What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-29 · 281 added, 838 removed, 1128 unchanged (50% of the section changed)

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Consolidated Statements of Income (Loss )

Consolidated Statements of Comprehensive In come ( Loss )

Consolidated Statements of Comprehensive Income (Loss )

Consolidated Statements of Stockholders' Equity

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

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

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

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

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

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

Material Weakness

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

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

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

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

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

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

Based on the results of our evaluation, management concluded that our internal control over financial reporting was effective as of December 25, 2024.

Remediation of Material Weakness

As discussed in our Annual Report on Form 10-K for the year ended December 27, 2023, management concluded that there was a material weakness in our internal control over financial reporting related to the calculation of state deferred taxes and the related income tax expense (benefit) as of the end of our fiscal year ended December 27, 2023.

In response to the identified material weakness at December 27, 2023, our management, with oversight from our Audit Committee, made the following changes and remediation efforts with respect to our controls and procedures:

▪ Hired a Head of Tax with over 20 years of tax leadership experience including working with Up-C structures, enhancing controls, processes, and tax technology.

▪ Strengthened the depth and experience of our tax department with additional hires who possess the technical expertise necessary to manage the unique complexities of the Up-C structure.

▪ Engaged with a new third-party tax consulting firm and completed a full review of our tax control environment, further bolstering our existing control processes and documentation standards.

▪ Developed enhanced management review control procedures over all related tax controls, but specifically the calculation of state deferred taxes and the related income tax expense (benefit).

▪ Established road map for further tax technology enhancements and a continuous improvement program to monitor the effectiveness of the implemented changes and make adjustments as needed.

After completing our testing of the design and operational effectiveness of these controls and updated procedures, management concluded that we remediated the previously identified material weakness as of December 25, 2024.

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

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

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

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

Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 25, 2024, as stated in their report included in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

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generally accepted accounting principles.

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

Restatement of 2022 and 2021 Financial Statements

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

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 25, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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

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

As of December 25, 2024, the Company is looking to its forecasted future U.S.

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

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Description of the Matter As discussed in Note 14 of the consolidated financial statements, the Company has a Tax Receivable Agreement (“TRA”) with certain current and historical holders of LLC interests, which is a contractual commitment to distribute 85% of any tax benefits (“TRA Payment”), realized or deemed to be realized by the Company to the parties to the TRA.

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

The TRA payments are contingent upon, among other things, the generation of future taxable income over the term of the TRA.

As of December 25, 2024, the Company’s liability due to the holders of LLC interests under the TRA (“TRA liability”), was $247.7 million.

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

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

Auditing management’s accounting for the TRA liability is highly judgmental because it requires the evaluation of the Company’s future qualified taxable income, which is inherently subjective, over the term of the TRA as a basis to determine if the related tax benefits are expected to be realized.

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

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

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

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

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

For example, we compared management’s projections of future taxable income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends.

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

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s financial forecasting process.

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

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

We assessed the historical accuracy of management’s forecasts and compared the significant assumptions used to current industry and economic trends and changes to the Company’s operations.

In addition, we performed sensitivity analyses to evaluate the impact of changes in assumptions to future taxable income.

/s/ Ernst & Young LLP

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We have audited Shake Shack Inc.’s (the Company’s) internal control over financial reporting as of December 25, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

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

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

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

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

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

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

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

In our opinion, Shake Shack Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 25, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 25, 2024 and December 27, 2023, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 25, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”) and our report dated February 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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

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

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

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/s/ Ernst & Young LLP

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(in thousands, except share and per share amounts)

(As Restated)

2024 December 27

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Additional paid-in capital 442,993 426,601

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

Retained earnings 26,984 16,777

Accumulated other comprehensive loss ( 1 ) ( 3 )

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Fiscal Year Ended

(As Restated) (As Restated)

2024 December 27

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Pre-opening costs 15,547 19,231 15,050

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

Impairments, loss on disposal of assets, and Shack closures 32,368 3,007 2,425

TOTAL EXPENSES 1,249,570 1,081,612 927,380

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INCOME (LOSS) BEFORE INCOME TAXES 14,244 16,980 ( 24,285 )

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

Income tax expense (benefit) 3,424 ( 4,010 ) ( 1,180 )

NET INCOME (LOSS) 10,820 20,990 ( 23,105 )

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Fiscal Year Ended

(As Restated) (As Restated)

2024 December 27

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Net income (loss) $ 10,820 $ 20,990 $ ( 23,105 )

Other comprehensive loss, net of tax (1) :

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

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

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

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

COMPREHENSIVE INCOME (LOSS) 10,822 20,987 ( 23,106 )

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Shares Amount Shares Amount

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

Effect of restatement

— — — — — 10,094 — — 10,094

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

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

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

Other comprehensive income:

Other comprehensive loss:

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

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

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

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

Other comprehensive income:

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

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

Other comprehensive loss:

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

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Distributions paid to non-controlling interest holders — — — — — — — ( 162 ) ( 162 )

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

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

Net income — — — — — 10,207 — 613 10,820

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Fiscal Year Ended

(As Restated) (As Restated)

2024 December 27

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Amortization of debt issuance costs 1,047 1,047 1,047

Amortization of cloud computing asset 1,798 1,500 1,245

Amortization of cloud computing assets

2,138 1,798 1,500

Non-cash operating lease cost 77,432 67,781 58,801

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( 1,054 ) ( 9,074 ) ( 5,014 )

Non-cash interest expense

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

Non-cash interest

( 102 ) 116 218

Gain on sale of equity securities — ( 81 ) —

Net amortization of discount on held-to-maturity securities

( 440 ) ( 1,620 ) —

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

Other non-cash income

Impairments, loss on disposal of assets, and Shack closures

32,368 3,007 2,425

Unrealized loss on equity securities — — 158

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— ( 94,019 ) —

Maturities of held-to-maturity securities

Maturities of held-to-maturity marketable securities

69,420 27,078 —

Purchases of equity securities

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Sales of equity securities

81,478 — 4,004

NET CASH USED IN INVESTING ACTIVITIES ( 66,079 ) ( 132,320 ) ( 143,424 )

FINANCING ACTIVITIES

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

Deferred financing costs

Payments on principal of finance leases ( 3,964 ) ( 3,272 ) ( 2,974 )

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( 482 ) ( 162 ) ( 410 )

Debt issuance costs — — ( 1,075 )

Net proceeds from stock option exercises 1,627 744 424

Employee withholding taxes related to net settled equity awards ( 6,198 ) ( 2,994 ) ( 2,242 )

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

NET CASH USED IN FINANCING ACTIVITIES ( 9,017 ) ( 5,684 ) ( 5,202 )

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

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Summary of Significant Accounting Policies

Restatement of Previously Issued Consolidated Financial Statements

Fair Value Measurements

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Related Party Transactions

S egment Reporting

Geographic Information

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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 December 27, 2023, there were 518 Shacks in operation, system-wide, of which 295 were domestic Company-operated Shacks, 39 were domestic licensed Shacks and 184 were international licensed Shacks.

