered potato roll, with an optional side of consommé for dipping.

▪ Una Pizza x Shake Shack — We teamed up with chef Anthony Mangieri of Una Pizza Napoletana to offer a three-course menu at Madison Square Park.

This was our first time executing a pre-ticketed event, which sold out in just over a day, and offering an upscale, prix fixe service style for collab, paying tribute to our fine dining roots.

Over the course of two nights, 200 guests sat down to enjoy a three-course meal with wine pairings and live Italian music under string lights in the park.

▪ Hot Ones Tasting Event — To promote the Hot Ones menu, we hosted a press and influencer event at the Santa Monica Shack.

Given Hot Ones' deep connection to the celebrity and entertainment world, the event served as an excellent moment to further cement Shake Shack as a key player in the LA market.

▪ The Drew Barrymore Show — John Karangis, our Executive Chef, was featured on The Drew Barrymore Show.

The episode, which also starred Ina Garten, included a segment titled "Drew's News" where John and Ina showcased our signature Chicken Shack.

In the segment, John shared a bit about our origin story and fine dining roots.

▪ Shake Shack Pickleball Club — This year, we launched the Shake Shack Pickleball Club ("SSPC").

We hosted SSPC events in multiple cities, including Chicago and Los Angeles.

The events were so popular among the tight-knit pickleball community that we had to turn down many walk-ups, and even had an audience of spectators who came out just to watch the tournaments.

Pickleball is a great way for us to engage with the communities outside of the Shacks.

▪ Shack Jams with Sofar Sounds — To amplify our Bourbon Bacon Cheddar campaign, we hosted a six-city concert series in partnership with Sofar Sounds called Shack Jams.

Throughout the series, we turned select Shacks into unexpected concert venues, hosted over 400 guests and highlighted our culinary innovation.

▪ Veggie Shack & Non-Dairy Launch — After months of taste tests, we unveiled three new plant-based options that are now a part of our core menu.

The Veggie Shack comes as a veggie option made from a proprietary blend of real garden vegetables and grains, seared to perfection with American cheese, pickles, crispy onions and ShackSauce all on a toasted potato bun.

The Non-Dairy Chocolate Shake and Non-Dairy Frozen Custard are made with NotMilk from NotCo – providing a plant-based dessert option for guests.

▪ Truffle Table — To celebrate the White Truffle Menu offerings, we tapped into our fine-dining roots to bring “The Truffle Table” to select Shacks across the country.

From February 27 to March 2, participating locations hosted a fine-dining pop-up complete with white tablecloths and a prix fixe tasting menu for $20 per guest.

▪ Super Mario Bros x Shake Shack — We teamed up with Nintendo’s The Super Mario Bros movie and offered fans an unforgettable takeover experience at our DUMBO Shack including exclusive menu items like the Gold Star Shake and 4 Cheese ‘Shroom + Fire Sauce.

The in-store experience opened to the public and greeted the first 100 guests each day with exclusive swag items.

For those not in the New York City area, we offered the chance to win tickets to see the film for any guests who ordered the ‘Shroom burger via the app or online.

▪ Trolls x Shake Shack — To bring some extra holiday cheer, we teamed up with DreamWorks for the release of Trolls Band Together and created three holiday shakes inspired by the Trolls characters Poppy, Branch and Viva.

The holiday shake trio is inspired by elements of the Trolls Band Together characters as well as exciting new flavors including Pink Sugar Cookie, Mint Chocolate and Cinnamon Roll, served in limited-edition Trolls-themed packaging.

To further drive excitement of the shakes, we created three larger-than-life Troll heads that popped up at our West Hollywood and Beverly Hills Shacks in parallel with the movie release.

▪ Nina Compton x TABASCO x Shake Shack — We teamed up with renowned award-winning chef Nina Compton to bring a taste of New Orleans to a New York City and New Orleans Shack.

Over the course of the two nights across two cities, guests enjoyed a selection of delicious dishes, including Crawfish Grilled Cheese, Gumbo and Chef Nina’s Fried Chicken Sandwich – all infused with the flavors of TABASCO hot sauces.

▪ Chief Avocado Officer — To drive awareness of our Avocado Bacon Menu, we invited fans to apply to be Shake Shack’s first-ever Chief Avocado Officer (CAO) through a fun “job application” where they could share their passion for avocados.

The CAO campaign served as a unique way to talk about our core menu offerings and play up our premium ingredient story while also giving our fans a new way to engage with the brand.

We had an estimated TV audience of over 4 million who watched local news stories about the CAO role as a result of our press outreach.

▪ STUDS x Shake Shack — We teamed up with STUDS, a cult-favorite ear-piercing brand, to create a limited-edition Burger huggie earring.

In partnership with STUDS, we hosted an influencer event in New York City, consumer events in key markets including Los Angeles, Chicago, New York, and Dallas and coordinated burger drops to key media offices.

▪ EEEEEATSCON with the Infatuation — This year, we headlined Chicago, New York City and Los Angeles EEEEEATSCON.

In Chicago, we teamed up with Esmé, a fine-dining restaurant known for fun dishes, to create the Esmé Shack and Hot N Spicy Custard featuring Esmé’s signature Cheeto puffs.

In New York City, we teamed up with WenWen, a Taiwanese restaurant in Brooklyn, to create the Taiwanese Beef Noodle Soup Burger and a Jade Rouge Milk Tea Sundae.

In Los Angeles, we partnered with Found Oyster, a Hollywood-based restaurant bringing east coast seafood shacks and west coast flavors together, to create a Chicken Schnitzel and Loaded Fries.

Capitalizing on Our Brand Strength

Since 2004, Shake Shack has become a globally recognized brand with significant consumer awareness relative to our current footprint of 518 Shacks system-wide.

