What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-02 compared with 2024-05-03 · 187 added, 188 removed, 556 unchanged (40% of the section changed)

40 unchanged sentences

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

none issued and outstanding as of March 27, 2024 and December 27, 2023.

none issued and outstanding as of June 26, 2024 and December 27, 2023.

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

39,966,973 and

39,474,315 shares issued and outstanding as of March 27, 2024 and December 27, 2023, respectively.

39,474,315 shares issued and outstanding as of June 26, 2024 and December 27, 2023, respectively.

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

2,487,936 and

2,834,513 shares issued and outstanding as of March 27, 2024 and December 27, 2023, respectively.

2,834,513 shares issued and outstanding as of June 26, 2024 and December 27, 2023, respectively.

Additional paid-in capital 433,877 426,601

10 unchanged sentences

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Shack sales $ 305,480 $ 261,810 $ 586,032 $ 506,064

11 unchanged sentences

TOTAL EXPENSES 305,714 267,057 596,184 523,524

INCOME (LOSS) FROM OPERATIONS 34 ( 3,189 )

INCOME FROM OPERATIONS 10,782 4,748 10,816 1,559

Other income, net 3,300 3,227 6,506 6,064

Interest expense ( 527 ) ( 405 ) ( 1,035 ) ( 808 )

INCOME (LOSS) BEFORE INCOME TAXES 2,732 ( 755 )

INCOME BEFORE INCOME TAXES 13,555 7,570 16,287 6,815

Income tax expense 3,173 347 3,691 1,214

NET INCOME (LOSS) 2,214 ( 1,622 )

Net income (loss) attributable to non-controlling interests 174 ( 88 )

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

NET INCOME 10,382 7,223 12,596 5,601

Net income attributable to non-controlling interests 714 275 888 187

NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.

$ 9,668 $ 6,948 $ 11,708 $ 5,414

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

Earnings per share of Class A common stock:

Basic $ 0.24 $ 0.18 $ 0.30 $ 0.14

6 unchanged sentences

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

Thirteen Weeks Ended

2024 March 29

Net income (loss) $ 2,214 $ ( 1,622 )

Thirteen Weeks Ended Twenty-Six Weeks Ended

Net income $ 10,382 $ 7,223 $ 12,596 $ 5,601

Other comprehensive loss, net of tax (1) :

1 unchanged sentence

OTHER COMPREHENSIVE LOSS — — ( 1 ) ( 4 )

COMPREHENSIVE INCOME (LOSS) 2,213 ( 1,626 )

Comprehensive income (loss) attributable to non-controlling interests 174 ( 88 )

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

COMPREHENSIVE INCOME 10,382 7,223 12,595 5,597

Comprehensive income attributable to non-controlling interests 714 275 888 187

COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAKE SHACK INC.

$ 9,668 $ 6,948 $ 11,707 $ 5,410

(1) Net of tax expense of $ 0 for the thirteen weeks ended March 27, 2024 and March 29, 2023.

(1) Net of tax expense of $ 0 for the thirteen and twenty-six weeks ended June 26, 2024 and June 28, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

(in thousands, except share amounts)

For the Thirteen Weeks Ended March 27, 2024 and March 29, 2023

For the Thirteen Weeks Ended June 26, 2024 and June 28, 2023

Common Stock Class B

3 unchanged sentences

Shares Amount Shares Amount

BALANCE, DECEMBER 27, 2023 39,474,315 $ 39 2,834,513 $ 3 $ 426,601 $ 16,777 $ ( 3 ) $ 25,953 $ 469,370

BALANCE, MARCH 27, 2024 39,635,382 $ 40 2,801,013 $ 3 $ 427,530 $ 18,817 $ ( 4 ) $ 25,907 $ 472,293

Net income — — — — — 9,668 — 714 10,382

6 unchanged sentences

Distributions paid to non-controlling interest holders — — — — — — — — —

BALANCE, JUNE 26, 2024 39,966,973 $ 40 2,487,936 $ 2 $ 433,877 $ 28,485 $ ( 4 ) $ 23,965 $ 486,365

BALANCE, MARCH 29, 2023 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 plans 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 39,449,246 $ 39 2,844,513 $ 3 $ 421,394 $ 1,927 $ ( 4 ) $ 25,088 $ 448,447

6 | Shake Shack Inc.

For the Twenty-Six Weeks Ended June 26, 2024 and 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, DECEMBER 27, 2023 39,474,315 $ 39 2,834,513 $ 3 $ 426,601 $ 16,777 $ ( 3 ) $ 25,953 $ 469,370

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

Net income — — — — — 11,708 — 888 12,596

Other comprehensive income (loss):

5 unchanged sentences

Distributions paid to non-controlling interest holders — — — — — — — ( 145 ) ( 145 )

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

BALANCE, JUNE 26, 2024 39,966,973 $ 40 2,487,936 $ 2 $ 433,877 $ 28,485 $ ( 4 ) $ 23,965 $ 486,365

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

Net income — — — — — 5,414 — 187 5,601

Other comprehensive income (loss):

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

Equity-based compensation — — — — 7,875 — — — 7,875

Activity under stock compensation plans 139,248 — — — ( 2,554 ) — — 515 ( 2,039 )

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 — — — — 230 — — — 230

Distributions paid to non-controlling interest holders — — — — — — — ( 52 ) ( 52 )

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

See accompanying Notes to Condensed Consolidated Financial Statements.

Shake Shack Inc.

Form 10-Q | 7

SHAKE SHACK INC.

1 unchanged sentence

(in thousands)

Thirteen Weeks Ended

2024 March 29

Twenty-Six Weeks Ended

OPERATING ACTIVITIES

Net income (loss) (including amounts attributable to non-controlling interests) $ 2,214 $ ( 1,622 )

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

Net income (including amounts attributable to non-controlling interests) $ 12,596 $ 5,601

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

Depreciation and amortization expense 50,937 43,574

Amortization of debt issuance costs 524 524

Amortization of cloud computing asset 518 439

Amortization of cloud computing assets

Non-cash operating lease cost 37,655 32,598

19 unchanged sentences

Purchases of property and equipment ( 65,992 ) ( 74,755 )

Purchases of held-to-maturity securities — ( 91,448 )

Maturities of held-to-maturity marketable securities 66,420 —

1 unchanged sentence

Sales of equity securities — 81,478

NET CASH PROVIDED BY INVESTING ACTIVITIES 11,307 46,462

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 428 ( 85,415 )

FINANCING ACTIVITIES

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 1 ) ( 4 )

INCREASE IN CASH AND CASH EQUIVALENTS 35,550 62,909

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 77,185 ( 26,824 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 224,653 230,521

2 unchanged sentences

8 | Shake Shack Inc.

Form 10-Q | 7

SHAKE SHACK INC.

12 unchanged sentences

Shake Shack Inc.

Form 10-Q | 9

NATURE OF OPERATIONS

4 unchanged sentences

As a result, the Company consolidates the financial results of SSE Holdings and reports a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings.

As of March 27, 2024 the Company owned 93.4 % of SSE Holdings.

As of June 26, 2024 the Company owned 94.1 % of SSE Holdings.

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

1 unchanged sentence

The Company operates and licenses Shake Shack restaurants ("Shacks"), which serve burgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine and more.

As of March 27, 2024, there were 525 Shacks in operation system-wide, of which 299 were Company-operated Shacks and 226 were licensed Shacks.

As of June 26, 2024, there were 547 Shacks in operation system-wide, of which 311 were Company-operated Shacks and 236 were licensed Shacks.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

13 unchanged sentences

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

As of March 27, 2024 and December 27, 2023, the net assets of SSE Holdings were $ 394,523 and $ 388,250 , respectively.

As of June 26, 2024 and December 27, 2023, the net assets of SSE Holdings were $ 409,417 and $ 388,250 , respectively.

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

7 unchanged sentences

10 | Shake Shack Inc.

Form 10-Q | 9

Recently Issued Accounting Pronouncements

1 unchanged sentence

Revenue Recognition

Revenue primarily consists of Shack sales and Licensing revenue.

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 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.

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.

Sales tax collected from guests is excluded from Shack sales and the obligation is included in Other current liabilities on the Condensed Consolidated Balance Sheets until the taxes are remitted to the appropriate taxing authorities.

Delivery services are fulfilled by third-party delivery partners whether ordered through the Shack app, website (collectively, "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.

4 unchanged sentences

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").

Revenue from gift cards is recognized when gift cards are redeemed by the guest 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 the thirteen weeks ended March 27, 2024 and March 29, 2023 was $ 134 and $ 106 , respectively.

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

Gift card breakage income for the thirteen weeks ended June 26, 2024 and June 28, 2023 was $ 110 and $ 72 , respectively.

Gift card breakage income for the twenty-six weeks ended June 26, 2024 and June 28, 2023 was $ 244 and $ 178 , respectively.

Gift card breakage income is included in Shack sales on the Condensed Consolidated Statements of Income.

Licensing Revenue

2 unchanged sentences

Ancillary promised services, such as training and assistance during the initial opening of a Shack, are typically combined with the license and considered one performance obligation per Shack.

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 requires judgment, as it is based on an estimated number of Shacks the Company expects the licensee to open.

The Company determines the transaction price for each contract, which requires judgement as the transaction price is comprised of the initial territory fee and an estimate of the total Shack opening fees based on the estimated number of Shacks the Company expects the licensee to open.

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

1 unchanged sentence

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

10 | Shake Shack Inc.

recognized in revenue as the performance obligations are satisfied.

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.

Shake Shack Inc.

Form 10-Q | 11

Revenue disaggregated by type was as follows:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Shack sales $ 305,480 $ 261,810 $ 586,032 $ 506,064

3 unchanged sentences

Total revenue $ 316,496 $ 271,805 $ 607,000 $ 525,083

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of March 27, 2024 was $ 23,370 .

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

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of June 26, 2024 was $ 22,978 .

The Company expects to recognize this amount as revenue over a long-term period, as the license term for each Shack ranges from five to twenty years .

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

8 unchanged sentences

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

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Gift card liability

$ 168 $ 144 $ 587 $ 477

Deferred revenue 385 274 702 518

5 unchanged sentences

Held-to-maturity securities $ 2,574 $ 68,561

Shake Shack Inc.

Form 10-Q | 11

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

The Company classified its held-to-maturity securities as Level 1 within the fair value hierarchy.

Refer to Note 6, Debt, for additional information relating to the fair value of the Company's outstanding debt instruments.

12 | Shake Shack Inc.

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

March 27, 2024

June 26, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Treasuries $ 2,574 $ 456 $ — $ 3,030

As of March 27, 2024, the contractual maturities of held-to-maturity securities were less than 12 months.

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

As of June 26, 2024, the contractual maturities of held-to-maturity securities were less than 12 months.

Any expected credit losses would not be material to the Condensed Consolidated Statements of Income.

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

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Income from marketable securities

$ 90 $ 126 $ 625 $ 621

Realized gain on sale of equity securities — — — 81

3 unchanged sentences

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.

There were no impairment charges recognized during the thirteen weeks ended March 27, 2024 and March 29, 2023.

There were no impairment charges recognized during the thirteen and twenty-six weeks ended June 26, 2024 and June 28, 2023.

SUPPLEMENTAL BALANCE SHEET INFORMATION

15 unchanged sentences

Shake Shack Inc.

Form 10-Q | 13

Convertible Notes

8 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 $ 226,795 and $ 205,000 , respectively, as of March 27, 2024 and December 27, 2023, 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.

Thirteen Weeks Ended

Classification March 27

2024 March 29

The fair value of the Convertible Notes was approximately $ 214,375 and $ 205,000 , respectively, as of June 26, 2024 and December 27, 2023, 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.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Amortization expense on Convertible Notes Interest expense $ 262 $ 262 $ 524 $ 524

9 unchanged sentences

14 | Shake Shack Inc.

Form 10-Q | 13

dependent upon the net lease adjusted leverage ratio.

As of March 27, 2024 and December 27, 2023, no amounts were outstanding under the Revolving Credit Facility.

As of June 26, 2024 and December 27, 2023, no amounts were outstanding under the Revolving Credit Facility.

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.

1 unchanged sentence

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 March 27, 2024, the Company was in compliance with all covenants.

As of June 26, 2024, 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 March 27, 2024 and December 27, 2023, the Company had outstanding letters of credit of $ 3,310 and $ 3,147 , respectively, in connection with the Revolving Credit Facility.

Thirteen Weeks Ended

Classification March 27

2024 March 29

As of June 26, 2024 and December 27, 2023, the Company had outstanding letters of credit of $ 3,310 and $ 3,147 , respectively, in connection with the Revolving Credit Facility.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Interest expense on Revolving Credit Facility Interest expense $ 17 $ 22 $ 34 $ 46

Classification March 27

Classification June 26

2024 December 27

4 unchanged sentences

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 Condensed Consolidated Balance Sheet.

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 Condensed 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 within the Condensed Consolidated Statements of Income (Loss) in the following line items.

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

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

3 unchanged sentences

Shake Shack Inc.

Form 10-Q | 15

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.

13 unchanged sentences

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

Classification March 27

Classification June 26

2024 December 27

10 unchanged sentences

The components of lease expense were as follows:

Thirteen Weeks Ended

Classification March 27

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Operating lease cost Occupancy and related expenses

10 unchanged sentences

16 | Shake Shack Inc.

Form 10-Q | 15

As of March 27, 2024, future minimum lease payments for operating and finance leases consisted of the following:

As of June 26, 2024, future minimum lease payments for operating and finance leases consisted of the following:

Operating Leases Finance Leases

8 unchanged sentences

Total lease liabilities $ 528,275 $ 12,758

(1) Operating leases are net of certain tenant allowance receivables that were reclassified to Other current assets as of March 27, 2024.

As of March 27, 2024, the Company had additional operating lease commitments of $ 148,440 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.

(1) Operating leases are net of certain tenant allowance receivables that were reclassified to Other current assets as of June 26, 2024.

As of June 26, 2024, the Company had additional operating lease commitments of $ 134,340 for non-cancelable leases without a possession date, which commence in 2024 or later.

These lease commitments are materially consistent with leases recognized on the Condensed Consolidated Balance Sheets.

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

7 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Thirteen Weeks Ended

2024 March 29

Twenty-Six Weeks Ended

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

7 unchanged sentences

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

The Company reports a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings.

The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the "LLC Agreement") of SSE Holdings provides that holders of LLC Interests may, from time to time, require SSE

The Company reports a non-controlling interest representing the economic interest held by the other members of SSE Holdings.

The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the "LLC Agreement") of SSE Holdings provides that holders of SSE Holdings, LLC membership interests ("LLC Interests") may,

Shake Shack Inc.

Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis.

Form 10-Q | 17

from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis.

In connection with any redemption or exchange, the Company will receive a corresponding number of LLC Interests, increasing the total ownership interest in SSE Holdings.

2 unchanged sentences

The following table summarizes the ownership interest in SSE Holdings:

March 27, 2024 December 27, 2023

June 26, 2024 December 27, 2023

LLC Interests Ownership % LLC Interests Ownership %

3 unchanged sentences

Total LLC Interests outstanding 42,454,909 100.0 % 42,308,828 100.0 %

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 and were as follows:

Thirteen Weeks Ended

2024 March 29

The weighted average ownership percentages for the applicable reporting periods are used to attribute Net income and Other comprehensive income to the non-controlling interest holders and were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Non-controlling interest holders' weighted average ownership percentages 6.3 % 6.7 % 6.5 % 6.7 %

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

Thirteen Weeks Ended

2024 March 29

Net income (loss) attributable to Shake Shack Inc.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Net income attributable to Shake Shack Inc.

$ 9,668 $ 6,948 $ 11,708 $ 5,414

3 unchanged sentences

Increase in additional paid-in capital as a result of the redemption of LLC Interests 2,953 — 3,239 194

Decrease in additional paid-in capital as a result of activity under stock compensation plan ( 5,577 ) ( 2,699 )

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

Increase (decrease) in additional paid-in capital as a result of activity under stock compensation plan ( 320 ) 145 ( 5,897 ) ( 2,554 )

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

$ 12,301 $ 7,093 $ 9,049 $ 3,050

18 | Shake Shack Inc.

The following table summarizes the LLC Interests activity:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

LLC Interests activity under the Company's stock compensation plan

9 unchanged sentences

Shares of Class B common stock surrendered and canceled 313,077 — 346,577 25,000

Shake Shack Inc.

Form 10-Q | 17

EQUITY-BASED COMPENSATION

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

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Performance stock units $ ( 505 ) $ 749 $ 278 $ 2,059

3 unchanged sentences

Equity-based compensation expense recognized was as follows:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

General and administrative expenses $ 3,317 $ 3,562 $ 6,633 $ 7,091

1 unchanged sentence

Equity-based compensation expense $ 3,739 $ 3,932 $ 7,381 $ 7,734

Shake Shack Inc.

Form 10-Q | 19

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

9 unchanged sentences

The following table presents the Company’s effective income tax rates:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Effective income tax rates 23.4 % 4.6 % 22.7 % 17.8 %

The increase in the effective income tax rate for the thirteen weeks ended March 27, 2024 was primarily driven by the change in pre-tax income for the period compared to a pre-tax loss for the same period last year and the impact of discrete items which had a disproportionate effect on the minimal pre-tax loss in the prior year.

Additionally, an increase in the Company's ownership interest in SSE Holdings increases its share of the taxable income (loss) of SSE Holdings.

18 | Shake Shack Inc.

The increases in the effective income tax rates for the thirteen and twenty-six weeks ended June 26, 2024 were primarily driven by increases in pre-tax income.

Additionally, increases in the Company's ownership interest in SSE Holdings for the thirteen and twenty-six weeks ended June 26, 2024 increase its share of the taxable income of SSE Holdings.

The Company's weighted average ownership interest in SSE Holdings was as follows:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Shake Shack's weighted average ownership percentages

3 unchanged sentences

The following table summarizes the LLC Interests acquired by the Company:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

LLC Interests activity under the Company's stock compensation plan 18,514 44,341 146,081 139,248

2 unchanged sentences

331,591 44,341 492,658 164,248

20 | Shake Shack Inc.

Deferred tax assets related to the basis difference in the Company's investment in SSE Holdings were as follows:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Deferred tax assets recognized upon acquisition of LLC Interests

5 unchanged sentences

Refer to "Tax Receivable Agreement," herein for additional information.

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Deferred tax assets recognized under the Tax Receivable Agreement

$ 2,760 $ — $ 3,063 $ 129

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 March 27, 2024, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets (except for those deferred tax assets relating to certain state tax credits and net operating losses) are more likely than not to be realized.

As of June 26, 2024, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets (except for those deferred tax assets relating to certain state tax credits and net operating losses) are more likely than not to be realized.

As such, no additional valuation allowance was recognized.

Tax Receivable Agreement

On February 4, 2015, the Company entered into a tax receivable agreement with certain of the then-existing members of SSE Holdings (the "Tax Receivable Agreement") that provides for the payment by the Company of 85 % of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of (i) increases in the Company's share of the tax basis in the net assets of SSE Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis

Shake Shack Inc.

Form 10-Q | 19

increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the "TRA Payments").

The Company expects to benefit from the remaining 15 % of any tax benefits that may actually realize.

7 unchanged sentences

They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

There were no transactions subject to the Tax Receivable Agreement for which the Company did not recognize the related liability, as the Company concluded that it would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred during the thirteen weeks ended March 27, 2024 and March 29, 2023.

Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws.

There were no transactions subject to the Tax Receivable Agreement for which the Company did not recognize the related liability, as the Company concluded that it would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred during the twenty-six weeks ended June 26, 2024 and June 28, 2023.

Shake Shack Inc.

Form 10-Q | 21

A summary of obligations under the Tax Receivable Agreement were as follows:

Thirteen Weeks Ended

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Additional liabilities recognized under the Tax Receivable Agreement

3 unchanged sentences

$ 246,878 $ 235,613

During the thirteen weeks ended March 27, 2024 and March 29, 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement.

During the twenty-six weeks ended June 26, 2024 and June 28, 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement.

EARNINGS (LOSS) PER SHARE

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

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

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

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

Diluted earnings per share of Class A common stock is computed by dividing Net income 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.

20 | Shake Shack Inc.

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):

Thirteen Weeks Ended

2024 March 29

Net income (loss) attributable to Shake Shack Inc.—basic $ 2,040 $ ( 1,534 )

Net income (loss) attributable to Shake Shack Inc.—diluted $ 2,040 $ ( 1,534 )

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Net income attributable to Shake Shack Inc.—basic $ 9,668 $ 6,948 $ 11,708 $ 5,414

Reallocation of net income attributable to non-controlling interests from the assumed conversion of Class B shares — 275 — 187

Net income attributable to Shake Shack Inc.—diluted $ 9,668 $ 7,223 $ 11,708 $ 5,601

Weighted average shares of Class A common stock outstanding—basic 39,750 39,416 39,632 39,374

4 unchanged sentences

Convertible Notes 1,467 1,467 1,467 1,467

Shares of Class B common stock — 2,845 — 2,848

Weighted average shares of Class A common stock outstanding—diluted 41,480 43,886 41,369 43,837

Earnings (loss) per share of Class A common stock—basic $ 0.05 $ ( 0.04 )

Earnings (loss) per share of Class A common stock—diluted $ 0.05 $ ( 0.04 )

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.

Earnings per share of Class A common stock—basic $ 0.24 $ 0.18 $ 0.30 $ 0.14

Earnings per share of Class A common stock—diluted $ 0.23 $ 0.16 $ 0.28 $ 0.13

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 per share, except when the effect would be anti-dilutive.

Refer to Note 6, Debt, for additional information.

22 | Shake Shack Inc.

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

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

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.

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

Thirteen Weeks Ended

2024 March 29

Stock options — 128,656 (2)

As such, separate presentation of basic and diluted earnings 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 per share, except when the effect would be anti-dilutive.

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Performance stock units 121,131 (1) 109,749 (1) 121,131 (1) 109,749 (1)

Restricted stock units — 576,227 (2)

Shares of Class B common stock 2,487,936 (2) — 2,487,936 (2) —

Convertible notes — 1,466,975 (2)

(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.

Shake Shack Inc.

Form 10-Q | 21

(1) Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings 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 per share of Class A common stock because the effect would have been anti-dilutive.

SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information:

Thirteen Weeks Ended

2024 March 29

Twenty-Six Weeks Ended

Cash paid for:

6 unchanged sentences

Establishment of liabilities under Tax Receivable Agreement

Shake Shack Inc.

Form 10-Q | 23

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Certain leases require the Company to obtain letters of credit.

As of March 27, 2024, the Company held three letters of credit, one for $ 402 , which expires in August 2024 and renews automatically for one-year periods through January 2034, one for $ 163 , which expires in December 2024 and renews automatically for one-year periods through December 2029 and one for $ 130 which expires in February 2026.

As of June 26, 2024, the Company held three letters of credit, one for $ 402 , which expires in August 2024 and renews automatically for one-year periods through January 2034, one for $ 163 , which expires in December 2024 and renews automatically for one-year periods through December 2029 and one for $ 130 which expires in February 2026.

Purchase Commitments

4 unchanged sentences

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.

As of March 27, 2024, the amount of the ultimate liability with respect to these matters was not material.

As of June 26, 2024, the amount of the ultimate liability with respect to these matters was not material.

Liabilities under Tax Receivable Agreement

1 unchanged sentence

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

Amounts payable under the Tax Receivable Agreement are

22 | Shake Shack Inc.

contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws.

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

The Company recognizes liabilities relating to the obligations under the Tax Receivable Agreement if concluding that it is probable that it would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits.

Refer to Note 10, Income Taxes, for additional information relating to the Tax Receivable Agreement.

9 unchanged sentences

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

Thirteen Weeks Ended

Classification March 27

2024 March 29

24 | Shake Shack Inc.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Amounts received from HYC Licensing revenue $ 144 $ 163 $ 242 $ 309

Classification March 27

Classification June 26

2024 December 27

2 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 March 27, 2024 and December 27, 2023.

Thirteen Weeks Ended

Classification March 27

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Amounts paid to MSP Conservancy Occupancy and related expenses $ 229 $ 224 $ 458 $ 448

Classification June 26

2024 December 27

Amounts due to MSP Conservancy

Accrued expenses

The Chairman of the Board of Directors serves as a director of Olo, Inc., a platform the Company uses in connection with its mobile ordering application.

Thirteen Weeks Ended

Classification March 27

2024 March 29

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Amounts paid to Olo, Inc.

Other operating expenses $ 133 $ 143 $ 314 $ 267

Shake Shack Inc.

Form 10-Q | 23

Classification March 27

Classification June 26

2024 December 27

2 unchanged sentences

Accrued expenses $ 222 $ 116

The Company's Chief Executive Officer is a member of the board of directors of Block, Inc.

The Company's former Chief Executive Officer is a member of the board of directors of Block, Inc.

(formerly known as "Square, Inc.").

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

Thirteen Weeks Ended

Classification March 27

2024 March 29

Shake Shack Inc.

Form 10-Q | 25

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Amounts paid to Block, Inc.

Other operating expenses $ 3,170 $ 1,909 $ 5,875 $ 3,585

Classification March 27

Classification June 26

2024 December 27

5 unchanged sentences

Refer to Note 10, Income Taxes, for additional information.

No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the thirteen weeks ended March 27, 2024 and March 29, 2023.

Classification March 27

No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the twenty-six weeks ended June 26, 2024 and June 28, 2023.

Classification June 26

2024 December 27

3 unchanged sentences

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

No tax distributions were payable to non-controlling interest holders as of March 27, 2024 and December 27, 2023, respectively.

Thirteen Weeks Ended

Classification March 27

2024 March 29

No tax distributions were payable to non-controlling interest holders as of June 26, 2024 and December 27, 2023, respectively.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Amounts paid to non-controlling interest holders Non-controlling interests $ — $ 3 $ 145 $ 52

24 | Shake Shack Inc.

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

What changed 10-Q

Item 1. Financial Statements