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▪ New Shacks, once opened, may not be profitable, and may negatively affect Shack sales at our existing Shacks.
−Removed: ▪ Our investments to enhance the guest experience through expanding the availability of our drive-thru options has required and will continue to require significant capital expenditures and may not generate the expected returns.
−Removed: ▪ If we are unable to maintain and grow Shack sales at our existing Shacks, our financial performance could be adversely affected.
+Added: ▪ Our marketing strategies and channels will evolve and our programs may not be successful.
▪ Our purpose to Stand For Something Good subjects us to risks.
1 unchanged sentence
If our suppliers or distributor are unable to fulfill their obligations under our arrangements with them, we could encounter supply shortages and incur higher costs.
−Removed: ▪ Our marketing strategies and channels will evolve and our programs may or may not be successful.
▪ We rely on a limited number of licensees for the operation of our licensed Shacks, and we have limited control with respect to the operations of our licensed Shacks, which could have a negative impact on our reputation and business.
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▪ Increased food commodity and energy costs could decrease our Restaurant-level profit margins or cause us to limit or otherwise modify our menu, which could adversely affect our business.
−Removed: ▪ The digital and delivery business, related expenses, execution and expansion thereof, is uncertain and subject to risk.
+Added: ▪ The digital and delivery strategy, related expenses, execution and expansion thereof, is uncertain and subject to risk.
▪ We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected.
−Removed: ▪ Shortages or interruptions in the supply or delivery of food products could adversely affect our operating results.
−Removed: ▪ Inflationary environment poses a risk to broader demand for restaurants, including ours.
▪ Pandemics or disease outbreaks, such as the COVID-19 pandemic, have disrupted, and may continue to disrupt our business, and have materially affected our business, results of operations and our financial condition.
2 unchanged sentences
▪ We are subject to risks associated with leasing property subject to long-term leases.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 18
▪ The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results.
1 unchanged sentence
▪ Our business is subject to risks related to our sale of alcoholic beverages.
+Added: Shake Shack Inc.
+Added: Form 10-K | 13
General Business and Economic Risks
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▪ Because a component of our strategy is to continue to grow our licensed business internationally, the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.
+Added: ▪ Our stock price could be extremely volatile, and, as a result, stockholders may not be able to resell shares at or above their purchase price.
▪ We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brand and adversely affect our business.
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Regulatory and Legal Risks
−Removed: ▪ We may be unable to develop and maintain effective internal controls over financial reporting.
▪ We are subject to many federal, state, local and foreign laws and regulations, as well as other statutory and regulatory requirements, with which compliance is both costly and complex.
Failure to comply with, or changes in these laws or requirements, could have an adverse impact on our business.
+Added: ▪ If we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial information or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could be impaired, which could have a material adverse effect on our business and stock price.
▪ Our ability to use our net operating loss carryforwards may be subject to limitation.
3 unchanged sentences
▪ Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the non-controlling interest holders that will not benefit Class A common stockholders to the same extent as it will benefit the non-controlling interest holders.
−Removed: ▪ The non-controlling interest holders have the right to have their LLC Interests redeemed or exchanged into shares of Class A common stock, which may cause volatility in our stock price.
▪ We will continue to incur relatively outsized costs as a result of being a public company and in the administration of our complex organizational structure.
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▪ We will not be reimbursed for any payments made to the non-controlling interest holders under the Tax Receivable Agreement in the event that any tax benefits are disallowed.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 19
Risks Related to Our Convertible Notes
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▪ The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
+Added: Shake Shack Inc.
+Added: Form 10-K | 14
▪ Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our Class A common stock.
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This will include developing new prototypes and standards throughout our future Shack classes, as well as our continued focus on increasing our licensed Shack presence, both domestically and abroad.
−Removed: ▪ Enhancing our guest experience and optimizing our Shack operations to increase guest frequency and drive greater sales.
−Removed: ▪ Menu innovation, with a focus on LTOs and collaborations which may lead to the expansion of existing menu items.
+Added: ▪ Grow same-Shack sales, which represents the change in year-over-year revenues for Company-operated Shacks open for 24 full months or longer.
+Added: ▪ Enhancing our guest experience and optimizing our Shack operations to increase guest frequency and drive greater sales and profitability.
+Added: ▪ Menu innovation, with a focus on LTOs to increase guest frequency.
We may experience challenges in achieving the goals we have set and we may be unsuccessful in executing our strategies once identified and we will be required to make significant capital expenditures to pursue these goals.
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▪ difficulty negotiating suitable lease terms;
−Removed: ▪ shortages of construction labor, materials, and restaurant equipment;
+Added: ▪ shortages of construction labor, materials, or restaurant equipment;
▪ recruitment and training of qualified personnel in the local market;
▪ our ability to obtain all required governmental permits in a timely manner, including zoning approvals;
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 20
▪ our ability to control construction and development costs of new Shacks, particularly in inflationary environments and including the impacts of tariffs or the responses of other governments, consumers or suppliers to U.S.
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▪ competition in new markets, including competition for appropriate sites;
−Removed: ▪ the risk of opening too many Shacks in a particular location, or in too close proximity;
+Added: Shake Shack Inc.
+Added: Form 10-K | 15
▪ failure of the landlords to timely deliver real estate to us and other landlord delays;
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Accordingly, we cannot assure you that we will be able to successfully expand as we may not correctly analyze the suitability of a location or anticipate all of the challenges imposed by expanding our operations.
−Removed: In fiscal 2024, we closed nine underperforming Company-operated Shacks, and, if we identify other underperforming Shacks in the future, we may be required to close additional Shacks.
+Added: We have closed underperforming Company-operated Shacks, and, if we identify other underperforming Shacks in the future, we may choose to close them, as a result.
Our growth strategy, and the substantial investment associated with the development of each new Company-operated Shack, may cause our operating results to fluctuate and be unpredictable or adversely affect our profits.
−Removed: In addition, as has happened when other restaurant concepts have tried to expand, we may find that our concept has limited appeal in new markets or we may experience a decline in the popularity of our concept in the markets in which we operate.
+Added: In addition, we may find that our concept has limited appeal in new markets or we may experience a decline in the popularity of our concept in the markets in which we operate.
If we are unable to expand in existing markets or penetrate new markets, our ability to increase our revenues and profitability may be materially harmed or we may face losses.
Our plans to open new Shacks, the ongoing need for capital expenditures at our existing Shacks and our ongoing digital enhancements require us to spend capital.
−Removed: Our growth strategy depends on opening new Shacks and continuing our digital evolution, which will require us to use cash flows from operations.
+Added: Our growth strategy depends on opening new Shacks in various formats and continuing our digital evolution, which will require us to use cash flows from operations.
+Added: Our drive-thru formats are larger than our traditional Shacks, which can result in higher real estate costs and require additional infrastructure and construction costs.
We cannot assure that cash flows from operations will be sufficient to allow us to implement our growth strategy.
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As a result, these new Shacks may be less successful or may achieve target Restaurant-level profit margins at a slower rate, if ever.
+Added: If we identify these Shacks as underperforming, we may choose to close them, as a result.
If we do not successfully execute our plans to enter new markets, our business, financial condition or results of operations could be adversely affected.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 21
−Removed: During fiscal 2024, we closed 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.
