What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-02 · 250 added, 190 removed, 315 unchanged (58% of the section changed)

7 unchanged sentences

You should evaluate all forward-looking statements made in this Form 10-Q in the context of the risks and uncertainties disclosed in our Annual Report on Form 10-K for the fiscal year ended December 27, 2023 ("2023 Form 10-K").

26 | Shake Shack Inc.

The forward-looking statements included in this Form 10-Q are made only as of the date hereof.

10 unchanged sentences

This commitment drives our integration into the local communities in which we operate and fosters a deep and lasting connection with our guests.

26 | Shake Shack Inc.

The following definitions apply to these terms as used herein:

7 unchanged sentences

Key Operating Metrics

Same-Shack sales for the thirteen weeks ended June 26, 2024 increased 4.0% compared to the same period last year, driven by a 4.8% increase in price mix partially offset by a 0.8% decline in guest traffic.

Same-Shack sales for the twenty-six weeks ended June 26, 2024 increased 2.8% compared to the same period last year, driven by a 4.2% increase in price mix partially offset by a 1.4% decline in guest traffic.

For the purpose of calculating same-Shack sales for the thirteen and twenty-six weeks ended June 26, 2024, Shack sales for 228 Shacks were included in the comparable Shack base.

Average weekly sales were $77,000 and $75,000, respectively, for the thirteen and twenty-six weeks ended June 26, 2024, which were flat compared to the same periods last year, primarily driven by higher menu prices, partially offset by a decline in guest traffic and menu mix.

System-wide sales for the thirteen weeks ended June 26, 2024 increased 13.5% to $483.7 million compared to the same period last year.

System-wide sales for the twenty-six weeks ended June 26, 2024 increased 12.9% to $927.0 million compared to the same period last year.

Digital sales for the thirteen weeks ended June 26, 2024 increased 20.9% to $105.1 million compared to the same period last year.

Digital sales for the twenty-six weeks ended June 26, 2024 increased 18.1% to $208.3 million compared to the same

Same-Shack sales for the thirteen weeks ended September 25, 2024 increased 4.4% compared to the same period last year, driven by a 4.1% increase in price mix and a 0.3% increase in guest traffic.

Same-Shack sales for the thirty-nine weeks ended September 25, 2024 increased 3.4% compared to the same period last year, driven by a 4.2% increase in price mix partially offset by a 0.8% decline in guest traffic.

For the purpose of calculating same-Shack sales for the thirteen and thirty-nine weeks ended September 25, 2024, Shack sales for 227 Shacks were included in the comparable Shack base.

Average weekly sales were $76,000 for the thirteen weeks ended September 25, 2024, compared to $74,000 for the same period last year, primarily driven by higher menu prices, partially offset by menu mix.

Average weekly sales were $75,000 for the thirty-nine weeks ended September 25, 2024, which was flat compared to the same period last year, primarily driven by higher menu prices, partially offset by a decline in guest traffic and menu mix.

System-wide sales for the thirteen weeks ended September 25, 2024 increased 12.8% to $495.1 million compared to the same period last year.

System-wide sales for the thirty-nine weeks ended September 25, 2024 increased 12.9% to $1,422.1 million compared to the same period last year.

Digital sales for the thirteen weeks ended September 25, 2024 increased 25.4% to $104.3 million compared to the same period last year.

Digital sales for the thirty-nine weeks ended September 25, 2024 increased 20.4% to $312.6 million compared to the same period last year.

Digital sales includes orders placed on the Shake Shack app, website and third-party delivery platforms, which represented 34.2% and 35.1%, respectively, of Shack sales during the thirteen and thirty-nine weeks ended September 25, 2024.

Shake Shack Inc.

Form 10-Q | 27

period last year.

Digital sales includes orders placed on the Shake Shack app, website and third-party delivery platforms, which represented 34.4% and 35.5%, respectively, of Shack sales during the thirteen and twenty-six weeks ended June 26, 2024.

Development Highlights

During the thirteen weeks ended June 26, 2024, we opened 12 new Company-operated Shacks and 11 new licensed Shacks.

There was one permanent licensed Shack closure in the second quarter of 2024.

The following table presents the Shacks opened during the thirteen weeks ended June 26, 2024:

During the thirteen weeks ended September 25, 2024, we opened eight new Company-operated Shacks and nine new licensed Shacks.

There were nine permanent Company-operated Shack closures and three permanent licensed Shack closures in the third quarter of 2024.

The following table presents the Shacks opened during the thirteen weeks ended September 25, 2024:

Location Type Opening Date

New York, NY — Penn Station Company-operated 3/28/2024

Dubai, UAE — Mirdif City Centre Licensed 4/5/2024

Scottsdale, AZ — Salt River Company-operated 4/10/2024

Kuala Lumpur, Malaysia — The Exchange TRX Licensed 4/10/2024

Tokyo, Japan — Joule Shibuya Licensed 4/13/2024

Newington, CT — Newington Company-operated 4/24/2024

Deerfield, IL — Deerfield Company-operated 4/25/2024

Foshan, China — Lingnan Tiandi Licensed 4/29/2024

Costa Mesa, CA — Costa Mesa Company-operated 5/8/2024

Shanghai, China — Kerry Parkside Licensed 5/11/2024

Pittsburgh, PA — The Terminal Company-operated 5/19/2024

Stamford, CT — Stamford Company-operated 5/22/2024

Wellesley, MA — Wellesley Company-operated 5/29/2024

Midlothian, VA — Midlothian Company-operated 5/29/2024

Secaucus, NJ — Secaucus Company-operated 6/9/2024

London, United Kingdom — St.