As of December 25, 2024, there were 579 Shacks in operation, system-wide, of which 329 were Company-operated Shacks and 250 were licensed Shacks.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

SSE Holdings is considered a variable interest entity.

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Use of Estimates

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

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

Actual results could differ from those estimates.

Segment Reporting

The chief operating decision maker (the "CODM") is the Chief Executive Officer.

The Company determined it has one operating segment and one reportable segment, as the CODM regularly reviews Shack operations and financial performance at a consolidated level to allocate resources.

Fair Value Measurements

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Assets and liabilities are categorized based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below.

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▪ Level 1 — Quoted prices in active markets for identical assets or liabilities.

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Marketable Securities

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

Treasury obligations, and foreign government securities.

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

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

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

Marketable securities classified as held-to-maturity securities consist of U.S.

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

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

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

No expected credit losses were recognized as of December 25, 2024 and December 27, 2023.

Accounts Receivable, Net

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

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Property and Equipment, Net

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

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

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

Valuation of Long-lived Assets

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

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

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

Refer to Note 4, Fair Value Measurements, for additional information.

Deferred Financing Costs

Deferred financing costs incurred in connection with the issuance of long-term debt and establishing credit facilities are capitalized and amortized in Interest expense based on the related debt agreements.

Deferred financing costs incurred in connection with the issuance of long-term debt and establishing credit facilities are capitalized and amortized in Interest expense on the Consolidated Statements of Income (Loss) based on the related debt agreements.

Deferred financing costs are included in Other assets on the Consolidated Balance Sheets.

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

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Revenue Recognition

Revenue primarily consists of Shack sales and Licensing revenue.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Licensing Revenue

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

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

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

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

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

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

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

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service period for the entire award.

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

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

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

For awards that contain a market condition, a Monte Carlo simulation valuation model is used to calculate the grant-date fair value.

The assumptions used in the valuation include expected term, volatility, risk-free interest rate, and closing price as of the valuation date.

Compensation expense for awards containing a market condition is recognized ratably over the performance period regardless of whether the market condition and requisite service period are met.

Actual distributed shares are calculated upon conclusion of the service and performance periods.

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Advertising costs totaled $ 22,169 , $ 12,437 and $ 12,376 in fiscal 2024, fiscal 2023 and fiscal 2022, respectively, and are included in General and administrative expense and Other operating expenses on the Consolidated Statements of Income (Loss).

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company uses its incremental borrowing rate (“IBR”) in determining the present value of future lease payments as there are no explicit rates provided in the leases.

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

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

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

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

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

Pre-opening Costs

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

Shake Shack Inc.

Form 10-K | 90

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

2 unchanged sentences

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

Recently Issued Accounting Pronouncements

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

ASU Description Effective Date

Recently Adopted Accounting Pronouncements

We adopted the Accounting Standards Update ("ASU") summarized below in fiscal 2024.

ASU Description Date Adopted

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

Improvements to

Reportable Segment

(ASU 2023-07)

1 unchanged sentence

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

Early adoption is permitted.

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

Fiscal years beginning after December 15, 2023

December 25, 2024

Recently Issued Accounting Pronouncements

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

ASU Description Effective Date

Income Taxes (Topic 740):

6 unchanged sentences

Fiscal years beginning after December 15, 2024

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

(ASU 2024-03)

This ASU requires that an entity disaggregate relevant expense captions presented on the face of the income statement into natural expense categories within the footnotes of the financial statements.

In addition, a separate disclosure of selling expenses is required to be presented.

The ASU is intended to allow stakeholders to better understand the components of an entity's expenses.

Early adoption is permitted.

The Company is evaluating the impact this standard will have on its Consolidated Financial Statements and related disclosures.

Fiscal years beginning after December 15, 2026

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

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Shake Shack Inc.

Form 10-K | 91

understated for the impacted periods.

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

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

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

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

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

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

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

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

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

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

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

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

Total liabilities and stockholders' equity

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

For the Fiscal Year Ended

December 28, 2022 For the Fiscal Year Ended

December 29, 2021

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

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

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

Net loss attributable to Shake Shack Inc.

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

Loss per share of Class A common stock:

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

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

For the Fiscal Year Ended

December 28, 2022 For the Fiscal Year Ended

December 29, 2021

CORRECTED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

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

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

Accrued expenses

4,707 ( 1,205 ) 3,502 7,175 — 7,175

Net cash provided by Operating activities

76,742 — 76,742 58,404 — 58,404

Shake Shack Inc.

Form 10-K | 95

Additional Paid-In Capital

Retained Earnings

(Accumulated Deficit)

CORRECTED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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

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

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

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

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

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

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

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

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

Restatement of Interim Financial Information (Unaudited)

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

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

Shake Shack Inc.

Form 10-K | 96

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

CORRECTED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

Current assets:

Cash and cash equivalents

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

Marketable securities

— — — 79,676 — 79,676

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

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

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

Total current assets

330,074 — 330,074 386,617 — 386,617

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

479,617 — 479,617 398,971 — 398,971

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

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

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

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

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

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

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

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

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

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

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

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

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

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

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

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

Commitments and contingencies

Stockholders' equity:

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

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

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

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

39 — 39 39 — 39

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

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

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

Retained earnings (accumulated deficit)

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

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

Total stockholders' equity attributable to Shake Shack Inc.

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

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

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

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

Shake Shack Inc.

Form 10-K | 97

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

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

Current assets:

Cash and cash equivalents

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

Marketable securities

91,537 — 91,537 79,625 — 79,625

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

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

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

Total current assets

329,518 — 329,518 387,575 — 387,575

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

500,085 — 500,085 411,018 — 411,018

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

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

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

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

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

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

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

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

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

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

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

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

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

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

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

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

Commitments and contingencies

Stockholders' equity:

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

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

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

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

39 — 39 39 — 39

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

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

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

Retained earnings (accumulated deficit)

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

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

Total stockholders' equity attributable to Shake Shack Inc.

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

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

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

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

Shake Shack Inc.

Form 10-K | 98

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

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

Current assets:

Cash and cash equivalents

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

Marketable securities

94,957 — 94,957 80,015 — 80,015

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

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

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

Total current assets

323,236 — 323,236 367,055 — 367,055

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

525,557 — 525,557 441,870 — 441,870

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

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

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

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

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

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

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

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

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

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

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

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

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

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

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

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

Commitments and contingencies

Stockholders' equity:

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

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

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

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

39 — 39 39 — 39

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

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

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

Retained earnings (accumulated deficit)

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

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

Total stockholders' equity attributable to Shake Shack Inc.