−Removed: If other Shacks are identified as non-performing, we may be required to close additional Shacks.
Our failure to manage our growth effectively could harm our business and operating results.
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Our existing personnel, management systems, financial and management controls and information systems may not be adequate to support our planned expansion.
−Removed: Our ability to manage our growth effectively will require us to continue to enhance these systems, procedures and controls and to locate, hire, train and retain management and operating personnel, particularly in new markets.
+Added: Our ability to manage
+Added: Shake Shack Inc.
+Added: Form 10-K | 16
+Added: our growth effectively will require us to continue to enhance these systems, procedures and controls, and to locate, hire, train and retain management and operating personnel, particularly in new markets.
We may not be able to respond on a timely basis to all of the changing demands that our planned expansion will impose on management and on our existing infrastructure, or be able to hire or retain the necessary management and operating personnel, which could harm our business, financial condition or results of operations.
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Although we have specific target operating and financial metrics, new Shacks may not meet these targets or may take longer than anticipated to do so.
+Added: If we identify these new Shacks as underperforming, we may choose to close them, as a result.
Any new Shacks we open may not be profitable or achieve operating results similar to those of our existing Shacks, which could adversely affect our business, financial condition and results of operations.
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Cannibalization of Shack sales among our Shacks may become significant in the future as we continue to expand our operations and could adversely affect our Shack sales growth, which could, in turn, adversely affect our business, financial condition and results of operations.
−Removed: Our investments to enhance the guest experience through expanding the availability of our drive-thru options has required and will continue to require significant capital expenditures and may not generate the expected returns.
−Removed: Our expansion strategies include opening new drive-thru Shacks at desirable locations which will require significant capital expenditures.
−Removed: Our drive-thru formats are larger than our traditional Shacks, which can result in higher real estate costs, and require additional infrastructure and construction costs.
−Removed: If our drive-thru initiatives are not well executed, or if we do not realize the intended benefits of these significant investments, our business results may suffer.
−Removed: If we are unable to maintain and grow Shack sales at our existing Shacks, our financial performance could be adversely affected.
−Removed: The level of same-Shack sales growth, which represents the change in year-over-year revenues for Company-operated Shacks open for 24 full months or longer, could affect our overall Shack sales growth.
−Removed: Our ability to increase same-Shack sales depends, in part, on our ability to successfully implement our initiatives to build Shack sales.
−Removed: It is possible such initiatives will not be
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 22
−Removed: successful, that we will not achieve our target same-Shack sales growth or that same-Shack sales growth could be negative, which may cause a decrease in Shack sales and profit growth that would adversely affect our business, financial condition or results of operations.
+Added: Our marketing strategies and channels will evolve and our programs may not be successful.
+Added: Shake Shack is a growing brand, and we incur costs and expend other resources in our marketing efforts to attract and retain guests.
+Added: Our strategy has historically included public relations, digital and social media, promotions, commercials on streaming platforms, and in-store messaging, which typically require less marketing spend as compared to traditional marketing programs.
+Added: As we continue to execute on our growth strategy, we expect to increase our investment in advertising and promotional activities, and may change our marketing model, including targeted marketing offers to unique guest segments and incentivizing and rewarding loyal guests.
+Added: Some of our marketing initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues.
+Added: Additionally, some of our competitors have greater financial resources, which enable them to spend significantly more on marketing and advertising than we are able to at this time.
+Added: Should our competitors increase spending on marketing and advertising or our marketing funds decrease for any reason, or should our advertising and promotions be less effective than those of our competitors, there could be a material adverse effect on our business, financial condition and results of operations.
Our purpose to Stand For Something Good subjects us to risks.
−Removed: Our purpose to Stand For Something Good is a significant part of our business strategy and who we are as a Company.
−Removed: It's our commitment to all that is good in the world and is a reflection of how we embrace our values both internally and externally.
−Removed: We pride ourselves on sourcing premium ingredients from like-minded producers — 100% all-natural proteins with no added hormones or antibiotics that are humanely raised and source verified.
+Added: We pride ourselves on sourcing premium ingredients from like-minded producers — 100% all-natural proteins with no added hormones that are humanely raised and source verified.
We are dedicated to using sustainable materials and equipment whenever possible, and distinctive furniture and fixtures that advance our sustainability initiatives, as well as being committed to achieving ethical and humane practices for the animals in our supply chain.
We also strive to be the best employer and a good citizen in each community we call home.
+Added: Shake Shack Inc.
+Added: Form 10-K | 17
We do, however, face many challenges in carrying out our purpose to Stand For Something Good.
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If we are unable to obtain a sufficient and consistent supply for our ingredients on a cost-effective basis, our food costs could increase or we may experience supply interruptions which could have an adverse effect on our operating margins.
−Removed: Additionally, some of our competitors have announced initiatives to offer better quality ingredients, such as antibiotic-free and fresh meat.
+Added: Additionally, some of our competitors have announced initiatives to offer better quality ingredients.
If this trend continues, it could further limit our supply for certain ingredients and we may lose our competitive advantage as it will be more difficult to differentiate ourselves.
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(iii) potato buns from two suppliers;
−Removed: (iv) custard base from four suppliers;
+Added: (iv) custard base from three suppliers;
(v) 'Shroom Burgers from one supplier;
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and (vii) ShackSauce from one supplier.
−Removed: Due to this concentration of suppliers, the cancellation of our supply arrangements with any one of these suppliers or the disruption, delay or inability of these suppliers to deliver these major products to our Shacks may materially and adversely affect our results of operations while we establish alternate distribution channels.
+Added: Due to this concentration of suppliers and our food quality expectations, the cancellation of our supply arrangements with any one of these suppliers or the disruption, delay or inability of these suppliers to deliver these major products to our Shacks may materially and adversely affect our results of operations while we establish alternate distribution channels.
In addition, if our suppliers fail to comply with food safety or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted.
We cannot assure you that we would be able to find replacement suppliers on commercially reasonable terms or a timely basis, if at all.
+Added: If there is a supply issue with all U.S.
+Added: raw beef, we have 23 approved raw beef suppliers and 14 approved beef processors in other countries.
+Added: The risks to using international suppliers are shipping lead time, shipping costs, potential import duties, and U.S.
+Added: customs delays.
+Added: Should there become a need to utilize international suppliers, it is unknown at this time how long it would take and at what cost imports would be, but the delay and cost would likely be adverse to our business.
+Added: Our burgers depend on the availability of our proprietary ground beef blend.
+Added: Availability of our blend depends on two different components:
+Added: raw material supplied by the slaughterhouses and ground and formed beef patties supplied by regional processors who further process and convert whole muscle purchased from the slaughterhouses.
+Added: The primary risk we face is with our regional processors.
+Added: If there is an interruption of operation at any one of our regional processor's facilities, we face an immediate risk because each Shack typically has less than three days of beef patty inventory on hand.
+Added: However, we have agreements with our regional processors to provide an alternate back-up supply in the event of a disruption of operations at one of our beef processors through our broadline distributor's network, but there would be a delay in availability due to production and shipping.
+Added: We contract with one distributor, which we refer to as our "broadline" distributor, to provide virtually all of our food distribution services in the United States.
+Added: As of December 31, 2025, approximately 95% of certain food and beverage ingredients, including
Shake Shack Inc.