Pancras Station Licensed 6/11/2024

Pasay, Philippines — NAIA Terminal 3 Licensed 6/11/2024

Mexico City, Mexico — Interlomas Licensed 6/12/2024

Toronto, Canada — Yonge and Dundas Licensed 6/13/2024

Seoul, South Korea — Dogok Licensed 6/14/2024

Bellevue, WA — Bellevue Square Company-operated 6/17/2024

Freehold, NJ — Freehold Company-operated 6/23/2024

Sloatsburg, NY — Ramapo Travel Plaza Licensed 6/26/2024

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.

Bangkok, Thailand — Mega Bangna Licensed 7/6/2024

Rochester, NY — Henrietta Company-operated 7/8/2024

Guadalajara, Mexico — Guadalajara Airport - Landside Licensed 7/12/2024

Warwick, RI — Warwick Company-operated 7/15/2024

Louis, MO — St.

Louis Lambert International Airport Licensed 7/15/2024

Torrance, CA — Torrance Company-operated 8/14/2024

Monterrey, Mexico — Plaza Cumbres Licensed 8/28/2024

Rishon Lezion, Israel — G City Complex Licensed 8/28/2024

Middletown Township, NJ — Middletown Company-operated 9/3/2024

Sloatsburg, NY — Sloatsburg Travel Plaza Licensed 9/10/2024

Seoul, South Korea — Gimpo Airport Licensed 9/10/2024

Jackson Heights, NY — Jackson Heights Company-operated 9/12/2024

Daegu, South Korea — Daegu Shinsegae Mall Licensed 9/13/2024

Jacksonville, FL — St.

John's Town Center Company-operated 9/17/2024

Shanghai, China — Yu Garden Licensed 9/22/2024

Port Chester, NY — Port Chester Company-operated 9/24/2024

New York, NY — Columbus Circle Company-operated 9/25/2024

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.

28 | Shake Shack Inc.

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the thirteen and twenty-six weeks ended June 26, 2024 and June 28, 2023:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

The following table summarizes our results of operations for the thirteen and thirty-nine weeks ended September 25, 2024 and September 27, 2023:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Shack sales $ 304,897 96.2 % $ 264,980 95.9 % $ 890,929 96.4 % $ 771,044 96.2 %

11 unchanged sentences

Pre-opening costs 3,662 1.2 % 4,969 1.8 % 10,429 1.1 % 14,103 1.8 %

Impairment and loss on disposal of assets 1,045 0.3 % 884 0.3 % 1,571 0.3 % 1,606 0.3 %

Impairments, loss on disposal of assets, and Shack closures 29,086 9.2 % 492 0.2 % 30,657 3.3 % 2,098 0.3 %

TOTAL EXPENSES 334,912 105.7 % 270,550 98.0 % 931,096 100.8 % 794,074 99.1 %

INCOME FROM OPERATIONS 10,782 3.4 % 4,748 1.7 % 10,816 1.8 % 1,559 0.3 %

INCOME (LOSS) FROM OPERATIONS (17,988) (5.7) % 5,657 2.0 % (7,172) (0.8) % 7,216 0.9 %

Other income, net 3,504 1.1 % 3,441 1.2 % 10,010 1.1 % 9,505 1.2 %

Interest expense (498) (0.2) % (433) (0.2) % (1,533) (0.2) % (1,241) (0.2) %

INCOME BEFORE INCOME TAXES 13,555 4.3 % 7,570 2.8 % 16,287 2.7 % 6,815 1.3 %

Income tax expense 3,173 1.0 % 347 0.1 % 3,691 0.6 % 1,214 0.2 %

NET INCOME 10,382 3.3 % 7,223 2.7 % 12,596 2.1 % 5,601 1.1 %

Net income attributable to non-controlling interests 714 0.2 % 275 0.1 % 888 0.1 % 187 — %

NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.

INCOME (LOSS) BEFORE INCOME TAXES (14,982) (4.7) % 8,665 3.1 % 1,305 0.1 % 15,480 1.9 %

Income tax expense (benefit) (3,873) (1.2) % 529 0.2 % (182) — % 1,743 0.2 %

NET INCOME (LOSS) (11,109) (3.5) % 8,136 2.9 % 1,487 0.2 % 13,737 1.7 %

Net income (loss) attributable to non-controlling interests (898) (0.3) % 509 0.2 % (10) — % 696 0.1 %

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ (10,211) (3.2) % $ 7,627 2.8 % $ 1,497 0.2 % $ 13,041 1.6 %

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Shack sales in any period are directly influenced by the number of operating weeks in such period and the total number of open Shacks.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

2 unchanged sentences

Percentage change compared to prior year 15.1 % 15.5 %

Shack sales for the thirteen weeks ended June 26, 2024 increased 16.7% to $305.5 million versus the same period last year.

The increase was primarily due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024, which contributed $32.1 million, as well as increased menu prices, which contributed $18.3 million, partially offset by menu mix, mainly related to strategic investments in marketing.

Shack sales for the thirteen weeks ended September 25, 2024 increased 15.1% to $304.9 million versus the same period last year.