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

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

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

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

Shake Shack Inc.

Form 10-K | 99

Thirteen Weeks Ended

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)

2023 March 30

Shack sales $ 244,254 $ 196,791

Licensing revenue 9,024 6,600

TOTAL REVENUE 253,278 203,391

Shack-level operating expenses:

Food and paper costs 71,772 59,884

Labor and related expenses 74,264 60,465

Other operating expenses 34,936 30,171

Occupancy and related expenses 18,583 16,276

General and administrative expenses 31,311 31,386

Depreciation and amortization expense 21,322 16,855

Pre-opening costs 3,557 2,712

Impairment and loss on disposal of assets 722 577

TOTAL EXPENSES 256,467 218,326

LOSS FROM OPERATIONS

( 3,189 ) ( 14,935 )

Other income (expense), net

2,837 ( 289 )

Interest expense ( 403 ) ( 355 )

LOSS BEFORE INCOME TAXES

( 755 ) ( 15,579 )

Income tax expense (benefit)

867 ( 4,297 )

( 1,622 ) ( 11,282 )

Net loss attributable to non-controlling interests

( 88 ) ( 1,120 )

NET LOSS ATTRIBUTABLE TO SHAKE SHACK INC.

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

Loss per share of Class A common stock:

Basic $ ( 0.04 ) $ ( 0.26 )

Diluted $ ( 0.04 ) $ ( 0.26 )

Weighted average shares of Class A common stock outstanding:

Basic 39,332 39,163

Diluted 39,332 39,163

Shake Shack Inc.

Form 10-K | 100

Thirteen Weeks Ended

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Shack sales $ 261,810 $ 223,054

Licensing revenue 9,995 7,698

TOTAL REVENUE 271,805 230,752

Shack-level operating expenses:

Food and paper costs 75,800 65,987

Labor and related expenses 75,158 65,851

Other operating expenses 36,109 32,151

Occupancy and related expenses 19,801 16,657

General and administrative expenses 31,476 29,487

Depreciation and amortization expense 22,252 18,087

Pre-opening costs 5,577 2,823

Impairment and loss on disposal of assets 884 528

TOTAL EXPENSES 267,057 231,571

INCOME (LOSS) FROM OPERATIONS

4,748 ( 819 )

Other income, net

Interest expense ( 405 ) ( 315 )

INCOME (LOSS) BEFORE INCOME TAXES

7,570 ( 596 )

Income tax expense

NET INCOME (LOSS)

7,223 ( 1,303 )

Net income (loss) attributable to non-controlling interests

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ 6,948 $ ( 1,188 )

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

Basic $ 0.18 $ ( 0.03 )

Diluted $ 0.16 $ ( 0.03 )

Weighted average shares of Class A common stock outstanding:

Basic 39,416 39,227

Diluted 43,886 39,227

Shake Shack Inc.

Form 10-K | 101

Thirteen Weeks Ended

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

2023 September 28

Shack sales $ 264,980 $ 219,501

Licensing revenue 11,227 8,313

TOTAL REVENUE 276,207 227,814

Shack-level operating expenses:

Food and paper costs 77,180 67,774

Labor and related expenses 76,233 64,638

Other operating expenses 37,307 33,680

Occupancy and related expenses 20,300 17,337

General and administrative expenses 30,939 26,931

Depreciation and amortization expense 23,130 18,647

Pre-opening costs 4,969 3,041

Impairment and loss on disposal of assets 492 592

TOTAL EXPENSES 270,550 232,640

INCOME (LOSS) FROM OPERATIONS

5,657 ( 4,826 )

Other income, net

Interest expense ( 433 ) ( 475 )

INCOME (LOSS) BEFORE INCOME TAXES

8,665 ( 3,819 )

Income tax expense (benefit)

529 ( 1,508 )

NET INCOME (LOSS)

8,136 ( 2,311 )

Net income (loss) attributable to non-controlling interests

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$ 7,627 $ ( 2,024 )

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

Basic $ 0.19 $ ( 0.05 )

Diluted $ 0.19 $ ( 0.05 )

Weighted average shares of Class A common stock outstanding:

Basic 39,460 39,274

Diluted 43,978 39,274

Shake Shack Inc.

Form 10-K | 102

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended March 30, 2022

Common Stock Class B

Common Stock Additional

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

Interest Total

Shares Amount Shares Amount

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

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

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

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

Other comprehensive income:

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

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

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

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

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

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

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

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

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

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended June 29, 2022

Common Stock Class B

Common Stock Additional

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

Interest Total

Shares Amount Shares Amount

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

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

Other comprehensive income:

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

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

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

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

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

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

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

Shake Shack Inc.

Form 10-K | 103

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended September 28, 2022

Common Stock Class B

Common Stock Additional

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

Interest Total

Shares Amount Shares Amount

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

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

Other comprehensive income:

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

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

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

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

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

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

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

Shake Shack Inc.

Form 10-K | 104

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended March 29, 2023

Common Stock Class B

Common Stock Additional

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

Interest Total

Shares Amount Shares Amount

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

Effect of restatement

— — — — 38 17,050 — — 17,088

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

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

Other comprehensive loss:

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

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

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

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

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

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

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

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

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

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended June 28, 2023

Common Stock Class B

Common Stock Additional

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

Interest Total

Shares Amount Shares Amount

BALANCE MARCH 29, 2023

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

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

Other comprehensive income (loss):

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

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

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

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

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

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

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

Shake Shack Inc.

Form 10-K | 105

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

For the Thirteen Weeks Ended September 27, 2023

Common Stock Class B

Common Stock Additional

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

Interest Total

Shares Amount Shares Amount

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

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

Other comprehensive income:

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

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

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

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

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

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

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

Revenue Recognition

7 unchanged sentences

The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of December 25, 2024 was $ 23,130 .

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

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

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

Shake Shack Inc.

Form 10-K | 106

Contract Balances

8 unchanged sentences

Gift card liability

$ 634 $ 1,781

Deferred revenue 1,461 1,103

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

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

Shake Shack Inc.

5 unchanged sentences

2024 December 27

Equity securities

Held-to-maturity securities

Total marketable securities

$ 68,561 $ 80,707

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

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

Refer to Note 8, Debt, for additional information relating to the fair value of the Company's outstanding debt instruments.

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

December 27, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

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

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

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

A summary of other income from investments was as follows:

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

2024 2023 2022

Income from investments

Income from marketable securities

$ 640 $ 2,885 $ 1,033

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

Realized gain on sale of equity securities — 81 —

Unrealized loss on equity securities — — ( 158 )

3 unchanged sentences

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

During fiscal 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 $ 29,348 , of which $ 27,633 was impairment expense, related to right-of-use assets, and property, plant and equipment, and $ 1,715 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, Shack sales, profitability, discount rates, and sublease income.

