What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-21 · 160 added, 143 removed, 395 unchanged (43% of the section changed)

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This section and other parts of this Annual Report on Form 10-K (“Form 10-K”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein.

All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company's growth, including our long-term growth goals, strategic initiatives, and liquidity.

All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about our growth, including our long-term growth goals, strategic priorities and initiatives, and liquidity.

Forward-looking statements discuss our current expectations, targets and projections relating to our financial position, results of operations, plans, objectives, future performance and business.

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These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "likely," "outlook," "potential," "preliminary," "project," "projection," "plan," "seek," "targets," "may," "could," "would," "will," "should," "can," "can have," the negatives thereof and other similar expressions.

Forward-looking statement reflect our current views with respect to future events and are based on certain assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from trends, plans, or expectations set forth in the forward-looking statement, as set forth in this Form 10-.

Forward-looking statements reflect our current views with respect to future events and are based on certain assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from trends, plans, or expectations set forth in the forward-looking statement, as set forth in this Form 10-K.

All forward-looking statements are expressly qualified in their entirety by these cautionary statements.

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With our fine-dining roots and a commitment to crafting uplifting experiences, Shake Shack has become a cult-brand and created a new category, fine-casual.

Our purpose is to Stand For Something Good in all aspects of our business, including the talented team we hire and train, the premium ingredients making up our menu, our community engagement and the design of our Shacks.

Stand For Something Good is a call to action for all of our stakeholders — our team, guests, communities, suppliers and investors — and we actively invite them all to share in this philosophy with us.

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

We operate on a 52/53 week fiscal year ending on the last Wednesday of December.

Fiscal 2025 included 53 weeks and fiscal 2024 included 52 weeks.

The additional operating week of fiscal 2025 is referred to as the "53rd week."

For discussion of our results of operations and changes in financial condition for fiscal 2024 compared to fiscal 2023 refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended December 25, 2024, filed on February 21, 2025.

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The Company does not recognize the sales from licensed Shacks as revenue.

Of these amounts, revenue is limited to licensing revenue based on a percentage of sales from licensed Shacks, as well as certain up-front fees, such as territory fees and opening fees.

Recent Business Trends

During the thirteen weeks ended December 25, 2024, we drove strength across the business as we grew Total revenue and same-Shack sales, and expanded our Restaurant-level profit margin as we delivered on our strategic priorities, including driving sales and improving how we manage labor in our Shacks.

During the thirteen weeks ended December 25, 2024, we opened a total of 28 Shacks system-wide, including 19 Company-operated Shacks.

As of December 25, 2024 there were 579 Shacks open globally.

Same-Shack sales for the thirteen weeks ended December 25, 2024 increased 4.3% compared to the same period last year, driven by a 4.8% increase in price mix, partially offset by a 0.5% decline in guest traffic.

Same-Shack sales for the fifty-two weeks ended December 25, 2024 increased 3.6% compared to the same period last year, driven by a 4.3% increase in price mix, partially offset by a 0.7% decline in guest traffic.

For the purpose of calculating same-Shack sales growth for the thirteen and fifty-two weeks ended December 25, 2024, Shack sales for 235 Shacks were included in the comparable Shack base.

Average weekly sales were $79,000 for the thirteen weeks ended December 25, 2024, compared to $76,000 for the same period last year, primarily driven by higher menu prices and the closure of nine underperforming Company-operated Shacks, partially offset by a decrease in items per check and guest traffic.

Average weekly sales were $76,000 for the fifty-two weeks ended

Of these amounts, revenue is limited to licensing revenue based on a percentage of sales from licensed Shacks, as well as certain up-front fees, such as territory fees, opening fees, and termination fees.

Key Operating Metrics

Same-Shack sales 1 for the fiscal fourth quarter ended December 31, 2025 increased 2.1% compared to the same period last year, driven by a 1.6% increase in price mix and a 0.5% increase in guest traffic.

Same-Shack sales 1 for the fiscal year ended December 31, 2025 increased 2.3% compared to the same period last year, driven by a 3.1% increase in price mix, partially offset by a 0.8% decline in guest traffic.

For the purpose of calculating same-Shack sales growth for the fiscal fourth quarter and fiscal year ended December 31, 2025, Shack sales for 278 Shacks were included in the comparable Shack base.

Average weekly sales 1 were $77,000 for the fiscal fourth quarter ended December 31, 2025, compared to $79,000 for the same period last year, primarily driven by a decline in guest traffic and menu mix, partially offset by higher menu prices.

Average weekly sales 1 were $76,000 for the fiscal year ended December 31, 2025, which was flat compared to the same period last year, primarily driven by a decline in guest traffic, offset by higher menu prices.