The increase was primarily due to the opening of 39 new Company-operated Shacks between September 27, 2023 and

Shake Shack Inc.

Form 10-Q | 29

Shack sales for the twenty-six weeks ended June 26, 2024 increased 15.8% to $586.0 million versus the same period last year.

The increase was primarily due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024, which contributed $57.0 million, as well as increased menu prices, which contributed $22.0 million.

September 25, 2024, which contributed $31.8 million, as well as increased menu prices, which contributed $16.4 million, partially offset by menu mix and a decline in urban traffic.

Shack sales for the thirty-nine weeks ended September 25, 2024 increased 15.5% to $890.9 million versus the same period last year.

The increase was primarily due to the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024, which contributed $72.0 million, as well as increased menu prices, which contributed $47.0 million.

Licensing Revenue

1 unchanged sentence

License fees are calculated as a percentage of sales and territory fees are payments for the exclusive right to develop Shacks in a specific geographic area.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Licensing revenue $ 12,027 $ 11,227 $ 32,995 $ 30,246

2 unchanged sentences

Percentage change compared to prior year 7.1 % 9.1 %

Licensing revenue for the thirteen weeks ended June 26, 2024 increased 10.2% to $11.0 million versus the same period last year.

Licensing revenue for the twenty-six weeks ended June 26, 2024 increased 10.2% to $21.0 million versus the same period last year.

The increases in Licensing revenue for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to the opening of 35 net new licensed Shacks between June 28, 2023 and June 26, 2024, which contributed $1.3 million and $2.4 million, respectively, as well as higher sales at existing domestic licensed Shacks, partially offset by a decline in sales in China.

Licensing revenue for the thirteen weeks ended September 25, 2024 increased 7.1% to $12.0 million versus the same period last year.

Licensing revenue for the thirty-nine weeks ended September 25, 2024 increased 9.1% to $33.0 million versus the same period last year.

The increases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to the opening of 27 net new licensed Shacks between September 27, 2023 and September 25, 2024, which contributed $1.0 million and $1.9 million, respectively, as well as higher sales at existing domestic licensed Shacks.

Food and Paper Costs

1 unchanged sentence

The components of Food and paper costs are variable by nature, change with sales volume, impacted by menu mix, channel mix and fluctuations in commodity costs, as well as geographic scale and proximity.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Food and paper costs $ 86,056 $ 77,180 $ 251,362 $ 224,752

2 unchanged sentences

Percentage change compared to prior year 11.5 % 11.8 %

Food and paper costs for the thirteen weeks ended June 26, 2024 increased 12.2% to $85.1 million versus the same period last year.

Food and paper costs for the twenty-six weeks ended June 26, 2024 increased 12.0% to $165.3 million versus the same period last year.

The increases for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024, which contributed approximately $9.4 million and $17.3 million, respectively.

As a percentage of Shack sales, the decreases in Food and paper costs for the thirteen and twenty-six weeks ended June 26, 2024 were primarily driven by menu price increases partially offset by increases in certain commodity costs, mainly beef and increases in marketing promotions.

Food and paper costs for the thirteen weeks ended September 25, 2024 increased 11.5% to $86.1 million versus the same period last year.

Food and paper costs for the thirty-nine weeks ended September 25, 2024 increased 11.8% to $251.4 million versus the same period last year.

The increases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024, which contributed approximately $9.3 million and $21.2 million, respectively.

As a percentage of Shack sales, the decreases in Food and paper costs for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily driven by increased menu prices partially offset by increases in marketing promotions and certain commodity costs, mainly beef and fries.

30 | Shake Shack Inc.

3 unchanged sentences

Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs, size and location of the Shack and the performance of our Company-operated Shacks.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Labor and related expenses $ 85,523 $ 76,233 $ 253,646 $ 225,655

2 unchanged sentences

Percentage change compared to prior year 12.2 % 12.4 %

Labor and related expenses for the thirteen weeks ended June 26, 2024 increased 15.2% to $86.6 million versus the same period last year.

Labor and related expenses for the twenty-six weeks ended June 26, 2024 increased 12.5% to $168.1 million versus the same period last year.

The increases for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024.

As a percentage of Shack sales, the decreases in Labor and related expenses for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to labor efficiencies and sales leverage partially offset by increased wages and incremental expenses from the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024.

Labor and related expenses for the thirteen weeks ended September 25, 2024 increased 12.2% to $85.5 million versus the same period last year.

Labor and related expenses for the thirty-nine weeks ended September 25, 2024 increased 12.4% to $253.6 million versus the same period last year.

As a percentage of Shack sales, the decreases in Labor and related expenses for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to labor efficiencies and sales leverage partially offset by increased wages and incremental expenses from the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024.

Other Operating Expenses

Other operating expenses consist of delivery commissions, Shack-level marketing expenses, repairs and maintenance, utilities and other operating expenses incidental to operating our Company-operated Shacks, such as non-perishable supplies, credit card fees and property insurance.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Other operating expenses $ 45,564 $ 37,307 $ 131,373 $ 108,352

2 unchanged sentences

Percentage change compared to prior year 22.1 % 21.2 %

Other operating expenses for the thirteen weeks ended June 26, 2024 increased 21.7% to $44.0 million versus the same period last year.

Other operating expenses for the twenty-six weeks ended June 26, 2024 increased 20.8% to $85.8 million versus the same period last year.