No impairment charges were recognized during fiscal 2023.

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

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

There were no impairment charges recognized during fiscal 2021.

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

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

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

Shake Shack Inc.

3 unchanged sentences

2024 December 27

Licensing receivables $ 4,610 $ 3,918

Licensing receivables, net of allowance for doubtful accounts

$ 5,735 $ 4,610

Credit card receivables 5,856 6,360

31 unchanged sentences

Gift card liability 2,584 2,603

Legal reserve 679 6,285

Other 5,869 4,989

Other current liabilities $ 19,538 $ 17,103

The components of Other long-term liabilities were as follows:

2023 December 28

Deferred licensing revenue $ 17,157 $ 14,340

Long-term portion of financing equipment lease liabilities 8,721 3,909

Other 760 2,438

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

Convertible Notes

3 unchanged sentences

(1) during any fiscal quarter commencing after the fiscal quarter ending on June 30, 2021 (and only during such fiscal quarter), if the last reported sale price of the Company's Class A common stock, par value $ 0.001 per share, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price for the Convertible Notes on each applicable trading day;

(2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per one thousand dollar principal amount of the Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of Class A common stock and the conversion rate for the Convertible Notes on each such trading day;

(2) during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per one thousand dollar principal amount of the Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of Class A common stock and the conversion rate for the Convertible Notes on each such trading day;

(3) if the Company calls such Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Convertible Notes called (or deemed called) for redemption;

2 unchanged sentences

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

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

Shake Shack Inc.

Form 10-K | 110

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

The fair value of the Convertible Notes was approximately $ 256,900 and $ 205,000 , respectively, as of December 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.

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

The Company may redeem for cash all or any portion of the Convertible Notes, at the Company's option, on or after March 6, 2025 if the last reported sale price of Class A common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.

Shake Shack Inc.

Form 10-K | 95

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

6 unchanged sentences

and the aggregate number of outstanding shares of common stock.

Classification December 27

2023 December 28

Classification 2024 2023 2022

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

9 unchanged sentences

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

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

As of December 25, 2024 and December 27, 2023, no amounts were outstanding under the Revolving Credit Facility.

1 unchanged sentence

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

The Revolving Credit Facility requires the Company to comply

Shake Shack Inc.

Form 10-K | 111

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

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

As of December 25, 2024, the Company was in compliance with all covenants.

1 unchanged sentence

As of December 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.

Classification December 27

2023 December 28

2022 December 29

Classification 2024 2023 2022

Interest expense on Revolving Credit Facility Interest expense $ 67 $ 74 $ 82

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

Shake Shack Inc.

Form 10-K | 96

Classification December 25

14 unchanged sentences

Total lease liabilities $ 562,940 $ 525,693

Shake Shack Inc.

Form 10-K | 112

The components of lease expense were as follows:

Classification December 27

2023 December 28

2022 December 29

Classification 2024 2023 2022

Operating lease cost Occupancy and related expenses

10 unchanged sentences

Total lease cost $ 104,917 $ 90,824 $ 78,638

Shake Shack Inc.

Form 10-K | 97

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

11 unchanged sentences

As of December 25, 2024, the Company had additional operating lease commitments of $ 138,716 for non-cancelable leases without a possession date, which commence in 2025 or later.

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

The terms of these lease commitments are materially consistent with leases recognized on the Consolidated Balance Sheets.

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

6 unchanged sentences

Finance leases 6.1 % 5.6 %

Shake Shack Inc.

Form 10-K | 113

Supplemental cash flow information related to leases was as follows:

2023 December 28

2022 December 29

2024 2023 2022

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

5 unchanged sentences

Finance leases 4,792 8,972 2,415

Shake Shack Inc.

Form 10-K | 98

EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

Team members are eligible to participate in a defined contribution savings plan maintained by Shake Shack.

Team members who have completed 90 days of continuous employment and are 21 years or older are eligible to participate in a defined contribution savings plan maintained by Shake Shack.

The plan is funded by participant and employer contributions.

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

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

Employer contributions, made at the Company's discretion, are paid directly to the third-party trustee and match a portion of certain participants' contributions.

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

1 unchanged sentence

STOCKHOLDERS' EQUITY

Redemptions of LLC Interests

LLC Interests

The SSE Holdings LLC Agreement 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.

1 unchanged sentence

Simultaneously, and in connection with a redemption, the corresponding number of shares of Class B common stock are surrendered and cancelled.

A summary of activity related to redemptions of LLC Interests were as follows:

2023 2022 2021

Redemption and acquisition of LLC Interests

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

Number of LLC Interests received by Shake Shack Inc.

35,000 52,074 29,601

Issuance of Class A common stock

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

Cancellation of Class B common stock

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

Shake Shack Inc.

Form 10-K | 114

Stock Compensation Plan Activity

The Company received an aggregate of 154,317 , 90,527 and 395,006 LLC Interests in connection with the activity under the stock compensation plan during fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

Refer to Note 12, Non-Controlling Interests, for additional information related to LLC Interests activity.

Dividend Restrictions

6 unchanged sentences

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

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

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

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

The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the "LLC Agreement") of SSE Holdings provides that holders of SSE Holdings, LLC membership interests ("LLC Interests") may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis.

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

1 unchanged sentence

As such, future redemptions or direct exchanges of LLC Interests in SSE Holdings by the other members of SSE Holdings will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital.

Shake Shack Inc.

Form 10-K | 99

The following table summarizes the ownership interest in SSE Holdings:

4 unchanged sentences

Total LLC Interests outstanding 42,523,781 100.0 % 42,308,828 100.0 %

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

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:

2024 2023 2022

Non-controlling interest holders' weighted average ownership percentages 6.2 % 6.7 % 6.9 %

Shake Shack Inc.

Form 10-K | 115

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

(As Restated) (As Restated)

2024 2023 2022

2 unchanged sentences

Other comprehensive income (loss):

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

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

Transfers (to) from non-controlling interests:

Increase in additional paid-in capital as a result of the redemption of LLC Interests 3,517 265 313

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

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

Decrease in additional paid-in capital as a result of activity under stock compensation plan ( 5,614 ) ( 3,271 ) ( 2,978 )

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

$ 8,112 $ 17,255 $ ( 23,895 )

12 unchanged sentences

Shares of Class B common stock surrendered and canceled 378,800 35,000 52,074

Shake Shack Inc.

Form 10-K | 100

EQUITY-BASED COMPENSATION

1 unchanged sentence

2024 2023 2022

Stock options $ — $ — $ 3

Performance stock units $ 2,611 $ 3,149 $ 4,199

7 unchanged sentences

Equity-based compensation expense $ 15,915 $ 14,888 $ 13,326

Shake Shack Inc.