System-wide sales increased 23.4% to $618.0 million for the fiscal fourth quarter ended December 31, 2025, versus the same period last year.

System-wide sales increased 15.9% to $2,228.8 million for the fiscal year ended December 31, 2025, versus the same period last year.

The 53rd week contributed $47.3 million to System-wide sales in fiscal 2025.

Average unit volume for Company-operated Shacks was $4.0 million for the fiscal year ended December 31, 2025, which was flat compared to the same period last year.

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December 25, 2024 compared to $75,000 for the same period last year, primarily driven by higher menu prices, partially offset by a decline in guest traffic.

System-wide sales increased 13.3% to $500.7 million for the thirteen weeks ended December 25, 2024, versus the same period last year.

System-wide sales increased 13.0% to $1,922.7 million for the fifty-two weeks ended December 25, 2024, versus the same period last year.

Average unit volume for Company-operated Shacks was $3.9 million for the fifty-two weeks ended December 25, 2024, which was flat compared to the same period last year.

Digital sales for the thirteen and fifty-two weeks ended December 25, 2024 decreased 20.1% and 20.3% respectively, compared to the same periods last year.

Digital sales includes orders placed on the Shake Shack app, website and third-party delivery platforms, which represented 36.6% of Shack sales during the thirteen weeks ended December 25, 2024.

Digital sales for the fiscal fourth quarter ended December 31, 2025 increased 30.0% to $150.7 million compared to the same period last year.

Digital sales for the fiscal year ended December 31, 2025 increased 20.3% to $515.4 million compared to the same period last year.

The 53rd week contributed $13.3 million to digital sales in fiscal 2025.

Digital sales includes orders placed on the Shake Shack app, website and third-party delivery platforms, which represented 39.1% and 37.0%, respectively, of Shack sales during the fiscal fourth quarter and fiscal year ended December 31, 2025.

(1) For fiscal fourth quarter and fiscal year ended December 31, 2025, same-Shack sales and average weekly sales were calculated excluding the 53rd week.

Shake Shack Inc.

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During fiscal 2025, we opened 45 new Company-operated Shacks and 40 new licensed Shacks.

There were six permanent licensed Shack closures and nine permanent Company-operated Shack closures in fiscal 2024.

There were four permanent licensed Shack closures and one permanent Company-operated Shack closure in fiscal 2025.

Below are Shacks opened during the fourth quarter of 2025.