The increases for the thirteen and twenty-six weeks ended June 26, 2024 were primarily driven by increased transaction costs associated with higher sales and higher facilities costs, mainly professional services and utilities, due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024 as well as increased marketing spend.

As a percentage of Shack sales, the increases in Other operating expenses for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to increases in marketing spend and delivery commissions associated with higher delivery sales.

Other operating expenses for the thirteen weeks ended September 25, 2024 increased 22.1% to $45.6 million versus the same period last year.

Other operating expenses for the thirty-nine weeks ended September 25, 2024 increased 21.2% to $131.4 million versus the same period last year.

The increases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily driven by increased transaction costs associated with higher sales, and higher facilities costs, mainly repair and maintenance and utilities as well as increased marketing spend.

As a percentage of Shack sales, the increases in Other operating expenses for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to increases in delivery commissions associated with higher delivery sales and increases in marketing spend.

Shake Shack Inc.

2 unchanged sentences

Occupancy and related expenses consist of Shack-level occupancy expenses (including rent, common area expenses and certain local taxes), and exclude occupancy expenses associated with unopened Shacks, which are recorded separately in Pre-opening costs.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Occupancy and related expenses $ 23,608 $ 20,300 $ 69,022 $ 58,684

2 unchanged sentences

Percentage change compared to prior year 16.3 % 17.6 %

Occupancy and related expenses for the thirteen weeks ended June 26, 2024 increased 17.3% to $23.2 million versus the same period last year.

Occupancy and related expenses for the twenty-six weeks ended June 26, 2024 increased 18.3% to $45.4 million versus the same period last year.

The increases for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024.

As a percentage of Shack sales, Occupancy and related expenses was flat for the thirteen weeks ended June 26, 2024 primarily driven by higher base rent offset by sales leverage.

As a percentage of Shack sales, the increase in Occupancy and related expenses for the twenty-six weeks ended June 26, 2024 was primarily due to higher base rent and variable rent.

Occupancy and related expenses for the thirteen weeks ended September 25, 2024 increased 16.3% to $23.6 million versus the same period last year.

Occupancy and related expenses for the thirty-nine weeks ended September 25, 2024 increased 17.6% to $69.0 million versus the same period last year.

The increases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024.

As a percentage of Shack sales, Occupancy and related expenses was flat for the thirteen weeks ended September 25, 2024 primarily driven by higher base rent offset by sales leverage.

As a percentage of Shack sales, the increase in Occupancy and related expenses for the thirty-nine weeks ended September 25, 2024 was primarily due to higher base rent and occupancy taxes.

General and Administrative Expenses

General and administrative expenses consist of costs associated with corporate and administrative functions that support Shack development and operations, as well as equity-based compensation expense.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

General and administrative expenses $ 35,691 $ 30,939 $ 107,948 $ 93,726

2 unchanged sentences

Percentage change compared to prior year 15.4 % 15.2 %

General and administrative expenses for the thirteen weeks ended June 26, 2024 increased 15.4% to $36.3 million versus the same period last year.

General and administrative expenses for the twenty-six weeks ended June 26, 2024 increased 15.1% to $72.3 million versus the same period last year.

The increase in General and administrative expenses for the thirteen weeks ended June 26, 2024 was primarily due to increased investments in marketing as well as increases in wages and other team costs to support our Shack growth.

The increase in General and administrative expenses for the twenty-six weeks ended June 26, 2024 was primarily due to the aforementioned items as well as costs related to the prior restatement of prior periods included in the fiscal 2023 Form 10-K and investments in technology initiatives.

As a percentage of Total revenue, the decreases in General and administrative expenses for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to sales leverage partially offset by the aforementioned items.

General and administrative expenses for the thirteen weeks ended September 25, 2024 increased 15.4% to $35.7 million versus the same period last year.

The increase was primarily due to increases in wages and other team costs to support our Shack growth, increased investments in marketing as well as professional fees related to non-recurring matters.

General and administrative expenses for the thirty-nine weeks ended September 25, 2024 increased 15.2% to $107.9 million versus the same period last year.

The increase was primarily due to the aforementioned items as well as costs related to the prior restatement of prior periods included in the fiscal 2023 Form 10-K.

As a percentage of Total revenue, the increase in General and administrative expenses for the thirteen weeks ended September 25, 2024 was primarily due to the aforementioned items partially offset by sales leverage.

As a percentage of Total revenue, General and administrative expenses was flat for the thirty-nine weeks ended September 25, 2024 primarily due to sales leverage partially offset by the aforementioned items.

32 | Shake Shack Inc.

1 unchanged sentence

Depreciation and amortization expense primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Depreciation and amortization expense $ 25,722 $ 23,130 $ 76,659 $ 66,704

2 unchanged sentences

Percentage change compared to prior year 11.2 % 14.9 %

Depreciation and amortization expense for the thirteen weeks ended June 26, 2024 increased 14.6% to $25.5 million versus the same period last year.

Depreciation and amortization expense for the twenty-six weeks ended June 26, 2024 increased 16.9% to $50.9 million versus the same period last year.

The increases in Depreciation and amortization expense for the thirteen and twenty-six weeks ended June 26, 2024 were predominantly due to incremental depreciation of capital expenditures related to the opening of 41 new Company-operated Shacks and technology projects placed into service between June 28, 2023 and June 26, 2024.