Form 10-K | 116

The Company capitalized $ 371 , $ 286 and $ 192 of equity-based compensation expense associated with the construction cost of our Shacks and certain digital and technology projects, during fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

1 unchanged sentence

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

In June 2024, the Company amended and restated the 2015 Plan (the “2025 Plan”) which authorizes the issuance of up to 842,321 additional shares of the Company’s Class A Common Stock and extends the term of the 2015 Plan by 10 years, among other things.

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

3 unchanged sentences

Grant Date Fair Value

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

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

Granted 199,345 102.77

1 unchanged sentence

Forfeited ( 82,436 ) 73.41

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

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

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

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

Outstanding and unvested as of December 25, 2024 442,804 $ 81.47

The weighted average grant-date fair value of restricted stock units granted during fiscal 2023 and fiscal 2022 were $ 58.26 and $ 71.25 , respectively.

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

As of December 25, 2024, total unrecognized compensation expense related to unvested restricted stock units was $ 25,942 , which is expected to be recognized over a weighted average period of 2.5 years.

Performance Stock Units

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

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

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

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

No performance stock units were granted during fiscal 2023.

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

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

Shake Shack Inc.

Form 10-K | 101

Performance Stock Units

Under the 2025 Plan, the Company may grant performance stock units and other types of performance-based equity awards that vest based on the outcome of certain performance criteria that are established and approved by the Compensation Committee of the Board of Directors.

The actual number of equity awards earned is based on the level of performance achieved over a predetermined performance period, relative to established financial goals.

Performance stock units granted during fiscal 2024 are subject to a requisite service period and the awards vest ratably over four years or cliff vest over three years .

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

Performance stock units containing market conditions are based on a Monte Carlo simulation, and related compensation expense is recognized using a graded attribution method over the vesting period and does not change regardless of the amount of shares received by the recipient based on achievement of the awards.

The fair value of performance stock units not containing a market condition is determined based on the closing market price of the Company's Class A common stock on the date of grant.

Compensation expense related to the performance stock units not containing a market condition is recognized using either a graded-vesting attribution method or straight-line over the vesting period based on the most probable outcome of the performance conditions.

No performance stock units were granted during fiscal 2023 and fiscal 2022.

A summary of performance stock unit activity was as follows:

Grant Date Fair Value

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

Performance achievement (1)

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

Granted 95,624 103.98

Vested ( 10,646 ) 129.68

Forfeited ( 33,957 ) 91.73

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

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

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

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

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

Outstanding and unvested as of December 25, 2024 172,446 $ 96.82

The weighted average grant date fair value of performance stock units granted during fiscal 2023 and fiscal 2022 was nil , and nil , respectively.

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

As of December 25, 2024, total unrecognized compensation expense related to unvested performance stock units was $ 6,645 , which is expected to be recognized over a weighted average period of 2.5 years.

3 unchanged sentences

The Company does not use cash to settle any of the equity-based awards, and issues new shares of Class A common stock upon the exercise of stock options.

The fair value of stock option awards was determined on the grant date using the Black-Scholes valuation model based on the following weighted average assumptions:

2023 2022 2021

Expected term (years) (1)

Expected volatility (2)

— % — % 45.4 %

Risk-free interest rate (3)

— % — % 1.4 %

Dividend yield (4)

(1) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method.

(2) Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term.

(3) The risk-free rate is an interpolation of yields on U.S.

Treasury securities with maturities equivalent to the expected term.

(4) A dividend yield of zero was used as the Company have no plans to declare dividends in the foreseeable future.

Shake Shack Inc.

7 unchanged sentences

Options vested and exercisable as of December 25, 2024 12,112 $ 24.66 $ 1,300 0.5

Options expected to vest as of December 27, 2023 — $ — $ — —

As of December 25, 2024, total unrecognized compensation expense related to unvested stock options was nil .

Cash received from stock options exercised was $ 1,627 and the cash tax benefit realized for the tax deductions from these option exercises was $ 137 for fiscal 2024.

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

No options were granted during fiscal 2024, fiscal 2023 and fiscal 2022.

The total intrinsic value of stock options exercised during fiscal 2024, fiscal 2023 and fiscal 2022 was $ 7,212 , $ 1,426 and $ 631 , respectively.

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

No stock options vested during fiscal 2024, fiscal 2023 and fiscal 2022.

The following table summarizes information about stock options outstanding and exercisable as December 25, 2024:

5 unchanged sentences

$ 36.41 1,108 1.9 $ 36.41

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

SSE Holdings is treated as a partnership for U.S.

federal and most applicable state and local income tax purposes.

Shake Shack is the sole managing member of SSE Holdings, which is classified as a partnership for U.S federal and most applicable state and local income tax purposes.

As the managing member, the Company consolidates SSE Holdings financial results.

As a partnership, SSE Holdings is not subject to U.S.

federal and certain state and local income taxes.

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

Instead, any taxable income or loss generated by SSE Holdings is allocated to its members, including the Company, on a pro rata basis.

The Company is subject to U.S.

federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc.

federal, state and local income taxes with respect to its allocable share of taxable income or loss from SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc.

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

Shake Shack Inc.

Form 10-K | 119

Income Tax Expense

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

(As Restated) (As Restated)

2024 2023 2022

2 unchanged sentences

Income (loss) before income taxes $ 14,244 $ 16,980 $ ( 24,285 )

The components of Income tax benefit were as follows:

(As Restated) (As Restated)

Shake Shack Inc.

Form 10-K | 103

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

2024 2023 2022

Current income taxes:

Federal $ — $ — $ —

State and local $ 554 $ 1,271 $ 222

5 unchanged sentences

Total deferred income taxes ( 1,054 ) ( 9,074 ) ( 5,014 )

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

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

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

Income tax expense (benefit) $ 3,424 $ ( 4,010 ) $ ( 1,180 )

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

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

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

(As Restated) (As Restated)

2024 2023 2022

5 unchanged sentences

Non-controlling interest ( 166 ) ( 1.2 ) % ( 196 ) ( 1.2 ) % 122 ( 0.5 ) %

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

Non-deductible expenses 2,240 15.7 % 1,169 6.9 % 1,467 ( 6.0 ) %

Reserve for uncertain tax positions

— — % 154 0.9 % — — %

Remeasurement of deferred tax assets in connection with other tax rate changes 392 2.8 % 1,547 9.1 % 225 ( 0.9 ) %

Return to provision adjustment

( 650 ) ( 4.6 ) % ( 519 ) ( 3.0 ) % 267 ( 1.1 ) %

Change in valuation allowance ( 97 ) ( 0.7 ) % ( 9,195 ) ( 54.1 ) % 4,955 ( 20.4 ) %

Other ( 343 ) ( 2.4 ) % 643 3.8 % — — %

Income tax benefit

Income tax expense (benefit)

$ 3,424 24.0 % $ ( 4,010 ) ( 23.6 ) % $ ( 1,180 ) 4.9 %

Shake Shack's effective income tax rates for fiscal 2024, fiscal 2023 and fiscal 2022 were 24.0 %, ( 23.6 )% and 4.9 %, respectively.

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

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

The increase in the effective income tax rate from fiscal 2023 to fiscal 2024 was primarily driven by the release of a valuation allowance and a higher remeasurement of deferred tax assets in fiscal 2023.

Shake Shack Inc.

2 unchanged sentences

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

(As Restated)

2024 December 27

20 unchanged sentences

As of December 25, 2024, the Company's federal and state net operating loss carryforwards for income tax purposes were $ 615,782 and $ 334,359 , respectively.

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

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

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

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

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

As of December 27, 2023, the total deferred tax asset related to the basis difference in the Company's investment in SSE Holdings was $ 90,419 .

Of the federal net operating loss carryforward, $ 563,915 can be carried forward indefinitely, while the remaining $ 51,867 will begin to expire in 2035.

Similarly, of the state net operating loss carryforward, $ 106,682 can be carried forward indefinitely, while the remaining $ 227,677 will begin to expire in 2025.

As of December 25, 2024, the Company had federal tax credit carryforwards, including a capital loss carryforward of $ 33,749 , which will begin to expire in 2025 and gross state tax credit carryforwards of $ 273 , also expiring in 2025.

As described in Note 12, Non-controlling Interests, the Company acquired a total of 593,753 LLC Interests during fiscal 2024 through LLC Interest redemptions and stock-based compensation plan activity.

Upon acquiring these LLC Interests, the Company recognized a deferred tax asset of $ 10,985 related to the basis difference in its investment in SSE Holdings.

As of December 25, 2024, the total deferred tax asset associated with the basis difference was $ 89,397 .

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

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

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

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

As of December 25, 2024, the Company concluded, based on the valuation of all available positive and negative evidence, that all of its deferred tax assets are more likely than not to be realized, except certain state credits and state net operating losses that are not expected to be utilized before expiration.

Accordingly, the Company maintained a valuation allowance of $ 260 .

The net change in valuation allowance for fiscal 2024 was a decrease of $ 97 .

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

2 unchanged sentences

Uncertain Tax Positions

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

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

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

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

Reconciliations of uncertain tax positions were as follows:

(As Restated) (As Restated)

Pursuant to ASC 740, the Company provides for uncertain tax positions based upon our assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

In 2024, no new uncertain tax positions were identified.

A reconciliation of the beginning to the ending accounts of gross unrecognized tax benefits for fiscal 2024, 2023, and 2022 is as follows:

2024 2023 2022

Beginning balance

Additions based on tax positions related to the current year

$ 147 $ — $ —

Additions for tax positions of prior years

Reductions for tax positions of prior years

Reductions for lapse of applicable statute of limitations

Ending balance

$ 147 $ 147 $ —

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

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

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

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

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

Shake Shack Inc.

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

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

Additionally, although SSE Holdings is treated as a partnership for U.S.

federal and state income taxes purposes, it is still required to file an annual U.S.

Return of Partnership Income, which is subject to examination by the Internal Revenue Service ("IRS").

The statute of limitations has expired for tax years through 2019 for SSE Holdings.

The Company files income tax returns in the United States federal and state and local jurisdictions.

The Company is currently open to examination by tax authorities for state and local jurisdictions for tax years beginning 2018.

Tax Receivable Agreement

5 unchanged sentences

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

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

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

The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or the Company.

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

Shake Shack Inc.

Form 10-K | 122

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

The Company recognized an additional liability in the amount of $ 720 for the TRA Payments due to the redeeming members, representing 85 % of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemption of LLC Interests, after concluding it was probable that such TRA Payments would be paid based on estimates of future taxable income.

On February 4, 2015, the Company entered into a tax receivable agreement with certain then-existing non-controlling members of SSE Holdings (the "Tax Receivable Agreement").

This agreement obligates the Company to pay the non-controlling interest holders 85 % of any tax benefits that the Company may actually realize, or deemed to realize, from (i) increases in the Company's share of the tax basis of SSE Holdings due to redemptions or exchanges of LLC Interests, (ii) tax basis increases resulting from payments made under the Tax Receivable Agreement, and (iii) deductions from imputed interest under the agreement (the "TRA Payments").

The Company expects to benefit from the remaining 15 % of any realized tax benefits.

The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or us.

Additionally, the rights of each non-controlling interest holder under the Tax Receivable Agreement, are assignable to transferees of its LLC Interests.

During fiscal 2024, the Company acquired a total of 378,800 LLC Interests in connection with the redemption of LLC Interests, which led to an increase in the tax basis of its investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement.

The Company recognized an additional asset of $ 10,985 for the TRA Payments due to the redeeming members, representing 85 % of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemption of LLC Interests.

This estimate was based on our conclusion that it was probable that such TRA Payments would be made, considering our projections of future taxable income.

No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement in fiscal 2024 and fiscal 2023.

As of December 27, 2023, the total amount of TRA Payments due under the Tax Receivable Agreement was $ 235,613 , of which no amount was included in Other current liabilities on the Consolidated Balance Sheets.

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

As of December 25, 2024, the total amount of TRA Payments due under the Tax Receivable Agreement was $ 247,734 , of which $ 717 amount was included in Other current liabilities on the Consolidated Balance Sheets.

EARNINGS (LOSS) PER SHARE

3 unchanged sentences

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

Shake Shack Inc.

Form 10-K | 106

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

(As Restated) (As Restated)

2024 2023 2022

16 unchanged sentences

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

Shake Shack Inc.

Form 10-K | 123

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

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

7 unchanged sentences

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

Shake Shack Inc.

Form 10-K | 107

SUPPLEMENTAL CASH FLOW INFORMATION

9 unchanged sentences

Establishment of liabilities under Tax Receivable Agreement

12,121 720 844

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Certain leases require the Company to obtain letters of credit.

As of December 27, 2023, the Company held two letters of credit, one for $ 130 , which expires in February 2026 and the second for $ 402 , which expires in August 2024 and renews automatically for one-year periods through January 31, 2034.

Shake Shack Inc.

Form 10-K | 124

As of December 25, 2024, the Company held three letters of credit, one for $ 402 , which expires in August 2025 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

3 unchanged sentences

Legal Contingencies

In May 2022, a claim was filed against Shake Shack alleging certain violations of the Fair Labor Standards Act relating to the classification of exempt managers.

The matter was settled with a maximum payment of $ 900 .

An accrual of $ 900 was recorded for this matter during the thirteen weeks ended March 29, 2023.

Subsequently, the accrual was reduced by $ 385 during the thirteen weeks ended December 27, 2023.

The Company is subject to various legal proceedings, claims and liabilities, involving employees and guests alike, which arise in the ordinary course of business and are generally covered by insurance.

1 unchanged sentence

Liabilities under Tax Receivable Agreement

As described in Note 15, Income Taxes, the Company is a party to the Tax Receivable Agreement under which it is contractually committed to pay certain of the members of SSE Holdings 85 % of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of certain transactions.

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

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

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

As of December 27, 2023 and December 28, 2022, the Company recognized liabilities totaling $ 235,613 and $ 234,893 , respectively, relating to the obligations under the Tax Receivable Agreement, after concluding that it was probable that it would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits.

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 in fiscal 2023.

The Company is a party to the Tax Receivable Agreement under which it is contractually committed to pay certain of the members of SSE Holdings 85 % of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of certain transactions.

The Company is not obligated to make any payments under the Tax Receivable

Shake Shack Inc.

Form 10-K | 108

Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized.

Refer to Note 14, Income Taxes, for additional information relating to the Tax Receivable Agreement.

RELATED PARTY TRANSACTIONS

8 unchanged sentences

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

Shake Shack Inc.

Form 10-K | 125

Classification 2024 2023 2022

5 unchanged sentences

The Chairman of the Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which Shake Shack has a license agreement and pays license fees to operate the Madison Square Park Shack.

No amounts were due to MSP Conservancy as of December 27, 2023 and December 28, 2022.

No payments were due to MSP Conservancy as of December 25, 2024 and December 27, 2023.

Classification 2024 2023 2022

1 unchanged sentence

$ 937 $ 898 $ 1,224

The Chairman of the Board of Directors serves as a director of Olo, Inc.

(formerly known as "Mobo Systems, Inc."), a platform the Company uses in connection with its mobile ordering application.

Shake Shack Inc.

Form 10-K | 109

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.

Classification 2024 2023 2022

6 unchanged sentences

Accrued expenses

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

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

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

8 unchanged sentences

Accrued expenses $ — $ 59

Shake Shack Inc.

Form 10-K | 126

Tax Receivable Agreement

8 unchanged sentences

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

No tax distributions were payable to non-controlling interest holders as of December 27, 2023 and December 28, 2022.

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

Classification 2024 2023 2022

Amounts paid to non-controlling interest holders Non-controlling interests $ 482 $ 162 $ 410

Shake Shack Inc.

Form 10-K | 110

SEGMENT REPORTING

Shake Shack operates and licenses Shake Shack restaurants, which serve burgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine and more.

The Company operates Shacks in the United States and has both domestic and international licensed Shacks.

The chief operating decision maker (the "CODM") is the Chief Executive Officer.

The Company determined it has one operating segment and one reportable segment, as the CODM regularly reviews Shack operations and financial performance at a consolidated level.

The CODM also allocates resources at a consolidated level.

The CODM uses net income to allocate resources (including labor, technology, and capital resources) for the single segment to make decisions regarding annual budget, new Shack openings, entering new geographic markets, landlord and vendor negotiations, marketing decisions, pursuing new business ventures, and driving the Company's mission.

2024 2023 2022

Segment revenue (1)

$ 1,252,608 $ 1,087,533 $ 900,486

Food and paper costs 339,940 305,041 261,584

Labor and related expenses 338,750 304,254 257,358

Other operating expenses (2)

178,381 149,449 129,650

Occupancy and related expenses 93,069 79,846 68,508

General and administrative expenses

149,047 129,542 120,009

Depreciation and amortization expense 102,468 91,242 72,796

Pre-opening costs 15,547 19,231 15,050

Impairments, loss on disposal of assets, and Shack closures 32,368 3,007 2,425

Interest expense 2,045 1,717 1,518

Income tax expense (benefit) 3,424 ( 4,010 ) ( 1,180 )

Other (income) loss, net (3)

( 13,251 ) ( 12,776 ) ( 4,127 )

Segment income (loss)

10,820 20,990 ( 23,105 )

Reconciliation of profit or loss:

Adjustments and reconciling items — — —

Consolidated net income (loss)

$ 10,820 $ 20,990 $ ( 23,105 )

2024 December 27

Total Assets $ 1,696,971 $ 1,605,857

(1) Refer to Note 20, for geographic information and breakdown of revenue and long-lived assets by geographic area.

(2) 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.

(3) Other income, net includes net unrealized and realized gains and losses from marketable securities, dividend and interest income, and adjustments to liabilities under the Tax Receivable Agreement.

Interest income was $ 640 , $ 2,390 and nil , respectively for the fifty-two weeks ended December 25, 2024, December 27, 2023 and December 28, 2022.

Shake Shack Inc.

Form 10-K | 111

GEOGRAPHIC INFORMATION

13 unchanged sentences

(in thousands, except share and per share amounts)

(As Restated)

2024 December 27

14 unchanged sentences

Due to SSE Holdings 32,482 22,027

Other current liabilities

Total current liabilities 33,286 22,794

11 unchanged sentences

Additional paid-in capital 442,993 426,601

Retained earnings (accumulated deficit) 5,277 ( 24,758 )

Retained earnings 35,502 5,277

Accumulated other comprehensive loss

10 unchanged sentences

Fiscal Year Ended

(As Restated) (As Restated)

2024 December 27

10 unchanged sentences

INCOME (LOSS) BEFORE INCOME TAXES 36,828 24,831 ( 29,055 )

Income tax benefit ( 5,203 ) ( 5,783 ) ( 21,677 )

Income tax expense (benefit) 6,603 ( 5,203 ) ( 5,783 )

NET INCOME (LOSS) $ 30,225 $ 30,034 $ ( 23,272 )

8 unchanged sentences

Fiscal Year Ended

(As Restated) (As Restated)

2024 December 27

1 unchanged sentence

Net income (loss) $ 30,225 $ 30,034 $ ( 23,272 )

Other comprehensive loss, net of tax (1) :

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

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

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

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

COMPREHENSIVE INCOME (LOSS) $ 30,227 $ 30,031 $ ( 23,273 )

9 unchanged sentences

Fiscal Year Ended

(As Restated) (As Restated)

2024 December 27

2 unchanged sentences

Net income (loss) $ 30,225 $ 30,034 $ ( 23,272 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

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

Equity in net (income) loss from SSE Holdings ( 8,558 ) ( 10,091 ) 25,335

6 unchanged sentences

Prepaid expenses and other current assets ( 1,342 ) ( 1 ) 2

Due to SSE Holdings ( 3,944 ) ( 728 ) ( 8,229 )

Due (to) from SSE Holdings 1,153 ( 3,944 ) ( 728 )

Accounts payable ( 146 ) 107 30

Accrued expenses ( 395 ) 515 ( 103 )

NET CASH USED IN OPERATING ACTIVITIES ( 1,224 ) ( 1,093 ) ( 7,213 )