Location Type Opening Date

Shanghai, China — Livat Licensed 9/26/2024

San Jose, CA — Westgate Center Company-operated 10/15/2024

Huntington Beach, CA — Huntington Beach Company-operated 10/22/2024

Newport News, VA — Newport News Company-operated 10/22/2024

Las Vegas, NV — Rhodes Ranch Company-operated 10/28/2024

Novi, MI — Novi Company-operated 11/5/2024

Tampa, FL — International Plaza Company-operated 11/7/2024

San Jose, CA — Campbell Company-operated 11/19/2024

Folsom, CA — Folsom Company-operated 11/19/2024

Nashville, TN — River North Nashville Company-operated 11/21/2024

Redlands, CA — Redlands Company-operated 11/25/2024

Wrentham, MA — Wrentham Company-operated 11/26/2024

Bangkok, Thailand — One Bangkok Licensed 11/28/2024

Brea, CA — Brea Company-operated 12/3/2024

Toronto, Canada — Union Station Licensed 12/4/2024

Old Bridge, NJ — Old Bridge Company-operated 12/5/2024

Tijiuana, Mexico — Tijiuana Airport Licensed 12/5/2024

College Park, MD — College Park Company-operated 12/10/2024

Birmingham, United Kingdom — Grand Central Licensed 12/10/2024

Boston, MA — Boston Logan International Airport Licensed 12/11/2024

Louis, MO — Enterprise Center Suite Level Licensed 12/12/2024

Downey, CA — Downey Company-operated 12/18/2024

Pittsburgh, PA — North Fayette Company-operated 12/18/2024

Lutz, FL — Wesley Chapel Company-operated 12/19/2024

Kuala Lumpur, Malaysia — Sunway Pyramid Licensed 12/19/2024

Palm Desert, CA — El Paseo Company-operated 12/20/2024

Philadelphia, PA — Fishtown Company-operated 12/21/2024

Istanbul, Turkey — Mall of Istanbul Licensed 12/25/2024

Istanbul, Turkey — Kozyatagi City Mall Licensed 9/25/2025

Phoenix, AZ — Avondale Company-operated 9/30/2025

Siheung, South Korea — Siheung Premium Outlet Licensed 10/2/2025

Toronto, Canada — Yonge & Eglinton Licensed 10/3/2025

Pittsburgh, PA — Pittsburgh Airport Dining Concourse Licensed 10/7/2025

Syracuse, NY — Dewitt Company-operated 10/14/2025

Zionsville, IN — Zionsville Company-operated 10/28/2025

Jenkintown, PA — Jenkintown Company-operated 10/28/2025

Vaughan, Canada — Vaughan Mills Licensed 10/28/2025

Staten Island, NY — Hylan Blvd Company-operated 10/30/2025

Tel Aviv, Israel — Kiryat Ono Licensed 10/30/2025

Hong Kong, China — Elements Mall Licensed 11/4/2025

Mexico City, Mexico — Pedregal Licensed 11/6/2025

Tacoma, WA — Tacoma Mall Company-operated 11/10/2025

Oceanport, NJ — Monmouth Park Licensed 11/13/2025

Quezon City, Philippines — Robinsons Magnolia Licensed 11/13/2025

Oklahoma City, OK — Oak OKC Company-operated 11/18/2025

Perrysburg, OH — Levis Commons Company-operated 11/18/2025

London, UK — Kings Cross Licensed 11/18/2025

Selden, NY — Selden Company-operated 11/19/2025

Manila, Philippines — Capitol Commons Licensed 11/28/2025

Kuala Lumpur, Malaysia — Pavilion KL Licensed 11/28/2025

Pikesville, MD — Festival at Woodholme Company-operated 11/30/2025

Phuket, Thailand — JungCeylon Licensed 12/1/2025

Pittsburgh, PA — East Liberty Company-operated 12/3/2025

Cheshire, CT — Shops at Stone Bridge Company-operated 12/9/2025

Beijing, China — Da Rong Cheng Art Park Licensed 12/12/2025

Mason, OH — Mason Company-operated 12/17/2025

Hong Kong, China — Langham Place Licensed 12/23/2025

Gyeonggi, South Korea — Paju Premium Outlet Licensed 12/23/2025

Orlando, FL — Colonial Marketplace Company-operated 12/30/2025

Pittsburgh, PA — Ross Park Mall Company-operated 12/30/2025

As of December 31, 2025, there were 659 Shacks in operation system wide, of which 373 were Company-operated Shacks and 286 were licensed Shacks.

Shake Shack Inc.

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INCOME BEFORE INCOME TAXES 72,609 5.0 % 14,244 1.1 %

Income tax expense (benefit) 3,424 0.3 % (4,010) (0.4) %

Income tax expense 22,903 1.6 % 3,424 0.3 %

NET INCOME 49,706 3.4 % 10,820 0.9 %

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$ 45,725 3.2 % $ 10,207 0.8 %

(1) We operate on a 52/53 week fiscal year ending on the last Wednesday of December.

Fiscal 2025 included 53 weeks and fiscal 2024 included 52 weeks.

(2) As a percentage of Shack sales.

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Shack sales for the fiscal year ended December 31, 2025 increased 15.2% to $1.4 billion versus the prior year.

The increase was primarily due to increased menu prices, which contributed $64.0 million, as well as the opening of 43 new Company-operated Shacks during fiscal 2024, which contributed $63.9 million.

The increase was primarily due to the opening of 45 new Company-operated Shacks during fiscal 2025, which contributed $218.5 million, partially offset by a decline in guest traffic.

Excluding the 53rd week, Shack sales for fiscal year 2025 increased 12.9% versus the prior year.

Licensing Revenue

Licensing revenue is comprised of license fees and opening fees and territory fees for certain licensed Shacks.

Licensing revenue is comprised of license fees and opening fees, territory fees, and termination fees for certain licensed Shacks.

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

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Licensing revenue for the fiscal year ended December 31, 2025 increased 20.2% to $54.1 million versus the prior year.

The increase was primarily due to 27 net new licensed Shacks opened during fiscal 2024, which contributed approximately $2.5 million, as well as higher sales, mainly at existing domestic licensed Shacks.

The increase was primarily due to higher sales at existing licensed Shacks, which contributed $3.5 million, and the opening of 40 new licensed Shacks during fiscal 2025, which contributed approximately $3.2 million, as well as revenue recognized from the contract termination of a licensed partner.

Excluding the 53rd week, Licensing revenue for fiscal year 2025 increased 17.5% versus the prior year.

Food and Paper Costs

Food and paper costs include the direct costs associated with food, beverage and packaging of our menu items.

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

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

(dollar amounts in thousands) 2025 2024

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Food and paper costs for the fiscal year ended December 31, 2025 increased 16.7% to $396.7 million versus the prior year.