Form 10-K | 18
−Removed: We contract with one distributor, which we refer to as our "broadline" distributor, to provide virtually all of our food distribution services in the United States.
−Removed: As of December 25, 2024, approximately 95% of certain food and beverage ingredients, including chicken, fries and custard, collectively representing 45% of our purchases, were processed through our broadline distributor for distribution and delivery to each Shack.
+Added: chicken, fries, and custard, collectively representing approximately 42% of our purchases, were processed through our broadline distributor for distribution and delivery to each Shack.
As of December 31, 2025, we utilized 20 affiliated distribution centers and each distribution center carries two to three weeks of inventory for our core ingredients.
In the event of a catastrophe, such as a fire, our broadline distributor can supply the Shacks affected by their respective distribution center from another affiliated distribution center.
−Removed: If a catastrophe were to occur at the distribution center that services the Shacks located in New York and northern New Jersey, we would be at immediate risk of product shortages because that distribution center supplies our domestic licensed Shacks as well as approximately 20% of our Company-operated Shacks as of December 25, 2024, which collectively represented 24% of our Shack sales for fiscal 2024.
−Removed: The other 19 distribution centers collectively supply the other 80% of our Company-operated Shacks, which represented the remaining 76% of our Shack sales.
+Added: If a catastrophe were to occur at the distribution centers that service the Shacks located in New York and northern New Jersey, or California, we would be at immediate risk of product shortages because these distribution centers supply approximately 21% of our Company-operated Shacks as of December 31, 2025.
Although we believe that alternative supply and distribution sources are available, there can be no assurance that we will continue to be able to identify or negotiate with such sources on terms that are commercially reasonable to us.
If our suppliers or distributors are unable to fulfill their obligations under their contracts or we are unable to identify alternative sources, we could encounter supply shortages and incur higher costs, each of which could have a material adverse effect on our results of operations.
−Removed: Our marketing strategies and channels will evolve and our programs may or may not be successful.
−Removed: Shake Shack is a growing brand, and we incur costs and expend other resources in our marketing efforts to attract and retain guests.
−Removed: Our strategy primarily includes public relations, digital and social media, promotions, commercials on streaming platforms, and in-store messaging, which typically require less marketing spend as compared to traditional marketing programs.
−Removed: As the number of Shacks increases, and as we expand into new markets, we expect to increase our investment in advertising and promotional activities, including targeted marketing offers to unique guest segments and incentivizing and rewarding loyal guests.
−Removed: We rely heavily on social media for many of our marketing efforts.
−Removed: If consumer sentiment towards social media changes or a new medium of communication becomes more mainstream, we may be required to fundamentally change our current marketing strategies which could require us to incur significantly more costs.
−Removed: Some of our marketing initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues.
−Removed: Additionally, some of our competitors have greater financial resources, which enable them to spend significantly more on marketing and advertising than we are able to at this time.
−Removed: Should our competitors increase spending on marketing and advertising or our marketing funds decrease for any reason, or should our advertising and promotions be less effective than those of our competitors, there could be a material adverse effect on our business, financial condition and results of operations.
−Removed: Additionally, we face additional expenses as it relates to our digital business which can vary over time and may impact our overall profitability.
We rely on a limited number of licensees for the operation of our licensed Shacks, and we have limited control with respect to the operations of our licensed Shacks, which could have a negative impact on our reputation and business.
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However, since we do not have day-to-day control over these Shacks, we cannot give assurance that there will not be differences in product and service quality, operations, labor law enforcement, marketing or that there will be adherence to all of our guidelines and applicable laws at these Shacks.
−Removed: In addition, if our licensees fail to make investments necessary to maintain or improve their Shacks, guest preference for the Shake
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 24
−Removed: Shack brand could suffer.
+Added: In addition, if our licensees fail to make investments necessary to maintain or upgrade their Shacks, guest preference for the Shake Shack brand could suffer.
Failure of these Shacks to operate effectively could adversely affect the results of operations from our licensed business or have a negative impact on our reputation.
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We take great pride in our culture and believe that it is an extremely important factor in our success.
−Removed: We believe that our culture of Enlightened Hospitality and our purpose to Stand For Something Good creates a truly differentiated experience for our guests and is one of the reasons guests choose to dine with us and team members choose us as a place of employment.
+Added: We believe that our purpose to Stand For Something Good creates a truly differentiated experience for our guests and is one of the reasons guests choose to
+Added: Shake Shack Inc.
+Added: Form 10-K | 19
+Added: dine with us and team members choose us as a place of employment.
If we are unable to maintain our culture, especially as we continue to rapidly grow and expand in new markets, our reputation may be damaged, we may lose the trust of our guests, team member morale may be diminished, and we may experience difficulty recruiting and retaining qualified team members.
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Regardless of the source or cause, any report of food-borne illnesses or food safety issues, whether or not accurate, at one or more of our Shacks, including Shacks operated by our licensees, could adversely affect our brand and reputation, which in turn could result in reduced guest traffic and lower sales.
−Removed: Additionally, we believe that, because our purpose to Stand For Something Good promotes the use of premium ingredients, our guests have high expectations of us and we could be more severely affected by incidents of food-borne illnesses or food safety issues than some of our competitors who do not promote such standards.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 25
−Removed: may also have a more difficult time recovering from a food-borne illness incident and may be required to incur significant costs to repair our reputation.
+Added: We may also have a difficult time recovering from a food-borne illness incident and may be required to incur significant costs to repair our reputation.
If any of our guests become ill from food-borne illnesses, we could be forced to temporarily close one or more Shacks, or choose to close as a preventative measure, if we suspect there was a pathogen in our Shacks.
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As our culture remains an important factor to our success, it in part depends on our ability to recruit, develop and reward high performing teams with a sufficient number of qualified managers and team members to meet the needs of our existing Shacks and to staff new Shacks.
−Removed: We aim to hire talented people who have integrity, who are warm, motivated, self-aware, intellectually curious, and possess the competencies and skills to continue to foster our growth.
We value people who are excited and committed to high performance, remarkable and enriching hospitality, embodying our culture, and actively growing themselves and the brand.
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Such increases have and may continue to cause an increase to our labor and related expenses and cause our Restaurant-level profit margins to decline.
−Removed: In the event there are additional minimum wage increases, rises in team member turnover or other legislation related to team member benefits are enacted or changed, such as the Affordable Care Act, we may be required to implement additional pay increases or provide additional benefits in the future in order to continue to build teams with the most qualified people, which may put further pressure on our operating margins by increasing costs.
−Removed: Overall, we expect wages at all levels to continue to increase in the near term and we expect these rising wages to add pressure to our operating profit.
+Added: Shake Shack Inc.
+Added: Form 10-K | 20
In addition to the expected increased costs of labor, if we are unable to identify and recruit a sufficient number of individuals to meet our growing needs, we may need to decrease the operating hours of some of our Shacks, which would result in lost sales.
We place a heavy emphasis on the qualification and training of our team members and spend a significant amount of time and money training our team members.
−Removed: Any inability to recruit and retain qualified individuals may result in higher turnover and increased labor costs, and could compromise the quality of our service, all of which could adversely affect our business.
−Removed: Any such inability could also delay the planned openings of new Shacks and could adversely impact our existing Shacks.
−Removed: Such increased costs of attracting qualified team members or delays in Shack openings could adversely affect our business, financial condition and results of operations.
+Added: Any inability to recruit and retain qualified individuals may result in higher turnover, increased labor costs, and delays in planned openings of new Shacks, which could compromise the quality of our service and could adversely affect our business, financial condition, and results of operations.
Increased food commodity and energy costs could decrease our Restaurant-level profit margins or cause us to limit or otherwise modify our menu, which could adversely affect our business.
Our profitability depends, in part, on our ability to anticipate and react to changes in the price and availability of food commodities, including among other things beef, poultry, fries, grains, dairy, and produce.
−Removed: Prices may be affected due to market
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 26
−Removed: changes, increased competition, the general risk of inflation, the impacts of tariffs or the responses of other governments, consumers or suppliers to U.S.
+Added: Prices may be affected due to market changes, increased competition, the impacts of tariffs or the responses of other governments consumers or suppliers to U.S.
imposed tariffs, shortages or interruptions in supply due to weather, disease or other conditions beyond our control, or other reasons.
−Removed: For example, the current avian flu has impacts on the costs of poultry and eggs.
+Added: Additionally, we are heavily impacted by inflation across our basket with the largest impact on our cost of beef.
+Added: As of December 2025, the U.S.
+Added: Bureau of Labor and Statistics reported increases in year-on-year inflation of 4.1% in the Food Away From Home index and 3.3% in the Limited-Service Meals index.
Other events, including events for products we do not serve, could increase commodity prices or cause shortages that could affect the cost and quality of the items we buy or require us to further raise prices or limit our menu items.
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There can be no assurance that future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by our guests without any resulting change to their visit frequencies or purchasing patterns.
−Removed: In addition, there can be no assurance that we will generate same-Shack sales growth in an amount sufficient to offset inflationary or other cost pressures.
We may decide to enter into certain forward pricing arrangements with our suppliers, which could result in fixed or formula-based pricing with respect to certain food products.
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Our profitability is also adversely affected by increases in the price of utilities, such as natural gas, electric, and water, whether as a result of inflation, shortages or interruptions in supply, or otherwise.
−Removed: Our ability to respond to increased costs by increasing prices or by implementing alternative processes or products will depend on our ability to anticipate and react to such increases and other more general economic and demographic conditions, as well as the responses of our competitors and guests.
+Added: Our ability to respond to increased costs by increasing menu prices or by implementing alternative processes or products will depend on our ability to anticipate and react to such increases and other more general economic and demographic conditions, as well as the responses of our competitors and guests.
All of these things may be difficult to predict and beyond our control.
2 unchanged sentences
Shortened windows of certainty can impact our ability to plan our business from a supply and profitability perspective and we face greater risk of margin volatility.
−Removed: The digital and delivery business, related expenses, execution and expansion thereof, is uncertain and subject to risk.
+Added: The digital and delivery strategy, related expenses, execution and expansion thereof, is uncertain and subject to risk.
We continue to execute upon our digital strategy, including the continued integration of our data platforms enabling segmentation and targeted marketing strategies.
1 unchanged sentence
As the digital space around us continues to evolve, our technology needs to evolve concurrently to stay competitive with the industry.
−Removed: If we do not maintain and innovate our digital systems that are competitive with the industry, and as we face execution risks around upgrades of existing and new digital platforms, our digital business may be adversely affected and could damage our sales as well as profitability.
+Added: If we do not maintain and
+Added: Shake Shack Inc.
+Added: Form 10-K | 21
+Added: innovate our digital systems that are competitive with the industry, and as we face execution risks around upgrades of existing and new digital platforms, our digital business may be adversely affected, which could damage our financial condition, and results of operations.
We rely on third-party service providers for our ordering and payment platforms relating to our mobile app and kiosks.
1 unchanged sentence
We also could see higher costs from our digital partners which we may not be able to fully offset by price.
−Removed: Information processed by these third parties could also be impacted by cyber attacks, which could not only negatively impact our sales, but also harm our brand image.
+Added: Information processed by these third parties could also be impacted by cyber attacks and guest credit card fraud, which could not only negatively impact our sales, but also harm our brand image.
Recognizing the option to provide delivery services throughout the restaurant industry, we understand the importance of providing such services to meet our guests wherever and whenever they want.
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We developed sealed packaging to provide some deterrence against such potential food tampering.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 27
We are also subject to risk if there is a shortage of delivery drivers, which could result in a failure to meet our guests' expectations.
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We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected.
−Removed: The restaurant industry is intensely competitive with many well-established companies that compete directly and indirectly with us with respect to taste, menu, price, food quality, service, value, design and location.
+Added: The restaurant industry is intensely competitive with many well-established and new companies that compete directly and indirectly with us with respect to taste, menu, price, food quality, service, value, design, and location.
We compete in the restaurant industry with multi-unit national, regional and locally-owned and/or operated limited-service restaurants, and full-service restaurants.
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They may also operate more restaurants than we do and be able to take advantage of greater economies of scale than we can given our current size.
−Removed: Our competition continues to intensify as new competitors enter the burger, fast casual, quick service and casual dining segments.
−Removed: Many of our competitors emphasize low cost "value meal" menu items or other programs that provide price discounts on their menu items, a strategy we are currently testing.
−Removed: We also face increasing competitive pressures from some of our competitors who have announced initiatives to offer better quality ingredients, such as antibiotic-free meat.
+Added: Many of our competitors emphasize low cost "value meal" menu items or other programs that provide price discounts on their menu items.
+Added: From time to time, we may run value offers and promotions that may not be as successful as our competitors.
+Added: We also face increasing competitive pressures from some of our competitors who have announced initiatives to offer better quality ingredients.
Changes in consumer tastes, nutritional and dietary trends, traffic patterns and the type, number, and location of competing restaurants often affect the restaurant business.
−Removed: Our sales could be impacted by changes in consumer preferences in response to dietary concerns, including preferences regarding items such as calories, sodium, carbohydrates or fat.
+Added: Our sales could be impacted by changes in consumer preferences in response
+Added: Shake Shack Inc.
+Added: Form 10-K | 22
+Added: to dietary considerations, including the use of semaglutides or preferences regarding items such as calories, sodium, carbohydrates or fat.
Our competitors may react more efficiently and effectively to these changes than we can.
We cannot make any assurances regarding our ability to effectively respond to changes in consumer health perceptions or our ability to adapt our menu items to trends in eating habits.
−Removed: Additionally, as we continue to expand upon our digital strategy and offer more ways to reach our guests through digital channels, such as the app, web ordering and delivery, we compete with other competitors who currently, or are beginning to, offer the same options as well as new and improved technologies.
−Removed: With these digital channels, there is also an increased opportunity for guest credit card fraud to occur, which may have a negative impact on guest traffic and our reputation temporarily.
Our continued success depends, in part, on the continued popularity of our menu and the experience we offer guests at our Shacks.
If we are unable to continue to compete effectively on any of the factors mentioned above, our traffic, Shack sales and Restaurant-level profit margins could decline and our business, financial condition and results of operations would be adversely affected.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 28
−Removed: Shortages or interruptions in the supply or delivery of food products could adversely affect our operating results.
−Removed: We are dependent on frequent deliveries of food products that meet our exact specifications.