Depreciation and amortization expense for the thirteen weeks ended September 25, 2024 increased 11.2% to $25.7 million versus the same period last year.

The increase was primarily due to incremental depreciation of capital expenditures related to the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024.

Depreciation and amortization expense for the thirty-nine weeks ended September 25, 2024 increased 14.9% to $76.7 million versus the same period last year.

The increase was primarily due to the aforementioned item as well as incremental depreciation of technology projects placed into service.

Pre-Opening Costs

3 unchanged sentences

Additionally, Company-operated Shack openings in new geographic markets may initially experience higher pre-opening costs than our established geographic markets, such as the New York City metropolitan area, where we have greater economies of scale and incur lower travel and lodging costs for our training team.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

2 unchanged sentences

Percentage change compared to prior year (26.3) % (26.1) %

Pre-opening costs for the thirteen weeks ended June 26, 2024 decreased 28.0% to $4.0 million versus the same period last year.

Pre-opening costs for the twenty-six weeks ended June 26, 2024 decreased 25.9% to $6.8 million versus the same period last year.

The decreases in Pre-opening costs for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to reductions in wages and team costs as we standardize the training process for unopened Shacks.

Impairment and Loss on Disposal of Assets

Impairment and loss on disposal of assets primarily consists of impairment charges related to our long-lived assets, which includes property and equipment, as well as operating and finance lease assets.

Additionally, Impairment and loss on disposal of assets includes the net book value of assets that have been retired which primarily consists of furniture, equipment and fixtures that were replaced in the normal course of business.

Pre-opening costs for the thirteen weeks ended September 25, 2024 decreased 26.3% to $3.7 million versus the same period last year.

Pre-opening costs for the thirty-nine weeks ended September 25, 2024 decreased 26.1% to $10.4 million versus the same period last year.

The decreases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to reductions in wages and team costs as we standardize the training process for unopened Shacks as well as reductions in legal costs compared to the prior year period.

Impairments, loss on disposal of assets, and Shack closures

Impairments, loss on disposal of assets, and Shack closures primarily consists of the net book value of assets that have been retired which primarily consists of furniture, equipment and fixtures that were replaced in the normal course of business;

impairment charges related to our long-lived assets, which includes property and equipment, as well as operating and finance lease assets;

and miscellaneous Shack closure expenses, including employee-related costs, cleaning, and sign removal costs.

Shake Shack Inc.

Form 10-Q | 33

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Impairments, loss on disposal of assets, and Shack closures

$ 29,086 $ 492 $ 30,657 $ 2,098

Percentage of Total revenue 9.2 % 0.2 % 3.3 % 0.3 %

Dollar change compared to prior year $ 28,594 $ 28,559

Percentage change compared to prior year 18.2 % (2.2) %

Impairment and loss on disposal of assets for the thirteen weeks ended June 26, 2024 increased 18.2% to $1.0 million versus the same period last year.

The increase was primarily due to an increase in abandoned construction projects, partially offset by decreases in costs of disposed assets at our Shacks and home office.

Impairment and loss on disposal of assets for the twenty-six weeks ended June 26, 2024 decreased 2.2% to $1.6 million versus the same period last year.

The decrease was primarily due to decreases in costs of disposed assets at our home office and at our Shacks, partially offset by an increase in the cost of abandoned projects.

Impairments, loss on disposal of assets, and Shack closures for the thirteen and thirty-nine weeks ended September 25, 2024 increased to $29.1 million and $30.7 million, respectively.

The increases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to expenses related to the closure of nine Company-operated Shacks in August 2024.

Other Income, Net

Other income, net consists primarily of interest income, adjustments to liabilities under the Tax Receivable Agreement, dividend income and net unrealized and realized gains and losses from marketable securities.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

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Percentage change compared to prior year 1.8 % 5.3 %

Other income, net for the thirteen weeks ended June 26, 2024 increased to $3.3 million from $3.2 million.

Other income, net for the twenty-six weeks ended June 26, 2024 increased to $6.5 million from $6.1 million.

The increases in Other income, net for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to an increase in interest income from investments.

Other income, net for the thirteen weeks ended September 25, 2024 increased to $3.5 million from $3.4 million.

Other income, net for the thirty-nine weeks ended September 25, 2024 increased to $10.0 million from $9.5 million.

The increases for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to increases in income from investments.

Interest Expense

Interest expense generally consists of interest on the current portion of our liabilities under the Tax Receivable Agreement, imputed interest related to our financing equipment leases, amortization of deferred financing costs, interest and fees on our Revolving Credit Facility and amortization of debt issuance costs.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

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Percentage change compared to prior year 15.0 % 23.5 %

Interest expense for the thirteen weeks ended June 26, 2024 increased 30.1% to $0.5 million versus the same period last year.

Interest expense for the twenty-six weeks ended June 26, 2024 increased 28.1% to $1.0 million versus the same period last year.

The increases in Interest expense for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to increased finance lease charges from the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024.

34 | Shake Shack Inc.

Income Tax Expense

Interest expense for the thirteen weeks ended September 25, 2024 increased 15.0% to $0.5 million versus the same period last year.

The increase for the thirteen weeks ended September 25, 2024 was primarily due to increased finance lease charges from the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024 as well as an increase in various sales tax audit assessment charges.

Interest expense for the thirty-nine weeks ended September 25, 2024 increased 23.5% to $1.5 million versus the same period last year.