The increase was primarily due to the openings from the fiscal 2023 class of Shacks, which contributed approximately $20.7 million of incremental expense as well as the opening of 43 new Company-operated Shacks during fiscal 2024, which contributed approximately $18.2 million.

The increase was primarily due to the openings from the fiscal 2024 class of Shacks, which contributed approximately $24.8 million of incremental expense as well as the opening of 45 new Company-operated Shacks during fiscal 2025, which contributed

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As a percentage of Shack sales, the decrease in Food and paper costs for fiscal 2024 was primarily due to increased menu prices, partially offset by increased marketing promotions and certain commodity costs, mainly beef and fries.

approximately $20.8 million.

Excluding the 53rd week, Food and paper costs for fiscal year 2025 increased 14.4% versus the prior year.

As a percentage of Shack sales, the increase in Food and paper costs for fiscal 2025 was primarily due to unfavorable menu mix and increased commodity costs, mainly beef, as well as increased marketing promotions, partially offset by increased menu price.

Labor and Related Expenses

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The increase was primarily due to the opening of 45 new Company-operated Shacks during fiscal 2025, which contributed $19.4 million.

As a percentage of Shack sales, the decrease in Labor and related expenses for fiscal 2024 was primarily due to labor efficiencies and sales leverage, partially offset by increased wages and incremental expenses from the opening of 43 new Company-operated Shacks during fiscal 2024.

Excluding the 53rd week, Labor and related expenses for fiscal year 2025 increased 4.4% versus the prior year.

As a percentage of Shack sales, the decrease in Labor and related expenses for fiscal 2025 was primarily due to labor efficiencies and sales leverage, partially offset by incremental expenses from the opening of 45 new Company-operated Shacks during fiscal 2025.

Other Operating Expenses

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Other operating expenses for the fiscal year ended December 31, 2025 increased 19.2% to $212.7 million versus the prior year.

The increase was primarily due to increased transaction costs associated with higher sales, increased facilities costs, mainly utilities and repair and maintenance, as well as increased marketing spend.

As a percentage of Shack sales, the increase in Other operating expenses for fiscal 2024 was primarily due to increased delivery commissions associated with higher delivery sales and increased marketing spend, partially offset by sales leverage.

Occupancy and Related Expenses

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

The increase was primarily due to increased transaction costs, mainly delivery commissions, associated with higher sales, as well as increased facilities costs and marketing spend.

Excluding the 53rd week, Other operating expenses for fiscal year 2025 increased 16.9% versus the prior year.

As a percentage of Shack sales, the increase in Other operating expenses for fiscal 2025 was primarily due to increased delivery commissions associated with the growth in our digital business and increased marketing spend, partially offset by sales leverage.

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Occupancy and Related Expenses

(dollar amounts in thousands) 2025 2024

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Occupancy and related expenses for the fiscal year ended December 31, 2025 increased 14.6% to $106.6 million versus the prior year.

The increase was primarily due to the openings from the fiscal 2023 class of Shacks weighted to the second half of fiscal 2023, which contributed approximately $4.6 million, as well as the opening of 43 new Company-operated Shacks during fiscal 2024.

As a percentage of Shack sales, the increase in Occupancy and related expenses for fiscal 2024 was primarily due to higher base rent.

The increase was primarily due to the openings from the fiscal 2024 class of Shacks, which contributed approximately $7.7 million of incremental expense as well as the opening of 45 new Company-operated Shacks during fiscal 2025, which contributed $4.3 million, partially offset by the closure of nine Company-operated Shacks in fiscal 2024.

Excluding the 53rd week, Occupancy and related expenses for fiscal year 2025 increased 14.5% versus the prior year.

As a percentage of Shack sales, Occupancy and related expenses was flat for fiscal 2025 compared to the same period last year.

General and Administrative Expenses

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General and administrative expenses for the fiscal year ended December 31, 2025 increased 18.2% to $176.2 million versus the prior year.

The increase was primarily due to increased investments in marketing and increased wages and other team costs to support our Shack growth and strategic initiatives, as well as costs associated with the prior restatement of prior periods included in the fiscal 2023 Form 10-K.

As a percentage of Total revenue, General and administrative expenses were flat for fiscal 2024 primarily due to sales leverage offset by the aforementioned items.

The increase was primarily due to increased investments in marketing as well as increased wages and other team costs to support our Shack growth, partially offset by a decrease in professional fees related to non-recurring matters and costs associated with the restatement of prior periods included in the fiscal 2023 Form 10-K.

As a percentage of Total revenue, the increase in General and administrative expenses for fiscal 2025 was primarily due to the aforementioned items.

Depreciation and Amortization Expense

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Percentage change compared to prior year 4.0 %

Depreciation and amortization expense for the fiscal year ended December 25, 2024 increased 12.3% to $102.5 million versus the prior year.

The increase was primarily due to incremental depreciation of capital expenditures related to the opening of 43 new Company-operated Shacks during fiscal 2024.

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Depreciation and amortization expense for the fiscal year ended December 31, 2025 increased 4.0% to $106.6 million versus the prior year.

The increase was primarily due to incremental depreciation of capital expenditures related to the opening of 45 new Company-operated Shacks during fiscal 2025, partially offset by a reduction in depreciation expense due to fully depreciated technology projects and assets compared to the prior year period and the closure of nine Company-operated Shacks in fiscal 2024.

Pre-Opening Costs

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

All such costs incurred prior to the opening of a Company-operated Shack are expensed in the period in which the expense was incurred.

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Percentage change compared to prior year 15.8 %

Pre-opening costs for the fiscal year ended December 25, 2024 decreased 19.2% to $15.5 million versus the prior year.

The decrease was primarily due to reductions in wages and team costs as we standardize the training process for unopened Shacks.

Pre-opening costs for the fiscal year ended December 31, 2025 increased 15.8% to $18.0 million versus the prior year.

The increase was primarily due to increased legal costs and occupancy expense to support our larger development pipeline as well as increased wages and team costs for our Shack teams related to the timing of Shack openings throughout the year.

Impairments, loss on disposal of assets, and Shack closures

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

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

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

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Dollar change compared to prior year $ (27,120)

Impairments, loss on disposal of assets, and Shack closures for the fiscal year ended December 25, 2024 increased to $32.4 million versus the prior year.

The increase was primarily due to expenses related to the closure of nine Company-operated Shacks in August 2024.

Impairments, loss on disposal of assets, and Shack closures for the fiscal year ended December 31, 2025 decreased to $5.2 million versus the prior year.

The decrease was primarily due to non-cash impairment charges and miscellaneous Shack closure expense of $29.3 million during fiscal 2024, related to the closure of nine Company-operated Shacks in August 2024, partially offset by the closure of one Company-operated Shack in December 2025.

Other Income, Net

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

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(dollar amounts in thousands) 2025 2024

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Percentage change compared to prior year (7.5) %

Other income, net for the fiscal year ended December 25, 2024 increased from $12.8 million to $13.3 million.

The increase was primarily due to increased income from cash equivalents, partially offset by decreased income from investments that matured in fiscal 2024.

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Other income, net for the fiscal year ended December 31, 2025 decreased from $13.3 million to $12.3 million.

The decrease was primarily due to a change from investments in the prior year to cash equivalents in the current year and lower interest rates on cash equivalents.

Interest Expense

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Interest expense for the fiscal year ended December 31, 2025 increased 5.6% to $2.2 million versus the prior year.

The increase was primarily due to increased finance lease charges from the opening of 43 new Company-operated Shacks during fiscal 2024.

Income Tax Expense (Benefit)

The increase was primarily due to increased finance lease charges from the opening of 45 new Company-operated Shacks during fiscal 2025, partially offset by a decrease in various sales tax audit assessment charges compared to prior year.

Income Tax Expense

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

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(dollar amounts in thousands) 2025 2024

Income tax expense (benefit)

Income tax expense

$ 22,903 $ 3,424

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Our effective income tax rate for the fiscal year ended December 31, 2025 increased to 31.5% from 24.0% in the prior year.

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

The increase in our effective income tax rate was primarily driven by foreign tax credits that are not expected to be realized and the remeasurement of deferred tax assets following the filing of the Company’s 2024 tax returns.

Net Income Attributable to Non-controlling Interests

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

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

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

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

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Net income attributable to non-controlling interests

$ 3,981 $ 613

Percentage of Total revenue 0.3 % — %

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Net income attributable to non-controlling interests for the fiscal year ended December 25, 2024 decreased from $0.7 million to $0.6 million.

The decrease was primarily due to a decline in net results compared to the same period last year, partially offset by a decrease in the non-controlling interest holders' weighted average ownership, which was 6.2% and 6.7%, respectively for fiscal 2024 and fiscal 2023.

Net income attributable to non-controlling interests for the fiscal year ended December 31, 2025 increased from $0.6 million to $4.0 million.

The increase was primarily due to increased net results compared to the same period last year, partially offset by a decrease in the non-controlling interest holders' weighted average ownership, which was 5.7% and 6.2%, respectively for fiscal 2025 and fiscal 2024.

NON-GAAP FINANCIAL MEASURES

To supplement the Consolidated Financial Statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"), we use the following non-GAAP financial measures:

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

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

Restaurant-Level Profit

Restaurant-level profit, formerly referred to as Shack-level operating profit, is defined as Shack sales less Shack-level operating expenses which include Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.

Restaurant-level profit is defined as Shack sales less Shack-level operating expenses which include Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.

How This Measure Is Useful

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Restaurant-level profit excludes certain costs, such as General and administrative expenses and Pre-opening costs, which are considered normal, recurring cash operating expenses and are essential to support the operation and development of our Shacks.

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

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

Therefore, this measure may not provide a complete understanding of the operating results of our Company as a

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whole and Restaurant-level profit and Restaurant-level profit margin should be reviewed in conjunction with our GAAP financial results.

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

(dollar amounts in thousands) 2025 (1)

Income (loss) from operations

Income from operations

$ 62,508 $ 3,038 $ 5,921

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Depreciation and amortization expense 106,600 102,468 91,242

102,468 91,242 72,796

Pre-opening costs 18,001 15,547 19,231

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22.6% 21.4% 19.9%

(1) The Company elected to reclassify certain marketing expenses from Other operating expenses to General and administrative expenses in the accompanying Consolidated Financial Statements for the fiscal year ended December 28, 2022 to conform with the presentation for the fiscal year ended December 25, 2024 and December 27, 2023 .

(1) The Company operates on a 52/53 week fiscal year.

Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.

(2) Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.

(3) For the fifty-two weeks ended December 28, 2022, Restaurant-level profit margin includes a $1,281 cumulative catch-up adjustment for gift card breakage income, recognized in Shack sales.

(3) As a percentage of Shack sales.

EBITDA and Adjusted EBITDA

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

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

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

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

How These Measures Are Useful

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

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

Reconciliations of EBITDA and adjusted EBITDA to Net income, the most directly comparable GAAP measure, were as follows.

(dollar amounts in thousands)

$ 49,706 $ 10,820 $ 20,990

Net income (loss)

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

Depreciation and amortization expense 106,600 102,468 91,242

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Legal settlements (4)

Gift card breakage cumulative catch-up adjustment — — (1,281)

3 3,652 3,386

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14.5% 14.0% 12.1%

(1) The Company operates on a 52/53 week fiscal year.

Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.

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

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

(5) Calculated as a percentage of Total revenue, which was $1,252.6 million, $1,087.5 million and $900.5 million, respectively, for the fifty-two weeks ended December 25, 2024, December 27, 2023 and December 28, 2022.

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

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

(6) Calculated as a percentage of Total revenue, which was $1,445.3 million, $1,252.6 million and $1,087.5 million, respectively, for fiscal 2025, 2024 and 2023.

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

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

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

Adjusted pro forma earnings (loss) per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income (loss) by the weighted average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards.

Adjusted pro forma earnings per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income by the weighted average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards.

Shake Shack Inc.

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How These Measures Are Useful

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

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

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

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

Limitations of the Usefulness of These Measures

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

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

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

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

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

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

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

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

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

(in thousands, except per share amounts) 2025 (1)

Net income (loss) attributable to Shake Shack Inc.

Net income attributable to Shake Shack Inc.

$ 45,725 $ 10,207 $ 20,264

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

Reallocation of Net income attributable to non-controlling interests from the assumed exchange of LLC Interests (2)

3,981 613 726

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Employee benefit charges (4)

Impairment charge and Shack closures (4)

Impairment charges and Shack closures (5)

2,949 29,348 —

Legal settlements (6)

Gift card breakage cumulative catch-up adjustment — — (1,281)

3 3,652 3,386

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3,906 (6,785) (9,254)

Adjusted pro forma net income (loss) $ 40,545 $ 16,158 $ (12,941)

Adjusted pro forma net income $ 58,315 $ 40,545 $ 16,158

Weighted average shares of Class A common stock outstanding—diluted 41,847 44,203 43,899

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Adjusted pro forma fully exchanged weighted average shares of Class A common stock outstanding—diluted 44,288 44,203 43,899

Adjusted pro forma earnings (loss) per fully exchanged share—diluted $ 0.92 $ 0.37 $ (0.31)

Adjusted pro forma earnings per fully exchanged share—diluted $ 1.32 $ 0.92 $ 0.37

2025 2024 2023

Earnings (loss) per share of Class A common stock—diluted $ 0.24 $ 0.48 $ (0.54)

Earnings per share of Class A common stock—diluted $ 1.09 $ 0.24 $ 0.48

Assumed exchange of LLC Interests for shares of Class A common stock (2)

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0.20 0.68 (0.11)

Adjusted pro forma earnings (loss) per fully exchanged share—diluted $ 0.92 $ 0.37 $ (0.31)

Adjusted pro forma earnings per fully exchanged share—diluted $ 1.32 $ 0.92 $ 0.37

Shake Shack Inc.