−Removed: Shortages or interruptions in the supply of food products caused by problems in production or distribution, inclement weather, unanticipated demand or other conditions could adversely affect the availability, quality and cost of ingredients, which would adversely affect our operating results.
−Removed: Our burgers depend on the availability of our proprietary ground beef blend.
−Removed: Availability of our blend depends on two different components:
−Removed: raw material supplied by the slaughterhouses and ground and formed beef patties supplied by regional processors who further process and convert whole muscle purchased from the slaughterhouses.
−Removed: The primary risk we face is with our regional processors.
−Removed: If there is an interruption of operation at any one of our regional processor's facilities, we face an immediate risk because each Shack typically has less than three days of beef patty inventory on hand.
−Removed: However, we have agreements with our regional processors to provide an alternate back-up supply in the event of a disruption in their operations.
−Removed: In addition, our second largest regional processor can, in an emergency, supply us in the event of a disruption of operations at one of our beef processors through our broadline distributor's network, but there would be a delay in availability due to production and shipping.
−Removed: As of December 25, 2024, we have nine approved raw beef suppliers and nine approved beef processors in the U.S.
−Removed: If there is a supply issue with all U.S.
−Removed: raw beef, we have 21 approved raw beef suppliers and 13 approved beef processors in other countries.
−Removed: The risks to using international suppliers are shipping lead time, shipping costs, potential import duties and U.S.
−Removed: customs delays.
−Removed: Should there become a need to utilize international suppliers, it is unknown at this time how long it would take and at what cost imports would be, but the delay and cost would likely be adverse to our business.
−Removed: Inflationary environment poses a risk to broader demand for restaurants, including ours.
−Removed: Our continued success depends on our guests' ability and willingness to pay for rising menu prices across our channels.
−Removed: The restaurant industry broadly has faced widespread inflation in recent years, and is likely to continue to face inflationary pressures for the foreseeable future.
−Removed: In a bid to help offset these additional cost pressures, many restaurants have raised menu prices as well as charge a premium price through third-party delivery channels.
−Removed: There is risk that guests may not absorb our price increases, resulting in changes to their visit frequencies or purchasing patterns.
−Removed: As of December 2024 and December 2023, the U.S.
−Removed: Bureau of Labor and Statistics reported increases in year-on-year inflation of 3.6% and 5.2%, respectively in the Food Away From Home index and 3.7% and 5.9%, respectively in the Limited-Service Meals index.
Pandemics or disease outbreaks, such as the COVID-19 pandemic, have disrupted, and may continue to disrupt our business, results of operations and our financial condition.
Disease outbreaks have historically posed significant challenges to public health and economic stability, with varying impacts depending on the nature of the disease and the responses undertaken.
−Removed: The COVID-19 pandemic, for instance, was officially declared a global pandemic by the World Health Organization in March 2020 and its emergency status ended in May 2023.
−Removed: Throughout the COVID-19 pandemic, state and local governments in the U.S.
−Removed: and throughout the world alternated between removing and easing certain restrictions and reintroducing restrictions on businesses, such as imposing curfews, restrictions on public gatherings, human interactions and restaurant operations, depending on the severity of local or regional outbreaks.
−Removed: Additionally, changes in behavior and routine may disrupt consumer activity and foot traffic in our Shacks, such as remote and hybrid work practices.
+Added: For example, changes in behavior and routine may disrupt consumer activity and foot traffic in our Shacks, such as remote and hybrid work practices.
The significance of the operational and financial impact on the Company would depend on how long and widespread any potential disruptions caused by an outbreak may be, and the corresponding response to contain the viruses and treat those affected by it prove to be.
Further, uncertain or changing economic and market conditions, including prolonged periods of high unemployment, staffing issues, inflation or deflation, prolonged weak consumer demand or a decrease in consumer discretionary spending, or political or other changes resulting from pandemics or other factors could continue to impact our business, sales and operating results.
−Removed: Viruses such as COVID-19 may be transmitted through human contact and airborne delivery, and the risk of contracting viruses could cause team members or guests to avoid gathering in public places.
−Removed: Additionally, government authorities, from time to time, may impose curfews, restrictions on public gatherings, human interactions and restaurant operations which may impact our
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 29
−Removed: ability to offer all sales channels at all Shacks.
−Removed: These restrictions and changing travel patterns may adversely affect our guest traffic and the ability to adequately staff our Shacks.
Additionally, if a significant percentage of our workforce or the workforce of our business partners may be unable to work due to reasons including illness or travel restrictions in connection with pandemics or disease outbreaks, our operations may be negatively impacted, which could have a material adverse effect on our business, financial condition and results of operations.
11 unchanged sentences
We do not own any real property and all of our Company-operated Shacks are located on leased premises.
−Removed: The leases for our Shacks generally have initial terms ranging from 10 to 15 years and typically include two five-year renewal options.
+Added: The leases for our Shacks generally have initial terms ranging from ten to fifteen years and typically include two five-year renewal options.
+Added: Shake Shack Inc.
+Added: Form 10-K | 23
Generally, our leases are net leases that require us to pay our share of the costs of real estate taxes, utilities, building operating expenses, insurance and other charges in addition to rent.
9 unchanged sentences
We have experienced pressure to make commitments relating to sustainability matters that affect companies in our industry, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability and the environment.
−Removed: If we are not effective in addressing environmental,
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 30
−Removed: sustainability and social matters affecting our industry and meeting evolving stakeholder expectations, our brand image may suffer, which could lead to a loss of sales.
+Added: If we are not effective in addressing environmental, sustainability and social matters affecting our industry and meeting evolving stakeholder expectations, our brand image may suffer, which could lead to a loss of sales.
Certain investors may choose not to invest in our securities if we do not meet their relevant ESG expectations, which may continue to evolve over time.
−Removed: In addition, in recent years, "anti-ESG" sentiment has gained momentum across the U.S., with several states and Congress having proposed or enacted "anti-ESG" policies, legislation, or initiatives, and the President having recently issued an executive order opposing diversity and inclusion ("DEI") initiatives in the private sector.
−Removed: Institutional investors and proxy advisory firms have also updated their guidelines and expectations with respect to ESG and DEI initiatives.
−Removed: Such anti-ESG and anti-DEI-related policies, legislation, initiatives, litigation, and scrutiny could result in us facing additional compliance obligations, becoming the subject of investigations and enforcement actions, or sustaining reputational harm.
+Added: Anti-ESG and anti-DEI-related policies, legislation, initiatives, litigation, and scrutiny could result in us facing additional compliance obligations, becoming the subject of investigations and enforcement actions, or sustaining reputational harm.
We may also experience increased costs in order to execute upon our ESG strategy or to revise our ESG strategy to meet evolving expectations and the regulatory environment, and our ability to achieve any stated objective is subject to numerous factors and conditions, many of which are outside of our control.
10 unchanged sentences
We are also subject to a variety of other claims from third parties arising in the ordinary course of our business, including contract claims.
−Removed: The restaurant industry has also been subject to claims that the menus and actions of restaurant chains have led to the obesity of certain of their guests.
+Added: Shake Shack Inc.
+Added: Form 10-K | 24
Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations.
7 unchanged sentences
Any future failure to comply with these regulations and obtain or retain licenses could adversely affect our business, financial condition and results of operations.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 31
We are also subject in certain states to "dram shop" statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.
19 unchanged sentences
▪ government or industry findings concerning our Shacks, restaurants operated by other food service providers or others across the food industry supply chain.
+Added: Shake Shack Inc.
+Added: Form 10-K | 25
Additionally, the use of social media platforms and similar devices provide individuals with access to a broad audience of consumers and other interested persons.
6 unchanged sentences
Ultimately, the risks associated with any such negative publicity or incorrect information cannot be completely eliminated or mitigated and may materially harm our reputation, business, financial condition and results of operations.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 32
Changes in economic conditions, both domestically and internationally, could materially affect our business, financial condition and results of operations.
1 unchanged sentence
These factors, as well as national, regional and local regulatory and economic conditions, gasoline prices, energy and other utility costs, conditions in the residential real estate and mortgage markets, health care costs, access to credit, disposable consumer income and consumer confidence, affect discretionary consumer spending.
−Removed: Furthermore, with some of our Shacks located in or near retail malls, general declines in mall traffic experienced by the retail industry over the last several years in general may negatively affect us.
In poor economic conditions, guest traffic could be adversely impacted if our guests choose to dine out less frequently or reduce the amount they spend on meals while dining out.
2 unchanged sentences
Because many of our Company-operated Shacks are concentrated in local or regional areas, we are susceptible to economic and other trends and developments, including adverse weather conditions, in these areas.
−Removed: Since our founding, we have built some of the industry's favorite community gathering places.
−Removed: As a result, much of our real estate footprint has been centered in urban, office, travel and dynamic traffic-driving sales environments.
−Removed: Our urban Shacks make up approximately 35% of our total Company-operated Shacks as of December 25, 2024.
−Removed: Additionally, our financial performance is highly dependent on Shacks located along both the East and West Coasts.
+Added: Our financial performance is highly dependent on Shacks located along both the East and West Coasts.
As a result, adverse economic conditions in any of these markets or regions could have a material adverse effect on our overall results of operations.
−Removed: In addition, given our geographic concentrations, negative publicity regarding any of our Shacks in these areas and other regional occurrences such as local strikes, terrorist attacks, increases in energy prices, inclement weather or natural or man-made disasters could have a material adverse effect on our business and operations.
+Added: In addition, given our geographic concentrations, negative publicity regarding any of our Shacks in these areas and other regional occurrences such as local strikes, terrorist attacks, increases in essential living costs, inclement weather or natural or man-made disasters could have a material adverse effect on our business and operations.
In particular, adverse weather conditions, such as regional winter storms, floods, severe thunderstorms and hurricanes, could negatively impact our results of operations.
8 unchanged sentences
Additionally, the techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time.
−Removed: While we continue to make significant investment in physical and technological security measures, team member training, and third-party services designed to anticipate cyber-attacks and prevent breaches, our information technology networks and infrastructure or those of our third-party vendors and other service providers could be vulnerable to damage, disruptions, shutdowns or breaches of confidential information due to criminal conduct, team member error or malfeasance, utility failures, natural disasters or other catastrophic events.
−Removed: Due to these scenarios we cannot provide assurance that we will be successful in preventing such breaches or data loss.
Shake Shack Inc.
Form 10-K | 26
+Added: addition, the rapid evolution and increased adoption of artificial intelligence technologies may also heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain, and mitigate.
+Added: While we continue to make significant investment in physical and technological security measures, team member training, and third-party services designed to anticipate cyber-attacks and prevent breaches, our information technology networks and infrastructure or those of our third-party vendors and other service providers could be vulnerable to damage, disruptions, shutdowns or breaches of confidential information due to criminal conduct, team member error or malfeasance, utility failures, natural disasters or other catastrophic events.
+Added: Due to these scenarios we cannot provide assurance that we will be successful in preventing such breaches or data loss.
Additionally, the information, security and privacy requirements imposed by governmental regulation are increasingly demanding.
4 unchanged sentences
If we are unable to maintain and update our information technology systems to meet the needs of our business, our business could be adversely impacted.
−Removed: We rely heavily on information systems, including point-of-sale processing in our Shacks, for management of our supply chain, accounting, payment of obligations, collection of cash, credit and debit card transactions, digital ordering and other processes and procedures.
+Added: We rely heavily on information technology systems, including point-of-sale processing in our Shacks, for management of our supply chain, accounting, payment of obligations, collection of cash, credit and debit card transactions, digital ordering and other processes and procedures.
As a rapidly growing business, our current information technology infrastructure may not be adequately suited to handle the increasing volume of data and additional information needs of our organization.
6 unchanged sentences
The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, expanding our systems as we grow or a breach in security of these systems could result in loss of sales, interruptions to or delays in our business and guest service and reduce efficiency in our operations.
−Removed: If our information technology systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, or if our business interruption insurance does not sufficiently compensate us for any losses that we may incur, our revenues and profits could be reduced and the reputation of our brand and our business could be materially adversely affected.
+Added: If our information technology systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, or if our business interruption insurance does not sufficiently compensate us for any losses that we may incur, our sales and profits could be reduced and the reputation of our brand and our business could be materially adversely affected.
In addition, remediation of such problems could result in significant, unplanned capital investments.
1 unchanged sentence
We may be adversely affected if any of our third-party service providers experience any interruptions in their systems, which could potentially impact the services we receive from them and cause a material failure or interruption in our own systems.
+Added: Shake Shack Inc.
+Added: Form 10-K | 27
Because a component of our strategy is to continue to grow our licensed business internationally, the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.
2 unchanged sentences
▪ changes in foreign currency exchange rates or currency restructurings and hyperinflation or deflation in the countries in which we operate;
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 34
▪ the imposition of restrictions on currency conversion or the transfer of funds or limitations on our ability to repatriate non-U.S.
16 unchanged sentences
Also, the economy of any region in which our Shacks are located may be adversely affected to a greater degree than that of other areas of the country or the world by certain developments affecting industries concentrated in that region or country.
−Removed: For example, a health outbreak, such as the COVID-19 pandemic, could slow traffic in the impacted regions and could result in a loss of sales.
Additionally, in the past, certain licensees have been negatively impacted by currency devaluation, and we have seen a reduction in licensing revenue from those respective Shacks.
1 unchanged sentence
As our international licensed operations increase, these risks will become more pronounced.
+Added: Our stock price could be extremely volatile, and, as a result, stockholders may not be able to resell shares at or above their purchase price.
+Added: In recent years the stock market in general has been highly volatile.
+Added: As a result, the market price and trading volume of our Class A common stock is likely to be similarly volatile, and investors in our Class A common stock may experience a decrease, which could be substantial, in value of their stock, including decreases unrelated to our results of operations or prospects, and could lose part or all of their investment.
+Added: The price of our Class A common stock has in the past, and in the future could be subject to wide fluctuations in response to a number of factors, including, but not limited to, actual or anticipated variations in our operating results or those of our competitors as compared to analyst expectations, the public's reaction to our press releases or other public announcements, the redemption of LLC interests by our non-controlling interest holders, or changes in the general market and economic conditions.
+Added: Shake Shack Inc.
+Added: Form 10-K | 28
We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brand and adversely affect our business.
−Removed: Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition using our trademarks, service marks, proprietary products and other intellectual property, including our name and logos and the unique character and atmosphere of our Shacks.
+Added: Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition in both domestic and international markets using our trademarks, service marks, proprietary products and other intellectual property, including our name and logos and the unique character and atmosphere of our Shacks.
We rely on U.S.
and foreign trademark, copyright, and trade secret laws, as well as license agreements, non-disclosure agreements, and confidentiality and other contractual provisions to protect our intellectual property.
−Removed: Nevertheless, our competitors may develop similar menu items and concepts, and adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and other intellectual property.
−Removed: The success of our business depends on our continued ability to use our existing trademarks and service marks to increase brand awareness and further develop our brand in both domestic and international markets.
−Removed: We have registered and applied to register trademarks and service marks in the United States and foreign jurisdictions.
−Removed: We may not be able to adequately protect our trademarks and service marks, and our competitors and others may successfully challenge the validity and/or enforceability of our trademarks and service marks and other intellectual property.
+Added: Nevertheless, our competitors may develop similar menu items and concepts, and they may challenge the validity and/or enforceability of our trademarks and service marks and other intellectual property.
+Added: Adequate remedies may not be available in the event of an unauthorized use or disclosure of our trademarks, service marks, trade secrets, and other intellectual property.
Additionally, we may be prohibited from entering into certain new markets due to restrictions surrounding competitors' trademarks.
−Removed: In addition, the laws of some foreign countries do not protect intellectual property to the same extent as the laws of the United States.
+Added: The laws of some foreign countries do not protect intellectual property to the same extent as the laws of the United States.
If our efforts to maintain and protect our intellectual property are inadequate, or if any third party misappropriates, dilutes or infringes on our intellectual property, the value of our brand may be harmed, which could have a material adverse effect on our business and might prevent our brand from achieving or maintaining market acceptance.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 35
We may also from time to time be required to institute litigation to enforce our trademarks, service marks and other intellectual property.
21 unchanged sentences
If a greater amount of claims are reported, or if medical costs increase beyond what we expect, our liabilities may not be sufficient and we could recognize additional expense, which could adversely affect our results of operations.
−Removed: REGULATORY AND LEGAL RISKS
−Removed: If we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial information or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could be impaired, which could have a material adverse effect on our business and stock price.
−Removed: As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), and the listing standards of the New York Stock Exchange.
−Removed: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
−Removed: It also requires management to perform an annual assessment of the effectiveness of our internal control over financial reporting and disclosure of any material weaknesses in such controls.
−Removed: We are required to have our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.
−Removed: As previously disclosed, we identified a material weakness in our internal control over financial reporting as of the end of our fiscal year ended December 27, 2023, in connection with management review internal controls over the calculation of state deferred taxes and the related income tax expense (benefit).
−Removed: Although we have remediated this material
Shake Shack Inc.
Form 10-K | 29
−Removed: weakness and concluded that our internal control over financial reporting was effective as of December 25, 2024, we can provide no assurance that the measures taken to remediate the material weakness identified in connection with the restatement will continue to be effective in the future.
−Removed: Moreover, additional material weaknesses or restatements of financial results may arise in the future due to a failure to implement and maintain adequate internal control over financial reporting as a result of circumvention of these controls.
−Removed: Any failure to remediate a material weakness, or to develop or maintain effective controls, or any difficulties encountered in the implementation or improvement of such controls, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods, such as the restatement of our previously issued consolidated financial statements described in more detail in this Annual Report on Form 10-K.
−Removed: Any failure to remediate a material weakness, or to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting that we are required to include in our periodic reports that will be filed with the SEC.
−Removed: In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
−Removed: In general, remediation measures may be time consuming and costly, and there is no assurance that any such initiatives will ultimately have the intended effects.
−Removed: Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.
−Removed: If our financial statements are not accurate, investors may not have a complete understanding of our operations.
−Removed: Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, or other potential claims or litigation.
−Removed: Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
−Removed: The SEC has adopted rules relating to cybersecurity which have required us to develop, implement and maintain effective controls with respect to these new obligations.
−Removed: In addition, California has approved climate change rules, including the requirement to provide a climate-related financial risk report, which will require effective internal controls.
−Removed: Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which may have a negative effect on the trading price of our Class A common stock.
−Removed: In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.
+Added: REGULATORY AND LEGAL RISKS
We are subject to many federal, state, local and foreign laws and regulations, as well as other statutory and regulatory requirements, with which compliance is both costly and complex.
6 unchanged sentences
Additionally, an unfavorable report on, or reaction to, our menu ingredients, the size of our portions or the nutritional content of our menu items could negatively influence the demand for our offerings.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 37
▪ Food safety regulations - There is a potential for increased regulation of certain food establishments in the United States, where compliance with a Hazard Analysis and Critical Control Points ("HACCP") approach may be required.
14 unchanged sentences
Further, if we enter into a new market with unionized construction companies, or the construction companies in our current markets become unionized, construction and build costs for new Shacks in such markets could materially increase.
+Added: Shake Shack Inc.
+Added: Form 10-K | 30
▪ The Affordable Care Act - We are required to provide affordable coverage to substantially all full-time employees, or otherwise be subject to potential excise tax penalties based on the affordability criteria in the Affordable Care Act.
4 unchanged sentences
The expenses associated with these modifications, or any damages, legal fees and costs associated with resolving ADA-related complaints could be material.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 38
▪ Privacy and cybersecurity - Our business requires the collection, transmission and retention of large volumes of guest and team member data, including credit and debit card numbers and other personally identifiable information.
18 unchanged sentences
Compliance with all of these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.
+Added: If we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial information or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could be impaired, which could have a material adverse effect on our business and stock price.
+Added: Shake Shack Inc.
+Added: Form 10-K | 31
+Added: As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), and the listing standards of the New York Stock Exchange.
+Added: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
+Added: It also requires management to perform an annual assessment of the effectiveness of our internal control over financial reporting and disclosure of any material weaknesses in such controls.
+Added: We are required to have our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.
+Added: Any failure to develop or maintain effective controls, or any difficulties encountered in the implementation or improvement of such controls, could harm our operating results or cause us to fail to meet our reporting obligations on a timely and accurate basis and may result in a restatement of our financial statements for prior periods.
+Added: Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting that we are required to include in our periodic reports that will be filed with the SEC.
+Added: If our financial statements are not accurate, investors may not have a complete understanding of our operations.
+Added: Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, or other potential claims or litigation.
+Added: Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
+Added: The SEC has adopted rules relating to cybersecurity which have required us to develop, implement, and maintain effective controls with respect to these new obligations.
+Added: In addition, California has approved climate change rules, including the requirement to provide a climate-related financial risk report, which will require effective internal controls.
+Added: Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which may have a negative effect on the trading price of our Class A common stock.
+Added: In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.
Our ability to use our net operating loss carryforwards may be subject to limitation.
As of December 31, 2025, our federal and state net operating loss (“NOL”) carryforwards for income tax purposes were $606.8 million and $370.2 million, respectively.
−Removed: Of the federal NOL carryforward, $563.9 million can be carried forward indefinitely, while the remaining $51.9 million will begin to expire in 2035.
−Removed: Similarly, of the state NOL carryforward, $106.7 million can be carried forward indefinitely, while the remaining $227.7 million will begin to expire in 2025.
−Removed: Federal NOLs incurred in taxable years beginning after December 31, 2017 will be carried forward indefinitely, but the deductibility of federal NOLs in taxable years beginning after December 31, 2020, is subject to certain limitations.
+Added: Of the federal NOL carryforwards, $555.0 million can be carried forward indefinitely, while the remaining $51.8 million will begin to expire in 2035.
+Added: Similarly, of the state NOL carryforwards, $48.5 million can be carried forward indefinitely, while the remaining $321.7 million will begin to expire in 2026.
+Added: Federal NOLs generated in taxable years beginning after December 31, 2017 may be carried forward indefinitely.
+Added: The utilization of these losses in taxable years beginning after December 31, 2020 is subject to an annual limitation based on taxable income.
In addition, under Section 382 of the Internal Revenue Code (“IRC”) of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOLs to offset its post-change income may be limited.
3 unchanged sentences
This could limit the amount of NOLs that we can utilize annually to offset future taxable income or tax liabilities.
−Removed: Subsequent statutory or regulatory changes in respect of the utilization of NOLs for federal or
+Added: Subsequent statutory or regulatory changes in respect of the utilization of NOLs for federal or state purposes, such as suspensions on the use of NOLs or limitations on the deductibility of NOLs carried forward, or other unforeseen reasons, may result in our existing NOLs expiring or otherwise being unavailable to offset future income tax liabilities.
Shake Shack Inc.
Form 10-K | 32
−Removed: state purposes, such as suspensions on the use of NOLs or limitations on the deductibility of NOLs carried forward, or other unforeseen reasons, may result in our existing NOLs expiring or otherwise being unavailable to offset future income tax liabilities.
Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.
26 unchanged sentences
In addition, the determination of future tax reporting positions, the structuring of future transactions and the handling of any future challenges by any taxing authorities to our tax reporting positions may take into consideration these non-controlling interest holders' tax or other considerations, which may differ from the considerations of us or our other stockholders.
−Removed: In addition, certain of the non-controlling interest holders may hold, and may from time to time in the future acquire interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or the business of our
+Added: In addition, certain of the non-controlling interest holders may hold, and may from time to time in the future acquire interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or the business of our suppliers.
+Added: Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, none of the non-controlling interest holders or any director who is not employed by us or his or her affiliates has any duty to refrain from engaging in a corporate opportunity in the same or similar lines of business as us.
+Added: The non-controlling interest holders may also
Shake Shack Inc.
Form 10-K | 33
−Removed: Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, none of the non-controlling interest holders or any director who is not employed by us or his or her affiliates has any duty to refrain from engaging in a corporate opportunity in the same or similar lines of business as us.
−Removed: The non-controlling interest holders may also pursue acquisitions that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.
+Added: pursue acquisitions that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.
Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the non-controlling interest holders that will not benefit Class A common stockholders to the same extent as it will benefit the non-controlling interest holders.
6 unchanged sentences
The actual amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of LLC Interests, the amount of gain recognized by such holders of LLC Interests, the amount and timing of the taxable income we generate in the future, and the federal tax rates then applicable.
−Removed: The non-controlling interest holders have the right to have their LLC Interests redeemed or exchanged into shares of Class A common stock, which may cause volatility in our stock price.
−Removed: As of December 25, 2024, we have an aggregate of 159,931,932 shares of Class A common stock authorized but unissued, including 2,455,713 shares of Class A common stock issuable upon the redemption or exchange of LLC Interests held by the non-controlling interest holders.
−Removed: Subject to certain restrictions set forth in the SSE Holdings LLC Agreement, the non-controlling interest holders are entitled to have their LLC Interests redeemed or exchanged for shares of our Class A common stock.
−Removed: We cannot predict the timing or size of any future issuances of our Class A common stock resulting from the redemption or exchange of LLC Interests or the effect, if any, that future issuances and sales of shares of our Class A common stock may have on the market price of our Class A common stock.
−Removed: Sales or distributions of substantial amounts of our Class A common stock, including shares issued in connection with an acquisition, or the perception that such sales or distributions could occur, may cause the market price of our Class A common stock to decline.
We will continue to incur relatively outsized costs as a result of being a public company and in the administration of our complex organizational structure.
3 unchanged sentences
These rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming.
−Removed: These laws and regulations also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 41
−Removed: and coverage or incur substantially higher costs to obtain the same or similar coverage.
+Added: These laws and regulations also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
Furthermore, if we are unable to continue to satisfy our obligations as a public company, we would be subject to delisting our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
2 unchanged sentences
As a result, our expenses for legal, tax, and accounting compliance may be significantly greater than other companies of our size that do not have a similar organizational structure or a tax receivable agreement in place.
+Added: Shake Shack Inc.
+Added: Form 10-K | 34
Our anti-takeover provisions could prevent or delay a change in control of our Company, even if such change in control would be beneficial to our stockholders.
22 unchanged sentences
We will continue to incur relatively outsized costs as a result of our complex organizational structure.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 42
Our organizational structure, including our Tax Receivable Agreement, is very complex and we require the expertise of various tax, legal and accounting advisers to ensure compliance with applicable laws and regulations.
3 unchanged sentences
SSE Holdings' ability to make such distributions may be subject to various limitations and restrictions.
+Added: Shake Shack Inc.
+Added: Form 10-K | 35
We are a holding company and have no material assets other than our ownership interest in SSE Holdings, certain deferred tax assets and our note receivable from SSE Holdings.
18 unchanged sentences
In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
−Removed: There can be no assurance that we will be able to fund or finance our obligations
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 43
−Removed: under the Tax Receivable Agreement.
+Added: There can be no assurance that we will be able to fund or finance our obligations under the Tax Receivable Agreement.
Furthermore, any increases in the federal corporate tax rate may result in an increase in our Tax Receivable Agreement liability, including a gross up of our deferred tax balances.
1 unchanged sentence
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that we determine, and the IRS or another tax authority may challenge all or part of the tax basis increases, as well as other related tax positions we take, and a court could sustain such challenge.
−Removed: If the outcome of any such challenge would reasonably be expected to materially affect a recipient's payments under the Tax Receivable Agreement, then we will not be permitted to settle or fail to contest such challenge without the consent (not to be unreasonably withheld or delayed) of each non-controlling interest holder that directly or indirectly owns at least 10% of the outstanding LLC Interests.
+Added: If the outcome of any such challenge would reasonably be expected to materially affect a recipient's payments under the Tax Receivable Agreement, then we will not be permitted to settle or fail to contest such
+Added: Shake Shack Inc.
+Added: Form 10-K | 36
+Added: challenge without the consent (not to be unreasonably withheld or delayed) of each non-controlling interest holder that directly or indirectly owns at least 10% of the outstanding LLC Interests.
We will not be reimbursed for any cash payments previously made to the non-controlling interest holders under the Tax Receivable Agreement in the event that any tax benefits initially claimed by us and for which payment has been made to non-controlling interest holders are subsequently challenged by a taxing authority and are ultimately disallowed.
13 unchanged sentences
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
−Removed: Shake Shack Inc.
−Removed: Form 10-K | 44
Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our Class A common stock.
3 unchanged sentences
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our Class A common stock could depress the price of our Class A common stock.
+Added: Shake Shack Inc.
+Added: Form 10-K | 37
Certain provisions in the indenture governing the Notes may delay or prevent an otherwise beneficial takeover attempt of us.
4 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.