The increase for the thirty-nine weeks ended September 25, 2024 was primarily due to increased finance lease charges from the opening of 39 new Company-operated Shacks between September 27, 2023 and September 25, 2024.

Income Tax Expense (Benefit)

We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings.

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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 us, on a pro rata basis.

34 | Shake Shack Inc.

We are subject to U.S.

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We are also subject to withholding taxes in foreign jurisdictions.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

Percentage of Total revenue (1.2) % 0.2 % — % 0.2 %

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Percentage change compared to prior year (832.1) % (110.4) %

Our effective income tax rates for the thirteen weeks ended June 26, 2024 and June 28, 2023 were 23.4% and 4.6%, respectively.

Our effective income tax rates for the twenty-six weeks ended June 26, 2024 and June 28, 2023 were 22.7% and 17.8%, respectively.

The increases were primarily driven by increases in pre-tax income compared to the same periods last year.

Our effective income tax rates for the thirteen weeks ended September 25, 2024 and September 27, 2023 were 25.9% and 6.1%, respectively.

The increase was primarily driven by a decline in pre-tax income and consistent non-deductible expenses, which together contributed to the higher effective rate.

Our effective income tax rates for the thirty-nine weeks ended September 25, 2024 and September 27, 2023 were (13.9)% and 11.3%, respectively.

The decrease was primarily driven by a decline in pre-tax income (loss) and higher tax credits applied against our estimated income tax liability, leading to a year-to-date tax benefit.

The Company's ownership interest in SSE Holdings is directly related to its share of the taxable income of SSE Holdings.

Our weighted average ownership interest in SSE Holdings was 93.7% and 93.3%, respectively, for the thirteen weeks ended June 26, 2024 and June 28, 2023, and 93.5% and 93.3%, respectively, for the twenty-six weeks ended June 26, 2024 and June 28, 2023.

These increases in the Company's ownership interest in SSE Holdings LLC increased its share of the taxable income of SSE Holdings.

Net Income Attributable to Non-Controlling Interests

Our weighted average ownership interest in SSE Holdings was 94.2% and 93.3%, respectively, for the thirteen weeks ended September 25, 2024 and September 27, 2023, and 93.7% and 93.3%, respectively, for the thirty-nine weeks ended September 25, 2024 and September 27, 2023.

These increases in the Company's ownership interest in SSE Holdings LLC increased its share of the taxable income (loss) of SSE Holdings.

Net Income (Loss) Attributable to Non-Controlling Interests

We are the sole managing member of SSE Holdings and have the sole voting power in, and control the management of, SSE Holdings.

Accordingly, we consolidate the financial results of SSE Holdings and report a non-controlling interest on our Condensed Consolidated Statements of Income, representing the portion of net income attributable to the other members of SSE Holdings.

Accordingly, we consolidate the financial results of SSE Holdings and report a non-controlling interest on our Condensed Consolidated Statements of Income (Loss), representing the portion of net income (loss) attributable to the other members of SSE Holdings.

The Third Amended and Restated Limited Liability Company Agreement of SSE Holdings provides that holders of LLC Interests may, 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, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in SSE Holdings.

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income and other comprehensive income to Shake Shack Inc.

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income (loss) and other comprehensive income (loss) to Shake Shack Inc.

and the non-controlling interest holders.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

Percentage of Total revenue (0.3) % 0.2 % — % 0.1 %

Net income attributable to non-controlling interests for the thirteen weeks ended June 26, 2024 increased to $0.7 million from $0.3 million in the same period last year.

Net income attributable to non-controlling interests for the twenty-six weeks ended June 26, 2024 increased to $0.9 million from $0.2 million in the same period last year.

The increases in Net income attributable to non-controlling interests for the thirteen and twenty-six weeks ended June 26, 2024 were primarily due to increases in net results compared to the same periods last year, partially offset by a decrease in the non-controlling interest holders' weighted average ownership, which was 6.3% and 6.5%, respectively, for the thirteen and twenty-six weeks ended June 26, 2024 and 6.7% for the thirteen and twenty-six weeks ended June 28, 2023.

Shake Shack Inc.

Form 10-Q | 35

Net income (loss) attributable to non-controlling interests for the thirteen weeks ended September 25, 2024 declined to a loss of $0.9 million from income of $0.5 million in the same period last year.

Net income (loss) attributable to non-controlling interests for the thirty-nine weeks ended September 25, 2024 declined to nil from $0.7 million in the same period last year.

The declines in Net income (loss) attributable to non-controlling interests for the thirteen and thirty-nine weeks ended September 25, 2024 were primarily due to decreases in net results compared to the same periods last year, partially offset by a decrease in the non-controlling interest holders' weighted average ownership, which was 5.8% and 6.3%, respectively, for the thirteen and thirty-nine weeks ended September 25, 2024 and 6.7% for the thirteen and thirty-nine weeks ended September 27, 2023.

NON-GAAP FINANCIAL MEASURES

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Restaurant-level profit, Restaurant-level profit margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share (collectively the "non-GAAP financial measures").

Shake Shack Inc.

Form 10-Q | 35

Restaurant-Level Profit

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Therefore, this measure may not provide a complete understanding of the operating results of our Company as a whole and Restaurant-level profit and Restaurant-level profit margin should be reviewed in conjunction with our GAAP financial results.

A reconciliation of Restaurant-level profit to Income from operations, the most directly comparable GAAP financial measure, is as follows.