We pride ourselves on providing a vibrant and authentic community gathering place that delivers an exceptional experience to our loyal guests.

One great advantage for Shake Shack has been our birthplace and

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▪ "Eat Cute” - Door Dash x Shake Shack — For Valentine's Day we teamed up with DoorDash to empower singles.

We created a dating site for Buffalo Chicken sandwich lovers called ‘Eat Cute,’ to help break the ice and spice things up.

Singles who matched on our dating site could send each other a code to redeem for a free Buffalo Chicken Sandwich.

▪ Maker’s Mark Distillery Trip — In June, we took 15 influencers to Kentucky to celebrate and promote our Bourbon Bacon Cheddar menu.

The trip consisted of a two-day experience including a welcome happy hour at our Lexington Shack, a full day Maker’s Mark distillery tour, an elaborate three-course dinner curated by our chefs, post-dinner cocktails and live music.

▪ Shake Shack x Not Co at The W South Beach — To celebrate our Non-Dairy Chocolate Shake and Custard, we hosted an event at the W South Beach in partnership with NotCo.

The event theme was “treat yourself,” with curated experiences like cryotherapy facials, Shack inspired nail art, hair braiding and of course, a shake and custard station.

We saw a great turnout from top-tier Miami lifestyle and food influencers as well as key reporters and bloggers.

Capitalizing on Our Brand Awareness

Since 2004, Shake Shack has become a globally recognized brand with significant consumer awareness relative to our current footprint of over 430 Shacks.

We pride ourselves on providing a vibrant and authentic community gathering place that delivers an exceptional experience to our loyal guests.

One great advantage for Shake Shack has been our birthplace and headquarters in New York City, and our origination from a fine dining company.

headquarters in New York City, and our origination from a fine-dining company.

This gives us tremendous media and brand power, often outweighing our relative size.

Shake Shack continues to receive recognition for being a fan and industry favorite.

In fiscal 2022, Shake Shack was awarded QSR Magazine's Best Brands to Work For, USA Today 10 Best Reader’s Choice Awards, and Nation’s Restaurant News’ Top 500 2022.

Culinary Innovation

In fiscal 2023, Shake Shack was awarded USA Today 10 Best Reader’s Choice Awards, Newsweek's Greatest Workplaces for Diversity, Fast Company's Innovation by Design (Drive Thru) and more.

Culinary Approach

Shake Shack's unique value proposition is partially defined by our roots in fine-dining.

We embrace that heritage and are committed to sourcing premium ingredients, such as antibiotic- and hormone-free proteins while offering excellent value to our guests.

Our core menu is inspired by the finest versions of the classic American roadside burger stand.

Occasionally, we supplement our menu with limited time offers, and we experiment with potential new categories we may consider adding to the menu over time.

We embrace that heritage and are committed to sourcing premium ingredients, such as antibiotic-free and no added hormone proteins while offering excellent value to our guests.

Our core menu is inspired by elevated versions of American classics.

We often supplement our menu with limited time offers, and we experiment with potential new categories we may consider adding to the menu over time.

We are committed to culinary creativity and excellence, collaborating with award-winning chefs, talented bakers, farmers and artisanal purveyors, each of whom bring their unique skills and expertise to the Shake Shack experience.

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While ingredient specifications and menu options can vary by country, the core menus at our US-based locations include the following:

Our burgers are made with a proprietary whole-muscle blend of 100% all-natural, hormone and antibiotic-free Angus beef, ground fresh, cooked to order and served on a non-GMO potato bun.

Our burgers are made with a proprietary whole-muscle blend of 100% all-natural, no added hormone, and antibiotic-free Angus beef, ground fresh, cooked to order and served on a non-GMO potato bun.

We take great care in the preparation of our burgers — from sourcing, to handling, to cooking — to ensure their taste and quality is second to none.

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Our burger offerings also include the SmokeShack®, 'Shroom Burger™ (a vegetarian burger), Shack Stack®, Avocado Bacon Burger and Hamburger.

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Our Chicken Shack is a 100% all-natural, hormone-free, antibiotic-free and cage-free chicken breast, slow cooked in buttermilk herbs, hand-battered, hand-breaded and crisp-fried to order.

Our Chicken Shack is a 100% all-natural, no added hormone, and antibiotic-free chicken breast, slow cooked in buttermilk and herbs, hand-battered, hand-breaded and crisp-fried to order.

Our Chicken Bites are made with all-natural, antibiotic-free whole muscle chicken that is sous-vide cooked for optimum flavor, moisture and texture.

Crinkle Cut Fries

Our classic, passionately beloved crinkle cut fries are made from premium Yukon potatoes and are prepared 100% free of artificial trans fats.

Our classic, passionately beloved crinkle cut fries are made from premium potatoes and are prepared 100% free of artificial trans fats.

So many of our guests love the crispiness and ridges of our crinkle cut fries;

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Shake Shack was born as a hot dog cart in 2001 and we’re proud to honor that legacy by continuing to offer a premium hot dog.

Our hot dogs are made from 100% all-natural, hormone and antibiotic-free beef.

Our hot dogs are made from 100% all-natural, no added hormone and antibiotic-free beef.

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Shakes and Frozen Custard

Our premium, dense, rich and creamy frozen custard, hand-spun daily on-site, is crafted from our proprietary vanilla and chocolate recipes.

Our premium, dense, rich and creamy frozen custard, hand-made daily on-site, is crafted from our proprietary vanilla and chocolate recipes.

We use only real sugar (no high-fructose corn syrup) and milk from dairy farmers who pledge not to use artificial growth hormones.

Shakes remain our guests' favorite in this category, and they're scooped and spun to order.

Shakes remain our guests' favorite in this category, and they're scooped and hand-spun to order.

Beer, Wine and Beverages

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Our Shack Red®, Shack White® and Shack Rose wines are sourced and produced exclusively by Gotham Project, providing our guests with premium beverage options not commonly found in our industry;

a nod to our fine dining heritage.

In addition, we serve Abita Root Beer, Shack-made lemonade, organic fresh brewed iced tea, Fifty/Fifty (half lemonade, half organic iced tea), Honest Kids organic apple juice and Shack|20® bottled still and sparkling waters, from which 1% of sales help support the clean-up of water sources around the world.

a nod to our fine-dining roots.

Innovation Kitchen

Our Innovation Kitchen is located on the lower level of the West Village Shack and connected to our home office and allows us to explore exciting new menu items for our guests.

Our Innovation Kitchen is located on the lower level of the West Village Shack in New York City, connected to our home office and allows us to explore exciting new menu items for our guests.

The culinary team uses this dedicated space to get even more creative, dig deeper into our fine-dining roots, collaborate with other chefs and explore new opportunities as we continue to grow.

The West Village Shack’s menu has all our classic items and features items from the Innovation Kitchen, with guest-favorite test items potentially becoming permanent menu items.

The West Village Shack’s menu has all our classic items and features items from the Innovation Kitchen, with guest-favorite test items potentially becoming national limited time offerings and permanent menu items.

This space also allows us to house our quality assurance and culinary teams together, ensuring that every item on our menu meets our strict standards.

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Our LTO program generally features a new, premium burger or chicken sandwich, and special fry options for varying time periods throughout the year along with unique beverages and shakes.

Some of our notable LTOs throughout 2022 were:

▪ Buffalo Chicken Sandwich and Fries — In January we put a Shake Shack spin on the classic Buffalo Chicken Sandwich, paired with Buffalo Spiced Fries and Buffalo Spiced Cheese Fries, all complete with our signature ranch sauce.

▪ Bourbon Bacon Cheddar Burger and Chicken — In May, we partnered with renowned bourbon producer Maker’s Mark to bring a Bourbon Bacon Cheddar menu to Shacks, which featured a burger and chicken sandwich that showcased a bourbon bacon jam made with Maker’s Mark Bourbon and applewood smoked bacon.

▪ Hot Ones Burger Menu — Partnering with the hit YouTube interview series, Hot Ones™ from First We Feast™, this menu focused on a spicy version of our signature ShackSauce by incorporating hot sauces made by the creators of the hit YouTube series.

The spicy ShackSauce was highlighted on the Hot Ones Burger, chicken sandwich, and fries.

Some of our notable LTOs throughout fiscal 2023 were:

▪ White Truffle Burger, ‘Shroom and Parmesan Fries — In February, we put an elevated spin on our burger, pairing it with a signature white truffle sauce made with real white truffle oil.

The menu also featured our iconic 'Shroom Burger in an LTO menu for the first time ever and White Truffle Parmesan Fries.

▪ Bourbon Bacon Jam Burger — In June, we brought back a fan-favorite from 2022 and partnered with renowned bourbon producer Maker’s Mark to feature a burger that showcased a bourbon bacon jam made with Maker’s Mark Bourbon, crispy onions and applewood smoked bacon.

▪ Hot Menu — In September we launched a new Hot Menu with the return of our classic Hot Chicken alongside a new Spicy ShackMeister Burger.

The menu was complete with Spicy Fries and Spicy Cheese Fries bringing the heat.

▪ Featured Shakes — Throughout fiscal 2023 we offered our guests new shakes, including fan-favorites like Tiramisu and OREO Cookie Funnel Cake, while launching exciting new shakes like Dreamsicle and Triple Chocolate Brownie.

We partnered with PFLAG during Pride month by encouraging guests to sprinkle their June with Pride by adding sprinkles to any shake or frozen custard;

the sprinkle sales were donated to PFLAG.

In November, we launched our Troll’s Holiday Shakes, a collaboration with Universal Pictures and DreamWorks Animation to celebrate the launch of the new Trolls Band Together film with tasty shakes inspired by beloved Trolls characters.

▪ Lemonades — Throughout fiscal 2023, we launched seasonal flavors like Dragonfruit Pomegranate Lemonade, Kiwi Apple Limeade, Blood Orange Lemonade, Harvest Berry Lemonade and fan-favorite Sunset Lemonade along with corresponding Fifty/Fifty options.

We also offered caffeinated versions of these specialty lemonades to add a little boost to guests’ beverages.

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▪ Featured Shakes — Throughout 2022 we offered our guests new shakes, including collaborations on flavors like Wake & Shake with Red Bay Coffee and Chocolate Pie with Four & Twenty Blackbirds.

In June we partnered with the Trevor Project during Pride month by donating 3% of sales from our limited time shake trio, OREO Funnel Cake, Sprinkle Cookie and Chocolate Churro shakes.

In September, we launched seasonal shakes with our Pumpkin Patch, Apple Cider Donut, and Choco Salted Toffee shakes.

Additionally, we brought back fan-favorites for our trio of holiday shakes during November and December, which included Christmas Cookie, Chocolate Milk & Cookies, and Chocolate Peppermint.

▪ Lemonades — Throughout 2022, we launched seasonal flavors like Hibiscus Lychee Punch, Kiwi Apple Limeade, Mango Passionade, Harvest Berry Lemonade and fan-favorite Strawberry Lemonade along with corresponding Fifty/Fifty options.

Exclusive Offerings

In addition to supplementing our menu with Shack-wide LTOs, we also seek to create new, exciting offerings that are inspired by local favorites or special events.

Some examples of our exclusive offerings from 2022 included:

▪ Veggie Shack — In November, we launched an updated vegetarian sandwich at select locations with crispy onions, pickles, ShackSauce, American cheese, and a vegetarian patty packed with real vegetables and grains like quinoa, mushrooms, and sweet potatoes.

▪ Non-Dairy Chocolate Shake and Frozen Custard — In May, we partnered with NotCo to offer a non-dairy chocolate frozen custard and non-dairy chocolate shake at select locations in NYC and Florida.

▪ Caffeinated Lemonades — In June, we launched our first-ever caffeinated lemonades at select Shacks in San Diego, featuring Strawberry Lemonade, Mango Passionade and Cherry Hibiscus, made in-house with naturally caffeinated green coffee extract and guarana.

▪ Frozen Lemonade — At our West Village Shack, we offered a Strawberry Frozen Lemonade for the Summer season, made with real strawberries and lemon juice.

In addition to supplementing our menu with Shack-wide LTOs, we also seek to create new, exciting options.

Exclusive offerings from fiscal 2023 included:

▪ Veggie Shack — In May, we launched a vegetarian sandwich at all locations with crispy onions, pickles, ShackSauce, American cheese, and a vegetarian patty packed with real vegetables and grains like quinoa, mushrooms, and sweet potatoes.

▪ Non-Dairy Chocolate Shake and Frozen Custard — In May, we partnered with NotCo and launched a non-dairy chocolate frozen custard and non-dairy chocolate shake at all of our U.S.

GROWTH STRATEGIES

Fiscal 2022 remained a challenging year for our business as permitting delays and equipment availability resulted in pressures on our development schedule and sales growth.

Amidst these challenges, we added 67 net new system-wide Shacks and reached 436 Shacks worldwide.

We remain well-positioned to continue significant, sustainable financial growth and we plan to continue to execute our growth strategies while remembering to Stand For Something Good in everything we do.

During fiscal 2023, we executed on our targeted development strategy which included a balanced portfolio of formats, including drive-thrus, that allowed us to maximize our potential in each market.

We opened 82 net new system-wide Shacks and reached 518 Shacks worldwide.

We believe we remain well-positioned to continue significant, sustainable financial growth and we plan to continue to execute our growth strategies while remembering to Stand For Something Good in everything we do.

Domestic Company-Operated Shacks

We have a strong pipeline of Shacks, however, further opportunity for growth lies in opening new, domestic Company-operated Shacks and we believe there is still tremendous whitespace opportunity to expand in both new and existing U.S.

We will continue to invest in infrastructure with an eye toward growing rapidly, but with discipline.

Although we have a strong pipeline of Shacks, further opportunity for growth lies in opening new, domestic Company-operated Shacks as we believe there is still tremendous whitespace to expand in both new and existing U.S.

We remain committed to investing with discipline for strong returns as we continue to build a robust pipeline for future growth.

In the long-term, we believe we have the potential to grow our current domestic Company-operated Shack footprint to at least 450 Shacks.

for comparison, we have only opened 56% of that number through the end of fiscal 2022.

Of course, the rate of future Shack growth in any particular period is inherently uncertain and is subject to numerous factors beyond our control.

As a result, we do not currently have an anticipated timeframe for such expansion.

Domestically, we expanded our Company-operated footprint by opening 36 net new Shacks in 2022, which represents a 17% increase from the prior fiscal year.

Domestically, we expanded our Company-operated footprint by opening 41 new Shacks in fiscal 2023, which represents a 16% increase from the prior fiscal year.

As of December 27, 2023, we had 295 domestic Company-operated Shacks.

We believe we have a versatile real estate model built for growth;

Our disciplined expansion strategy is designed to leverage our business model's strength and our brand awareness.

For 2023, we are targeting to open approximately 40 new Company-operated

For 2024, we are targeting to open approximately 40 new Company-operated Shacks as we continue to be encouraged by the success of our multi-format strategy which includes, but is not limited to, core, drive-thru, flagship, and small format.

In addition to opening new Shacks, we continue to focus on improving our same-Shack sales performance by providing a dynamic, personalized guest experience that includes seasonal and Shack-specific offerings, technological upgrades like the Company-owned app, web ordering, and delivery, thoughtful integration with local communities and Enlightened Hospitality.

Additionally, we are making greater investments in our direct marketing and promotional initiatives to drive sustainable long-term traffic growth.

Capital Investments & Development

We are deploying capital towards strong returns mainly in building new Shacks, updating our current Shacks and investing in our digital infrastructure.

While retaining the exceptional experience Shake Shack is known for, we are developing new prototypes and standards throughout our future Shack classes that will lower costs over time and create an improved guest and team member experience while driving strong returns on capital.

In choosing a new site, we focus first and foremost on the guest experience so that each new location can be the ideal spot for people to gather together or experience Shake Shack the way they choose.

We utilize tools that collect and analyze demographic data for both existing and potential sites.

In addition to our in-house team of experienced real estate professionals, we also use a national real estate broker to leverage external resources in pursuit of pipeline development.

Looking beyond, we are pursuing and developing sites where we can continue to implement our development strategy, including drive-thru concepts.

In fiscal 2023, the average investment cost was approximately $3.0 million, or approximately $2.6 million net of tenant improvement allowances received from our landlords, an increase of roughly 8.3% compared to the prior year.

This increase was primarily driven by a few challenging projects, the highest mix of drive-thrus thus far, as well as inflationary pressures and costly permitting and construction delays.

The total investment cost of a new Shack, which includes costs related to leasehold

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Shacks as we continue to be encouraged by the success of our multi-format strategy which includes but is not limited to, freestanding buildings, drive-thrus, shopping centers, regional malls, outlet malls and more.

In addition to opening new Shacks, we continue to focus on improving our same-Shack sales performance by providing a dynamic, personalized guest experience that includes new seasonal and Shack-specific offerings, technological upgrades like the Company-owned app and web ordering/delivery, thoughtful integration with local communities and excellent standards of hospitality.

We also continue to innovate our core menu to deliver fresh offerings and the ability for our guests to purchase premium add-ons such as bacon, avocado or cherry peppers, all while maintaining the standard of our core menu items.

improvements, furniture, fixtures and equipment ranged from approximately $1.1 million to $6.4 million.

Shacks opened during fiscal 2023 took between 16 and 56 weeks to build, compared to 17 and 52 weeks in the prior year.

Although fiscal 2023 is targeted to be the high water mark for new Shack investment costs, we believe we can build a more standardized operation in a slightly smaller footprint, with less seats and a lower cost to build, while maintaining the great guest experience Shake Shack is known for.

In addition to investments in new Shacks, we also undertook some special projects to renovate and refresh some of our existing Shacks.

As our Shacks continue to age, we will need to make additional investments to keep them operating effectively.

Shake Shack Drive-Thru

We are investing ahead with drive-thru and optimizing our investments for quick learning, including Shack design and site selection, with the goal increasing our total addressable market and to provide our guests with an additional option to enjoy Shake Shack.

The launch of drive-thru was a massive cross-functional effort, and we are encouraged by the performance to date.

The Shake Shack drive-thru is a modern version of the traditional drive-thru experience, supported by technology-enhanced hospitality and innovative design.

We view this as an opportunity to increase our market share while maintaining our core tradition of building community gathering places.

As of December 28, 2022, we had 11 drive-thru Shacks in operation and we are targeting to open at least 10 to 15 more in 2023.

Our drive-thrus are light, bright and designed with a focus on convenience and efficiency with guests having an additional option to experience Shake Shack.

The layout offers flexibility for our guests to order and pay at multiple points along the journey, based on demand, and is part of our ongoing drive to create memorable experiences for guests.

Our drive-thru color palette consists of different shades of white, black and earthy greens that are complemented by warm woods and added textures of more intimate lighting.

We partner with sustainable furniture company Crow Works in Ohio to provide interior and exterior furniture which will be a mix of reclaimed wood, metal and upholstery for guests who choose to dine in.

We remain encouraged by the drive-thru opportunity to not only increase our total addressable market but to also provide our guests with an additional option to enjoy Shake Shack.

We continue to refine, take down cost to build and improve the model overall for guests and team members alike, including reducing our total experience time, and look forward to significant progress over time.

As of December 27, 2023, we had 29 drive-thru Shacks in operation and we are particularly excited to expand drive-thrus in our strong coastal markets in 2024, including Long Island, New York, New Jersey and California, where we generally expect higher brand awareness.

Kiosk & Digital Capital Expenditures

To further support our Shacks and improve the guest experience, we have made investments in various digital tools to expand our reach, laying the groundwork for sustainable, long-term growth.

Kiosk is an example of how we are bridging the in-Shack and digital world.

In fiscal 2023, we completed our kiosk retrofit program with approximately 95% of our domestic Company-operated Shacks now having kiosks, making it our largest and fastest growing channel.

Kiosk is also our highest margin channel and an important tool we can leverage to learn and improve our marketing efforts over time, maximize labor efficiency, and enhance guest experience.

We are also testing further optimization of the kiosk experience with new functionality that allows for upsell add-on opportunities.

Additionally, we have implemented plans to further enhance merchandising capabilities, add omnichannel features, and integrate operator management tools.

In addition to scaling our kiosk infrastructure, we continue to make investments in our digital business through digital marketing initiatives and development of additional product features.

These enhancements are strategically tailored to promote guest loyalty and retention, as well as to enrich the overall guest experience.

Moreover, we have bolstered our home office capacities to provide greater levels of support to our Shacks.

Growing Our Licensed Shack Business

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As of December 27, 2023 we had 223 licensed Shacks, of which 184 were international and 39 were domestic.

Through learnings from our licensed partnerships, we are able to share insights with the broader Company and we continue to work with our licensees to navigate both COVID-19 pressures and inflationary challenges across the globe.

Through learnings from our licensed partnerships, we are able to share insights with the broader Company and we continue to work with our licensees to navigate macroeconomic uncertainty, inflationary challenges, and geopolitical interdependency across the globe.

Thanks to our roots in New York and the success of our licensed Shacks around the world, we continue to attract interest from potential licensees from many different markets.

In 2023, we look forward to opening our first Shack in two new countries--Thailand and the Bahamas--and we are optimistic about future expansion opportunities beyond these exciting new markets.

We are also excited about opening our first Shack in Malaysia in 2024, and continuing to consider opening up new markets in the future.

In 2024, we look forward to opening our first Shack in three new markets — Kuala Lumpur, Tel Aviv, and Toronto — and we are optimistic about future expansion opportunities beyond these exciting new markets.

The enduring strength of our brand continues to create opportunities to expand domestically and abroad.

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International Licensed Operations

In fiscal 2022, we opened 25 international Shacks and closed two international Shacks.

The 25 new international Shacks included 13 Shacks in China and Hong Kong, one in the United Arab Emirates, four in South Korea, one in Japan, one in the Philippines, one in Singapore, two in Mexico, one in Turkey, and one in Qatar.

As of the end of fiscal 2022, one of our international licensed Shacks was temporarily closed.

Looking to fiscal 2023, we plan to go even deeper as we expand into new markets such as Guadalajara in Mexico and Wuhan in China.

Although many international licensed markets have recovered significantly from peak pandemic levels, conditions remain volatile and ever-changing, especially in China.

In fiscal 2023, we opened 38 international Shacks and closed three international Shacks.

The 38 new international Shacks included 13 in China and Hong Kong, four in Kuwait, five in Mexico, two in the Philippines, one in Singapore, three in South Korea, two in Thailand, one in The Bahamas, two in Turkey, one in the United Arab Emirates, and four in the United Kingdom.

As of December 27, 2023, one of our international Shacks was temporarily closed.

Although many international licensed markets have recovered significantly from peak pandemic pressures, conditions remain volatile and ever-changing, especially in China.

We remain highly confident in the long-term trajectory of our licensed business, but expect that geopolitical pressures in the Middle East and macroeconomic pressures in China could present challenges in 2024 in terms of number of openings and sales.

Domestic Licensed Operations

In fiscal 2022, we opened eight domestic licensed Shacks, including one in a stadium (Enterprise Center in St.

Louis, Missouri), three in airports (Nashville International Airport, Indianapolis International Airport, and Orlando International Airport), three in roadway travel plazas (two in New Jersey–Vince Lombardi Travel Plaza and Molly Pitcher Travel Plaza—and one in New York, Junius Ponds Travel Plaza), and one in a museum (Smithsonian Hazy Center in Chantilly, Virginia).

While COVID-19 related pressures still exist, our domestic licensed Shacks continue to benefit from considerable improvements to capacity and movement restrictions across airports and major U.S.

sports venues.

Capital Investments & Development

In fiscal 2022 timelines to build our Shacks remained pressured due to the impacts of the COVID-19 pandemic, inflation, supply chain disruptions, permitting delays and other macro-economic factors.

In an attempt to mitigate the missed expectations in our development pipeline we pre-ordered additional materials and equipment in the second half of the year.

Despite the setbacks of 2022, we remain focused on our long term development pipeline and building Shacks to stand the test of time.

We believe we have significant opportunity ahead and we remain methodical and accountable for results.

Capital Expenditures

In choosing a new site, we focus first and foremost on the guest experience so that each new location can be the ideal spot for people to gather together.

Our experienced development team actively leads the site selection process, and their recommendations are reviewed and approved by our Real Estate Committee, which follows a stringent approval process to ensure quality, fiduciary responsibility and overall adherence to our strategic growth goals.

Our analytical tools allow for extensive demographic analysis and data collection for both existing and potential sites.

In addition to our in-house team of experienced real estate professionals, we also use a national real estate broker to manage a network of regional brokers to leverage external resources in pursuit of pipeline development.

Looking beyond, we are pursuing and developing sites where we can continue to implement our Shack Track and drive-thru concepts.

We try to learn quickly from our successes and failures.

In fiscal 2022, a Shack took between 17 and 52 weeks to build as we managed through landlord, permitting and industry-wide supply chain delays.

One Shack experienced an extended build time, excluding this Shack, the Shack class of 2022 took between 17 and 38 weeks to build.

The total investment cost of a new Shack, which includes costs related to leasehold improvements, furniture, fixtures and equipment ranged from approximately $1.3 million to $4.1 million.

The average investment cost was approximately $2.7 million, or approximately $2.4 million net of tenant improvement allowances received from our landlords.

We use a number of regional general contractors and employ a mixed approach of bidding and strategic negotiation to ensure the high quality construction.

Higher investment costs in fiscal 2022 were attributable to inflationary pressures across the construction sector as well as higher costs to build our drive-thru Shacks, which are more expensive than traditional formats.

In addition to investments in new Shacks, we also undertook some special projects to renovate and refresh some of our existing Shacks.

As our Shacks continue to age, we will need to make additional investments to keep them operating effectively.

We saw elevated costs to repair and maintain our restaurants and equipment due to shortages and inflationary press in fiscal 2022.

Digital Capital Expenditures

To further support our Shacks and improve the guest experience we have made investments in various digital tools to expand our reach with more convenient channels, laying the groundwork for sustainable, long-term growth

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Kiosk is an example of how we are bridging the in-Shack and digital world.

In fiscal 2022 we rolled out digital kiosks to most of our domestic Company-operated Shacks and we have committed to retrofitting all domestic Company-operated Shacks with kiosks by the end of 2023.

Kiosk is our highest margin channel and highest in-Shack check and, we believe we can better utilize our team members to support other parts of the guest journey.

In fiscal 2023, we opened six domestic licensed Shacks, including one at Newark Liberty International Airport and five in roadway travel plazas in New Jersey and New York.

Our domestic licensed Shacks continue to perform well, driven by continued strength in U.S.

airports and roadway locations, which we believe can be a growth opportunity for the licensed business.

At Shake Shack, we believe our success depends upon maintaining efficient and nimble operations.

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Profitability is vital to our success and impacts our ability to grow.

Since early 2020, we have not fully recovered our sales and profit profile.

To address this, we are taking actions to improve our overall Shack margins back to pre-pandemic levels.

We have tasked all teams to improve the areas they are accountable for and we have empowered our leaders to act creatively, quickly, and responsibly to manage costs while continuing to drive sales.

Our Shacks must be fully staffed, operating at full capacity with optimized throughput to capture maximum sales potential.

In 2022, we made significant investments in our teams in addition to digital and technology initiatives to support our current Shacks and those to come.

However, as we place a renewed focus on improving profitability, disciplined management of our general and administrative expenses is prudent given the uncertain macroeconomic backdrop.

To maximize profitability, our Shacks must be fully staffed, operating at full capacity with optimized throughput to capture maximum sales potential.

In fiscal 2023, we continued to make significant investments in our teams as well as digital and technology initiatives to support our current Shacks and those to come.

In light of these investments, we continued to execute on disciplined management of our general and administrative expenses, as we remain committed to improving profitability and strengthening the Company for future growth.

Despite ongoing macro and inflationary pressures, we improved profitability in fiscal 2023 through efficiency and discipline across our Shacks, general and administrative expenses, and capex investments.

We are improving Shack profitability by focusing on sales initiatives that target our own, more profitable channels, optimizing labor, improving off-premise profitability, tactical menu pricing supply chain initiatives as well as other opportunities within other operating expenses such as repair and maintenance costs.

We believe there are several opportunities to continue to grow long-term profitability and are doubling down on these strategies to execute in 2024 and beyond.

Management Information Systems

Our domestic Company-operated Shacks use computerized point-of-sale and back-office systems designed for the restaurant industry.

We use many customized features to increase operational effectiveness, improve internal communication and enhance data analysis.

The point-of-sale system uses a touch screen interface, graphical order confirmation display, touch screen kitchen display and integrated, high-speed credit card and gift card processing.

This system also collects daily transaction data, which generates information about sales, product mix and average transaction size.

From there, our back-office systems assist in the management of our Company-operated Shacks and provide real-time labor and food cost management tools.

These tools provide the home office and operations management quick, easy access to detailed business data, and allow Shack-level managers to spend less time addressing administrative needs.

In fiscal 2023, we engaged in efforts to centralize data from across the enterprise to build out our data warehouse.

In doing so, we were able to gather new insights and facilitate informed decision making across the organization.

Our selected partner brings global reach, and more cost effective access to specialist technical skills and technology services.

We expect to continue improving our information technology infrastructure to better serve our business needs and accommodate growth.

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In fiscal 2023, we commenced a project to consolidate data from across the enterprise to enable fresh insights and informed decision making while ensuring the data is validated, secured and accessible.

With an emphasis on cost management, we began to transition our data to hybrid cloud and optimized our cloud infrastructure to support digital growth and analytic ambitions as well as automating repetitive and manual processes.

These platforms are already enabling our Business Intelligence team to mine new insights across the organization.

In the coming year, our focus will be on adding supply chain data and analytics and delivering insights to help our operators to better run our Shacks.

As cybersecurity continues to be a challenge, our focus remains on enhancing cyber maturity with a combination of end user training, third-party tooling and services, updated policies and benchmarking.

During fiscal 2023, we continued to see elevated levels of cyber attacks including phishing, malware and bot attacks.

Sourcing and Supply Chain

Our Stand For Something Good vision isn't just a slogan, it indicates how we source and develop our ingredients.

We work with best-in-class suppliers across our supply chain, and we're always looking for the best ways to provide top quality food at an excellent value.

We pride ourselves on sourcing premium ingredients from partners who share our dedication to quality, like 100% all-natural proteins with no hormones or antibiotics, that are humanely raised and source-verified.

In fact, we are committed to sourcing 100% cage-free eggs for our global supply chain by 2025, and we're already sourcing 100% cage-free eggs for both the U.S.

supply chains.

Our domestic regional strategy for ground beef production is designed to help make sure we consistently serve freshly ground beef at our domestic Shacks.

As we've expanded domestically, we have nine approved raw beef suppliers and 10 approved beef processors around the country who produce our burgers on a daily basis.

We pride ourselves on sourcing premium ingredients from partners who share our dedication to quality, like 100% all-natural proteins with no added hormones or antibiotics, that are humanely raised and source-verified.

We are currently sourcing 100% cage-free eggs across our U.S.

supply chain and are striving to advance the sourcing in our global supply chain to include 100% cage-free eggs as well, while maintaining the quality and standards we are known for.

Our domestic regional strategy for ground beef production is designed to help ensure we consistently serve freshly ground beef at our domestic Shacks.

As we've expanded domestically, we have nine approved raw beef suppliers and 10 approved ground beef processors around the country who produce our burgers on a daily basis.

To ensure dependable quality, we have a limited number of domestic suppliers for our major ingredients, including beef patties, chicken, potato buns, custard, portobello mushrooms and cheese sauce.

During fiscal 2022, we purchased all of our (i) ground beef patties from 10 approved beef processors, with approximately 42% of our ground beef patties from one supplier;

During fiscal 2023, we purchased all of our (i) ground beef patties from 10 approved ground beef processors, with approximately 41% of our ground beef patties from one supplier;

(ii) chicken breasts from two suppliers;

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and (vii) ShackSauce from one supplier.

We believe we have developed a reliable supply chain, but we have also taken strides to identify alternative sources to help lessen the possible interruptions of service and product.

We believe we have developed a reliable supply chain, but we have also taken strides to identify alternative sources to help lessen the possible interruptions of service and product, including testing with new suppliers.

We have a centralized distribution process with one distributor, which we refer to as our "broadline" distributor, to provide virtually all of our food distribution services in the U.S.

As of December 27, 2023, approximately 95% of certain food and beverage ingredients including chicken, fries and custard were fulfilled through our broadline distributor for distribution and delivery to each Company-operated Shack which collectively represents approximately 47% of our total purchases.

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As of December 27, 2023, we were utilizing 20 affiliated distribution centers to supply our domestic Company-operated Shacks.

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We have developed and implemented training and operating standards related to the food preparation, cleanliness and safety in each Shack, and of course, we have a dedicated Quality Assurance team.

Management Information Systems

Our domestic Company-operated Shacks use computerized point-of-sale and back-office systems designed for the restaurant industry.

We use many customized features to increase operational effectiveness, improve internal communication and enhance data analysis.

The point-of-sale system uses a touch screen interface, graphical order confirmation display, touch screen kitchen display and integrated, high-speed credit card and gift card processing.

This system also collects daily transaction data, which generates information about sales, product mix and average transaction size.

From there, our back-office systems assist in the management of our Company-operated Shacks and provide real-time labor and food cost management tools.

These tools provide the home office and operations management quick, easy access to detailed business data, and allow Shack-level managers to spend less time addressing administrative needs.

We expect to continue improving our information technology infrastructure to better serve our business needs and accommodate growth.

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Environmental Responsibility

We focus on environmental responsibility across our operations, including with respect to our ingredients, where we are committed to sourcing our world-class ingredients from suppliers who share our values, using 100% antibiotic- and hormone-free proteins from ethically raised animals and non-GMO buns, continuing to mitigate impact by removing unnecessary packaging elements and substituting more sustainable, certified materials where possible, and increasing our use of renewable energy and improving our energy management.

We have also begun greenhouse gas emissions reporting in compliance with industry standards, in order to assess our current standing as we establish a baseline and can continue to implement action plans toward progress and improving our environmental impact.

We focus on environmental responsibility across our operations, including with respect to our ingredients, where we are committed to sourcing our premium ingredients from suppliers who share our values, using antibiotic-free and no added hormone proteins from ethically raised animals and non-GMO buns.

We remained dedicated in our efforts to reduce our environmental footprint by removing unnecessary packaging elements and switching to more sustainable, certified materials whenever possible, expanding our use of renewable energy and improving our energy management.

We track and calculate scope 1 and scope 2 greenhouse gas emissions to report in compliance with industry standards, in order to assess our current standing.

The restaurant industry is highly competitive and fragmented, with restaurants competing on a variety of fronts, including taste, price, food quality, service, location and the ambiance and condition of the restaurant.

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As new competitors enter the burger and fast casual segment and offer new digital experiences as well as companies that offer subscription based meal options, our competition continues to intensify.

We also face increasing pressures from certain

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competitors who have announced initiatives to offer better quality ingredients relative to their previous offerings, such as antibiotic-free meat or plant-based meat alternatives.

We also face increasing pressures from certain competitors who have announced initiatives to offer better quality ingredients relative to their previous offerings, such as antibiotic-free meat or plant-based meat alternatives.

For more information regarding the risks we face from our competitors, see "Risks Related to Operating in the Restaurant Industry — We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected" in Item 1A, Risk Factors .

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We also have exclusive arrangements with our suppliers of crinkle cut fries, ShackMeister Ale, Shack Red wine, Shack White wine, Shack Rosé wine, hot dogs and cherry peppers.

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GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

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We are not aware of any federal, state or local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, that have materially affected, or are reasonably expected to materially affect, our results of operations, competitive position, or capital expenditures.

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Our business is subject to seasonal fluctuations which can impact sales from quarter-to-quarter.

Year-over-year and quarter-to-quarter results can be also be impacted by the number and timing of new Shack openings.

Additionally, given our use of a fiscal calendar, there may be some fluctuations between quarters due to holiday shifts in the calendar year.

The effects of the COVID-19 pandemic may continue to have an impact on consumer behaviors and guest traffic that may result in temporary changes in the seasonal fluctuations of our business.

We typically see higher sales in the summer months, followed by a slower fall season during the back-to-school months and an increase around the holiday season.

However, given our use of a fiscal calendar, there may be some fluctuations between quarters due to holiday shifts in the calendar year.

Year-over-year and quarter-to-quarter results can also be impacted by the number and timing of new Shack openings.

The effects of the COVID-19 pandemic may continue to have an impact on guest traffic, consumer behaviors and mobility patterns, including work from home trends, which may result in temporary changes in the seasonal fluctuations of our business.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

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Fogertey 40 Chief Financial Officer

Zachary Koff 43 Chief Operating Officer

Randy Garutti has served as Shake Shack’s Chief Executive Officer and on the Board of Directors since April 2012.

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Garutti was the Director of Operations for USHG (NYSE:

HUGS), of which Mr.

Meyer is the Chief Executive Officer and Chairman, overseeing the operations for all its restaurants.

HUGS), over which Mr.

Meyer is the Executive Chairman, overseeing the operations for all its restaurants.

In addition, Mr.

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Garutti also is a member of the board of directors of the Columbus Avenue Business Improvement District, a not-for-profit organization.

As previously announced in the Current Report on Form 8-K filed on December 11, 2023, and as further described in the Current Report on Form 8-K filed on January 26, 2024, Mr.

Garutti has informed the Company’s Board of Directors that he will retire from the Company in 2024 upon the selection of his successor.

Garutti will continue to lead the Company as its Chief Executive Officer and as an executive Board member through the "Resignation Date" as defined in the January 26, 2024 Form 8-K..

The Company intends to retain Mr.

Garutti as an advisor following his service as Chief Executive Officer through the end of 2024 to ensure a proper transition.

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Fogertey has served as our Chief Financial Officer since June 2021.

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Prior to covering the Restaurant sector, Ms.

Fogertey was a Vice President, Lead Derivative Strategist overseeing single stock options in the US and Latin America as well as global ETFs and market structure.

Fogertey was a Vice President, Lead Derivative Strategist overseeing single stock options in the U.S.and Latin America as well as global ETFs and market structure.

Fogertey has a BSBA in Accounting, Finance and International Business from Washington University in St.

Louis, Olin School of Business.

Zachary Koff has served as Shake Shack’s Chief Operating Officer since January 2017.

Prior to becoming Chief Operating Officer, Mr.

Koff served as Senior Vice President, Operations since March 2015, Vice President, Operations since April 2012, and Director of Operations since February 2010.

Prior to joining Shake Shack, Mr.

Koff spent eight years working in operations for Bravo Brio Restaurant Group.

Koff graduated from Cornell University’s School of Hotel Administration in 2002 with a Bachelor’s Degree in Hospitality Administration.

AVAILABLE INFORMATION

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Securities and Exchange Commission ("SEC").

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, statements of changes in beneficial ownership and amendments to those reports are available for free on our investor relations website as

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soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.

The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

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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-K

Item 1. Business