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 977 ( 1,221 ) ( 1,092 )

INVESTING ACTIVITIES

Purchases of LLC Interests from SSE Holdings ( 27,618 ) ( 11,731 ) ( 7,619 )

Loan to SSE Holdings — — ( 243,750 )

NET CASH USED IN INVESTING ACTIVITIES ( 27,618 ) ( 11,731 ) ( 7,619 )

FINANCING ACTIVITIES

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

Debt issuance costs — — ( 1,075 )

Proceeds from issuance of Class A common stock to SSE Holdings upon settlement of equity awards 27,618 11,731 7,619

1 unchanged sentence

NET CASH PROVIDED BY FINANCING ACTIVITIES 29,238 12,475 8,043

DECREASE IN CASH ( 480 ) ( 669 ) ( 1,648 )

Effect of exchange rate changes on cash and cash equivalents

2 ( 3 ) ( 1 )

INCREASE (DECREASE) IN CASH 2,599 ( 480 ) ( 669 )

CASH AT BEGINNING OF PERIOD 6,672 7,152 7,821

22 unchanged sentences

The following table presents amounts in the Parent Company's Condensed Balance Sheets that were eliminated in consolidation:

(As Restated)

2024 December 27

4 unchanged sentences

Due to SSE Holdings 32,482 22,027

Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 247,734 and $ 235,613 , respectively as of December 25, 2024 and December 27, 2023.

Shake Shack Inc.

Form 10-K | 117

Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 235,613 and $ 234,893 , respectively as of December 27, 2023 and December 28, 2022.

The following table presents amounts in the Parent Company's Condensed Statements of Income (Loss) that were eliminated in consolidation:

(As Restated) (As Restated)

2024 2023 2022

4 unchanged sentences

7,466 3,715 ( 769 )

RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED FINANCIAL STATEMENTS

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

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

Refer to Note 3, Restatement of Previously Issued Consolidated Financial Statements, to the Company's Consolidated Financial Statements included in Part II, Item 8, for additional information.

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

December 28, 2022 December 29, 2021

CORRECTED CONDENSED BALANCE SHEETS

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

Deferred income taxes, net $ 307,025 $ 17,088 $ 324,113 $ 304,442 $ 14,205 $ 318,647

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

Retained earnings (accumulated deficit)

( 41,808 ) 17,050 ( 24,758 ) ( 15,674 ) 14,188 ( 1,486 )

December 28, 2022 December 29, 2021

CORRECTED CONDENSED STATEMENTS OF LOSS

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

Income tax benefit

$ ( 2,921 ) $ ( 2,862 ) $ ( 5,783 ) $ ( 17,583 ) $ ( 4,094 ) $ ( 21,677 )

( 26,134 ) 2,862 ( 23,272 ) ( 27,883 ) 4,094 ( 23,789 )

Shake Shack Inc.

Form 10-K | 133

December 28, 2022 December 29, 2021

CORRECTED CONDENSED STATEMENTS OF CASH FLOWS

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

Net income (loss)

$ ( 26,134 ) $ 2,862 $ ( 23,272 ) $ ( 27,883 ) $ 4,094 $ ( 23,789 )

Deferred income taxes ( 4,126 ) ( 1,657 ) ( 5,783 ) ( 17,583 ) ( 4,094 ) ( 21,677 )

Accrued expenses (1)

1,101 ( 1,205 ) ( 104 ) 118 — 118

Net cash used in Operating activities

( 1,093 ) — ( 1,093 ) ( 7,213 ) — ( 7,213 )

(1) The prior impact of adjustments have been updated to conform with the current year presentation.

These updates are not a part of the restatements above.

All referenced amounts for prior periods in this Schedule I and the notes herein reflect the balances and amounts on a restated basis.

NOTE RECEIVABLE FROM SSE HOLDINGS

15 unchanged sentences

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

Refer to Note 9, Debt, in the Company's Consolidated Financial Statements, included in Part II, Item 8, for additional information relating to the Convertible Notes.

Refer to Note 8, Debt, in the accompanying Consolidated Financial Statements, for additional information.

COMMITMENTS AND CONTINGENCIES

On February 4, 2015, the Parent Company entered into a tax receivable agreement with the non-controlling interest holders that provides for payments to the non-controlling interest holders of 85 % of the amount of any tax benefits that the Parent Company actually realizes, or in some cases is deemed to realize, as a result of certain transactions.

Refer to Note 15, Income Taxes, to the Company's Consolidated Financial Statements included in Part II, Item 8, for additional information relating to the Parent Company's Tax Receivable Agreement.

As described in Note 18, Commitments and Contingencies, to the Company's Consolidated Financial Statements, amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income of Shake Shack Inc.

over the term of the Tax Receivable Agreement and (ii) future

Refer to Note 14, Income Taxes,in the accompanying Consolidated Financial Statements, for additional information relating to the Parent Company's Tax Receivable Agreement.

As described in Note 14, Income Taxes, in the accompanying Consolidated Financial Statements, the Company is obligated to pay the non-controlling interest holders 85 % of any tax benefits that the Company may actually realize, or deemed to realize, from (i) increases in the Company's share of the tax basis of SSE Holdings due to redemptions or exchanges of LLC Interests, (ii) tax basis increases resulting from payments made under the Tax Receivable Agreement, and (iii) deductions from imputed interest under the agreement (the "TRA Payments").

As of December 25, 2024 and December 27, 2023, liabilities under the Tax Receivable Agreement totaled $ 247,734 and $ 235,613 , respectively.

Shake Shack Inc.

Form 10-K | 118

changes in tax laws.

As of December 27, 2023 and December 28, 2022, liabilities under the tax receivable agreement totaled $ 235,613 and $ 234,893 , respectively.

SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information:

(As Restated)

2024 2023 2022

10 unchanged sentences

Valuation and Qualifying Accounts

Balance at beginning of period Additions Reductions Balance at end of period

Balance at beginning of period Additions Balance at end of period

(in thousands) Charged to costs and expenses Charged to other accounts

Deferred tax asset valuation allowance:

Fiscal year ended December 29, 2021 (As Restated) $ 2,656 $ ( 6,063 ) $ 8,580 $ — $ 5,173

Fiscal year ended December 28, 2022 (As Restated) $ 5,173 $ 4,955 $ ( 568 ) (1) $ — $ 9,560

Fiscal year ended December 28, 2022 $ 5,173 $ 4,955 $ ( 568 ) (1) $ 9,560

Fiscal year ended December 27, 2023 $ 9,560 $ ( 9,203 ) $ — $ 357

Fiscal year ended December 25, 2024 $ 357 $ ( 97 ) $ — $ 260

(1) Amount relates to a valuation allowance established on deferred tax assets related to our investment in SSE Holdings.

3 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data