36 | Shake Shack Inc.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

Income from operations $ 10,782 $ 4,748 $ 10,816 $ 1,559

A reconciliation of Restaurant-level profit to Income (loss) from operations, the most directly comparable GAAP financial measure, is as follows.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

Income (loss) from operations $ (17,988) $ 5,657 $ (7,172) $ 7,216

Licensing revenue 12,027 11,227 32,995 30,246

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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

Employee benefit charges (1)

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(2) As a percentage of Shack sales.

36 | Shake Shack Inc.

EBITDA and Adjusted EBITDA

EBITDA is defined as Net income before Interest expense (net of interest income), Income tax expense and Depreciation and amortization expense.

Adjusted EBITDA is defined as EBITDA (as defined above) excluding equity-based compensation expense, Impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that we do not believe directly reflect our core operations and may not be indicative of our recurring business operations.

EBITDA is defined as Net income (loss) before Interest expense (net of interest income), Income tax expense (benefit) and Depreciation and amortization expense.

Adjusted EBITDA is defined as EBITDA (as defined above) excluding equity-based compensation expense, Impairments, loss on disposal of assets, and Shack closures, amortization of cloud-based software implementation costs, as well as certain non-recurring items that we do not believe directly reflect our core operations and may not be indicative of our recurring business operations.

How These Measures Are Useful

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Therefore, these measures may not provide a complete understanding of our performance and should be reviewed in conjunction with our GAAP financial measures.

A reconciliation of EBITDA and adjusted EBITDA to Net income, the most directly comparable GAAP measure, is as follows.

Shake Shack Inc.

Form 10-Q | 37

Thirteen Weeks Ended Twenty-Six Weeks Ended

(dollar amounts in thousands) June 26

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

A reconciliation of EBITDA and adjusted EBITDA to Net income (loss), the most directly comparable GAAP measure, is as follows.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(dollar amounts in thousands) September 25

2024 September 27

2023 September 25

2024 September 27

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

Depreciation and amortization expense 25,722 23,130 76,659 66,704

Interest expense, net 442 (845) 810 (164)

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

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

EBITDA 11,182 30,950 78,774 82,020

1 unchanged sentence

Amortization of cloud-based software implementation costs 529 440 1,577 1,320

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

Restatement costs (1)

Impairments, loss on disposal of assets, and Shack closures

29,086 492 30,657 2,098

Restatement costs (1)

CEO transition costs 53 — 641 —

9 unchanged sentences

(4) Expenses incurred for professional fees related to non-recurring matters.

(5) Calculated as a percentage of Total revenue, which was $316.5 million and $607.0 million for the thirteen and twenty-six weeks ended June 26, 2024, respectively, and $271.8 million and $525.1 million for the thirteen and twenty-six weeks ended June 28, 2023, respectively.

(5) Calculated as a percentage of Total revenue, which was $316.9 million and $923.9 million for the thirteen and thirty-nine weeks ended September 25, 2024, respectively, and $276.2 million and $801.3 million for the thirteen and thirty-nine weeks ended September 27, 2023, respectively.

Shake Shack Inc.

Form 10-Q | 37

Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share

Adjusted pro forma net income represents Net income attributable to Shake Shack Inc.

Adjusted pro forma net income represents Net income (loss) attributable to Shake Shack Inc.

assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring items that we do not believe are directly related to our core operations and may not be indicative of our recurring business operations.

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When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share are supplemental measures of operating performance that we believe are useful measures to evaluate our performance period over period and relative to our competitors.

By assuming the full exchange of all outstanding LLC Interests, we believe these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in Net income attributable to Shake Shack Inc.

driven by increases in our ownership of SSE Holdings, which are unrelated to our operating performance, and excludes items that are non-recurring or may not be indicative of our ongoing operating performance.

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Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share may differ from similarly titled measures used by other companies due to different methods of calculation.

Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should not be considered alternatives to Net income and earnings per share, as determined under GAAP.

While these measures are useful in evaluating our performance, they do not account for the earnings attributable to the non-controlling interest holders and therefore do not provide a complete understanding of the Net income attributable to Shake Shack Inc.

Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should not be considered alternatives to Net income (loss) and earnings (loss) per share, as determined under GAAP.

Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should be evaluated in conjunction with our GAAP financial results.

A reconciliation of adjusted pro forma net income to Net income (loss) attributable to Shake Shack Inc., the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully exchanged and diluted share are set forth below.

38 | Shake Shack Inc.

reconciliation of adjusted pro forma net income to Net income attributable to Shake Shack Inc., the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully exchanged and diluted share are set forth below.