Form 10-K | 58

(1) Assumes the exchange of all outstanding LLC Interests for shares of Class A common stock, resulting in the elimination of the non-controlling interest and recognition of the net income (loss) attributable to non-controlling interests.

For the fifty-two weeks ended December 25, 2024 and December 27, 2023, this exchange is included in weighted-average shares of Class A common stock outstanding-diluted and therefore no additional share and per share adjustments are required.

(1) The Company operates on a 52/53 week fiscal year.

Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.

(2) Assumes the exchange of all outstanding LLC Interests for shares of Class A common stock, resulting in the elimination of the non-controlling interest and recognition of the net income attributable to non-controlling interests.

For fiscal 2024 and 2023 , this exchange is included in weighted-average shares of Class A common stock outstanding-diluted and therefore no additional share and per share adjustments are required.

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

(4) Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.

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

For the fifty-two weeks ended December 28, 2022, this amount includes a non-cash impairment charge of $0.1 million related to one Shack.

(5) Expenses incurred related to Shack closures and impairment charges during fiscal 2024 and fiscal 2025.

(6) Expenses incurred to establish accruals related to the settlements of legal matters.

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

(7) For the fifty-two weeks ended December 25, 2024, December 27, 2023 and December 28, 2022, amounts represent the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 20.1%, 24.5% and 31.0%, respectively, which include provisions for U.S.

(8) For fiscal 2025, 2024 and 2023, amounts represent the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 24.6%, 20.1% and 24.5%, respectively, which include provisions for U.S.

federal income taxes, certain LLC entity-level taxes and foreign withholding taxes, assuming the highest statutory rates apportioned to each applicable state, local and foreign jurisdiction.

(9) Represents the per share impact of non-GAAP adjustments for each period.

Refer to the reconciliation of Adjusted Pro Forma Net Income (Loss) above, for additional information.

Refer to the reconciliation of Adjusted pro forma net income above, for additional information.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

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

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

As of December 31, 2025, we maintained a Cash and cash equivalents balance of $360.1 million.

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Our requirements for working capital are generally not significant because our guests pay for their food and beverage purchases in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the supplier of such items.

Our ongoing capital expenditures are principally related to opening new Shacks, existing Shack capital investments (both for remodels and maintenance), as well as investments in our corporate technology infrastructure to support our home office, Shake Shack locations, and digital strategy.

Our ongoing capital expenditures are principally related to opening new Shacks, existing Shack capital investments (both for remodels and maintenance), as well as investments in our corporate technology infrastructure to support our Shack Support Centers, Shake Shack locations, and digital strategy.

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

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Although the amount of any payments that must be made under the Tax Receivable Agreement may be significant, the timing of these payments will vary and will generally be limited to one payment per member per year.

The amount of such payments are also limited to the extent we utilize the related deferred tax assets.

The amount of such payments is also limited to the extent we utilize the related deferred tax assets.

The payments that we are required to make will generally reduce the amount of overall cash flow that might have otherwise been available to us or to SSE Holdings, but we expect the cash tax savings we will realize from the utilization of the related deferred tax assets to fund the required payments.

We believe our existing cash and cash equivalents balances and cash from operations will be sufficient to fund our operating and finance lease obligations, capital expenditures, Tax Receivable Agreement obligations and working capital needs for at least the next 12 months.

Shake Shack Inc.

Form 10-K | 59

Summary of Cash Flows

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Effect of exchange rate changes on cash and cash equivalents

Net Increase (decrease) in cash and cash equivalents 96,061 (5,868)

Net Increase in cash and cash equivalents 39,409 96,061

Cash and cash equivalents at beginning of period 320,714 224,653

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This increase was primarily due to a $49.2 million improvement in net results after excluding non-cash charges, partially offset by changes in working capital of $2.0 million.

The changes in working capital primarily included an increase in payments on lease liabilities due to the opening of 43 new Company-operated Shacks in fiscal 2024 and termination payments related to the Shack closures in fiscal 2024.

The changes in working capital primarily included an increase in promotional campaigns not yet invoiced and an increase in accrued expenses related to our larger development pipeline, partially offset by an increase in foreign withholding tax receivable related to our licensed Shack partners, an increase in payments on lease liabilities due to the opening of 45 new Company-operated Shacks in fiscal 2025, and a decrease in payables related to general business operations.

Investing Activities

For fiscal 2024, net cash used in investing activities was $66.1 million compared to $132.3 million for fiscal 2023, a decrease of $66.2 million.

This decrease was primarily due to a decrease in net proceeds from marketable securities activity of $55.5 million as well as a decrease of $10.7 million in capital expenditures.

The marketable securities activity was primarily the result of an increase in maturities of held-to-maturity securities of $42.3 million and a decrease in net purchases of held-to-maturity securities of $94.0 million, offset by a decrease in sales of equity securities of $81.5 million.

For fiscal 2025, net cash used in investing activities was $165.8 million compared to $66.1 million for fiscal 2024, an increase of $99.7 million.

This increase was primarily driven by the absence of $69.4 million of proceeds from maturities of held-to-maturity marketable securities in the current period as well as an increase of $30.3 million in capital expenditures related to our larger development pipeline, as compared to the prior year.

Financing Activities

For fiscal 2025, net cash used in financing activities was $17.1 million compared to $9.0 million for fiscal 2024, an increase of $8.1 million.

This increase was primarily due to an increase in withholding taxes related to the vesting of equity awards.

This increase was primarily due to an increase in withholding taxes related to the vesting of equity awards and an increase in payments of financing leases due to the opening of 45 new Company-operated Shacks during fiscal 2025.

Convertible Notes

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Revolving Credit Facility

In August 2019, we entered into a Revolving Credit Facility, which matures in March 2026 and permits borrowings up to $50.0 million, with the ability to increase available borrowings up to an additional $100.0 million, subject to satisfaction of certain conditions.

In August 2019, we entered into a Revolving Credit Facility, which permits borrowings up to $50.0 million, with the ability to increase available borrowings up to an additional $100.0 million, subject to satisfaction of certain conditions.

The Revolving Credit Facility also permits the issuance of letters of credit upon our request of up to $15.0 million.

In July 2025, the Company entered into the sixth amendment to the Revolving Credit Facility ("Sixth Amendment"), which, among other things, extends the maturity date until the earlier of (a) February 28, 2028, or (b) the date that is 91 days prior to the scheduled maturity date of any Convertible Notes outstanding at any time.

Shake Shack Inc.

Form 10-K | 60

In June 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:

Outstanding borrowings under the Revolving Credit Facility bear interest at 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.

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The majority of our purchase obligations are due within the next 12 months.

The Company also enters into long-term, exclusive contracts with certain vendors to supply food, beverages and paper goods, obligating the Company to purchase specified quantities.

OFF-BALANCE SHEET ARRANGEMENTS

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Changes in these assumptions could have a significant impact on the recoverability of the asset and may result in additional impairment charges.

In fiscal 2024, we determined to close nine underperforming Company-operated Shacks, and as a result, we recorded $27.6 million of impairment expense, related to right-of-use assets, and property, plant and equipment.

During fiscal 2025, the Company closed one Shack due to a change in ownership of the property and subsequent termination of the lease by the landlord, which resulted in a non-cash impairment charge of $1,179.

Additionally, the Company recognized a non-cash impairment charge of $170 related to the nine Shack closures in fiscal 2024.

During fiscal 2024, the Company recognized a non-cash impairment charge of $27,633 related to the closure of nine underperforming Company-operated Shacks in California, Ohio and Texas.

No impairment charges were recognized during fiscal 2023.

During fiscal 2022, the Company recognized an impairment charge of $0.1 million related to one Shack.

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

We currently lease all of our Company-operated Shacks, the home office, and certain equipment under various lease agreements.

We currently lease all of our Company-operated Shacks, the Shack Support Centers, and certain equipment under various lease agreements.

Determining the probable term for each lease requires judgment by management and can impact the classification and accounting for a lease as financing or operating, as well as the period for straight-lined rent expense and the depreciation period for lease hold improvements.

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Since determining the likelihood of a tax benefit’s sustainability involves significant assumptions, actual outcomes may vary from our estimates, depending on different assumptions or conditions.

Any interest and penalties associated with uncertain tax positions are included in Income tax expense (benefit) in the accompanying Consolidated Statements of Income (Loss).

Any interest and penalties associated with uncertain tax positions are included in Income tax expense (benefit) in the accompanying Consolidated Statements of Income.

A valuation allowance is established for deferred tax assets if it is more likely than not that they will not be realized.

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Therefore, we would only recognize a liability for TRA payments if we determine it is probable that we will generate sufficient future taxable income over the term of the TRA to utilize the related tax benefits.

As of December 25, 2024, we recognized $247.7 million of liabilities relating to our obligations under the TRA, after concluding that it was probable that we would have sufficient future taxable income to utilize the related tax benefits.

As of December 31, 2025 and December 25, 2024, respectively, we recognized $246.8 million and $247.7 million of liabilities relating to our obligations under the TRA, after concluding that it was probable that we would have sufficient future taxable income to utilize the related tax benefits.

There were no transactions subject to the TRA for which we did not recognize the related liability, as we concluded that we would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred in fiscal 2025.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis