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Item 1. Financial Statements

2024-10-31 compared with 2024-08-02 · 212 added, 147 removed, 596 unchanged (38% of the section changed)

40 unchanged sentences

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

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

none issued and outstanding as of September 25, 2024 and December 27, 2023.

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

40,027,089 and

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

39,474,315 shares issued and outstanding as of September 25, 2024 and December 27, 2023, respectively.

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

2,456,158 and

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

2,834,513 shares issued and outstanding as of September 25, 2024 and December 27, 2023, respectively.

Additional paid-in capital 437,788 426,601

10 unchanged sentences

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share amounts)

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Shack sales $ 304,897 $ 264,980 $ 890,929 $ 771,044

9 unchanged sentences

Pre-opening costs 3,662 4,969 10,429 14,103

Impairment and loss on disposal of assets 1,045 884 1,571 1,606

Impairments, loss on disposal of assets, and Shack closures 29,086 492 30,657 2,098

TOTAL EXPENSES 334,912 270,550 931,096 794,074

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

INCOME (LOSS) FROM OPERATIONS ( 17,988 ) 5,657 ( 7,172 ) 7,216

Other income, net 3,504 3,441 10,010 9,505

Interest expense ( 498 ) ( 433 ) ( 1,533 ) ( 1,241 )

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

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

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.

INCOME (LOSS) BEFORE INCOME TAXES ( 14,982 ) 8,665 1,305 15,480

Income tax expense (benefit) ( 3,873 ) 529 ( 182 ) 1,743

NET INCOME (LOSS) ( 11,109 ) 8,136 1,487 13,737

Net income (loss) attributable to non-controlling interests ( 898 ) 509 ( 10 ) 696

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ ( 10,211 ) $ 7,627 $ 1,497 $ 13,041

Earnings per share of Class A common stock:

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

Basic $ ( 0.26 ) $ 0.19 $ 0.04 $ 0.33

6 unchanged sentences

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Thirteen Weeks Ended Twenty-Six Weeks Ended

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

Other comprehensive loss, net of tax (1) :

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Net income (loss) $ ( 11,109 ) $ 8,136 $ 1,487 $ 13,737

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

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

OTHER COMPREHENSIVE LOSS — — ( 1 ) ( 4 )

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.

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

COMPREHENSIVE INCOME (LOSS) ( 11,107 ) 8,137 1,488 13,734

Comprehensive income (loss) attributable to non-controlling interests ( 898 ) 509 ( 10 ) 696

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ ( 10,209 ) $ 7,628 $ 1,498 $ 13,038

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

(1) Net of tax expense of $ 0 for the thirteen and thirty-nine weeks ended September 25, 2024 and September 27, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

(in thousands, except share amounts)

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

For the Thirteen Weeks Ended September 25, 2024 and September 27, 2023

Common Stock Class B

Common Stock Additional

Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Non-

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

Interest Total

Shares Amount Shares Amount

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

Other comprehensive income (loss):

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

Net loss — — — — — ( 10,211 ) — ( 898 ) ( 11,109 )

Other comprehensive income:

Net change in foreign currency translation adjustment — — — — — — 2 — 2

4 unchanged sentences

Distributions paid to non-controlling interest holders — — — — — — — ( 63 ) ( 63 )

BALANCE, SEPTEMBER 25, 2024 40,027,089 $ 40 2,456,158 $ 2 $ 437,788 $ 18,274 $ ( 2 ) $ 22,953 $ 479,055

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

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

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

Other comprehensive income (loss):

Other comprehensive income:

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

4 unchanged sentences

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

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

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

6 | Shake Shack Inc.

For the Twenty-Six Weeks Ended June 26, 2024 and June 28, 2023

For the Thirty-Nine Weeks Ended September 25, 2024 and September 27, 2023

Common Stock Class B

4 unchanged sentences

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

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

Other comprehensive income (loss):

Net income (loss) — — — — — 1,497 — ( 10 ) 1,487

Other comprehensive income:

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

4 unchanged sentences

Distributions paid to non-controlling interest holders — — — — — — — ( 208 ) ( 208 )

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

BALANCE, SEPTEMBER 25, 2024 40,027,089 $ 40 2,456,158 $ 2 $ 437,788 $ 18,274 $ ( 2 ) $ 22,953 $ 479,055

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

Net income — — — — — 13,041 — 696 13,737

Other comprehensive income (loss):

Other comprehensive loss:

Net change in foreign currency translation adjustment — — — — — — ( 3 ) — ( 3 )

4 unchanged sentences

Distributions paid to non-controlling interest holders — — — — — — — ( 131 ) ( 131 )

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

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

See accompanying Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

(in thousands)

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

2024 September 27

OPERATING ACTIVITIES

10 unchanged sentences

Net amortization of discount on held-to-maturity securities ( 440 ) ( 939 )

Impairment and loss on disposal of assets 1,571 1,606

Impairments, loss on disposal of assets, and Shack closures

Changes in operating assets and liabilities:

16 unchanged sentences

Sales of equity securities — 81,478

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

NET CASH USED IN INVESTING ACTIVITIES ( 31,381 ) ( 126,264 )

FINANCING ACTIVITIES

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

As of September 25, 2024 the Company owned 94.2 % 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 June 26, 2024, there were 547 Shacks in operation system-wide, of which 311 were Company-operated Shacks and 236 were licensed Shacks.

As of September 25, 2024, there were 552 Shacks in operation system-wide, of which 310 were Company-operated Shacks and 242 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 June 26, 2024 and December 27, 2023, the net assets of SSE Holdings were $ 409,417 and $ 388,250 , respectively.

As of September 25, 2024 and December 27, 2023, the net assets of SSE Holdings were $ 398,182 and $ 388,250 , respectively.

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

21 unchanged sentences

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

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.

Gift card breakage income for the thirteen weeks ended September 25, 2024 and September 27, 2023 was $ 73 and $ 60 , respectively.

Gift card breakage income for the thirty-nine weeks ended September 25, 2024 and September 27, 2023 was $ 317 and $ 238 , respectively.

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

Licensing Revenue

11 unchanged sentences

Revenue disaggregated by type was as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Shack sales $ 304,897 $ 264,980 $ 890,929 $ 771,044

3 unchanged sentences

Total revenue $ 316,924 $ 276,207 $ 923,924 $ 801,290

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 aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of September 25, 2024 was $ 22,518 .

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 .

9 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Gift card liability

10 unchanged sentences

12 | Shake Shack Inc.

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

June 26, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Treasuries $ 2,574 $ 456 $ — $ 3,030

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 Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Income from marketable securities

5 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 and twenty-six weeks ended June 26, 2024 and June 28, 2023.

There were no impairment charges recognized during the thirteen and thirty-nine weeks ended September 27, 2023.

On August 27, 2024, the Company determined to close and executed the closure of nine underperforming Company-operated Shacks in California, Ohio and Texas as these Shacks were not projected to provide acceptable returns in the foreseeable future, in part due to changes in the trade area and the negative impact on other Shacks within their proximity by cannibalizing sales.

The total expenses related to the identified Shack closures were $ 28,157 for the thirteen and thirty-nine weeks ended September 25, 2024, of which $ 26,394 was impairment expense, related to right-of-use assets, and property, plant and equipment, and $ 1,763 was miscellaneous Shack closure expense.

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, profitability, and sublease income.

Subsequent to the balance sheet date, the Company continues working with the landlords to negotiate lease terminations for the nine Shack closures.

SUPPLEMENTAL BALANCE SHEET INFORMATION

26 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 $ 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

The fair value of the Convertible Notes was approximately $ 234,820 and $ 205,000 , respectively, as of September 25, 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 Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Amortization expense on Convertible Notes Interest expense $ 262 $ 262 $ 786 $ 786

10 unchanged sentences

dependent upon the net lease adjusted leverage ratio.

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

As of September 25, 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 June 26, 2024, the Company was in compliance with all covenants.

As of September 25, 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 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

As of September 25, 2024 and December 27, 2023, the Company had outstanding letters of credit of $ 3,894 and $ 3,147 , respectively, in connection with the Revolving Credit Facility.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Interest expense on Revolving Credit Facility Interest expense $ 17 $ 14 $ 51 $ 60

Classification June 26

Classification September 25

2024 December 27

11 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 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.

19 unchanged sentences

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

Classification June 26

Classification September 25

2024 December 27

10 unchanged sentences

The components of lease expense were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Operating lease cost Occupancy and related expenses

10 unchanged sentences

16 | Shake Shack Inc.

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

As of September 25, 2024, future minimum lease payments for operating and finance leases consisted of the following:

Operating Leases Finance Leases

8 unchanged sentences

Total lease liabilities $ 543,385 $ 12,554

(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.

(1) Operating leases are net of certain tenant allowance receivables that were reclassified to Other current assets as of September 25, 2024.

As of September 25, 2024, the Company had additional operating lease commitments of $ 140,515 for non-cancelable leases without a possession date, which commence in 2024 or later.

The terms of 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:

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

2024 September 27

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

16 unchanged sentences

The following table summarizes the ownership interest in SSE Holdings:

June 26, 2024 December 27, 2023

September 25, 2024 December 27, 2023

LLC Interests Ownership % LLC Interests Ownership %

3 unchanged sentences

Total LLC Interests outstanding 42,483,247 100.0 % 42,308,828 100.0 %

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

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 Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Non-controlling interest holders' weighted average ownership percentages 5.8 % 6.7 % 6.3 % 6.7 %

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Net income attributable to Shake Shack Inc.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Net income (loss) attributable to Shake Shack Inc.

$ ( 10,211 ) $ 7,627 $ 1,497 $ 13,041

Other comprehensive loss:

Unrealized holding loss on foreign currency translation adjustment — — ( 1 ) ( 4 )

Other comprehensive income (loss):

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

Transfers (to) from non-controlling interests:

Increase in additional paid-in capital as a result of the redemption of LLC Interests 302 71 3,541 265

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.

Decrease in additional paid-in capital as a result of activity under stock compensation plan ( 213 ) ( 469 ) ( 6,110 ) ( 3,023 )

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

$ ( 10,120 ) $ 7,230 $ ( 1,071 ) $ 10,280

1 unchanged sentence

The following table summarizes the LLC Interests activity:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

LLC Interests activity under the Company's stock compensation plan

11 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Performance stock units $ 990 $ 391 $ 1,268 $ 2,450

3 unchanged sentences

Equity-based compensation expense recognized was as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

General and administrative expenses $ 3,726 $ 3,163 $ 10,359 $ 10,254

14 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Effective income tax rates 25.9 % 6.1 % ( 13.9 ) % 11.3 %

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 increase in the effective income tax rate for the thirteen weeks ended September 25, 2024 was primarily driven by a decline in pre-tax income and consistent non-deductible expenses, which together contributed to the higher effective rate.

The decrease in the effective income tax rate for the thirty-nine weeks ended September 25, 2024 was primarily driven by a decline in pre-tax income and higher tax credits applied against our estimated income tax liability, leading to a year-to-date tax benefit.

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Shake Shack's weighted average ownership percentages

3 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

LLC Interests activity under the Company's stock compensation plan 28,338 7,022 174,419 146,270

4 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Deferred tax assets recognized upon acquisition of LLC Interests

5 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Deferred tax assets recognized under the Tax Receivable Agreement

1 unchanged sentence

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 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 of September 25, 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.

11 unchanged sentences

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.

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 thirty-nine weeks ended September 25, 2024 and September 27, 2023.

Shake Shack Inc.

1 unchanged sentence

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Additional liabilities recognized under the Tax Receivable Agreement

3 unchanged sentences

$ 247,824 $ 235,613

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.

During the thirty-nine weeks ended September 25, 2024 and September 27, 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement.

EARNINGS (LOSS) PER SHARE

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

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 Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Net income (loss) attributable to Shake Shack Inc.—basic $ ( 10,211 ) $ 7,627 $ 1,497 $ 13,041

Reallocation of net income (loss) attributable to non-controlling interests from the assumed conversion of Class B shares — 509 ( 10 ) 696

Net income (loss) attributable to Shake Shack Inc.—diluted $ ( 10,211 ) $ 8,136 $ 1,487 $ 13,737

Weighted average shares of Class A common stock outstanding—basic 40,010 39,460 39,758 39,402

6 unchanged sentences

Weighted average shares of Class A common stock outstanding—diluted 40,010 43,978 44,163 43,884

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.

Earnings (loss) per share of Class A common stock—basic $ ( 0.26 ) $ 0.19 $ 0.04 $ 0.33

Earnings (loss) per share of Class A common stock—diluted $ ( 0.26 ) $ 0.19 $ 0.03 $ 0.31

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.

Refer to Note 6, Debt, for additional information.

1 unchanged sentence

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 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

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 Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

Stock options 52,050 (2) — — —

Performance stock units 86,313 (2) 100,898 (1) 85,440 (1) 100,898 (1)

Restricted stock units 139,742 (2) — — —

Shares of Class B common stock 2,465,936 (2) — — —

(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.

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.

SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information:

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

2024 September 27

Cash paid for:

14 unchanged sentences

Certain leases require the Company to obtain letters of credit.

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.

As of September 25, 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 June 26, 2024, the amount of the ultimate liability with respect to these matters was not material.

As of September 25, 2024, the amount of the ultimate liability with respect to these matters was not material.

Liabilities under Tax Receivable Agreement

13 unchanged sentences

24 | Shake Shack Inc.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Amounts received from HYC Licensing revenue $ 313 $ 419 $ 555 $ 728

Classification June 26

Classification September 25

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.

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

No payments were due to MSP Conservancy during the thirty-nine weeks ended September 25, 2024 and September 27, 2023.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Amounts paid to MSP Conservancy Occupancy and related expenses $ 249 $ 224 $ 707 $ 672

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 Twenty-Six Weeks Ended

Classification June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Amounts paid to Olo, Inc.

Other operating expenses $ 301 $ 156 $ 615 $ 423

Classification June 26

Classification September 25

2024 December 27

2 unchanged sentences

Accrued expenses $ 227 $ 116

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.

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 June 26

2024 December 27

Amounts due to Block, Inc.

Accounts payable

Accrued expenses $ — $ 59

Tax Receivable Agreement

1 unchanged sentence

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 twenty-six weeks ended June 26, 2024 and June 28, 2023.

Classification June 26

No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the thirty-nine weeks ended September 25, 2024 and September 27, 2023.

Classification September 25

2024 December 27

1 unchanged sentence

Liabilities under Tax Receivable Agreement, net of current portion $ 247,824 $ 235,613

Shake Shack Inc.

Form 10-Q | 25

Distributions to Members of SSE Holdings

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

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

Classification June 26

No tax distributions were payable to non-controlling interest holders as of September 25, 2024 and December 27, 2023, respectively.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

Classification September 25

2024 September 27

2023 September 25

2024 September 27

Amounts paid to non-controlling interest holders Non-controlling interests $ 63 $ 79 $ 208 $ 131

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