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands, except per share amounts) June 26

Net income attributable to Shake Shack Inc.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands, except per share amounts) September 25

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

Reallocation of Net income attributable to non-controlling interests from the assumed exchange of LLC Interests (1)

Reallocation of Net income (loss) attributable to non-controlling interests from the assumed exchange of LLC Interests (1)

(898) 509 (10) 696

Restatement costs (2)

Impairment charge and Shack closures (2)

28,157 — 28,157 —

Restatement costs (3)

CEO transition costs 53 — 641 —

7 unchanged sentences

Assumed exchange of LLC Interests for shares of Class A common stock (1)

2,693 — 2,761 —

Dilutive effect of equity awards 278 — — —

Dilutive effect of convertible notes 1,467 — — —

Adjusted pro forma fully exchanged weighted average shares of Class A common stock outstanding—diluted 44,221 43,978 44,163 43,884

Adjusted pro forma earnings per fully exchanged share—diluted $ 0.25 $ 0.17 $ 0.66 $ 0.34

Thirteen Weeks Ended Twenty-Six Weeks Ended

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

Assumed exchange of LLC Interests for shares of Class A common stock (1)

0.01 — 0.01 —

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2024 September 27

2023 September 25

2024 September 27

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

Non-GAAP adjustments (7)

0.52 (0.02) 0.63 0.03

Dilutive effect of convertible notes (0.01) — — —

Adjusted pro forma earnings per fully exchanged share—diluted $ 0.25 $ 0.17 $ 0.66 $ 0.34

1 unchanged sentence

Refer to Note 11, Earnings (Loss) per Share, in the accompanying Condensed Consolidated Financial Statements , for additional information.

(2) Expenses incurred related to Shack closures during fiscal 2024.

(3) Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K.

1 unchanged sentence

(5) Expenses incurred for professional fees related to non-recurring matters.

(5) Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 24.1% and 18.4% for the thirteen and twenty-six weeks ended June 26, 2024, respectively, and 14.9% and 25.1% for the thirteen and twenty-six weeks ended June 28, 2023, respectively.

(6) Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 20.4% and 19.2% for the thirteen and thirty-nine weeks ended September 25, 2024, respectively, and 15.1% and 20.5% for the thirteen and thirty-nine weeks ended September 27, 2023, respectively.

Amounts include provisions for U.S.

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Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand, short-term investments and availability under our Revolving Credit Facility.

As of June 26, 2024, we maintained a Cash and cash equivalents balance of $301.8 million and a short-term investments balance of $2.6 million in Marketable securities.

As of September 25, 2024, we maintained a Cash and cash equivalents balance of $310.9 million.

In March 2021, we issued 0% Convertible Senior Notes (“Convertible Notes”), and received $243.8 million of proceeds, net of discounts.

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In addition, we are obligated to make payments to certain members of SSE Holdings under the Tax Receivable Agreement.

As of June 26, 2024, such obligations totaled $246.9 million.

As of September 25, 2024, such obligations totaled $247.8 million.

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.

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The following table presents a summary of our cash flows from operating, investing and financing activities.

Twenty-Six Weeks Ended

(in thousands) June 26

Thirty-Nine Weeks Ended

(in thousands) September 25

2024 September 27

Net cash provided by operating activities $ 126,072 $ 90,591

Net cash provided by (used in) investing activities 428 (85,415)

Net cash used in investing activities (31,381) (126,264)

Net cash used in financing activities (8,480) (4,825)

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Operating Activities

For the twenty-six weeks ended June 26, 2024, net cash provided by operating activities was $84.2 million compared to $62.2 million for the twenty-six weeks ended June 28, 2023, an increase of $22.0 million.

For the thirty-nine weeks ended September 25, 2024, net cash provided by operating activities was $126.1 million compared to $90.6 million for the thirty-nine weeks ended September 27, 2023, an increase of $35.5 million.

The increase was primarily driven by a $21.8 million improvement in net results after excluding non-cash charges as well as changes in working capital of $13.7 million.

The changes in working capital included an increase in liabilities related to marketing promotions and a change in the timing and payments related to accruals, partially offset by an increase in payments on lease liabilities due to the opening of 41 new Company-operated Shacks between June 28, 2023 and June 26, 2024 and higher base rent.

The changes in working capital included an increase in liabilities related to marketing promotions and a change in the timing and payments related to accruals, partially offset by an increase in payments on lease liabilities due to the opening of 30 net new Company-operated Shacks between September 27, 2023 and September 25, 2024 and higher base rent.

Investing Activities

For the twenty-six weeks ended June 26, 2024, net cash provided by investing activities was $0.4 million compared to net cash used in investing activities of $85.4 million for the twenty-six weeks ended June 28, 2023, an increase of $85.8 million.

The increase was primarily due to a net increase in marketable securities activity as a result of maturities of held-to-maturity marketable securities in the current year of $66.4 million, partially offset by the purchase of held-to-maturity marketable securities of $91.4 million and the sale of equity securities of $81.5 million in the prior year.

For the thirty-nine weeks ended September 25, 2024, net cash used in investing activities was $31.4 million compared to net cash used in investing activities of $126.3 million for the thirty-nine weeks ended September 27, 2023, a decrease of $94.9 million.

The decrease was primarily due to a net increase in marketable securities activity of $163.4 million, due to the timing of purchases and maturities of held-to-maturity securities in fiscal 2023 and 2024, partially offset by the sale of equity securities of $81.5 million in the prior year.

Financing Activities

For the twenty-six weeks ended June 26, 2024, net cash used in financing activities was $7.5 million compared to $3.6 million for the twenty-six weeks ended June 28, 2023, an increase of $3.9 million.

For the thirty-nine weeks ended September 25, 2024, net cash used in financing activities was $8.5 million compared to $4.8 million for the thirty-nine weeks ended September 27, 2023, an increase of $3.7 million.

This increase was primarily due to an increase in withholding taxes related to net settled equity awards.

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(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 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.

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The Revolving Credit Facility requires us 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, we were in compliance with all covenants.

As of September 25, 2024, we were in compliance with all covenants.

Contractual Obligations

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis