What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-02-23 · 937 added, 370 removed, 1029 unchanged (56% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Loss

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Income ( Loss )

Consolidated Statements of Comprehensive In come ( Loss )

Consolidated Statements of Stockholders' Equity

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Management is responsible for the preparation, integrity and objectivity of the accompanying Consolidated Financial Statements and related financial information.

The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America and necessarily include certain amounts that are based on estimates and informed judgments.

The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and necessarily include certain amounts that are based on estimates and informed judgments.

Our management also prepared the related financial information included in this Annual Report on Form 10-K and is responsible for its accuracy and consistency with the Consolidated Financial Statements.

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Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f).

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we assessed the effectiveness of our internal control over financial reporting as of December 28, 2022, based on the framework in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on the results of our evaluation, management concluded that our internal control over financial reporting was effective as of December 28, 2022.

Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 28, 2022, as stated in their report herein.

Prior to filing, management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework.

Based on this assessment, our management identified a material weakness in management review controls over the calculation of state deferred taxes and the related income tax expense (benefit).

During the compilation of the annual financial statements for Shake Shack Inc., management identified a material weakness in internal controls over the calculation of state deferred taxes and the related income tax expense (benefit).

We identified material errors in the computation of deferred tax assets that originated at the inception of the Up-C structure.

When the Company recorded its deferred taxes, it failed to account for differences between federal and state tax depreciation.

The resulting error caused an overstatement of income tax expense and understatement of deferred tax assets during the impacted periods.

Material Weakness

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness in our internal control resulted in the restatement of the Company's Consolidated Financial Statements as of and for the years ended December 28, 2022 and December 29, 2021 included in this report.

The material weakness did not result in any identified material misstatements in the Consolidated Financial Statements as of and for the year ended December 27, 2023.

As a result of the material weakness noted above, management has concluded that our internal control over financial reporting was not effective as of December 27, 2023.

Ernst & Young LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of its audit, has issued an attestation report, included herein, on the effectiveness of our internal control over financial reporting.

The material weakness described above, which related to internal controls over the calculation of state deferred taxes and the related income tax expense (benefit), was identified during the performance of our year-end control procedures.

Shake Shack Inc.

Form 10-K | 76

We have implemented certain remedial measures including, but not limited to, a review of all existing accounting for income taxes to ensure that it was in compliance with GAAP prior to filing the Consolidated Financial Statements as of and for the year ended December 27, 2023.

In addition, we are in the process of developing enhanced control procedures designed to ensure proper accounting for our tax related accounts and balances, which will include adding technical resources to perform and oversee income tax accounting.

Based on additional procedures and post-closing review, management concluded that the Consolidated Financial Statements included in this report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented, in conformity with GAAP.

The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Except as otherwise discussed above, there were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect such controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

Shake Shack Inc.

Form 10-K | 77

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 28, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 27, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024 expressed an adverse opinion thereon.

Restatement of 2022 and 2021 Financial Statements

As discussed in Note 3 to the consolidated financial statements, the consolidated financial statements as of December 28, 2022 and for the years ended December 28, 2022 and December 29, 2021 have been restated to correct misstatements.

Basis for Opinion

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Form 10-K | 78

Measurement of deferred tax assets related to the Company’s investment in SSE Holdings LLC

Description of the Matter As discussed in Notes 12 and 14 of the consolidated financial statements, the noncontrolling interest holders of SSE Holdings LLC (“LLC”) may redeem their equity interests in SSE Holdings LLC (“LLC interests”) for shares of the Company’s Class A common stock.

For income tax purposes, these redemptions are treated as direct purchases of LLC equity and are recorded at their fair market value upon the date of the redemption.

The resulting incremental tax basis in excess of the book basis arising from a redemption represents a deductible temporary difference for which a deferred tax asset is recorded.

At December 28, 2022, the Company’s total deferred tax asset related to the basis difference in its investment in LLC was $90 million.

The basis difference in the Company’s investment in LLC changes through redemptions of LLC interests and other qualifying transactions.

Auditing management’s accounting for the basis differences in its investment in LLC is especially complex and challenging as the Company’s accounting requires timely identification of all historical basis differences and subsequent adjustments related to the redemptions, described above, and the related tax receivable agreement (“TRA”) payments to the LLC holders, discussed below.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for determining the completeness and measurement of the Company’s basis differences in the investment in LLC.

For example, we tested management’s review controls over the calculation of the change in tax basis resulting from the redemptions, including the determination of fair market value.

In addition, we tested controls over management’s communication of redemptions to the Company’s stock transfer agent as detailed in redemption notices provided by the LLC holder.

To test the completeness and accuracy of the deferred tax asset related to the basis difference in the investment in the LLC, we performed audit procedures that included, among others, on a sample basis, testing redemptions of LLC interests by inspection of redemption notices, inquiry with legal counsel to verify the completeness of the redemption notices in the period, and external confirmation of LLC’s and the Company’s shares issued and outstanding with the stock transfer agent.

Further, to test the measurement of the deferred tax asset, for a selection of redemptions, we recalculated the change in tax basis resulting from the redemptions, including the determination of fair value.

Measurement of the valuation allowance against deferred tax assets

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As of December 27, 2023, the Company is in a three-year cumulative book loss position and is looking to its forecasted future U.S.

federal taxable income to conclude that it is more likely than not that these deferred tax assets, except for certain local unincorporated business tax and foreign tax credits, will be fully realized prior to their expiration.

At December 28, 2022, the Company had a net deferred tax asset balance for U.S.

federal income taxes of $301 million, for which a valuation allowance of $10 million was provided.

taxable income to conclude that it is more likely than not that these deferred tax assets, except for certain local unincorporated business tax credits and state loss carryforwards, will be fully realized prior to their expiration.

As of December 27, 2023, the Company had a net deferred tax asset balance for U.S.

income taxes of $326.2 million, for which a valuation allowance of $0.4 million was provided.

Auditing management’s analysis of the realizability of these U.S.

federal deferred tax assets is highly judgmental because it requires the evaluation of positive evidence to support the position that the Company will generate sufficient future U.S.

federal taxable income to realize their deferred tax assets as tax deductions on future income tax returns.

deferred tax assets is highly judgmental because it requires the evaluation of positive and negative evidence to support the position that the Company will generate sufficient future U.S.

taxable income to realize the deferred tax assets as tax deductions on future income tax returns.

The Company’s forecasted financial information, which is inherently subjective, is a significant component of management’s analysis.

Shake Shack Inc.

Form 10-K | 78

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s income tax process, including the review of deferred taxes and the evaluation of valuation allowances.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s evaluation of deferred tax asset realizability.

In addition, we obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s financial forecasting process.

Such controls include management’s review of forecasted pretax income, including the significant assumptions such as projected Shack openings and operating margins, and operating costs, among others.

In our testing surrounding the assessment of the valuation allowance as described above, we performed audit procedures that included, among others, evaluating the conclusions reached by the Company regarding the realizability of deferred tax assets, which involved performing procedures over (i) the scheduled reversal of deferred taxes and (ii) forecasted financial information.

Such controls include management’s review of forecasted pretax income, including significant assumptions such as projected Shack openings, operating margins, and operating costs, among others.

In our testing of management’s assessment of deferred tax asset realizability as described above, we performed audit procedures that included, among others, evaluating the conclusions reached by the Company regarding the realizability of deferred tax assets, which involved performing procedures over (i) the scheduled reversal of deferred taxes and (ii) forecasted financial information.

In order to test management’s financial forecasts, we assessed the historical accuracy of management’s forecasts and compared the significant assumptions used to current industry and economic trends and changes to the Company’s operations.

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The TRA payments are contingent upon, among other things, the generation of future taxable income over the term of the TRA and future changes in tax laws.

At December 28, 2022, the Company’s liability due to the holders of LLC interests under the TRA (“TRA liability”), was $235 million.

As of December 27, 2023, the Company’s liability due to the holders of LLC interests under the TRA (“TRA liability”), was $235.6 million.

Auditing management’s accounting for the TRA liability is especially complex and judgmental as the Company’s calculation of the TRA liability requires estimates of its future qualified taxable income over the term of the TRA as a basis to determine if the related tax benefits are expected to be realized.

Significant changes in estimates could have a material effect on the Company’s results of operations.

Shake Shack Inc.

Form 10-K | 79

Such controls include management's review controls over the computation of the TRA liability, which is based on several inputs including the Company’s share of the tax basis in the LLC, as discussed above, as well as the estimate of future qualified taxable income over the term of the TRA.

Such controls include management review controls over the computation of the TRA liability, which is based on several inputs including the Company’s share of the tax basis in the LLC, as discussed above, as well as the estimate of future qualified taxable income over the term of the TRA.

We also tested management’s review control over the calculation of the TRA liability in accordance with the terms set out in the TRA.

We tested the measurement of the Company’s TRA liability by performing audit procedures that included, among others, procedures on the redemptions, as described above, and recalculating the Company’s share of the tax basis in the net assets of LLC, as discussed above.

We tested the measurement of the Company’s TRA liability by performing audit procedures that included, among others, evaluating the reasonableness and existence of the redemption activity, and recalculating the Company’s share of the tax basis in the net assets of LLC..

To test the Company’s position that there is sufficient future taxable income to realize the tax benefits related to the redemptions discussed above, we evaluated the assumptions used by management to develop the projections of future taxable income.

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We also recalculated the TRA liability and verified the calculation of the TRA liability was in accordance with the terms set out in the TRA.

Shake Shack Inc.

Form 10-K | 79

Lease accounting

Description of the Matter As discussed in Note 9 of the consolidated financial statements, domestic Company-operated Shacks are located on leased premises.

As of December 28, 2022, the Company’s right-of-use assets and lease liabilities are $367 million and $469 million, respectively.

Auditing management’s accounting and presentation for leases was especially complex and challenging as the Company’s accounting for the right-of-use asset, and the lease liability involved the compilation and review of the details associated with the population of non-uniform leases as well as the determination of the incremental borrowing rate and the evaluation of impairment of the right-of-use assets.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for determining the classification, valuation and completeness of the right-of-use asset and the lease liability.

Such controls include management’s review of the completeness of the population of leases and verification of the accuracy of the computation of the right-of-use asset and lease liability, including the determination of the incremental borrowing rate, and the evaluation of impairment of the right-of-use assets.

We tested the completeness of the lease population through the evidence obtained from inquiries of Company personnel and an assessment of leases on a location-by-location basis based upon our knowledge of the Company’s openings of new Shake Shack restaurants for each location.

For a sample of leases, we performed audit procedures that included, among others, testing the accuracy of the data used in the calculation of the right-of-use asset and the lease liability by agreeing the underlying inputs, such as possession date, lease term and payment terms, to source documents, such as lease contracts.

We tested automated system controls over the computation and recording of right-of-use assets, lease liabilities, amortization, and interest.

We recalculated the right-of-use asset and the lease liability and evaluated the key assumptions and methodologies used in the Company’s selection of the incremental borrowing rate by developing a comparative calculation.

We tested the Company’s impairment assessment, by evaluating significant assumptions, including market rent assumptions, lease terms, and discount rate, used to estimate the fair value of right-of-use assets, and valuation methodologies used in the Company’s models.

/s/ Ernst & Young LLP

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We have audited Shake Shack Inc.’s (the Company’s) internal control over financial reporting as of December 27, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

In our opinion, Shake Shack Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2022 and December 29, 2021, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 28, 2022, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”) and our report dated February 23, 2023 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Shake Shack Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 27, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in internal controls over the calculation of state deferred taxes and the related income tax expense (benefit).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 27, 2023 and December 28, 2022, the related consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 27, 2023, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”) and our report dated February 29, 2024 expressed an unqualified opinion thereon.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 29, 2024, which expressed an unqualified opinion thereon.

Basis for Opinion

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and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Shake Shack Inc.

Form 10-K | 81

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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(in thousands, except share and per share amounts)

(As Restated)

2023 December 28

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Retained earnings (accumulated deficit) 16,777 ( 3,487 )

Accumulated other comprehensive income — 1

Accumulated other comprehensive loss ( 3 ) —

Total stockholders' equity attributable to Shake Shack Inc.

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SHAKE SHACK INC.

CONSOLIDATED STATEMENTS OF LOSS

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share amounts)

Fiscal Year Ended

(As Restated) (As Restated)

2023 December 28

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TOTAL EXPENSES 1,081,612 927,380 755,746

LOSS FROM OPERATIONS ( 26,894 ) ( 15,853 ) ( 43,876 )

Other income (expense), net 4,127 95 ( 786 )

INCOME (LOSS) FROM OPERATIONS 5,921 ( 26,894 ) ( 15,853 )

Other income, net 12,776 4,127 95

Interest expense ( 1,717 ) ( 1,518 ) ( 1,577 )

LOSS BEFORE INCOME TAXES ( 24,285 ) ( 17,335 ) ( 45,477 )

Income tax expense (benefit) 1,682 ( 7,224 ) 57

NET LOSS ( 25,967 ) ( 10,111 ) ( 45,534 )

Net loss attributable to non-controlling interests ( 1,876 ) ( 1,456 ) ( 3,376 )

NET LOSS ATTRIBUTABLE TO SHAKE SHACK INC.

INCOME (LOSS) BEFORE INCOME TAXES 16,980 ( 24,285 ) ( 17,335 )

Income tax benefit ( 4,010 ) ( 1,180 ) ( 11,318 )

NET INCOME (LOSS) 20,990 ( 23,105 ) ( 6,017 )

Net income (loss) attributable to non-controlling interests 726 ( 1,876 ) ( 1,456 )

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ 20,264 $ ( 21,229 ) $ ( 4,561 )

Loss per share of Class A common stock:

Earnings (loss) per share of Class A common stock:

Basic $ 0.51 $ ( 0.54 ) $ ( 0.12 )

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SHAKE SHACK INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Fiscal Year Ended

(As Restated) (As Restated)

2023 December 28

2022 December 29

Net loss $ ( 25,967 ) $ ( 10,111 ) $ ( 45,534 )

Other comprehensive income (loss), net of tax (1) :

Net income (loss) $ 20,990 $ ( 23,105 ) $ ( 6,017 )

Other comprehensive loss, net of tax (1) :

Change in foreign currency translation adjustment ( 3 ) ( 1 ) ( 2 )

OTHER COMPREHENSIVE INCOME (LOSS) ( 1 ) ( 2 ) 1

COMPREHENSIVE LOSS ( 25,968 ) ( 10,113 ) ( 45,533 )

Comprehensive loss attributable to non-controlling interests ( 1,876 ) ( 1,456 ) ( 3,376 )

COMPREHENSIVE LOSS ATTRIBUTABLE TO SHAKE SHACK INC.

OTHER COMPREHENSIVE LOSS ( 3 ) ( 1 ) ( 2 )

COMPREHENSIVE INCOME (LOSS) 20,987 ( 23,106 ) ( 6,019 )

Comprehensive income (loss) attributable to non-controlling interests 726 ( 1,876 ) ( 1,456 )

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ 20,261 $ ( 21,230 ) $ ( 4,563 )

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(in thousands, except share amounts)

Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-

Retained Earnings (Accumulated Deficit)

Accumulated Other Comprehensive Income (Loss) Non-

Shares Amount Shares Amount

BALANCE DECEMBER 25, 2019 34,417,302 $ 35 3,145,197 $ 3 $ 244,410 $ 54,367 $ 2 $ 23,168 $ 321,985

BALANCE DECEMBER 30, 2020 (As Reported) 38,717,790 $ 39 2,951,188 $ 3 $ 395,067 $ 12,209 $ 3 $ 27,172 $ 434,493

Effect of restatement

— — — — — 10,094 — — 10,094

BALANCE DECEMBER 30, 2020 (As Restated) 38,717,790 39 2,951,188 3 395,067 22,303 3 27,172 444,587

Net loss — — — — — ( 4,561 ) — ( 1,456 ) ( 6,017 )

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Equity-based compensation — — — — 8,803 — — — 8,803

Activity under stock compensation plans 456,942 1 5,909 305 6,215

Activity under stock compensation plan

395,006 — — — 1,829 — — 1,348 3,177

Redemption of LLC interests 29,601 — ( 29,601 ) — 33 — — ( 33 ) —

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Distributions paid to non-controlling interest holders — — — — — — — ( 968 ) ( 968 )

Issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs 3,649,537 3 135,718 9,276 144,997

BALANCE DECEMBER 30, 2020 38,717,790 39 2,951,188 3 395,067 12,209 3 27,172 434,493

BALANCE DECEMBER 29, 2021 (As Restated) 39,142,397 39 2,921,587 3 405,957 17,742 1 26,063 449,805

Net loss — — — — — ( 21,229 ) — ( 1,876 ) ( 23,105 )

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Equity-based compensation — — — — 13,518 — — — 13,518

Activity under stock compensation plans 395,006 — 1,829 1,348 3,177

Activity under stock compensation plan

90,527 — — — ( 2,978 ) — — 1,168 ( 1,810 )

Redemption of LLC interests 52,074 — ( 52,074 ) — 313 — — ( 313 ) —

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Distributions paid to non-controlling interest holders — — — — — — — ( 410 ) ( 410 )

BALANCE DECEMBER 29, 2021 39,142,397 39 2,921,587 3 405,940 3,554 1 26,063 435,600

Net loss ( 24,091 ) ( 1,876 ) ( 25,967 )

BALANCE DECEMBER 28, 2022 (As Restated) 39,284,998 39 2,869,513 3 415,649 ( 3,487 ) — 24,632 436,836

Net income — — — — — 20,264 — 726 20,990

Other comprehensive income:

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Equity-based compensation — — — — 15,174 — — — 15,174

Activity under stock compensation plans 90,527 — ( 2,978 ) 1,168 ( 1,810 )

Activity under stock compensation plan

154,317 — — — ( 3,271 ) — — 1,022 ( 2,249 )

Redemption of LLC interests 35,000 — ( 35,000 ) — 265 — — ( 265 ) —

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Fiscal Year Ended

(As Restated) (As Restated)

2023 December 28

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OPERATING ACTIVITIES

Net loss (including amounts attributable to non-controlling interests) $ ( 25,967 ) $ ( 10,111 ) $ ( 45,534 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) (including amounts attributable to non-controlling interests) $ 20,990 $ ( 23,105 ) $ ( 6,017 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization expense 91,242 72,796 58,991

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(Gain) loss on sale of marketable securities ( 81 ) — 5

Impairment and loss on disposal of assets 2,425 1,632 10,151

Other non-cash expense (income)

Net amortization of discount on held-to-maturity securities

( 1,620 ) — —

Impairment and loss on disposal of assets 3,007 2,425 1,632

Other non-cash income

Unrealized loss on equity securities — 158 277

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( 146,167 ) ( 142,559 ) ( 101,495 )

Purchases of marketable securities

Purchases of held-to-maturity securities

( 94,019 ) — —

Sales of marketable securities — 4,004 20,000

Maturities of held-to-maturity securities

Purchases of equity securities

( 690 ) ( 865 ) ( 47,399 )

Sales of equity securities

81,478 — 4,004

NET CASH USED IN INVESTING ACTIVITIES ( 132,320 ) ( 143,424 ) ( 144,890 )

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Proceeds from issuance of convertible notes, net of discount — — 243,750

Proceeds from Revolving Credit Facility

Payments on Revolving Credit Facility

— — ( 50,000 )

Deferred financing costs

— ( 169 ) ( 64 )

Proceeds from issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs — — 144,997

Payments on principal of finance leases ( 3,272 ) ( 2,974 ) ( 2,694 )

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Debt issuance costs — — ( 1,075 )

Payments under tax receivable agreement — — ( 6,643 )

Net proceeds from stock option exercises 744 424 6,731

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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ( 5,684 ) ( 5,202 ) 242,021

Effect of exchange rate changes on cash and cash equivalents ( 3 ) ( 1 ) ( 2 )

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 5,868 ) ( 71,885 ) 155,533

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Nature of Operations

Summary of Significant Accounting Policies

Restatement of Previously Issued Consolidated Financial Statements

Fair Value Measurements

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Certain reclassifications have been made to prior period amounts to conform to the current year presentation.

The Company has elected to reclassify certain marketing expenses for prior periods to conform with the presentation for the fiscal year ended December 27, 2023.

These reclassifications had no effect on previously reported Net Income (Loss).

For the fiscal year ended December 28, 2022 and December 29, 2021, the Company reclassified $ 1,219 and $ 1,200 , respectively from Other operating expenses to General and administrative expenses in the accompanying Consolidated Statements of Income (Loss).

SSE Holdings is considered a variable interest entity.

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The Company operates on a 52/53 week fiscal year ending on the last Wednesday of December.

Fiscal year 2022 contained 52 weeks and ended on December 28, 2022 ("fiscal 2022").

Fiscal year 2021 contained 52 weeks and ended on December 29, 2021 ("fiscal 2021").

Fiscal year 2020 contained 53 weeks and ended on December 30, 2020 ("fiscal 2020").

Fiscal 2023 contained 52 weeks and ended on December 27, 2023 ("fiscal 2023").

Fiscal 2022 contained 52 weeks and ended on December 28, 2022 ("fiscal 2022").

Fiscal 2021 contained 52 weeks and ended on December 29, 2021 ("fiscal 2021").

Unless otherwise stated, references to years in this report relate to fiscal years.

Use of Estimates

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

Actual results could differ from those estimates.

Shake Shack Inc.

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

Actual results could differ from those estimates.

Segment Reporting

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Marketable Securities

Marketable securities consist of mutual funds that primarily invest in corporate bonds, certificates of deposits, asset-backed securities, commercial paper, U.S.

Marketable securities classified as available-for-sale securities consist of mutual funds that primarily invest in corporate bonds, certificates of deposits, asset-backed securities, commercial paper, U.S.

Treasury obligations, and foreign government securities.

Marketable securities are recorded at fair value, with unrealized gains and losses recorded in Other income (expense), net.

Dividend and interest income are recognized when earned and are recorded in Other income (expense), net on the Consolidated Statements of Loss.

Available-for-sale securities are recorded at fair value, with unrealized gains and losses recorded in Other income, net.

Dividend and interest income are recognized when earned and are recorded in Other income, net on the Consolidated Statements of Income (Loss).

Held-to-maturity securities consist of U.S.

Treasuries for which the Company has the ability and intent to hold to maturity and are reported at amortized cost, net of a valuation allowance for credit losses.

Interest income and the amortization of discounts and premiums are recorded in Other income, net on the Consolidated Statements of Income (Loss).

No expected credit losses were recognized as of December 27, 2023.

Accounts Receivable, Net

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No adjustment is deemed necessary to reduce inventory to net realizable value due to the rapid turnover and high utilization of inventory.

Shake Shack Inc.

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Property and Equipment, Net

Property and equipment, net is stated at historical cost less accumulated depreciation.

Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets, which generally range from five to seven years for equipment, furniture and fixtures, and two to five years for computer equipment and software.

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which generally range from five to seven years for equipment, furniture and fixtures, and two to five years for computer equipment and software.

Leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease terms.

1 unchanged sentence

The cost of repairs and maintenance are expensed when incurred.

Costs for refurbishments and improvements that significantly increase the productive capacity or extend the useful life of the

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assets are capitalized.

When assets are disposed, the resulting gain or loss is recognized in Impairment and loss on disposal of assets on the Consolidated Statements of Loss.

Costs for refurbishments and improvements that significantly increase the productive capacity or extend the useful life of the assets are capitalized.

When assets are disposed, the resulting gain or loss is recognized in Impairment and loss on disposal of assets on the Consolidated Statements of Income (Loss).

Valuation of Long-lived Assets

The Company assesses potential impairments to our long-lived assets, which include property and equipment and operating lease right-of-use assets, whenever events or circumstances indicate that the carrying value of an asset may not be recoverable.

Recoverability of an asset is measured by a comparison of the carrying value of the asset group to the estimated undiscounted future cash flows expected to be generated by the asset group.

If the carrying value of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying value of the asset exceeds the fair value of the asset, considering external market participant assumptions.

The Company assesses potential impairments to its long-lived assets, which include property and equipment and operating and finance lease right-of-use assets, whenever events or circumstances indicate that the carrying value of an asset may not be recoverable.

The recoverability evaluation is first performed at the market service area level ("MSA").

If the carrying value of the MSA exceeds its estimated undiscounted future cash flows, a secondary recoverability test is performed for all individual Shacks within the identified MSA.

An impairment charge is recognized when the carrying amount of the asset exceeds the fair value of the asset, considering external market participant assumptions, and is allocated across all assets of the impaired Shack.

Since the determination of future cash flows is an estimate of future performance, there may be future impairments in the event that future cash flows do not meet expectations.

5 unchanged sentences

Implementation costs associated with cloud computing arrangements hosted by third-party vendors are capitalized when incurred during the application development phase.

Amortization is calculated on a straight-line basis over the contractual term of the cloud computing arrangement and is recorded within General and administrative expenses on the Consolidated Statements of Loss.

As of December 27, 2023 and December 28, 2022, capitalized implementation costs from cloud computing arrangements totaled $ 5,572 and $ 6,212 , respectively, net of accumulated amortization.

3 unchanged sentences

As of December 27, 2023 and December 28, 2022, indefinite-lived intangible assets relating to transferable liquor licenses totaled $ 1,903 and $ 1,837 , respectively.

Indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter, and whenever events or circumstances indicate that an impairment may exist.

Indefinite-lived intangible assets are evaluated for impairment at least annually during the fourth quarter, and whenever events or circumstances indicate that an impairment may exist.

When evaluating intangible assets for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that an intangible asset group is impaired.

2 unchanged sentences

In addition, the Company continuously monitors and may revise the useful lives of intangible assets when facts and circumstances change.

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Revenue Recognition

1 unchanged sentence

Generally, revenue is recognized as promised goods or services transfer to the guest or customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Revenue from Shack sales is recognized when payment is tendered at the point of sale, net of discounts, as the performance obligation has been satisfied.

Revenue from Shack sales is recognized when payment is tendered at the point of sale, net of discounts, as the performance obligation has been satisfied at that time.

Sales tax collected from guests is excluded from Shack sales and the obligation is included as sales tax payable until the taxes are remitted to the appropriate taxing authorities.

Revenue from gift cards is deferred and recognized over time as redemptions occur.

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Delivery services are fulfilled by third-party delivery partners whether ordered through the Shack app and website ("Company-owned platforms") or though third-party delivery partners.

Delivery services are fulfilled by third-party delivery partners whether ordered through the Shack app, website ("Company-owned platforms") or through third-party delivery platforms.

Revenue from orders through Company-owned platforms includes delivery fees and is recognized when the delivery partner transfers the order to the guest as the Company controls the delivery.

For these sales, the Company receives payment directly from the guest at the time of sale.

Revenue from orders through third-party delivery partners is recognized when the order is transferred to the third-party delivery partner and excludes delivery fees collected by the delivery partner as the Company does not control the delivery.

The Company receives payment from the delivery partner subsequent to the transfer of order and the payment terms are short-term in nature.

For all delivery sales, the Company is considered the principal and recognizes the revenue on a gross basis.

During fiscal 2022, the Company concluded it has accumulated a sufficient level of historical data from a large pool of homogeneous transactions to allow it to reasonably and objectively determine an estimated gift card breakage rate and the pattern of actual gift card redemptions.

Accordingly, the Company recognizes breakage income and reduces the related gift card liability for unredeemed gift cards in proportion to actual redemptions of gift cards.

The Company will continue to review historical gift card redemption information at each reporting period to assess the continued appropriateness of the gift card breakage rate and pattern of redemption.

Revenue from orders through third-party delivery partners is recognized when the order is transferred to the third-party delivery partner and excludes delivery fees collected by the delivery platforms as the Company does not control the delivery.

The Company receives payment from the delivery partner subsequent to the transfer of the order and the payment terms are short-term in nature.

For all delivery sales, the Company is considered the principal and recognizes revenue on a gross basis.

The Company sells gift cards which do not have expiration dates.

Revenue from gift cards is recognized when gift cards are redeemed by the customer or, in the event a gift card is not expected to be redeemed, in proportion to actual redemptions of gift cards ("gift card breakage").

The gift card breakage rate is determined from historical gift card redemption patterns.

Gift card breakage income for fiscal 2023 and 2022 was $ 327 and $ 1,472 , respectively.

During fiscal 2022, the Company concluded it had accumulated a sufficient level of historical data from a large pool of homogeneous transactions to allow it to reasonably and objectively determine an estimated gift card breakage rate and the pattern of actual gift card redemptions.

In accordance with ASC 250, Accounting Changes and Error Corrections, the Company concluded that this accounting change represented a change in accounting estimate.

As a result, a cumulative catch-up adjustment was recorded during fiscal 2022 that resulted in $ 1,281 of gift card breakage income.

Inclusive of this cumulative catch-up, $ 1,472 of gift card breakage income was recognized during fiscal 2022.

Gift card breakage income is included in Shack sales in the Consolidated Statements of Loss.

Gift card breakage income is included in Shack sales in the Consolidated Statements of Income (Loss).

Licensing Revenue

Licensing revenue includes initial territory fees, Shack opening fees and ongoing sales-based royalty fees from licensed Shacks.

2 unchanged sentences

The Company determines the transaction price for each contract, which is comprised of the initial territory fee and an estimate of the total Shack opening fees the Company expects to be entitled to.

The calculation of total Shack opening fees included in the transaction price requires judgment, as it is based on an estimated number of Shacks the Company expects the licensee to open.

The calculation of total Shack opening fees requires judgment, as it is based on an estimated number of Shacks the Company expects the licensee to open.

The transaction price is then allocated equally to each Shack expected to open.

The performance obligation is satisfied over time, starting when a Shack opens through the end of the license term for the related Shack therefore revenue is recognized on a straight-line basis over the license term.

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

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

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

These payments are initially deferred and recognized in revenue as the performance obligations are satisfied.

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

1 unchanged sentence

Equity-based compensation expense is measured based on the grant-date fair value of the awards.

For awards with graded-vesting features and service conditions only, compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award.

For awards with graded-vesting features and service conditions only, compensation expense is recognized on a straight-line basis over the total requisite

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service period for the entire award.

For awards with graded-vesting features and a combination of service and performance conditions, compensation expense is recognized using a graded-vesting attribution method over the vesting period based on the most probable outcome of the performance conditions.

2 unchanged sentences

Forfeitures are recognized as they occur for all equity awards.

Equity-based compensation expense is included in General and administrative expenses and Labor and related expenses on the Consolidated Statements of Loss.

Equity-based compensation expense is included in General and administrative expenses and Labor and related expenses on the Consolidated Statements of Income (Loss).

Most advertising costs are expensed as incurred, with the exception of advertising production costs, which are expensed at the time the advertising first takes place.

Advertising costs amounted to $ 12,376 , $ 5,677 and $ 1,449 in fiscal 2022, fiscal 2021 and fiscal 2020, respectively, and are included in General and administrative expense and Other operating expenses on the Consolidated Statements of Loss.

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Advertising costs totaled $ 12,437 , $ 12,376 and $ 5,677 in fiscal 2023, fiscal 2022 and fiscal 2021, respectively, and are included in General and administrative expense and Other operating expenses on the Consolidated Statements of Income (Loss).

Shake Shack currently leases all of its domestic Company-operated Shacks, the home office and certain equipment under various non-cancelable lease agreements that expire on various dates through 2045.

The Company evaluates contracts entered into to determine whether the contract involves the use of property or equipment, which is either explicitly or implicitly identified in the contract.

The Company evaluates whether it controls the use of the asset, which is determined by assessing whether substantially all economic benefits from the use of the asset is obtained, and whether the Company has the right to direct the use of the asset.

If these criteria are met and the Company has identified a lease, a right of use asset and lease liability are recorded on the Consolidated Balance Sheets.

The Company evaluates whether it controls the use of the asset, which is determined by assessing whether substantially all economic benefit from the use of the asset is obtained, and whether the Company has the right to direct the use of the asset.

If these criteria are met, the Company has identified a lease, within the contract, and therefore a right of use asset and lease liability are recorded on the Consolidated Balance Sheets.

Upon possession of a leased asset, the Company determines whether the lease is an operating or finance lease.

4 unchanged sentences

When the achievement of such sales thresholds are deemed to be probable, contingent rent is accrued in proportion to the sales recognized during the period.

For operating leases, fixed lease payments are recognized as operating lease costs on a straight-line basis over the lease term.

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

Once a domestic Company-operated Shack opens, the straight-line lease expense and contingent rent, if applicable, are recorded in Occupancy and related expenses on the Consolidated Statements of Loss.

Many of the leases also require the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in Occupancy and related expenses on the Consolidated Statements of Loss.

For operating leases, fixed lease payments are recognized as operating lease costs on a straight-line basis over the lease term within the Consolidated Statements of Income (Loss) in the following line items.

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

Once a domestic Company-operated Shack opens, the straight-line lease expense and contingent rent, if applicable, are recorded in Occupancy and related expenses.

Many of these leases also require the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in Occupancy and related expenses.

Finance leases are recognized in depreciation expense on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability.

For both operating and finance leases that contain lease and non-lease components, the components are combined and accounted for as a single lease component.

Variable lease costs for both operating and finance leases, if any, is recognized as incurred.

For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Consolidated Balance Sheets.

Variable lease costs for both operating and finance leases, if any, are recognized as incurred.

Leases with a term of 12 months or less are deemed short-term and are not recognized on the Consolidated Balance Sheets.

Fixed lease payments for short-term leases are recognized on a straight-line basis over the lease term.

The Company calculates operating lease assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date.

3 unchanged sentences

The credit rating used to develop the IBR is determined by utilizing the credit ratings of other public companies with similar financial information as SSE Holdings.

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The Company expends cash for leasehold improvements to build out and equip leased properties.

2 unchanged sentences

In most cases, landlord incentives are received after the Company takes possession of the property and as milestones are met during the construction of the property.

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

The Company includes these amounts in the measurement of the initial operating lease liability, and lease asset.

Pre-opening Costs

Pre-opening costs are expensed as incurred and consist primarily of occupancy, manager and team member wages, cookware, travel and lodging costs for the opening training team and other supporting team members, marketing expenses, legal fees, and inventory costs incurred prior to the opening of a Shack.

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Income taxes are accounted for pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying values and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse.

Any effects of changes in income tax rates or laws are included in Income tax expense on the Consolidated Statements of Loss in the period of enactment.

Any effects of changes in income tax rates or laws are included in Income tax expense on the Consolidated Statements of Income (Loss) in the period of enactment.

A valuation allowance is recognized if we determine it is more likely than not that all or a portion of a deferred tax asset will not be recognized.

In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operations.

Recently Adopted Accounting Pronouncements

Accounting Standards Updates ("ASU") adopted in fiscal 2022 are summarized below.

ASU Description Date

Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 This amendment updates the sunset date of the reference rate relief guidance during the transition period for the discontinuation of the UK Financial Conduct Authority (FCA) publishing of the LIBOR rate which originally was announced to be December 31, 2021 but was deferred to June 30, 2023.

Topic 848 now has a new sunset date of December 31, 2024.

December 21, 2022

Recently Issued Accounting Pronouncements

The Company reviewed all recently issued accounting pronouncements and concluded that they were not applicable or not expected to have a significant impact on the Consolidated Financial Statements.

Accounting standards updates ("ASU") applicable to the Company that were issued in 2023 are summarized below.

ASU Description Effective Date

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

(ASU 2023-07)

This ASU requires that an entity report segment information in accordance with Topic 280, Segment Reporting.

The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

Early adoption is permitted.

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

Fiscal years beginning after December 15, 2023

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

(ASU 2023-09)

This ASU requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.

The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures.

Early adoption is permitted.

The Company is currently evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

Fiscal years beginning after December 15, 2024

All other ASUs issued but not yet effective are not applicable or not expected to have a material impact on the Company’s future Consolidated Financial Statements.

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the preparation of the Company's Consolidated Financial Statements as of and for the fiscal year ended December 27, 2023, the Company discovered that in prior years it had not appropriately accounted for the deferred tax asset associated with its investment in SSE Holdings, primarily due to incorrect accounting for state tax depreciation.

The error resulted in an overstatement of income tax expense of approximately $ 2,862 for the fiscal year ended December 28, 2022 and an understatement of income tax benefit of $ 4,094 for the fiscal year ended December 29, 2021 and deferred tax assets were

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understated for the impacted periods.

The error also resulted in an understatement of retained earnings and deferred tax assets as of December 26, 2020 of approximately $ 10,094 related to prior periods.

The error did not impact total revenue or loss before income taxes for the fiscal years ended December 28, 2022 and December 29, 2021.

The misstatements were material to the previously issued financial statements of the Company and as a result, the Company has restated its Consolidated Balance Sheets, Consolidated Statements of Loss, Consolidated Statements of Comprehensive Loss, Consolidated Statements of Stockholder's Equity, and Consolidated Statements of Cash Flows as of and for the fiscal years ended December 28, 2022 and December 29, 2021 presented herein.

The restatement includes adjustments to Deferred income taxes, net, Additional paid-in capital, Retained earnings (accumulated deficit), Income tax expense (benefit), Net income (loss), Net income (loss) attributable to Shake Shack Inc., and Earnings (loss) per share.

The impact of the correction of the misstatements is summarized below:

As of December 28, 2022 As of December 29, 2021

CORRECTED CONSOLIDATED BALANCE SHEETS As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Deferred income taxes, net $ 300,538 $ 17,088 $ 317,626 $ 298,668 $ 14,205 $ 312,873

Total assets 1,494,862 17,088 1,511,950 1,457,570 14,205 1,471,775

Additional paid-in capital 415,611 38 415,649 405,940 17 405,957

Retained earnings (accumulated deficit) ( 20,537 ) 17,050 ( 3,487 ) 3,554 14,188 17,742

419,748 17,088 436,836 435,600 14,205 449,805

Total liabilities and stockholders' equity

1,494,862 17,088 1,511,950 1,457,570 14,205 1,471,775

For the Fiscal Year Ended

December 28, 2022 For the Fiscal Year Ended

December 29, 2021

CORRECTED CONSOLIDATED STATEMENTS OF LOSS As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Income tax expense (benefit) $ 1,682 $ ( 2,862 ) $ ( 1,180 ) $ ( 7,224 ) $ ( 4,094 ) $ ( 11,318 )

( 25,967 ) 2,862 ( 23,105 ) ( 10,111 ) 4,094 ( 6,017 )

Net loss attributable to Shake Shack Inc.

( 24,091 ) 2,862 ( 21,229 ) ( 8,655 ) 4,094 ( 4,561 )

Loss per share of Class A common stock:

Basic $ ( 0.61 ) $ 0.07 $ ( 0.54 ) $ ( 0.22 ) $ 0.10 $ ( 0.12 )

Diluted $ ( 0.61 ) $ 0.07 $ ( 0.54 ) $ ( 0.22 ) $ 0.10 $ ( 0.12 )

For the Fiscal Year Ended

December 28, 2022 For the Fiscal Year Ended

December 29, 2021

CORRECTED CONSOLIDATED STATEMENTS OF CASH FLOWS

As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Net income (loss) (including amounts attributable to non-controlling interests) $ ( 25,967 ) $ 2,862 $ ( 23,105 ) $ ( 10,111 ) $ 4,094 $ ( 6,017 )

Deferred income taxes ( 3,357 ) ( 1,657 ) ( 5,014 ) ( 10,379 ) ( 4,094 ) ( 14,473 )

Accrued expenses

4,707 ( 1,205 ) 3,502 7,175 — 7,175

Net cash provided by Operating activities

76,742 — 76,742 58,404 — 58,404

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Additional Paid-In Capital

Retained Earnings

(Accumulated Deficit)

CORRECTED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

BALANCE AT DECEMBER 30, 2020 $ 395,067 $ — $ 395,067 $ 12,209 $ 10,094 $ 22,303

Net loss — — — ( 8,655 ) 4,094 ( 4,561 )

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis 208 17 225 — — —

BALANCE AT DECEMBER 29, 2021 405,940 17 405,957 3,554 14,188 17,742

Net loss — — — ( 24,091 ) 2,862 ( 21,229 )

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis ( 1,182 ) 21 ( 1,161 ) — — —

BALANCE AT DECEMBER 28, 2022 $ 415,611 $ 38 $ 415,649 $ ( 20,537 ) $ 17,050 $ ( 3,487 )

All referenced amounts for prior periods in these financial statements and the notes herein reflect the balances and amounts on a restated basis.

Restatement of Interim Financial Information (Unaudited)

The Company has restated its unaudited Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Stockholder's Equity for the quarterly periods ended March 30, 2022, June 29, 2022, September 28, 2022, March 29, 2023, June 28, 2023 and September 27, 2023.

The Condensed Consolidated Statements of Income (Loss) and Condensed Consolidated Statements of Cash Flows for the periods ended March 30, 2022, June 29, 2022, September 28, 2022, March 29, 2023, June 28, 2023 and September 27, 2023 were not impacted by the misstatement.

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As of March 29, 2023 As of March 30, 2022

CORRECTED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Current assets:

Cash and cash equivalents

$ 293,430 $ — $ 293,430 $ 279,251 $ — $ 279,251

Marketable securities

— — — 79,676 — 79,676

Accounts receivable, net 14,175 — 14,175 11,755 — 11,755

Inventories 4,394 — 4,394 3,780 — 3,780

Prepaid expenses and other current assets 18,075 — 18,075 12,155 — 12,155

Total current assets

330,074 — 330,074 386,617 — 386,617

Property and equipment, net of accumulated depreciation of $ 310,939 and $ 236,933 , respectively

479,617 — 479,617 398,971 — 398,971

Operating lease assets 379,475 — 379,475 346,128 — 346,128

Deferred income taxes, net 301,538 17,088 318,626 304,166 14,205 318,371

Other assets 16,211 — 16,211 13,846 — 13,846

TOTAL ASSETS $ 1,506,915 $ 17,088 $ 1,524,003 $ 1,449,728 $ 14,205 $ 1,463,933

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 16,002 $ — $ 16,002 $ 13,395 $ — $ 13,395

Accrued expenses 45,677 — 45,677 38,997 — 38,997

Accrued wages and related liabilities 18,678 — 18,678 16,032 — 16,032

Operating lease liabilities, current 44,578 — 44,578 36,951 — 36,951

Other current liabilities 18,117 — 18,117 20,586 — 20,586

Total current liabilities 143,052 — 143,052 125,961 — 125,961

Long-term debt 244,851 — 244,851 243,804 — 243,804

Long-term operating lease liabilities 441,554 — 441,554 399,487 — 399,487

Liabilities under tax receivable agreement, net of current portion 235,361 — 235,361 234,273 — 234,273

Other long-term liabilities 22,192 — 22,192 20,944 — 20,944

Total liabilities 1,087,010 — 1,087,010 1,024,469 — 1,024,469

Commitments and contingencies

Stockholders' equity:

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

none issued and outstanding as of March 29, 2023 and March 30, 2022.

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

39,404,905 and 39,218,290 shares issued and outstanding as of March 29, 2023 and March 30, 2022, respectively.

39 — 39 39 — 39

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

2,844,513 and 2,911,587 shares issued and outstanding as of March 29, 2023 and March 30, 2022, respectively.

Additional paid-in capital 417,451 38 417,489 406,981 17 406,998

Retained earnings (accumulated deficit)

( 22,071 ) 17,050 ( 5,021 ) ( 6,608 ) 14,188 7,580

Accumulated other comprehensive loss ( 4 ) — ( 4 ) — — —

Total stockholders' equity attributable to Shake Shack Inc.

395,418 17,088 412,506 400,415 14,205 414,620

Non-controlling interests 24,487 — 24,487 24,844 — 24,844

Total equity 419,905 17,088 436,993 425,259 14,205 439,464

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,506,915 $ 17,088 $ 1,524,003 $ 1,449,728 $ 14,205 $ 1,463,933

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As of June 28, 2023 As of June 29, 2022

CORRECTED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Current assets:

Cash and cash equivalents

$ 203,697 $ — $ 203,697 $ 278,332 $ — $ 278,332

Marketable securities

91,537 — 91,537 79,625 — 79,625

Accounts receivable, net 14,332 — 14,332 11,936 — 11,936

Inventories 4,674 — 4,674 3,955 — 3,955

Prepaid expenses and other current assets 15,278 — 15,278 13,727 — 13,727

Total current assets

329,518 — 329,518 387,575 — 387,575

Property and equipment, net of accumulated depreciation of $ 331,571 and $ 254,291 , respectively

500,085 — 500,085 411,018 — 411,018

Operating lease assets 385,386 — 385,386 361,522 — 361,522

Deferred income taxes, net 302,025 17,088 319,113 305,230 14,205 319,435

Other assets 15,802 — 15,802 14,735 — 14,735

TOTAL ASSETS $ 1,532,816 $ 17,088 $ 1,549,904 $ 1,480,080 $ 14,205 $ 1,494,285

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 17,005 $ — $ 17,005 $ 16,420 $ — $ 16,420

Accrued expenses 50,588 — 50,588 40,013 — 40,013

Accrued wages and related liabilities 18,221 — 18,221 18,440 — 18,440

Operating lease liabilities, current 46,490 — 46,490 38,775 — 38,775

Other current liabilities 17,881 — 17,881 20,261 — 20,261

Total current liabilities 150,185 — 150,185 133,909 — 133,909

Long-term debt 245,113 — 245,113 244,066 — 244,066

Long-term operating lease liabilities 448,580 — 448,580 418,010 — 418,010

Liabilities under tax receivable agreement, net of current portion 235,361 — 235,361 234,862 — 234,862

Other long-term liabilities 22,218 — 22,218 21,597 — 21,597

Total liabilities 1,101,457 — 1,101,457 1,052,444 — 1,052,444

Commitments and contingencies

Stockholders' equity:

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

none issued and outstanding as of June 28, 2023 and June 29, 2022.

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

39,449,246 and 39,266,670 shares issued and outstanding as of June 28, 2023 and June 29, 2022, respectively.

39 — 39 39 — 39

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

2,844,513 and 2,871,513 shares issued and outstanding as of June 28, 2023 and June 29, 2022, respectively.

Additional paid-in capital 421,356 38 421,394 410,520 17 410,537

Retained earnings (accumulated deficit)

( 15,123 ) 17,050 1,927 ( 7,796 ) 14,188 6,392

Accumulated other comprehensive loss ( 4 ) — ( 4 ) ( 1 ) — ( 1 )

Total stockholders' equity attributable to Shake Shack Inc.

406,271 17,088 423,359 402,765 14,205 416,970

Non-controlling interests 25,088 — 25,088 24,871 — 24,871

Total equity 431,359 17,088 448,447 427,636 14,205 441,841

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,532,816 $ 17,088 $ 1,549,904 $ 1,480,080 $ 14,205 $ 1,494,285

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As of September 27, 2023 As of September 28, 2022

CORRECTED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Current assets:

Cash and cash equivalents

$ 190,020 $ — $ 190,020 $ 256,998 $ — $ 256,998

Marketable securities

94,957 — 94,957 80,015 — 80,015

Accounts receivable, net 13,889 — 13,889 11,800 — 11,800

Inventories 4,608 — 4,608 3,996 — 3,996

Prepaid expenses and other current assets 19,762 — 19,762 14,246 — 14,246

Total current assets

323,236 — 323,236 367,055 — 367,055

Property and equipment, net of accumulated depreciation of $ 353,303 and $ 271,938 , respectively

525,557 — 525,557 441,870 — 441,870

Operating lease assets 397,870 — 397,870 370,536 — 370,536

Deferred income taxes, net 302,156 17,088 319,244 306,976 14,205 321,181

Other assets 16,037 — 16,037 15,330 — 15,330

TOTAL ASSETS $ 1,564,856 $ 17,088 $ 1,581,944 $ 1,501,767 $ 14,205 $ 1,515,972

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 21,251 $ — $ 21,251 $ 17,210 $ — $ 17,210

Accrued expenses 47,630 — 47,630 49,387 — 49,387

Accrued wages and related liabilities 18,164 — 18,164 17,758 — 17,758

Operating lease liabilities, current 47,610 — 47,610 40,690 — 40,690

Other current liabilities 17,522 — 17,522 19,497 — 19,497

Total current liabilities 152,177 — 152,177 144,542 — 144,542

Long-term debt 245,375 — 245,375 244,328 — 244,328

Long-term operating lease liabilities 463,370 — 463,370 429,165 — 429,165

Liabilities under tax receivable agreement, net of current portion 235,614 — 235,614 234,892 — 234,892

Other long-term liabilities 26,322 — 26,322 20,588 — 20,588

Total liabilities 1,122,858 — 1,122,858 1,073,515 — 1,073,515

Commitments and contingencies

Stockholders' equity:

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

none issued and outstanding as of September 27, 2023 and September 28, 2022.

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

39,466,268 and 39,279,699 shares issued and outstanding as of September 27, 2023 and September 28, 2022, respectively.

39 — 39 39 — 39

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

2,834,513 and 2,869,513 shares issued and outstanding as of September 27, 2023 and September 28, 2022, respectively.

Additional paid-in capital 423,811 38 423,849 413,274 17 413,291

Retained earnings (accumulated deficit)

( 7,496 ) 17,050 9,554 ( 9,820 ) 14,188 4,368

Accumulated other comprehensive loss ( 3 ) — ( 3 ) ( 1 ) — ( 1 )

Total stockholders' equity attributable to Shake Shack Inc.

416,354 17,088 433,442 403,495 14,205 417,700

Non-controlling interests 25,644 — 25,644 24,757 — 24,757

Total equity 441,998 17,088 459,086 428,252 14,205 442,457

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,564,856 $ 17,088 $ 1,581,944 $ 1,501,767 $ 14,205 $ 1,515,972

Shake Shack Inc.

Form 10-K | 99

Thirteen Weeks Ended

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

2023 March 30

Shack sales $ 244,254 $ 196,791

Licensing revenue 9,024 6,600

TOTAL REVENUE 253,278 203,391

Shack-level operating expenses:

Food and paper costs 71,772 59,884

Labor and related expenses 74,264 60,465

Other operating expenses 34,936 30,171

Occupancy and related expenses 18,583 16,276

General and administrative expenses 31,311 31,386

Depreciation and amortization expense 21,322 16,855

Pre-opening costs 3,557 2,712

Impairment and loss on disposal of assets 722 577

TOTAL EXPENSES 256,467 218,326

LOSS FROM OPERATIONS

( 3,189 ) ( 14,935 )

Other income (expense), net

2,837 ( 289 )

Interest expense ( 403 ) ( 355 )

LOSS BEFORE INCOME TAXES

( 755 ) ( 15,579 )

Income tax expense (benefit)

867 ( 4,297 )

( 1,622 ) ( 11,282 )

Net loss attributable to non-controlling interests

( 88 ) ( 1,120 )

NET LOSS ATTRIBUTABLE TO SHAKE SHACK INC.

$ ( 1,534 ) $ ( 10,162 )

Loss per share of Class A common stock:

Basic $ ( 0.04 ) $ ( 0.26 )

Diluted $ ( 0.04 ) $ ( 0.26 )

Weighted average shares of Class A common stock outstanding:

Basic 39,332 39,163

Diluted 39,332 39,163

Shake Shack Inc.

Form 10-K | 100

Thirteen Weeks Ended

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Shack sales $ 261,810 $ 223,054

Licensing revenue 9,995 7,698

TOTAL REVENUE 271,805 230,752

Shack-level operating expenses:

Food and paper costs 75,800 65,987

Labor and related expenses 75,158 65,851

Other operating expenses 36,109 32,151

Occupancy and related expenses 19,801 16,657

General and administrative expenses 31,476 29,487

Depreciation and amortization expense 22,252 18,087

Pre-opening costs 5,577 2,823

Impairment and loss on disposal of assets 884 528

TOTAL EXPENSES 267,057 231,571

INCOME (LOSS) FROM OPERATIONS

4,748 ( 819 )

Other income, net

Interest expense ( 405 ) ( 315 )

INCOME (LOSS) BEFORE INCOME TAXES

7,570 ( 596 )

Income tax expense

NET INCOME (LOSS)

7,223 ( 1,303 )

Net income (loss) attributable to non-controlling interests

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ 6,948 $ ( 1,188 )

Earnings (loss) per share of Class A common stock:

Basic $ 0.18 $ ( 0.03 )

Diluted $ 0.16 $ ( 0.03 )

Weighted average shares of Class A common stock outstanding:

Basic 39,416 39,227

Diluted 43,886 39,227

Shake Shack Inc.

Form 10-K | 101

Thirteen Weeks Ended

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

2023 September 28

Shack sales $ 264,980 $ 219,501

Licensing revenue 11,227 8,313

TOTAL REVENUE 276,207 227,814

Shack-level operating expenses:

Food and paper costs 77,180 67,774

Labor and related expenses 76,233 64,638

Other operating expenses 37,307 33,680

Occupancy and related expenses 20,300 17,337

General and administrative expenses 30,939 26,931

Depreciation and amortization expense 23,130 18,647

Pre-opening costs 4,969 3,041

Impairment and loss on disposal of assets 492 592

TOTAL EXPENSES 270,550 232,640

INCOME (LOSS) FROM OPERATIONS

5,657 ( 4,826 )

Other income, net

Interest expense ( 433 ) ( 475 )

INCOME (LOSS) BEFORE INCOME TAXES

8,665 ( 3,819 )

Income tax expense (benefit)

529 ( 1,508 )

NET INCOME (LOSS)

8,136 ( 2,311 )

Net income (loss) attributable to non-controlling interests

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ 7,627 $ ( 2,024 )

Earnings (loss) per share of Class A common stock:

Basic $ 0.19 $ ( 0.05 )

Diluted $ 0.19 $ ( 0.05 )

Weighted average shares of Class A common stock outstanding:

Basic 39,460 39,274

Diluted 43,978 39,274

Shake Shack Inc.

Form 10-K | 102

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended March 30, 2022

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Non-

Interest Total

Shares Amount Shares Amount

BALANCE DECEMBER 29, 2021 (As Reported) 39,142,397 $ 39 2,921,587 $ 3 $ 405,940 $ 3,554 $ 1 $ 26,063 $ 435,600

Effect of restatement — — — — 17 14,188 — — 14,205

BALANCE DECEMBER 29, 2021 (As Restated) 39,142,397 39 2,921,587 3 405,957 17,742 1 26,063 449,805

Net loss — — — — — ( 10,162 ) — ( 1,120 ) ( 11,282 )

Other comprehensive income:

Net change in foreign currency translation adjustment — — — — — — ( 1 ) — ( 1 )

Equity-based compensation — — — — 3,224 — — — 3,224

Activity under stock compensation plan 65,893 — — — ( 2,276 ) — — 252 ( 2,024 )

Redemption of LLC interests 10,000 — ( 10,000 ) — 49 — — ( 49 ) —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 44 — — — 44

Distributions paid to non-controlling interest holders — — — — — — — ( 302 ) ( 302 )

BALANCE MARCH 30, 2022 (As Restated) 39,218,290 $ 39 2,911,587 $ 3 $ 406,998 $ 7,580 $ — $ 24,844 $ 439,464

For the thirteen weeks ended June 29, 2022 and September 28, 2022, the effect of the restatement is included in the beginning balances as of March 30, 2022 and June 29, 2022, respectively.

As such, only the restated Condensed Consolidated Statements of Stockholders' Equity are shown below.

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended June 29, 2022

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Non-

Interest Total

Shares Amount Shares Amount

BALANCE MARCH 30, 2022 (As Restated) 39,218,290 $ 39 2,911,587 $ 3 $ 406,998 $ 7,580 $ — $ 24,844 $ 439,464

Net loss — — — — — ( 1,188 ) — ( 115 ) ( 1,303 )

Other comprehensive income:

Net change in foreign currency translation adjustment — — — — — — ( 1 ) — ( 1 )

Equity-based compensation — — — — 3,501 — — — 3,501

Activity under stock compensation plan 8,306 — — — ( 332 ) — — 421 89

Redemption of LLC interests 40,074 — ( 40,074 ) — 257 — — ( 257 ) —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 113 — — — 113

Distributions paid to non-controlling interest holders — — — — — — — ( 22 ) ( 22 )

BALANCE JUNE 29, 2022 (As Restated) 39,266,670 $ 39 2,871,513 $ 3 $ 410,537 $ 6,392 $ ( 1 ) $ 24,871 $ 441,841

Shake Shack Inc.

Form 10-K | 103

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended September 28, 2022

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Non-

Interest Total

Shares Amount Shares Amount

BALANCE JUNE 29, 2022 (As Restated) 39,266,670 $ 39 2,871,513 $ 3 $ 410,537 $ 6,392 $ ( 1 ) $ 24,871 $ 441,841

Net loss — — — — — ( 2,024 ) — ( 287 ) ( 2,311 )

Other comprehensive income:

Net change in foreign currency translation adjustment — — — — — — — — —

Equity-based compensation — — — — 3,570 — — — 3,570

Activity under stock compensation plan 11,029 — — — ( 182 ) — — 245 63

Redemption of LLC interests 2,000 — ( 2,000 ) — 7 — — ( 7 ) —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — ( 641 ) — — — ( 641 )

Distributions paid to non-controlling interest holders — — — — — — — ( 65 ) ( 65 )

BALANCE SEPTEMBER 28, 2022 (As Restated) 39,279,699 $ 39 2,869,513 $ 3 $ 413,291 $ 4,368 $ ( 1 ) $ 24,757 $ 442,457

Shake Shack Inc.

Form 10-K | 104

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended March 29, 2023

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Non-

Interest Total

Shares Amount Shares Amount

BALANCE DECEMBER 28, 2022 (As Reported) 39,284,998 $ 39 2,869,513 $ 3 $ 415,611 $ ( 20,537 ) $ — $ 24,632 $ 419,748

Effect of restatement

— — — — 38 17,050 — — 17,088

BALANCE DECEMBER 28, 2022 (As Restated) 39,284,998 39 2,869,513 3 415,649 ( 3,487 ) — 24,632 436,836

Net loss — — — — — ( 1,534 ) — ( 88 ) ( 1,622 )

Other comprehensive loss:

Net change in foreign currency translation adjustment — — — — — — ( 4 ) — ( 4 )

Equity-based compensation — — — — 3,864 — — — 3,864

Activity under stock compensation plan 94,907 — — — ( 2,699 ) — — 186 ( 2,513 )

Redemption of LLC interests 25,000 — ( 25,000 ) — 194 — — ( 194 ) —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 481 — — — 481

Distributions paid to non-controlling interest holders — — — — — — — ( 49 ) ( 49 )

BALANCE MARCH 29, 2023 (As Restated) 39,404,905 $ 39 2,844,513 $ 3 $ 417,489 $ ( 5,021 ) $ ( 4 ) $ 24,487 $ 436,993

For the thirteen weeks ended June 28, 2023 and September 27, 2023, the effect of the restatement is included in the beginning balances as of March 29, 2023 and June 28, 2023, respectively.

As such, only the restated Condensed Consolidated Statements of Stockholders' Equity are shown below.

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended June 28, 2023

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Non-

Interest Total

Shares Amount Shares Amount

BALANCE MARCH 29, 2023

(As Restated) 39,404,905 $ 39 2,844,513 $ 3 $ 417,489 $ ( 5,021 ) $ ( 4 ) $ 24,487 $ 436,993

Net income — — — — — 6,948 — 275 7,223

Other comprehensive income (loss):

Net change in foreign currency translation adjustment — — — — — — — — —

Equity-based compensation — — — — 4,011 — — — 4,011

Activity under stock compensation plan 44,341 — — — 145 — — 329 474

Redemption of LLC interests — — — — — — — — —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — ( 251 ) — — — ( 251 )

Distributions paid to non-controlling interest holders — — — — — — — ( 3 ) ( 3 )

BALANCE JUNE 28, 2023 (As Restated) 39,449,246 $ 39 2,844,513 $ 3 $ 421,394 $ 1,927 $ ( 4 ) $ 25,088 $ 448,447

Shake Shack Inc.

Form 10-K | 105

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended September 27, 2023

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Non-

Interest Total

Shares Amount Shares Amount

BALANCE JUNE 28, 2023 (As Restated) 39,449,246 $ 39 2,844,513 $ 3 $ 421,394 $ 1,927 $ ( 4 ) $ 25,088 $ 448,447

Net income — — — — — 7,627 — 509 8,136

Other comprehensive income:

Net change in foreign currency translation adjustment — — — — — — 1 — 1

Equity-based compensation — — — — 3,563 — — — 3,563

Activity under stock compensation plan 7,022 — — — ( 469 ) — — 197 ( 272 )

Redemption of LLC interests 10,000 — ( 10,000 ) — 71 — — ( 71 ) —

Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — ( 710 ) — — — ( 710 )

Distributions paid to non-controlling interest holders — — — — — — — ( 79 ) ( 79 )

BALANCE SEPTEMBER 27, 2023 (As Restated) 39,466,268 $ 39 2,834,513 $ 3 $ 423,849 $ 9,554 $ ( 3 ) $ 25,644 $ 459,086

Revenue Recognition

9 unchanged sentences

This amount excludes any variable consideration related to sales-based royalties.

Shake Shack Inc.

Form 10-K | 106

Contract Balances

6 unchanged sentences

Deferred revenue, long-term 17,157 14,340

Revenue recognized during fiscal 2022 and fiscal 2021 included in the respective liability balances at the beginning of the period were as follows:

Revenue recognized that was included in the respective liability balances at the beginning of the period was as follows:

Gift card liability (1)

1 unchanged sentence

Deferred revenue 1,103 954

(1) For fiscal 2022, amount includes the cumulative catch-up adjustment that resulted in $ 1,281 of gift card breakage income.

(1) For fiscal 2022, amount includes the cumulative catch-up adjustment of $ 1,281 for gift card breakage income.

Refer to Note 2, Summary of Significant Accounting Policies, for additional information.

FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying value of the Company's Cash and cash equivalents, Accounts receivable, net, Accounts payable and Accrued expenses approximates fair value due to the short-term nature of these financial instruments.

Shake Shack Inc.

Form 10-K | 107

As of December 28, 2022 and December 29, 2021, the Company held certain assets that are required to be measured at fair value on a recurring basis including Marketable securities, which consist of investments in equity securities.

Assets measured at fair value on a recurring basis were as follows:

FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying values of the Company's Cash and cash equivalents, Accounts receivable, net, Accounts payable and Accrued expenses approximate fair value due to the short-term nature of these financial instruments.

The Company's marketable securities were as follows:

2023 December 28

Level 1 Level 1

Equity securities

Mutual funds $ 80,707 $ 80,000

Held-to-maturity securities

Total marketable securities

$ 68,561 $ 80,707

The Company classified its available-for-sale and held-to-maturity securities as Level 1 measurements within the fair value hierarchy.

Refer to Note 9, Debt, for additional information relating to the fair value of the Company's outstanding debt instruments.

A summary of other income (expense) from equity securities was as follows:

The Company's held-to-maturity securities were as follows:

December 27, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Treasuries $ 68,561 $ 481 $ — $ 69,042

As of December 27, 2023, the contractual maturities of held-to-maturity securities were less than 12 months.

Any expected credit losses would not be material to the Consolidated Statements of Income (Loss).

A summary of other income from investments was as follows:

2023 2022 2021

Equity securities:

Dividend income $ 1,033 $ 301 $ 359

Realized gain (loss) on sale of investments — ( 5 ) 79

Income from investments

$ 2,885 $ 1,033 $ 301

Realized gain (loss) on sale of equity securities 81 — ( 5 )

Unrealized loss on equity securities — ( 158 ) ( 277 )

1 unchanged sentence

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

Assets and liabilities measured at fair value on a non-recurring basis include long-lived assets, operating lease right-of-use assets and indefinite-lived intangible assets.The Company performs its impairment analysis at least annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.

During fourth quarter of fiscal 2022, the Company recognized an impairment charge of $ 99 related to one Shack.

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

The Company performs its impairment analysis at least annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.

No impairment charges were recognized during fiscal 2023.

During fiscal 2022, the Company recognized an impairment charge of $ 99 related to one Shack.

These impairment charges were included in Impairment and loss on disposal of assets on the Consolidated Statements of Income (Loss).

There were no impairment charges recognized during fiscal 2021.

During fiscal 2020, the Company recognized an impairment charge of $ 7,644 related to two Shacks and the home office which was primarily attributed to operating lease right-of-use assets.

These impairment charges were included in Impairment and loss on disposal of assets on the Consolidated Statement of Loss.

The fair values of assets were determined using an income-based approach and are classified as Level 3 within the fair value hierarchy.

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

Shake Shack Inc.

Form 10-K | 108

ACCOUNTS RECEIVABLE, NET

6 unchanged sentences

Accounts receivable, net $ 16,847 $ 13,877

Shake Shack Inc.

Form 10-K | 95

PROPERTY AND EQUIPMENT, NET

12 unchanged sentences

SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of Prepaid expenses and other current assets were as follows:

2023 December 28

Prepaid expenses

$ 5,641 $ 3,815

Tenant allowance receivables

12,136 10,121

Prepaid expenses and other current assets

$ 18,967 $ 14,699

Shake Shack Inc.

Form 10-K | 109

The components of Other current liabilities were as follows:

1 unchanged sentence

Sales tax payable $ 6,076 $ 5,363

Gift card liability 2,285 3,297

Current portion of financing equipment lease liabilities 3,435 2,546

Gift card liability 2,603 2,285

Legal reserve 679 6,285

7 unchanged sentences

Other long-term liabilities $ 26,638 $ 20,687

Shake Shack Inc.

Form 10-K | 96

The components of Long-term debt were as follows:

2022 December 29

Convertible Notes

Discount and debt issuance costs, net of amortization ( 5,411 ) ( 6,458 )

Total Long-term debt $ 244,589 $ 243,542

Convertible Notes

In March 2021, the Company issued $ 250,000 aggregate principal amount of 0% Convertible Senior Notes due 2028 (“Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933.

The Convertible Notes will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances.

The Company's $ 250,000 aggregate principal amount of 0 % Convertible Senior Notes due 2028 (“Convertible Notes”) will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances.

Upon conversion, the Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election.

6 unchanged sentences

The Convertible Notes had an initial conversion rate of 5.8679 shares of Class A common stock per one thousand dollar principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $ 170.42 per share of Class A common stock.

The fair value of the Convertible Notes was approximately $ 205,000 and $ 162,500 , respectively, as of December 27, 2023 and December 28, 2022, based on external pricing data, including available quoted market prices of these

Shake Shack Inc.

Form 10-K | 110

instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as a Level 2 measurement within the fair value hierarchy.

The Company may not redeem the Convertible Notes prior to March 6, 2025.

1 unchanged sentence

In addition, if Shake Shack undergoes a fundamental change (as defined in the indenture governing the Convertible Notes), subject to certain conditions, holders may require it to repurchase for cash all or any portion of their Convertible Notes at a repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or if the Company delivers a notice of redemption in respect of some

Shake Shack Inc.

Form 10-K | 97

or all of the Convertible Notes, the Company will, in certain circumstances, increase the conversion rate of the Convertible Notes for a holder who elects to convert the Convertible Notes in connection with such a corporate event or convert the Convertible Notes called (or deemed called) for redemption during the related redemption period, as the case may be.

In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or if the Company delivers a notice of redemption in respect of some or all of the Convertible Notes, the Company will, in certain circumstances, increase the conversion rate of the Convertible Notes for a holder who elects to convert the Convertible Notes in connection with such a corporate event or convert the Convertible Notes called (or deemed called) for redemption during the related redemption period, as the case may be.

Contemporaneously with the issuance of the Convertible Notes, Shake Shack Inc.

4 unchanged sentences

and the aggregate number of outstanding shares of common stock.

Total amortization expense was $ 1,047 and $ 867 , respectively, for fiscal 2022 and fiscal 2021, and was included in Interest expense in the Consolidated Statements of Loss.

In connection with the issuance of the Convertible Notes, the Company also incurred consulting and advisory fees of $ 231 during fiscal 2021 and was included in General and administrative expenses in the Consolidated Statements of Loss.

No amounts for consulting and advisory fees were incurred during fiscal 2022.

The fair value of the Convertible Notes was approximately $ 162,500 and $ 206,018 , respectively, as of December 28, 2022 and December 29, 2021, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as a Level 2 measurement within the fair value hierarchy.

Classification December 27

2023 December 28

Amortization expense on Convertible Notes Interest expense $ 1,047 $ 1,047

2023 December 28

Convertible Notes

$ 250,000 $ 250,000

Discount and debt issuance costs, net of amortization ( 4,364 ) ( 5,411 )

Long-term debt

$ 245,636 $ 244,589

Revolving Credit Facility

The Company maintains a revolving credit facility agreement ("Revolving Credit Facility") which permits borrowings up to $ 50 million and issuance of letters of credit upon the Company's request of up to $ 15 million.

The Company maintains a revolving credit facility agreement ("Revolving Credit Facility") which permits borrowings up to $ 50,000 with the ability to increase available borrowings up to an additional $ 100,000 , subject to satisfaction of certain conditions.

The Revolving Credit Facility has a maturity date of March 5, 2026.

In fiscal 2023, the Company entered into the fourth amendment to the Revolving Credit Facility ("Fourth Amendment"), which, among other things, modified the benchmark interest rate to either:

(i) the base rate plus applicable margin ranging from 0.0 % to 1.5 % or (ii) the Secured Overnight Financing Rate (“SOFR”) plus applicable margin ranging from 1.0 % to 2.5 %, in each case depending on the net lease adjusted leverage ratio.

As of December 27, 2023 and December 28, 2022, no amounts were outstanding under the Revolving Credit Facility.

In August 2022, the Company entered into an irrevocable standby letter of credit to secure obligations under the workers' compensation insurance coverage in the amount of $ 1,260 , which expires in July 2023 and renews automatically for one-year periods.

As of December 28, 2022, the Company maintained $ 1,863 of letters of credit in connection with the Revolving Credit Facility.

The Company maintained a letter of credit of $ 603 in connection with the Revolving Credit Facility as of December 29, 2021.

As of December 28, 2022, the Revolving Credit Facility had unamortized deferred financing costs of $ 62 which were included in Other assets on the Consolidated Balance Sheets.

Total interest expense related to the Revolving Credit Facility was $ 82 , $ 479 and $ 531 , respectively, for fiscal 2022, fiscal 2021 and fiscal 2020.

Interest expense for fiscal 2021 primarily included the write-off of previously capitalized costs on the Revolving Credit Facility.

The Revolving Credit Facility requires the Company to comply with maximum net lease adjusted leverage and minimum fixed charge coverage ratios, as well as other customary affirmative and negative covenants.

As of December 28, 2022, the Company was in compliance with all covenants.

The obligations under the Revolving Credit Facility are secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors.

The obligations under the Revolving Credit Facility are guaranteed by each of SSE Holdings' direct and indirect subsidiaries, with certain exceptions.

The Revolving Credit Facility requires the Company to comply

Shake Shack Inc.

Form 10-K | 111

A summary of operating and finance lease assets and lease liabilities were as follows:

with maximum net lease adjusted leverage and minimum fixed charge coverage ratios, as well as other customary affirmative and negative covenants.

As of December 27, 2023, the Company was in compliance with all covenants.

The Revolving Credit Facility also permits the issuance of letters of credit upon our request of up to $ 15,000 .

As of December 27, 2023 and December 28, 2022, the Company had outstanding letters of credit of $ 3,147 and $ 1,863 , respectively, in connection with the Revolving Credit Facility.

Classification December 27

2023 December 28

2022 December 29

Interest expense on Revolving Credit Facility Interest expense $ 74 $ 82 $ 479

(1) Interest expense for fiscal 2021 primarily included the write-off of previously capitalized costs on the Revolving Credit Facility.

Classification December 27

2023 December 28

Unamortized deferred financing costs on Revolving Credit Facility Other assets $ 42 $ 62

A summary of operating and finance right-of-use assets and lease liabilities were as follows:

Classification December 27

2023 December 28

Operating leases Operating lease assets $ 398,296 $ 367,488

8 unchanged sentences

Total lease liabilities $ 525,693 $ 475,920

Shake Shack Inc.

Form 10-K | 112

The components of lease expense were as follows:

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Total lease cost $ 90,824 $ 78,638 $ 67,959

Shake Shack Inc.

Form 10-K | 99

As of December 27, 2023, future minimum lease payments for operating and finance leases consisted of the following:

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(1) Operating leases are net of certain tenant allowance receivables that were reclassified to Other current assets as of December 27, 2023.

As of December 28, 2022 the Company had additional operating lease commitments of $ 160,464 for non-cancelable leases without a possession date, which begin to commence in 2023.

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

As of December 27, 2023 the Company had additional operating lease commitments of $ 154,198 for non-cancelable leases without a possession date, which commence in 2024 or later.

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

A summary of lease terms and discount rates for operating and finance leases were as follows:

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Finance leases 5.6 % 4.0 %

Shake Shack Inc.

Form 10-K | 113

Supplemental cash flow information related to leases was as follows:

8 unchanged sentences

Finance leases 8,972 2,415 4,119

Shake Shack Inc.

Form 10-K | 100

EMPLOYEE BENEFIT PLANS

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Employer contributions are paid directly to the third-party trustee and are at the Company's discretion.

Employer contributions are based on matching a portion of participants' contributions.

The Company matches 100 % of participants' contributions for the first 3 % of eligible compensation contributed and 50 % of contributions made in excess of 3 % of eligible compensation up to 5 % of eligible compensation.

Employer contributions are based on matching a portion of certain participants' contributions.

The Company matches 100 % of certain participants' contributions for the first 3 % of eligible compensation contributed and 50 % of contributions made in excess of 3 % of eligible compensation up to 5 % of eligible compensation.

Employer contributions totaled $ 1,888 , $ 1,553 and $ 1,337 , respectively, for fiscal 2023, fiscal 2022 and fiscal 2021.

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Shares of Class B common stock surrendered and cancelled 35,000 52,074 29,601

Shake Shack Inc.

Form 10-K | 114

Stock Compensation Plan Activity

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As of December 27, 2023, essentially all of the net assets of SSE Holdings were restricted.

Shake Shack Inc.

Form 10-K | 101

NON-CONTROLLING INTERESTS

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Total LLC Interests outstanding 42,308,828 100.0 % 42,154,511 100.0 %

The weighted average ownership percentages for the applicable reporting periods are used to attribute Net loss and Other comprehensive loss to Shake Shack Inc.

and the non-controlling interest holders.

The non-controlling interest holders' weighted average ownership percentage for fiscal 2022, fiscal 2021 and fiscal 2020 was 6.9 %, 7.0 % and 7.7 % respectively.

During fiscal 2022, an aggregate of 52,074 LLC Interests were redeemed by the non-controlling interest holders for newly-issued shares of Class A common stock, and the Company received 52,074 LLC Interests, increasing its total ownership interest in SSE Holdings to 93.2 %.

During fiscal 2021, an aggregate of 29,601 LLC Interests were redeemed by the non-controlling interest holders for newly-issued shares of Class A common stock, and the Company received 29,601 LLC Interests, increasing its total ownership interest in SSE Holdings to 93.1 %.

The weighted average ownership percentages for the applicable reporting periods are used to attribute Net income (loss) and Other comprehensive income (loss) to the non-controlling interest holders.

2023 2022 2021

Non-controlling interest holders' weighted average ownership percentages 6.7 % 6.9 % 7.0 %

Shake Shack Inc.

Form 10-K | 115

The following table summarizes the effects of changes in ownership of SSE Holdings on the Company's equity:

(As Restated) (As Restated)

2023 2022 2021

Net loss attributable to Shake Shack Inc.

Net income (loss) attributable to Shake Shack Inc.

$ 20,264 $ ( 21,229 ) $ ( 4,561 )

Other comprehensive income (loss):

Unrealized holding gain (loss) on foreign currency translation adjustment ( 1 ) ( 2 ) 1

Unrealized holding loss on foreign currency translation adjustment ( 3 ) ( 1 ) ( 2 )

Transfers (to) from non-controlling interests:

Increase in additional paid-in capital as a result of the redemption of LLC Interests 265 313 33

Increase (decrease) in additional paid-in capital as a result of stock option exercises and the related income tax effect ( 2,978 ) 1,829 5,909

Increase in additional paid-in-capital as a result of the issuance of Class A common stock sold in equity offerings — — 135,718

Total effect of changes in ownership interest on equity attributable to Shake Shack Inc.

Increase (decrease) in additional paid-in capital as a result of activity under stock compensation plan ( 3,271 ) ( 2,978 ) 1,829

Total effect of changes in ownership interest on equity (loss) attributable to Shake Shack Inc.

$ 17,255 $ ( 23,895 ) $ ( 2,701 )

The Company received an aggregate of 90,527 , 395,006 and 456,942 LLC Interests in connection with the activity under the stock compensation plan during fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Shake Shack Inc.

Form 10-K | 102

The following table summarizes the LLC Interests activity:

2023 2022 2021

LLC Interests activity under the Company's stock compensation plan

Number of LLC Interests received by Shake Shack Inc.

154,317 90,527 395,006

Redemption and acquisition of LLC Interests

Number of LLC Interests redeemed by non-controlling interest holders 35,000 52,074 29,601

Number of LLC Interests received by Shake Shack Inc.

35,000 52,074 29,601

Issuance of Class A common stock

Shares of Class A common stock issued in connection with redemptions of LLC Interests 35,000 52,074 29,601

Cancellation of Class B common stock

Shares of Class B common stock surrendered and canceled 35,000 52,074 29,601

EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized was as follows:

A summary of equity-based compensation expense by award type was as follows:

2023 2022 2021

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Total income tax benefit recognized related to equity-based compensation $ 391 $ 302 $ 223

Equity-based compensation expense was as follows:

Equity-based compensation expense recognized was as follows:

2023 2022 2021

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Equity-based compensation expense $ 14,888 $ 13,326 $ 8,703

Shake Shack Inc.

Form 10-K | 116

The Company capitalized $ 286 , $ 192 and $ 100 of equity-based compensation expense associated with the construction cost of our Shacks and certain digital and technology projects, during fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

Restricted Stock Units

In January 2015, the Company adopted the 2015 Incentive Award Plan (the "2015 Plan") under which it may grant up to 5,865,522 restricted stock units and other equity-based awards to team members, directors and officers.

The restricted stock units granted generally vest equally over periods ranging from one to five years .

The fair value of restricted stock units is determined based on the closing market price of our Class A common stock on the date of grant.

Compensation expense related to the restricted stock units is recognized using a straight-line attribution method over the vesting period.

A summary of restricted stock unit activity was as follows:

Grant Date Fair Value

Outstanding as of December 28, 2022 395,853 $ 76.82

Granted 326,692 58.26

Vested ( 147,163 ) 70.29

Forfeited ( 63,838 ) 68.94

Outstanding as of December 27, 2023 511,544 $ 67.82

As of December 27, 2023, there were 511,544 restricted stock units outstanding, of which none were vested.

The weighted average grant date fair value of share awards granted during fiscal 2023, fiscal 2022 and fiscal 2021 were $ 58.26 , $ 71.25 , and $ 117.39 , respectively.

The total fair value of shares vested during fiscal 2023, fiscal 2022 and fiscal 2021 was $ 10,382 , $ 5,936 and $ 8,385 , respectively.

As of December 27, 2023, total unrecognized compensation expense related to unvested restricted stock units was $ 25,159 , which is expected to be recognized over a weighted average period of 2.6 years.

Performance Stock Units

Under the 2015 Plan, the Company may grant performance stock units and other types of performance-based equity awards that vest based on the outcome of certain performance criteria that are established and approved by the Compensation Committee of the Board of Directors.

The actual number of equity awards earned is based on the level of performance achieved over a predetermined performance period, relative to established financial goals, none of which are considered market conditions.

For performance stock units granted during fiscal 2022, the amount of awards that can be earned ranges from 0 % to 200 % of the number of performance stock units granted, based on the achievement of approved financial goals over a 1-year or 3-year performance period.

In addition to the performance conditions, performance stock units are also subject to a requisite service period and the awards vest ratably over 4 years years or cliff vest over 3 years.

No performance stock units were granted during fiscal 2023.

The fair value of performance stock units is determined based on the closing market price of our Class A common stock on the date of grant.

Compensation expense related to the performance stock units is recognized using either a graded-vesting attribution method or straight-line over the vesting period based on the most probable outcome of the performance conditions.

Shake Shack Inc.

Form 10-K | 117

A summary of performance stock unit activity was as follows:

Grant Date Fair Value

Outstanding as of December 28, 2022 159,822 $ 92.22

Performance achievement (1)

Vested ( 25,494 ) 91.36

Forfeited ( 12,903 ) 88.70

Outstanding as of December 27, 2023 121,425 $ 92.77

(1) Represents the incremental awards earned and/or awards forfeited based on the achievement of performance conditions.

As of December 27, 2023, there were 121,425 performance stock units outstanding, of which none were vested.

The weighted average grant date fair value of share awards granted during fiscal 2023, fiscal 2022 and fiscal 2021 was nil , nil , and $ 98.87 , respectively.

The total fair value of awards that vested during fiscal 2023, fiscal 2022 and fiscal 2021 was $ 1,441 , $ 1,869 and $ 3,083 , respectively.

As of December 27, 2023, total unrecognized compensation expense related to unvested performance stock units was $ 3,147 , which is expected to be recognized over a weighted average period of 1.1 years.

Stock Options

In January 2015, the Company adopted the 2015 Incentive Award Plan (the "2015 Plan") under which it may grant up to 5,865,522 stock options and other equity-based awards to team members, directors and officers.

Under the 2015 Plan, the Company may grant stock options to team members, directors and officers.

The stock options granted generally vest equally over periods ranging from one to five years .

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Cash received from stock options exercised was $ 744 and the cash tax benefit realized for the tax deductions from these option exercises was $ 203 for fiscal 2023.

The weighted average grant date fair value of options granted during fiscal 2022, fiscal 2021 and fiscal 2020 was nil , $ 58.92 , $ 16.21 , respectively.

The weighted average grant date fair value of options granted during fiscal 2023, fiscal 2022 and fiscal 2021 was nil , nil , $ 58.92 , respectively.

The total intrinsic value of stock options exercised during fiscal 2023, fiscal 2022 and fiscal 2021 was $ 1,426 , $ 631 and $ 30,533 , respectively.

The total fair value of stock options vested during fiscal 2022, fiscal 2021 and fiscal 2020 was nil , $ 60 and $ 2,674 , respectively.

The total fair value of stock options vested during fiscal 2023, fiscal 2022 and fiscal 2021 was nil , nil and $ 60 , respectively.

The following table summarizes information about stock options outstanding and exercisable as December 27, 2023:

5 unchanged sentences

$ 36.41 1,108 2.9 $ 36.41

Performance Stock Units

For performance stock units granted during fiscal 2021, the amount of awards that can be earned ranges from 0 % to 200 % of the number of performance stock units granted, based on the achievement of approved financial goals over a one-year or three-year performance period.

In addition to the performance conditions, performance stock units are also subject to a requisite service period and the awards vest ratably over four years years or cliff vest over three years .

No performance stock units were granted during fiscal 2022.

The fair value of performance stock units is determined based on the closing market price of our Class A common stock on the date of grant.

Shake Shack Inc.

Form 10-K | 104

A summary of performance stock unit activity was as follows:

Grant Date Fair Value

Outstanding as of December 29, 2021 186,159 $ 90.31

Performance achievement (1)

Vested ( 26,949 ) 88.18

Forfeited ( 5,286 ) 87.22

Outstanding as of December 28, 2022 159,822 $ 92.22

(1) Represents the incremental awards earned and/or awards forfeited based on the achievement of performance conditions .

As of December 28, 2022, there were 159,822 performance stock units outstanding, of which none were vested.

The weighted average grant date fair value of share awards granted during fiscal 2022, fiscal 2021 and fiscal 2020 was nil , $ 98.87 , and $ 57.20 , respectively.

The total fair value of awards that vested during fiscal 2022, fiscal 2021 and fiscal 2020 was $ 1,869 , $ 3,083 and $ 2,730 , respectively.

As of December 28, 2022, total unrecognized compensation expense related to unvested performance stock units was $ 6,396 , which is expected to be recognized over a weighted average period of 2.0 years.

Restricted Stock Units

Under the 2015 Plan, the Company may grant restricted stock units to team members, directors and officers.

The restricted stock units granted generally vest equally over periods ranging from one to five years .

The fair value of restricted stock units is determined based on the closing market price of our Class A common stock on the date of grant.

Compensation expense related to the restricted stock units is recognized using a straight-line attribution method over the vesting period.

A summary of restricted stock unit activity was as follows:

Grant Date Fair Value

Outstanding as of December 29, 2021 231,429 $ 84.37

Granted 271,026 71.25

Vested ( 76,055 ) 78.02

Forfeited ( 30,547 ) 81.65

Outstanding as of December 28, 2022 395,853 $ 76.82

As of December 28, 2022, there were 395,853 restricted stock units outstanding, of which none were vested.

The weighted average grant date fair value of share awards granted during fiscal 2022, fiscal 2021 and fiscal 2020 were $ 71.25 , $ 117.39 , and $ 57.41 , respectively.

The total fair value of shares vested during fiscal 2022, fiscal 2021 and fiscal 2020 was $ 5,936 , $ 8,385 and $ 2,463 , respectively.

As of December 28, 2022, total unrecognized compensation expense related to unvested restricted stock units was $ 22,519 , which is expected to be recognized over a weighted average period of 2.83 years.

Shake Shack is the sole managing member of SSE Holdings and, as a result, consolidates the financial results of SSE Holdings.

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federal and certain state and local income taxes.

Any taxable income or loss

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Form 10-K | 105

generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis.

Any taxable income or loss generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis.

The Company is subject to U.S.

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The Company is also subject to withholding taxes in foreign jurisdictions.

Shake Shack Inc.

Form 10-K | 119

Income Tax Expense

The components of Loss before income taxes were as follows:

The components of Income (loss) before income taxes were as follows:

(As Restated) (As Restated)

2023 2022 2021

1 unchanged sentence

Foreign 30,407 25,169 21,498

Loss before income taxes $ ( 24,285 ) $ ( 17,335 ) $ ( 45,477 )

The components of Income tax expense (benefit) were as follows:

Income (loss) before income taxes $ 16,980 $ ( 24,285 ) $ ( 17,335 )

The components of Income tax benefit were as follows:

(As Restated) (As Restated)

2023 2022 2021

8 unchanged sentences

Total deferred income taxes ( 9,074 ) ( 5,014 ) ( 14,473 )

Income tax expense (benefit) $ 1,682 $ ( 7,224 ) $ 57

(1) For fiscal 2021, certain amounts were reclassified for consistent presentation with the current year.

Reconciliations of Income tax expense (benefit) computed at the U.S.

federal statutory income tax rate to the recognized Income tax expense (benefit) and the U.S.

Income tax benefit $ ( 4,010 ) $ ( 1,180 ) $ ( 11,318 )

Reconciliations of Income tax benefit computed at the U.S.

federal statutory income tax rate to the recognized Income tax benefit and the U.S.

statutory income tax rate to our effective tax rates were as follows:

(As Restated) (As Restated)

2023 2022 2021

6 unchanged sentences

Remeasurement of deferred tax assets in connection with other tax rate changes 1,547 9.1 % 225 ( 0.9 ) % 1,034 ( 6.0 ) %

Reserve for uncertain tax positions

154 0.9 % — — % — — %

Change in valuation allowance ( 9,195 ) ( 54.2 ) % 4,955 ( 20.4 ) % ( 6,059 ) 35.0 %

Other 241 1.4 % 1,734 ( 7.1 ) % 51 ( 0.3 ) %

Income tax expense (benefit) $ 1,682 ( 6.9 ) % $ ( 7,224 ) 41.7 % $ 57 ( 0.1 ) %

(1) For fiscal 2021, certain amounts were reclassified for consistent presentation with the current year.

Income tax benefit

$ ( 4,010 ) ( 23.6 ) % $ ( 1,180 ) 4.9 % $ ( 11,318 ) 65.3 %

Shake Shack's effective income tax rates for fiscal 2023, fiscal 2022 and fiscal 2021 were ( 23.6 )%, 4.9 % and 65.3 %, respectively.

The decrease in our effective income tax rate from fiscal 2021 to fiscal 2022 was primarily driven by additional expense related to an increase in valuation allowance, increase in foreign tax expense, net expense related to equity-based

The decrease in the effective income tax rate from fiscal 2022 to fiscal 2023 was primarily driven by additional benefit related to a decrease in valuation allowance and higher tax credits, partially offset by an increase in foreign tax expense and the revaluation of deferred tax assets as a result of a reduction in certain state income tax rates.

The decrease in the effective income tax rate from fiscal 2021 to fiscal 2022 was primarily driven by additional expense related to an increase in valuation allowance, an increase in foreign tax expense, and net expense related to equity-based compensation, partially offset by higher tax credits.

Shake Shack Inc.

Form 10-K | 120

compensation, partially offset by higher tax credits.

The increase in our effective income tax rate from fiscal 2020 to fiscal 2021 was primarily driven by the increase in the income tax benefit from the release of the valuation allowance and higher tax credits, partially offset by higher foreign tax expense.

Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities were as follows:

(As Restated)

2023 December 28

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Net deferred tax assets $ 326,208 $ 317,626

(1) For fiscal 2021, certain amounts were reclassified for consistent presentation with the current year.

As of December 28, 2022, the Company's federal and state net operating loss carryforwards for income tax purposes were $ 558,397 and $ 303,323 .

As of December 27, 2023, the Company's federal and state net operating loss carryforwards for income tax purposes were $ 596,347 and $ 327,152 , respectively.

If not utilized, $ 544,480 of the Company's federal net operating losses can be carried forward indefinitely, and the remainder will begin to expire in 2035.

If not utilized $ 49,912 of the Company's state net operating loss carryforwards can be carried forward indefinitely, and the remainder will begin to expire in 2024.

As of December 28, 2022, the Company had federal tax credit carryforwards of $ 18,660 which will begin to expire in 2025 and gross state tax credits of $ 756 which will begin to expire in 2023.

As described in Note 11, Stockholders' Equity, the Company acquired an aggregate of 142,601 LLC Interests in connection with the redemption of LLC Interests and activity relating to its stock compensation plan during fiscal 2022.

As of December 27, 2023, the Company had federal tax credit carryforwards of $ 25,727 which will begin to expire in 2025 and gross state tax credit carryforwards of $ 406 which will begin to expire in 2024.

As described in Note 12, Stockholders' Equity, the Company acquired an aggregate of 189,317 LLC Interests during fiscal 2023 through redemption of LLC Interests and activity under stock-based compensation plans.

The Company recognized a deferred tax liability in the amount of $ 720 associated with the basis difference in its investment in SSE Holdings upon acquisition of these LLC Interests.

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The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized.

As of December 28, 2022, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets are

Shake Shack Inc.

Form 10-K | 107

more likely than not to be realized, except New York City UBT and certain foreign tax credits no longer expected to be utilized before expiration.

As of December 27, 2023, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets are more likely than not to be realized, except certain state attributes that are not expected to be utilized before expiration.

As such, a valuation allowance in the amount of $ 357 was recognized.

The net change in valuation allowance for fiscal 2022 was an increase of $ 4,387 .

The net change in valuation allowance for fiscal 2023 was a decrease of $ 9,201 primarily related to the change in realizability of foreign tax credits.

Refer to Schedule II, Valuation and Qualifying Accounts for additional information.

Shake Shack Inc.

Form 10-K | 121

Uncertain Tax Positions

There were no reserves for uncertain tax positions as of December 28, 2022 and December 29, 2021.

As of December 27, 2023, the Company assessed its tax positions by applying the two-step recognition and measurement model pursuant to ASC 740 and considering the applicable unit of account.

Pursuant to ASC 740-10-25-6, the Company recognizes the financial statement effects of a tax position only when it is more likely than not that the position will be sustained upon examination.

At the conclusion of the Company's examination in New York City for tax years 2015 -2017, a reserve of $ 207 was recognized based on a settlement with the taxing authority.

In addition, the Company recognized an uncertain tax reserve of $ 195 for tax years 2018-2022.

Reconciliations of uncertain tax positions were as follows:

(As Restated) (As Restated)

2023 2022 2021

Beginning balance

Additions based on tax positions related to the current year

Additions for tax positions of prior years

Reductions for tax positions of prior years

Reductions for lapse of applicable statute of limitations

Ending balance

$ 147 $ — $ —

The Company does not expect a significant increase or decrease in unrecognized tax benefits within the next twelve months.

The $ 147 of unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate.

Interest and penalties, if any, related to income tax liabilities are included in income tax expense.

During the fiscal year ended December 27, 2023, the Company recognized $ 139 in interest expense.

As of December 27, 2023, the Company accrued $ 48 of interest expense.

Shake Shack Inc.

was formed in September 2014 and did not engage in any operations prior to the IPO and Organizational Transactions.

was formed in September 2014 and did not engage in any operations prior to the IPO and other transactions completed in connection with the IPO.

The statute of limitations remains open for tax years beginning in 2015 for Shake Shack Inc.

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

Shake Shack Inc.

Form 10-K | 122

During fiscal 2023, the Company acquired an aggregate of 35,000 LLC Interests in connection with the redemption of LLC Interests, which resulted in an increase in the tax basis of its investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement.

3 unchanged sentences

Refer to Note 18, Commitments and Contingencies, for additional information relating to the liabilities under the Tax Receivable Agreement.

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") to provide certain relief as a result of the COVID-19 pandemic.

The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit ("ERC") and retroactive technical correction of prior tax legislation for tax depreciation of certain qualified improvement property, among other changes.

The CARES Act allows for a five-year carryback of federal NOLs generated in 2018 through 2020 and eliminates the 80% taxable income limitation by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018 through 2020.

Shake Shack Inc.

Form 10-K | 108

As there is no authoritative guidance under U.S.

GAAP on accounting for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standard ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance.

Subsequent to the second quarter of 2020, we began deferring the employer-paid portion of social security taxes;

50% of this was recognized at the end of 2021 and the other 50% and the end of 2022 as required by the CARES Act.

Inflation Reduction Act

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act (“IRA”) into law.

The IRA, among other things, enacted a 15% corporate minimum tax effective for tax years after December 31, 2022, a 1% tax on share repurchases after December 31, 2022, and created and extended certain tax-related energy incentives.

The Company currently does not expect the tax-related provisions of the IRA to have a material impact on our financial results.

EARNINGS (LOSS) PER SHARE

Basic loss per share of Class A common stock is computed by dividing Net loss attributable to Shake Shack Inc.

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

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

Diluted loss per share of Class A common stock is computed by dividing Net loss attributable to Shake Shack Inc.

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

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

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) per share of Class A common stock (in thousands, except per share amounts):

(As Restated) (As Restated)

2023 2022 2021

Net loss attributable to Shake Shack Inc.—basic $ ( 24,091 ) $ ( 8,655 ) $ ( 42,158 )

Net loss attributable to Shake Shack Inc.—diluted $ ( 24,091 ) $ ( 8,655 ) $ ( 42,158 )

Net income (loss) attributable to Shake Shack Inc.—basic $ 20,264 $ ( 21,229 ) $ ( 4,561 )

Reallocation of net income attributable to non-controlling interests from the assumed conversion of Class B shares 726 — —

Net income (loss) attributable to Shake Shack Inc.—diluted $ 20,990 $ ( 21,229 ) $ ( 4,561 )

Weighted average shares of Class A common stock outstanding—basic 39,419 39,237 39,085

Effect of dilutive securities:

Stock options 75 — —

Performance stock units 11 — —

Restricted stock units 85 — —

Convertible Notes 1,467 — —

Shares of Class B common stock 2,842 — —

Weighted average shares of Class A common stock outstanding—diluted 43,899 39,237 39,085

Loss per share of Class A common stock—basic $ ( 0.61 ) $ ( 0.22 ) $ ( 1.14 )

Loss per share of Class A common stock—diluted $ ( 0.61 ) $ ( 0.22 ) $ ( 1.14 )

Earnings (loss) per share of Class A common stock—basic $ 0.51 $ ( 0.54 ) $ ( 0.12 )

Earnings (loss) per share of Class A common stock—diluted $ 0.48 $ ( 0.54 ) $ ( 0.12 )

The effect of potential share settlement of the Convertible Notes outstanding for the period is included as potentially dilutive shares of Class A common stock under application of the if-converted method in the computation of diluted earnings (loss) per share, except when the effect would be anti-dilutive.

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

However, shares of Class B common stock outstanding for the period are considered potentially dilutive shares of Class A common stock under application of the if-converted method and are included in the computation of diluted earnings (loss) per share, except when the effect would be anti-dilutive.

However, shares of Class B common stock outstanding for the period are considered

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Form 10-K | 123

The following table presents potentially dilutive securities excluded from the computations of diluted loss per share of Class A common stock:

potentially dilutive shares of Class A common stock under application of the if-converted method and are included in the computation of diluted earnings (loss) per share, except when the effect would be anti-dilutive.

The following table presents potentially dilutive securities excluded from the computations of diluted earnings (loss) per share of Class A common stock:

2023 2022 2021

4 unchanged sentences

Convertible notes — 1,466,975 (2) 1,466,975 (2)

(1) Number of securities outstanding at the end of the period that were excluded from the computation of diluted loss per share of Class A common stock because the effect would have been anti-dilutive.

(1) Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings (loss) per share of Class A common stock because the performance conditions associated with these awards were not met assuming the end of the reporting period was the end of the performance period.

(2) Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings (loss) per share of Class A common stock because the effect would have been anti-dilutive.

SUPPLEMENTAL CASH FLOW INFORMATION

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As of December 27, 2023, the Company held two letters of credit, one for $ 130 , which expires in February 2026 and the second for $ 402 , which expires in August 2024 and renews automatically for one-year periods through January 31, 2034.

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Form 10-K | 124

Purchase Commitments

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These obligations are generally short-term in nature and are recorded as liabilities when the related goods are received or services rendered.

The Company also enters into long-term,

Shake Shack Inc.

Form 10-K | 110

exclusive contracts with certain vendors to supply food, beverages and paper goods, obligating the Company to purchase specified quantities.

The Company also enters into long-term, exclusive contracts with certain vendors to supply food, beverages and paper goods, obligating the Company to purchase specified quantities.

Legal Contingencies

In December 2022, the Company refined the liability estimate related to settling both a private action and a regulatory action relating to New York City’s predictive scheduling laws based on additional information received in the period.

The previous accrual of $ 6,750 has been reduced by $ 1,400 as of December 28, 2022.

In November 2022, the Company mediated a matter alleging certain violations of the California Labor Code which was settled and an accrual in the amount of $ 1,360 has been recorded as of December 28, 2022.

In May 2022, a claim was filed against Shake Shack alleging certain violations of the Fair Labor Standards Act relating to the classification of exempt managers.

The matter was settled with a maximum payment of $ 900 .

An accrual of $ 900 was recorded for this matter during the thirteen weeks ended March 29, 2023.

Subsequently, the accrual was reduced by $ 385 during the thirteen weeks ended December 27, 2023.

The Company is subject to various legal proceedings, claims and liabilities, involving employees and guests alike, which arise in the ordinary course of business and are generally covered by insurance.

9 unchanged sentences

Union Square Hospitality Group

The Chairman of the Board of Directors serves as the Chief Executive Officer of Union Square Hospitality Group, LLC.

The Chairman of the Board of Directors serves as the Executive Chairman of Union Square Hospitality Group, LLC.

As a result, Union Square Hospitality Group, LLC and its subsidiary, set forth below, are considered related parties.

5 unchanged sentences

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

Classification 2022 2021 2020

Amounts received from HYC Licensing revenue $ 802 $ 320 $ 67

Shake Shack Inc.

Form 10-K | 125

Classification 2023 2022 2021

Amounts received from HYC Licensing revenue $ 988 $ 802 $ 320

Classification December 27

3 unchanged sentences

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

No amounts were due to MSP Conservancy as of December 27, 2023 and December 28, 2022.

Classification 2023 2022 2021

Amounts paid to MSP Conservancy Occupancy and related expenses

General and administrative expenses $ 1,224 $ 863 $ 846

$ 898 $ 1,224 $ 863

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

7 unchanged sentences

Accounts payable

Accrued expenses

The Company's Chief Executive Officer is a member of the board of directors of Block, Inc.

8 unchanged sentences

Accounts payable

USHG Acquisition Corp.

The Company's Chief Executive Officer served on the board of directors of USHG Acquisition Corp.

in 2022, in which the Company's Chairman of the Board of Directors serves as the chairman of the board of directors of USHG Acquisition Corp.

USHG Acquisition Corp.

is a newly organized blank check company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities.

No amounts were paid to USHG Acquisition Corp.

during fiscal 2022, fiscal 2021 and fiscal 2020.

No amounts were due to or due from USHG Acquisition Corp.

as of both December 28, 2022 and December 29, 2021.

Accrued expenses

Shake Shack Inc.

3 unchanged sentences

Refer to Note 15, Income Taxes, for additional information.

Classification 2022 2021 2020

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

No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during fiscal 2023, fiscal 2022 and fiscal 2021.

Classification December 27

22 unchanged sentences

(in thousands, except share and per share amounts)

(As Restated)

2023 December 28

3 unchanged sentences

Total current assets 6,735 7,214

Due from SSE Holdings 2,963 2,035

Deferred income taxes, net 328,870 324,113

2 unchanged sentences

Note receivable - conversion option 12,900 6,300

Due from SSE Holdings 8,213 2,963

TOTAL ASSETS $ 935,960 $ 887,542

17 unchanged sentences

Additional paid-in capital 426,601 415,649

Accumulated deficit ( 41,808 ) ( 15,674 )

Accumulated other comprehensive income — 1

Retained earnings (accumulated deficit) 5,277 ( 24,758 )

Accumulated other comprehensive loss

Total stockholders' equity 431,917 390,933

5 unchanged sentences

SHAKE SHACK INC.

CONDENSED STATEMENTS OF LOSS

CONDENSED STATEMENTS OF INCOME (LOSS)

(PARENT COMPANY ONLY)

1 unchanged sentence

Fiscal Year Ended

(As Restated) (As Restated)

2023 December 28

6 unchanged sentences

INCOME (LOSS) FROM OPERATIONS 1,254 ( 906 ) 387

Equity in net loss from SSE Holdings ( 25,335 ) ( 19,393 ) ( 41,152 )

Other expense, net ( 1,767 ) ( 25,593 ) ( 1,147 )

Equity in net income (loss) from SSE Holdings 10,091 ( 25,335 ) ( 19,393 )

Other income (expense), net 14,533 ( 1,767 ) ( 25,593 )

Interest expense ( 1,047 ) ( 1,047 ) ( 867 )

LOSS BEFORE INCOME TAXES ( 29,055 ) ( 45,466 ) ( 42,918 )

Benefit from income taxes ( 2,921 ) ( 17,583 ) ( 760 )

NET LOSS $ ( 26,134 ) $ ( 27,883 ) $ ( 42,158 )

INCOME (LOSS) BEFORE INCOME TAXES 24,831 ( 29,055 ) ( 45,466 )

Income tax benefit ( 5,203 ) ( 5,783 ) ( 21,677 )

NET INCOME (LOSS) $ 30,034 $ ( 23,272 ) $ ( 23,789 )

See accompanying Notes to Condensed Financial Statements.

3 unchanged sentences

SHAKE SHACK INC.

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(PARENT COMPANY ONLY)

1 unchanged sentence

Fiscal Year Ended

(As Restated) (As Restated)

2023 December 28

2022 December 29

Net loss $ ( 26,134 ) $ ( 27,883 ) $ ( 42,158 )

Other comprehensive income (loss), net of tax (1) :

Net income (loss) $ 30,034 $ ( 23,272 ) $ ( 23,789 )

Other comprehensive loss, net of tax (1) :

Change in foreign currency translation adjustment ( 3 ) ( 1 ) ( 2 )

OTHER COMPREHENSIVE INCOME (LOSS) ( 1 ) ( 2 ) 1

COMPREHENSIVE LOSS $ ( 26,135 ) $ ( 27,885 ) $ ( 42,157 )

OTHER COMPREHENSIVE LOSS ( 3 ) ( 1 ) ( 2 )

COMPREHENSIVE INCOME (LOSS) $ 30,031 $ ( 23,273 ) $ ( 23,791 )

(1) Net of tax benefit of $ 0 for fiscal years ended December 27, 2023, December 28, 2022 and December 29, 2021.

8 unchanged sentences

Fiscal Year Ended

(As Restated) (As Restated)

2023 December 28

1 unchanged sentence

OPERATING ACTIVITIES

Net loss $ ( 26,134 ) $ ( 27,883 ) $ ( 42,158 )

Adjustments to reconcile net loss to net cash used in operating activities:

Equity in net loss from SSE Holdings 25,335 19,393 41,152

Net income (loss) $ 30,034 $ ( 23,272 ) $ ( 23,789 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Equity in net (income) loss from SSE Holdings ( 10,091 ) 25,335 19,393

Amortization of debt issuance costs 1,047 1,047 867

1 unchanged sentence

Deferred income taxes ( 5,249 ) ( 5,783 ) ( 21,677 )

Unrealized loss on Note receivable - conversion option 9,700 32,200 —

Other non-cash (income) expense ( 7,934 ) ( 6,609 ) 1,147

(Gain) loss on note receivable - conversion option ( 6,600 ) 9,700 32,200

Other non-cash income ( 7,933 ) ( 7,934 ) ( 6,609 )

Changes in operating assets and liabilities:

Accounts receivable — — 1

Prepaid expenses and other current assets ( 1 ) 2 ( 19 )

10 unchanged sentences

Debt issuance costs — — ( 1,075 )

Proceeds from issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs — — 144,861

Proceeds from issuance of Class A common stock to SSE Holdings upon settlement of equity awards 11,731 7,619 41,875

Proceeds from stock option exercises 744 424 6,640

Payments under tax receivable agreement — — ( 6,643 )

NET CASH PROVIDED BY FINANCING ACTIVITIES 12,475 8,043 291,190

INCREASE (DECREASE) IN CASH ( 669 ) ( 1,648 ) 246

DECREASE IN CASH ( 480 ) ( 669 ) ( 1,648 )

CASH AT BEGINNING OF PERIOD 7,152 7,821 9,469

22 unchanged sentences

The following table presents amounts in the Parent Company's Condensed Balance Sheets that were eliminated in consolidation:

(As Restated)

2023 December 28

4 unchanged sentences

Due to SSE Holdings 22,027 16,975

Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 234,893 and $ 234,045 , respectively as of December 28, 2022 and December 29, 2021.

Shake Shack Inc.

Form 10-K | 132

The following table presents amounts in the Parent Company's Condensed Statements of Loss that were eliminated in consolidation:

Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 235,613 and $ 234,893 , respectively as of December 27, 2023 and December 28, 2022.

The following table presents amounts in the Parent Company's Condensed Statements of Income (Loss) that were eliminated in consolidation:

(As Restated) (As Restated)

2023 2022 2021

3 unchanged sentences

Income tax expense (benefit)

3,715 ( 769 ) ( 7,234 )

RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED FINANCIAL STATEMENTS

The error also resulted in an understatement of retained earnings and deferred tax assets as of December 26, 2020 of approximately $ 10,094 related to prior periods.

The error did not impact total revenue or loss before income taxes for the fiscal years ended December 28, 2022 and December 29, 2021.

Refer to Note 3, Restatement of Previously Issued Consolidated Financial Statements, to the Company's Consolidated Financial Statements included in Part II, Item 8, for additional information.

The impact of the correction of the misstatements is summarized below:

December 28, 2022 December 29, 2021

CORRECTED CONDENSED BALANCE SHEETS

As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Deferred income taxes, net $ 307,025 $ 17,088 $ 324,113 $ 304,442 $ 14,205 $ 318,647

Additional paid-in capital 415,611 38 415,649 405,940 17 405,957

Retained earnings (accumulated deficit)

( 41,808 ) 17,050 ( 24,758 ) ( 15,674 ) 14,188 ( 1,486 )

December 28, 2022 December 29, 2021

CORRECTED CONDENSED STATEMENTS OF LOSS

As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Income tax benefit

$ ( 2,921 ) $ ( 2,862 ) $ ( 5,783 ) $ ( 17,583 ) $ ( 4,094 ) $ ( 21,677 )

( 26,134 ) 2,862 ( 23,272 ) ( 27,883 ) 4,094 ( 23,789 )

Shake Shack Inc.

Form 10-K | 133

December 28, 2022 December 29, 2021

CORRECTED CONDENSED STATEMENTS OF CASH FLOWS

As previously reported Impact of Adjustment As Restated As previously reported Impact of Adjustment As Restated

Net income (loss)

$ ( 26,134 ) $ 2,862 $ ( 23,272 ) $ ( 27,883 ) $ 4,094 $ ( 23,789 )

Deferred income taxes ( 4,126 ) ( 1,657 ) ( 5,783 ) ( 17,583 ) ( 4,094 ) ( 21,677 )

Accrued expenses (1)

1,101 ( 1,205 ) ( 104 ) 118 — 118

Net cash used in Operating activities

( 1,093 ) — ( 1,093 ) ( 7,213 ) — ( 7,213 )

(1) The prior impact of adjustments have been updated to conform with the current year presentation.

These updates are not a part of the restatements above.

All referenced amounts for prior periods in this Schedule I and the notes herein reflect the balances and amounts on a restated basis.

NOTE RECEIVABLE FROM SSE HOLDINGS

In March 2021, contemporaneously with the issuance of the Convertible Notes described in Note 4, Debt, below, the Parent Company entered into a $ 250,000 intercompany note with SSE Holdings (the "Intercompany Note").

SSE Holdings promises to pay the Parent Company, for value received, the principal amount with interest of the Intercompany Note in March 2028.

The Parent Company will exercise its right to convert the Intercompany Note to maintain at all times a one-to-one ratio between the number of common units, directly or indirectly, held by the Parent Company and the aggregate number of outstanding shares of Class A common stock.

The Intercompany Note will mature in March 2028 unless the Parent Company exercises its right to convert the Intercompany Note to maintain at all times a one-to-one ratio between the number of common units, directly or indirectly, held by the Parent Company and the aggregate number of outstanding shares of Class A common stock.

As of December 27, 2023 and December 28, 2022, the balance of the Note receivable from SSE Holdings was $ 216,946 and $ 209,013 , respectively, net of accretion.

The Parent Company's right to convert the Intercompany Note into common units of SSE Holdings (the "Conversion Option") is required to be bifurcated from the Intercompany Note and shown separately on the Parent Company's Condensed Balance Sheets.

The Conversion Option is to be recorded at fair value and remeasured at each subsequent reporting date.

On the date of issuance, the Conversion Option was determined to be an asset with a fair value of $ 48,200 .

As of December 27, 2023 and December 28, 2022, the fair value of the Conversion Option was $ 12,900 and $ 6,300 , respectively.

The Parent Company recorded unrealized losses of $ 9,700 and $ 32,200 , respectively in fiscal 2022 and fiscal 2021, within Other income (expense), net due to the change in fair value of the Conversion Option.

As of December 28, 2022 and December 29, 2021, the balance of the Note receivable from SSE Holdings was $ 209,013 and $ 201,080 , respectively, net of accretion.

The Parent Company recognized interest income of $ 7,933 and $ 6,605 , respectively, in fiscal 2022 and fiscal 2021, within Other income (expense), net primarily associated with the accretion of the Conversion Option value at issuance.

In March 2021, the Parent Company issued $ 225,000 aggregate principal amount of 0% Convertible Senior Notes due 2028 (“Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933.

The Parent Company granted an option to the initial purchasers to purchase up to an additional $ 25,000 aggregate principal amount of Convertible Notes to cover over-allotments, which was subsequently fully exercised during March 2021, resulting in a total issuance of $ 250,000 aggregate principal amount of Convertible Notes.

The Convertible Notes will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances.

Upon conversion, the Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election.

The following table presents amounts in the Parent Company's Condensed Statements of Income (Loss) related to the change in value and accretion on the Conversion Option:

Classification 2023 2022 2021

Unrealized gain (loss)

Other income (expense), net

$ 6,600 $ ( 9,700 ) $ ( 32,200 )

Interest income

Other income (expense), net

$ 7,933 $ 7,933 $ 6,605

In March 2021, the Parent Company issued $ 250,000 aggregate principal amount of 0 % Convertible Senior Notes (“Convertible Notes”) which will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances.

Upon conversion, the Parent Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election.

Refer to Note 9, Debt, in the Company's Consolidated Financial Statements, included in Part II, Item 8, for additional information relating to the Convertible Notes.

10 unchanged sentences

The following table sets forth supplemental cash flow information:

(As Restated)

2023 2022 2021

13 unchanged sentences

Deferred tax asset valuation allowance:

Fiscal year ended December 30, 2020 $ 954 $ ( 2,610 ) $ 4,312 $ — $ 2,656

Fiscal year ended December 29, 2021 $ 2,656 $ ( 6,063 ) $ 8,580 $ — $ 5,173

Fiscal year ended December 29, 2021 (As Restated) $ 2,656 $ ( 6,063 ) $ 8,580 $ — $ 5,173

Fiscal year ended December 28, 2022 (As Restated) $ 5,173 $ 4,955 $ ( 568 ) (1) $ — $ 9,560

Fiscal year ended December 27, 2023 $ 9,560 $ ( 9,203 ) $ — $ — $ 357

4 unchanged sentences

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 8. Financial Statements and Supplementary Data