Shake Shack Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO FINANCIAL STATEMENTS Page Management's Report 66 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 67 Consolidated Balance Sheets 72 Consolidated Statements of Income 73 Consolidated Statements of Comprehensive Income 74 Consolidated Statements of Stockholders' Equity 75 Consolidated Statements of Cash Flows 76 Notes to Consolidated Financial Statements 77 Shake Shack Inc. Form 10-K | 65 MANAGEMENT'S REPORT Management's Annual Report on the Consolidated Financial Statements Management is responsible for the preparation, integrity and objectivity of the accompanying Consolidated Financial Statements and related financial information. The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and necessarily include certain amounts that are based on estimates and informed judgments. Our management also prepared the related financial information included in this Annual Report on Form 10-K and is responsible for its accuracy and consistency with the Consolidated Financial Statements. Ernst & Young LLP, our independent registered public accounting firm, has audited the Consolidated Financial Statements as of December 31, 2025, as stated in their report herein. Management's Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Prior to filing, management, including our Chief Executive Officer and Principal Financial Officer and Corporate Controller, assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework. Based on the results of our evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2025 Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2025, as stated in their report included in this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect such controls, including any corrective actions with regard to significant deficiencies and material weaknesses. Shake Shack Inc. Form 10-K | 66 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Shake Shack Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Shake Shack Inc. (the Company) as of December 31, 2025 and December 25, 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and December 25, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Shake Shack Inc. Form 10-K | 67 Measurement of the valuation allowance against deferred tax assets Description of the Matter As discussed in Notes 2 and 14 of the consolidated financial statements, a valuation allowance is recognized if the Company determines it is more likely than not that all or a portion of a deferred tax asset will not be recognized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, tax planning strategies and recent and forecasted results of operations. As of December 31, 2025, the Company is looking to its forecasted future U.S. taxable income to conclude that it is more likely than not that these deferred tax assets, except for certain local unincorporated business tax credits and state loss carryforwards, will be fully realized prior to their expiration. As of December 31, 2025, the Company had a net deferred tax asset balance for U.S. income taxes of $322.4 million, for which a valuation allowance of $1.0 million was provided. Auditing management’s analysis of the realizability of these U.S. deferred tax assets is highly judgmental because it requires the evaluation of positive and negative evidence to support the position that the Company will generate sufficient future U.S. taxable income to realize the deferred tax assets as tax deductions on future income tax returns. The Company’s forecasted financial information, which is inherently subjective, is a significant component of management’s analysis. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s evaluation of deferred tax asset realizability. In addition, we obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s financial forecasting process. Such controls include management’s review of forecasted pretax income, including significant assumptions such as projected Shack openings, operating margins, and operating costs, among others. In our testing of management’s assessment of deferred tax asset realizability as described above, we performed audit procedures that included, among others, evaluating the conclusions reached by the Company regarding the realizability of deferred tax assets, which involved performing procedures over (i) the scheduled reversal of deferred taxes and (ii) forecasted financial information. In order to test management’s financial forecasts, we assessed the historical accuracy of management’s forecasts and compared the significant assumptions used to current industry and economic trends and changes to the Company’s operations. In addition, we performed sensitivity analyses to evaluate the impact of changes in assumptions to future taxable income and ultimately, realizability of deferred tax assets. Measurement of the Tax Receivable Agreement liability Description of the Matter As discussed in Note 14 of the consolidated financial statements, the Company has a Tax Receivable Agreement (“TRA”) with certain current and historical holders of LLC interests, which is a contractual commitment to distribute 85% of any tax benefits (“TRA Payment”), realized or deemed to be realized by the Company to the parties to the TRA. The TRA payments are contingent upon, among other things, the generation of future taxable income over the term of the TRA. As of December 31, 2025, the Company’s liability due to the holders of LLC interests under the TRA (“TRA liability”), was $246.8 million. Auditing management’s accounting for the TRA liability is highly judgmental because it requires the evaluation of the Company’s future qualified taxable income, which is inherently subjective, over the term of the TRA as a basis to determine if the related tax benefits are expected to be realized. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s financial forecasting process. Such controls include management’s review of forecasted pretax income, including significant assumptions such as projected Shack openings, operating margins, and operating costs, among others. To test the Company’s position that there is sufficient future taxable income to realize the tax benefits payable under the TRA, we evaluated the assumptions used by management to develop the projections of future taxable income. We assessed the historical accuracy of management’s forecasts and compared the significant assumptions used to current industry and economic trends and changes to the Company’s operations. In addition, we performed sensitivity analyses to evaluate the impact of changes in assumptions to future taxable income. Shake Shack Inc. Form 10-K | 68 /s/ Ernst & Young LLP We have served as the Company's auditor since 2014. New York, New York February 26, 2026 Shake Shack Inc. Form 10-K | 69 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Shake Shack Inc. Opinion on Internal Control Over Financial Reporting We have audited Shake Shack Inc.’s (the Company’s) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and December 25, 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”) and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Shake Shack Inc. Form 10-K | 70 /s/ Ernst & Young LLP New York, New York February 26, 2026 Shake Shack Inc. Form 10-K | 71 SHAKE SHACK INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31 2025 December 25 2024 ASSETS Current assets: Cash and cash equivalents $ 360,123 $ 320,714 Accounts receivable, net 32,962 19,687 Inventories 7,182 6,014 Prepaid expenses and other current assets 30,080 21,801 Total current assets 430,347 368,216 Property and equipment, net of accumulated depreciation of $ 551,004 and $ 457,186 , respectively. 625,851 551,600 Operating lease assets 507,253 424,611 Deferred income taxes, net 322,385 341,586 Other assets 10,373 10,958 TOTAL ASSETS $ 1,896,209 $ 1,696,971 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 24,747 $ 23,609 Accrued expenses 103,354 63,005 Accrued wages and related liabilities 25,481 25,422 Operating lease liabilities, current 63,553 55,739 Other current liabilities 27,783 19,538 Total current liabilities 244,918 187,313 Long-term debt 247,731 246,683 Long-term operating lease liabilities 575,138 494,499 Liabilities under tax receivable agreement, net of current portion 244,463 247,017 Other long-term liabilities 30,210 27,833 Total liabilities 1,342,460 1,203,345 Commitments and contingencies (Note 17) Stockholders' equity: Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of December 31, 2025 and December 25, 2024. — — Class A common stock, $0.001 par value—200,000,000 shares authorized; 40,254,281 and 40,068,068 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. 40 40 Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,434,789 and 2,455,713 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. 2 2 Additional paid-in capital 452,577 442,993 Retained earnings 72,709 26,984 Accumulated other comprehensive loss ( 1 ) ( 1 ) Total stockholders' equity attributable to Shake Shack Inc. 525,327 470,018 Non-controlling interests 28,422 23,608 Total equity 553,749 493,626 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,896,209 $ 1,696,971 See accompanying Notes to Consolidated Financial Statements. Shake Shack Inc. Form 10-K | 72 SHAKE SHACK INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Fiscal Year Ended December 31 2025 December 25 2024 December 27 2023 Shack sales $ 1,391,166 $ 1,207,561 $ 1,046,819 Licensing revenue 54,140 45,047 40,714 TOTAL REVENUE 1,445,306 1,252,608 1,087,533 Shack-level operating expenses: Food and paper costs 396,714 339,940 305,041 Labor and related expenses 360,693 338,750 304,254 Other operating expenses 212,677 178,381 149,449 Occupancy and related expenses 106,632 93,069 79,846 General and administrative expenses 176,233 149,047 129,542 Depreciation and amortization expense 106,600 102,468 91,242 Pre-opening costs 18,001 15,547 19,231 Impairments, loss on disposal of assets, and Shack closures 5,248 32,368 3,007 TOTAL EXPENSES 1,382,798 1,249,570 1,081,612 INCOME FROM OPERATIONS 62,508 3,038 5,921 Other income, net 12,260 13,251 12,776 Interest expense ( 2,159 ) ( 2,045 ) ( 1,717 ) INCOME BEFORE INCOME TAXES 72,609 14,244 16,980 Income tax expense (benefit) 22,903 3,424 ( 4,010 ) NET INCOME 49,706 10,820 20,990 Less: Net income attributable to non-controlling interests 3,981 613 726 NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC. $ 45,725 $ 10,207 $ 20,264 Earnings per share of Class A common stock: Basic $ 1.14 $ 0.26 $ 0.51 Diluted $ 1.09 $ 0.24 $ 0.48 Weighted average shares of Class A common stock outstanding: Basic 40,212 39,830 39,419 Diluted 41,847 44,203 43,899 See accompanying Notes to Consolidated Financial Statements. Shake Shack Inc. Form 10-K | 73 SHAKE SHACK INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Fiscal Year Ended December 31 2025 December 25 2024 December 27 2023 Net income $ 49,706 $ 10,820 $ 20,990 Other comprehensive income (loss), net of tax (1) : Change in foreign currency translation adjustment — 2 ( 3 ) OTHER COMPREHENSIVE INCOME (LOSS) — 2 ( 3 ) COMPREHENSIVE INCOME 49,706 10,822 20,987 Less: Comprehensive income attributable to non-controlling interests 3,981 613 726 COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAKE SHACK INC. $ 45,725 $ 10,209 $ 20,261 (1) Net of tax benefit of $ 0 for fiscal years ended December 31, 2025, December 25, 2024 and December 27, 2023. See accompanying Notes to Consolidated Financial Statements. Shake Shack Inc. Form 10-K | 74 SHAKE SHACK INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands, except share amounts) Class A Common Stock Class B Common Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Non- Controlling Interest Total Equity Shares Amount Shares Amount BALANCE DECEMBER 28, 2022 39,284,998 $ 39 2,869,513 $ 3 $ 415,649 $ ( 3,487 ) $ — $ 24,632 $ 436,836 Net income — — — — — 20,264 — 726 20,990 Other comprehensive loss: Net change in foreign currency translation adjustment — — — — — — ( 3 ) — ( 3 ) Equity-based compensation — — — — 15,174 — — — 15,174 Activity under stock compensation plan 154,317 — — — ( 3,271 ) — — 1,022 ( 2,249 ) Redemption of LLC interests 35,000 — ( 35,000 ) — 265 — — ( 265 ) — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — ( 1,216 ) — — — ( 1,216 ) Distributions paid to non-controlling interest holders — — — — — — — ( 162 ) ( 162 ) BALANCE DECEMBER 27, 2023 39,474,315 39 2,834,513 3 426,601 16,777 ( 3 ) 25,953 469,370 Net income — — — — — 10,207 — 613 10,820 Other comprehensive income: Net change in foreign currency translation adjustment — — — — — — 2 — 2 Equity-based compensation — — — — 16,286 — — — 16,286 Activity under stock compensation plan 214,953 1 — — ( 5,614 ) — — 1,040 ( 4,573 ) Redemption of LLC interests 378,800 — ( 378,800 ) ( 1 ) 3,517 — — ( 3,516 ) — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 2,203 — — — 2,203 Distributions paid to non-controlling interest holders — — — — — — — ( 482 ) ( 482 ) BALANCE DECEMBER 25, 2024 40,068,068 40 2,455,713 2 442,993 26,984 ( 1 ) 23,608 493,626 Net income — — — — — 45,725 — 3,981 49,706 Equity-based compensation — — — — 19,953 — — — 19,953 Activity under stock compensation plan 165,289 — — — ( 12,101 ) — — 2,404 ( 9,697 ) Redemption of LLC interests 20,924 — ( 20,924 ) — ( 271 ) — — 271 — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 2,003 — — — 2,003 Distributions paid to non-controlling interest holders — — — — — — — ( 1,842 ) ( 1,842 ) BALANCE DECEMBER 31, 2025 40,254,281 40 2,434,789 $ 2 $ 452,577 $ 72,709 ( 1 ) $ 28,422 $ 553,749 See accompanying Notes to Consolidated Financial Statements. Shake Shack Inc. Form 10-K | 75 SHAKE SHACK INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Year Ended December 31 2025 December 25 2024 December 27 2023 OPERATING ACTIVITIES Net income (including amounts attributable to non-controlling interests) $ 49,706 $ 10,820 $ 20,990 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 106,600 102,468 91,242 Amortization of debt issuance costs 1,048 1,047 1,047 Amortization of cloud computing assets 2,188 2,138 1,798 Non-cash operating lease cost 88,849 77,432 67,781 Equity-based compensation 19,503 15,915 14,888 Deferred income taxes 16,616 ( 1,054 ) ( 9,074 ) Non-cash interest 45 ( 102 ) 116 Gain on sale of equity securities — — ( 81 ) Net amortization of discount on held-to-maturity securities — ( 440 ) ( 1,620 ) Impairments, loss on disposal of assets, and Shack closures 5,248 32,368 3,007 Changes in operating assets and liabilities: Accounts receivable ( 9,546 ) ( 2,839 ) ( 2,970 ) Inventories ( 1,168 ) ( 610 ) ( 1,220 ) Prepaid expenses and other current assets ( 3,115 ) ( 2,629 ) ( 2,253 ) Other assets ( 5,959 ) ( 2,896 ) ( 6,307 ) Accounts payable ( 1,527 ) 3,356 687 Accrued expenses 29,902 6,644 9,513 Accrued wages and related liabilities 59 4,477 3,328 Other current liabilities 3,436 ( 712 ) ( 2,809 ) Operating lease liabilities ( 82,683 ) ( 77,167 ) ( 58,216 ) Other long-term liabilities 3,153 2,939 2,292 NET CASH PROVIDED BY OPERATING ACTIVITIES 222,355 171,155 132,139 INVESTING ACTIVITIES Purchases of property and equipment ( 165,849 ) ( 135,499 ) ( 146,167 ) Purchases of held-to-maturity securities — — ( 94,019 ) Maturities of held-to-maturity marketable securities — 69,420 27,078 Purchases of equity securities — — ( 690 ) Sales of equity securities — — 81,478 NET CASH USED IN INVESTING ACTIVITIES ( 165,849 ) ( 66,079 ) ( 132,320 ) FINANCING ACTIVITIES Payments on principal of finance leases ( 5,511 ) ( 3,964 ) ( 3,272 ) Deferred financing costs ( 10 ) — — Distributions paid to non-controlling interest holders ( 1,842 ) ( 482 ) ( 162 ) Payments under tax receivable agreement ( 37 ) — — Net proceeds from stock option exercises 123 1,627 744 Employee withholding taxes related to net settled equity awards ( 9,820 ) ( 6,198 ) ( 2,994 ) NET CASH USED IN FINANCING ACTIVITIES ( 17,097 ) ( 9,017 ) ( 5,684 ) Effect of exchange rate changes on cash and cash equivalents — 2 ( 3 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 39,409 96,061 ( 5,868 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 320,714 224,653 230,521 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 360,123 $ 320,714 $ 224,653 See accompanying Notes to Consolidated Financial Statements. Shake Shack Inc. Form 10-K | 76 SHAKE SHACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) Page Note 1 Nature of Operations 78 Note 2 Summary of Significant Accounting Policies 78 Note 3 Revenue 83 Note 4 Fair Value Measurements 84 Note 5 Accounts Receivable 85 Note 6 Property and Equipment 85 Note 7 Supplemental Balance Sheet Information 86 Note 8 Debt 86 Note 9 Leases 88 Note 10 Employee Benefit Plans 90 Note 11 Stockholders' Equity 90 Note 12 Non-Controlling Interests 90 Note 13 Equity-Based Compensation 92 Note 14 Income Taxes 94 Note 15 Earnings Per Share 99 Note 16 Supplemental Cash Flow Information 100 Note 17 Commitments and Contingencies 100 Note 18 Related Party Transactions 101 Note 19 Segment Reporting 102 Note 20 Geographic Information 103 Shake Shack Inc. Form 10-K | 77 NOTE 1: NATURE OF OPERATIONS Shake Shack Inc. was formed on September 23, 2014 as a Delaware corporation for the purpose of facilitating an initial public offering and other related transactions in order to carry on the business of SSE Holdings, LLC and its subsidiaries ("SSE Holdings"). Shake Shack Inc. is the sole managing member of SSE Holdings and, as sole managing member, the Company operates and controls all of the business and affairs of SSE Holdings. As a result, the Company consolidates the financial results of SSE Holdings and reports a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. As of December 31, 2025 the Company owned 94.3 % of SSE Holdings. Unless the context otherwise requires, "we," "us," "our," "Shake Shack," the "Company" and other similar references, refer to Shake Shack Inc. and, unless otherwise stated, all of its subsidiaries, including SSE Holdings. The Company operates and licenses Shake Shack restaurants ("Shacks"), which serve burgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine and more. As of December 31, 2025, there were 659 Shacks in operation, system wide, of which 373 were Company-operated Shacks and 286 were licensed Shacks. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of Shake Shack Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. SSE Holdings is considered a variable interest entity. Shake Shack Inc. is the primary beneficiary as the Company has the majority economic interest in SSE Holdings and, as the sole managing member, has decision making authority that significantly affects the economic performance of the entity, while the limited partners have no substantive kick-out or participating rights. As a result, the Company consolidates SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of the Company's consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of December 31, 2025 and December 25, 2024, the net assets of SSE Holdings were $ 500,732 and $ 413,793 , respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreement. Refer to Note 8, Debt, and Note 14, Income Taxes, for additional information. Fiscal Year The Company operates on a 52/53 week fiscal year ending on the last Wednesday of December. Fiscal 2025 contained 53 weeks and ended on December 31, 2025 ("fiscal 2025"). Fiscal 2024 contained 52 weeks and ended on December 25, 2024 ("fiscal 2024"). Fiscal 2023 contained 52 weeks and ended on December 27, 2023 ("fiscal 2023"). Unless otherwise stated, references to years in this report relate to fiscal years. Use of Estimates The preparation of these Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Assets and liabilities are categorized based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. Shake Shack Inc. Form 10-K | 78 ▪ Level 1 — Quoted prices in active markets for identical assets or liabilities. ▪ Level 2 — Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. ▪ Level 3 — Inputs that are both unobservable and significant to the overall fair value measurements reflecting an entity's estimates of assumptions that market participants would use in pricing the asset or liability. Cash and Cash Equivalents Cash and cash equivalents consist primarily of cash on hand, deposits with banks, money market funds and short-term, highly liquid investments that have original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. Marketable Securities In fiscal 2023 and 2024, the Company had marketable securities classified as held-to-maturity securities, which consisted of U.S. Treasuries for which the Company had the ability and intent to hold to maturity and were reported at amortized cost, net of a valuation allowance for credit losses. As of December 31, 2025 and December 25, 2024, the Company did not have any investments in marketable securities. Interest income and the amortization of discounts and premiums are recorded in Other income, net on the Consolidated Statements of Income. Accounts Receivable, Net Accounts receivable, net consist primarily of receivables from our licensees for licensing revenue and related reimbursements, credit card receivables and vendor rebates. The collectability of accounts receivable is evaluated based on a variety of factors, including historical experience, current economic conditions and other factors. Inventories Inventories, which primarily consist of food, paper goods, beverages, and retail merchandise, are valued at the lower of weighted average cost or net realizable value. No adjustment is deemed necessary to reduce inventory to net realizable value due to the rapid turnover and high utilization of inventory. Property and Equipment, Net Property and equipment, net is stated at historical cost less accumulated depreciation. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which generally range from five to seven years for equipment, furniture and fixtures, and two to five years for computer equipment and software. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease terms. Costs incurred when constructing Shacks are capitalized. The cost of repairs and maintenance are expensed when incurred. Costs for refurbishments and improvements that significantly increase the productive capacity or extend the useful life of the assets are capitalized. When assets are disposed, the resulting gain or loss is recognized in Impairments, loss on disposal of assets, and Shack closures on the Consolidated Statements of Income. Valuation of Long-lived Assets The Company assesses potential impairments to its long-lived assets, which include property and equipment and operating and finance lease right-of-use assets, whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. The recoverability evaluation is first performed at the market service area level ("MSA"). If the carrying value of the MSA exceeds its estimated undiscounted future cash flows, a secondary recoverability test is performed for all individual Shacks within the identified MSA. An impairment charge is recognized when the carrying amount of the asset exceeds the fair value of the asset, considering external market participant assumptions, and is allocated across all assets of the impaired Shack. Since Shake Shack Inc. Form 10-K | 79 the determination of future cash flows is an estimate of future performance, there may be future impairments in the event that future cash flows do not meet expectations. Refer to Note 4, Fair Value Measurements, for additional information. Deferred Financing Costs Deferred financing costs incurred in connection with the issuance of long-term debt and establishing credit facilities are capitalized and amortized in Interest expense on the Consolidated Statements of Income based on the related debt agreements. Deferred financing costs are included in Other assets on the Consolidated Balance Sheets. Other Assets Other assets consist primarily of capitalized implementation costs from cloud computing arrangements, certain custom pre-ordered furniture, fixtures and equipment for future and existing Shacks, transferable liquor licenses, and security deposits. Implementation costs associated with cloud computing arrangements hosted by third-party vendors are capitalized when incurred during the application development phase. Amortization is calculated on a straight-line basis over the contractual term of the cloud computing arrangement and is recorded within General and administrative expenses on the Consolidated Statements of Income. As of December 31, 2025 and December 25, 2024, capitalized implementation costs from cloud computing arrangements totaled $ 2,376 and $ 4,051 , respectively, net of accumulated amortization. The costs of obtaining non-transferable liquor licenses that are directly issued by local government agencies for nominal fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets. Annual liquor license renewal fees, for both types of licenses, are expensed over the renewal term. As of December 31, 2025 and December 25, 2024, indefinite-lived intangible assets relating to transferable liquor licenses totaled $ 2,038 . Indefinite-lived intangible assets are evaluated for impairment at least annually during the fourth quarter, and whenever events or circumstances indicate that an impairment may exist. When evaluating intangible assets for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that an intangible asset group is impaired. If determined that it is more likely than not that the carrying value of the intangible asset group exceeds its fair value, the Company performs a quantitative assessment to derive the fair value of the intangible asset group. If the carrying value of the intangible asset group exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. In addition, the Company continuously monitors and may revise the useful lives of intangible assets when facts and circumstances change. Revenue Recognition Shack Sales Revenue from Shack sales is recognized when payment is tendered at the point of sale, net of discounts, as the performance obligation has been satisfied at that time. Sales tax collected from guests is excluded from Shack sales and the obligation is included in Other current liabilities on the Consolidated Balance Sheets until the taxes are remitted to the appropriate taxing authorities. Delivery services are fulfilled by third-party delivery partners whether ordered through the Shack app, website (collectively, "Company-owned platforms") or through third-party delivery platforms. Revenue from orders through Company-owned platforms includes delivery fees and is recognized when the delivery partner transfers the order to the guest as the Company controls the delivery. For these sales, the Company receives payment directly from the guest at the time of sale. Revenue from orders through third-party delivery platforms is recognized when the order is transferred to the third-party delivery partner and excludes delivery fees collected by the delivery partner as the Company does not control the delivery. The Company receives payment from the delivery partner subsequent to the transfer of the order and the payment terms are short-term in nature. For all delivery sales, the Company is considered the principal and recognizes revenue on a gross basis. Shake Shack Inc. Form 10-K | 80 The Company sells gift cards which do not have expiration dates. Revenue from gift cards is recognized when gift cards are redeemed by the guest or, in the event a gift card is not expected to be redeemed, in proportion to actual redemptions of gift cards ("gift card breakage"). The gift card breakage rate is determined from historical gift card redemption patterns. Gift card breakage income for fiscal 2025, 2024, and 2023 was $ 525 , $ 413 and $ 327 , respectively. Gift card breakage income is included in Shack sales on the Consolidated Statements of Income. Licensing Revenue Licensing revenue includes initial territory fees, Shack opening fees, termination fees and ongoing sales-based royalty fees from licensed Shacks. Generally, the licenses granted to develop, open and operate each Shack in a specified territory are the predominant good or service transferred to the licensee and represent distinct performance obligations. Ancillary promised services, such as training and assistance during the initial opening of a Shack, are typically combined with the license and considered one performance obligation per Shack. The Company determines the transaction price for each contract, which requires judgment as the transaction price is comprised of the initial territory fee and an estimate of the total Shack opening fees based on the estimated number of Shacks the Company expects the licensee to open. The transaction price is then allocated equally to each Shack expected to open. The performance obligation is satisfied over time, starting when a Shack opens through the end of the license term for the related Shack, therefore revenue is recognized on a straight-line basis over the license term. Generally, payment for the initial territory fee is received upon execution of the license agreement and payment for the Shack opening fees is received either in advance of or upon opening the related Shack. These payments are initially deferred and recognized in revenue as the performance obligations are satisfied. Revenue from sales-based royalties is recognized as the related sales occur. Equity-based Compensation Equity-based compensation expense is measured based on the grant-date fair value of the awards. For awards with graded-vesting features and a combination of service and performance conditions, compensation expense is recognized using a graded-vesting attribution method over the vesting period. For awards with cliff vesting features and a combination of service and performance conditions, compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award based on the most probable outcome of the performance conditions. For awards that contain a market condition, a Monte Carlo simulation valuation model is used to calculate the grant-date fair value. The assumptions used in the valuation include expected term, volatility, risk-free interest rate, and closing price as of the valuation date. Compensation expense for awards containing a market condition is recognized ratably over the performance period regardless of whether the market condition and requisite service period are met. Actual distributed shares are calculated upon conclusion of the service and performance periods. Forfeitures are recognized as they occur for all equity awards. Equity-based compensation expense is included in General and administrative expenses and Labor and related expenses on the Consolidated Statements of Income. Advertising Most advertising costs are expensed as incurred, with the exception of advertising production costs, which are expensed at the time the advertising first takes place. Advertising costs totaled $ 34,138 , $ 22,169 and $ 12,437 in fiscal 2025, fiscal 2024 and fiscal 2023, respectively, and are included in General and administrative expense and Other operating expenses on the Consolidated Statements of Income. Leases Shake Shack currently leases all of its Company-operated Shacks, Shack Support Centers and certain equipment under various non-cancelable lease agreements that expire on various dates through 2045. The Company evaluates contracts entered into to determine whether the contract involves the use of property or equipment, which is either explicitly or implicitly identified in the contract. The Company evaluates whether it controls the use of the asset, which is determined by assessing whether substantially all economic benefit from the use of the asset is obtained, and whether the Company has the right to direct the use of the asset. If these criteria are met, the Company has identified a lease, within the contract, and therefore a right-of-use asset and lease liability are recorded on the Consolidated Balance Sheets. Upon possession of a leased asset, the Company Shake Shack Inc. Form 10-K | 81 determines whether the lease is an operating or finance lease. All of the Company's real estate leases are classified as operating leases and most equipment leases are classified as finance leases. Generally, real estate leases have initial terms ranging from ten to fifteen years and typically include two five-year renewal options. Renewal options are generally not recognized as part of the right-of-use assets and lease liabilities as it is not reasonably certain at commencement date that the Company would exercise the renewal options. Real estate leases typically contain fixed minimum rent payments and/or contingent rent payments which are based upon sales in excess of specified thresholds. When the achievement of such sales thresholds are deemed to be probable, contingent rent is accrued in proportion to the sales recognized during the period. For operating leases, fixed lease payments are recognized as operating lease costs on a straight-line basis over the lease term and are included in specific line items on the Consolidated Statements of Income. Lease expense incurred before a Shack opens is recorded in Pre-opening costs. Once a Company-operated Shack opens, the straight-line lease expense and contingent rent, if applicable, are included in Occupancy and related expenses. Many of these leases also require the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in Occupancy and related expenses. Finance leases are recognized in depreciation expense on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liabilities. For both operating and finance leases that contain lease and non-lease components, the components are combined and accounted for as a single lease component. Variable lease costs for both operating and finance leases, if any, are recognized as incurred. Leases with a term of 12 months or less are deemed short-term and are not recognized on the Consolidated Balance Sheets. Fixed lease payments for short-term leases are recognized on a straight-line basis over the lease term on the Consolidated Statements of Income. The Company calculates operating lease right-of-use assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. The Company uses its incremental borrowing rate (“IBR”) in determining the present value of future lease payments as there are no explicit rates provided in the leases. The IBR used to measure the lease liability is derived from the average of the yield curves obtained from using the notching method and the recovery rate method. The most significant assumption in calculating the IBR is the Company's credit rating and is subject to judgment. The credit rating used to develop the IBR is determined by utilizing the credit ratings of other public companies with similar financial information as SSE Holdings. The Company expends cash for leasehold improvements to build out and equip leased properties. Generally, a portion of the leasehold improvements and building costs are reimbursed by the landlords through landlord incentives pursuant to agreed-upon terms in the lease agreements. Landlord incentives usually take the form of cash, full or partial credits against future minimum or contingent rents otherwise payable by the Company, or a combination thereof. In most cases, landlord incentives are received after the Company takes possession of the property and as milestones are met during the construction of the property. The Company includes these amounts in the measurement of the initial operating lease liability and right-of-use asset. Pre-opening Costs Pre-opening costs are expensed as incurred and consist primarily of occupancy, manager and team member wages, cookware, travel and lodging costs for the opening training team and other supporting team members, marketing expenses, legal fees, and inventory costs incurred prior to the opening of a Company-operated Shack. Income Taxes Income taxes are accounted for pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying values and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in Income tax expense on the Consolidated Statements of Income in the period of enactment. A valuation allowance is recognized if the Company determines it is more likely than not that all or a portion of a deferred tax asset will not be recognized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent and expected future results of operations. Shake Shack Inc. Form 10-K | 82 Recently Adopted Accounting Pronouncements The Company adopted the Accounting Standards Update ("ASU") summarized below in fiscal 2025. ASU Description Date Adopted Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09) This ASU requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. December 31, 2025 Recently Issued Accounting Pronouncements ASUs applicable to the Company that were recently issued are summarized below. ASU Description Effective Date Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03) This ASU requires that an entity disaggregate relevant expense captions presented on the face of the income statement into natural expense categories within the footnotes of the financial statements. In addition, a separate disclosure of selling expenses is required to be presented. The ASU is intended to allow stakeholders to better understand the components of an entity's expenses. Early adoption is permitted. The Company is evaluating the impact this standard will have on its Consolidated Financial Statements and related disclosures. Fiscal years beginning after December 15, 2026 All other ASUs issued but not yet effective are not applicable or not expected to have a material impact on the Company’s future Consolidated Financial Statements. NOTE 3: REVENUE Revenue Recognition Revenue disaggregated by type was as follows: 2025 2024 2023 Shack sales $ 1,391,166 $ 1,207,561 $ 1,046,819 Licensing revenue: Sales-based royalties 51,532 43,487 39,853 Initial territory, opening, and termination fees 2,608 1,560 861 Total revenue $ 1,445,306 $ 1,252,608 $ 1,087,533 The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of December 31, 2025 was $ 27,308 . The Company expects to recognize this amount as revenue over a long-term period, as the majority of license terms for each Shack range from ten to twenty years . This amount excludes any variable consideration related to sales-based royalties. Shake Shack Inc. Form 10-K | 83 Contract Balances Contract liabilities and receivables from contracts with customers were as follows: December 31 2025 December 25 2024 Shack sales receivables $ 13,397 $ 10,699 Licensing receivables, net of allowance for doubtful accounts 7,507 5,735 Gift card liability 3,711 2,584 Deferred revenue, current 1,928 1,666 Deferred revenue, long-term 19,154 17,060 Revenue recognized that was included in the respective liability balances at the beginning of the period was as follows: 2025 2024 Gift card liability $ 869 $ 776 Deferred revenue 2,123 1,461 NOTE 4: FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis The carrying values of the Company's Cash and cash equivalents, Accounts receivable, net, Accounts payable and Accrued expenses approximate fair value due to the short-term nature of these financial instruments. Refer to Note 8, Debt, for additional information relating to the fair value of the Company's outstanding debt instruments. A summary of other income from marketable securities was as follows: 2025 2024 2023 Income from marketable securities $ — $ 640 $ 2,885 Realized gain on sale of equity securities — — 81 Total $ — $ 640 $ 2,966 Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis Assets and liabilities measured at fair value on a non-recurring basis include long-lived assets, operating lease right-of-use assets and indefinite-lived intangible assets. The Company performs its impairment analysis at least annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. During fiscal 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 related to right-of-use assets, and property, plant and equipment. The Company also recorded a gain on lease termination partially offset by miscellaneous Shack closure expense which totaled $( 87 ). Additionally in fiscal 2025, the Company recognized miscellaneous Shack closure expense of $ 1,687 and 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 and miscellaneous Shack closure expense of $ 1,715 related to the closure of nine underperforming Company-operated Shacks in California, Ohio and Texas. No impairment charges were recognized during fiscal 2023. Shake Shack Inc. Form 10-K | 84 The fair values of assets were determined using an income-based approach and are classified as Level 3 within the fair value hierarchy. Significant inputs include projections of future cash flows, Shack sales, profitability, discount rates, and sublease income. These impairment charges were included in Impairments, loss on disposal of assets, and Shack closures on the Consolidated Statements of Income. NOTE 5: ACCOUNTS RECEIVABLE, NET The components of Accounts receivable, net were as follows: December 31 2025 December 25 2024 Licensing receivables, net of allowance for doubtful accounts $ 7,507 $ 5,735 Credit card receivables 7,143 5,856 Delivery receivables 5,187 4,225 Vendor rebates 5,175 796 Other receivables 7,950 3,075 Accounts receivable, net $ 32,962 $ 19,687 NOTE 6: PROPERTY AND EQUIPMENT, NET The components of Property and equipment, net were as follows: December 31 2025 December 25 2024 Leasehold improvements $ 757,035 $ 676,098 Equipment 136,900 116,561 Furniture and fixtures 38,233 34,057 Computer equipment and software 137,933 122,406 Financing equipment lease right-of-use assets 25,373 19,630 Construction in progress 81,381 40,034 Property and equipment, gross 1,176,855 1,008,786 Less: accumulated depreciation ( 551,004 ) ( 457,186 ) Property and equipment, net $ 625,851 $ 551,600 Depreciation expense was $ 106,574 , $ 102,442 and $ 91,216 for fiscal 2025, fiscal 2024 and fiscal 2023, respectively. Shake Shack Inc. Form 10-K | 85 NOTE 7: SUPPLEMENTAL BALANCE SHEET INFORMATION The components of Prepaid expenses and other current assets were as follows: December 31 2025 December 25 2024 Prepaid expenses $ 11,162 $ 8,196 Tenant allowance receivables 17,924 12,761 Other 994 844 Prepaid expenses and other current assets $ 30,080 $ 21,801 The components of Other current liabilities were as follows: December 31 2025 December 25 2024 Sales tax payable $ 10,080 $ 6,999 Current portion of financing equipment lease liabilities 5,959 4,086 Gift card liability 3,711 2,584 Other 8,033 5,869 Other current liabilities $ 27,783 $ 19,538 NOTE 8: DEBT Convertible Notes The Company's $ 250,000 aggregate principal amount of 0 % Convertible Senior Notes due 2028 (“Convertible Notes”) will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances. Upon conversion, the Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election. The Convertible Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 1, 2027, only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on June 30, 2021 (and only during such fiscal quarter), if the last reported sale price of the Company's Class A common stock, par value $ 0.001 per share, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price for the Convertible Notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per one thousand dollar principal amount of the Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of Class A common stock and the conversion rate for the Convertible Notes on each such trading day; (3) if the Company calls such Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Convertible Notes called (or deemed called) for redemption; and (4) upon the occurrence of specified corporate events as set forth in the Indenture. On or after December 1, 2027, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Notes may convert all or any portion of their Convertible Notes at any time, regardless of the foregoing circumstances. The Convertible Notes had an initial conversion rate of 5.8679 shares of Class A common stock per one thousand dollar principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $ 170.42 per share of Class A Shake Shack Inc. Form 10-K | 86 common stock. The fair value of the Convertible Notes was approximately $ 236,875 and $ 256,900 , respectively, as of December 31, 2025 and December 25, 2024, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as a Level 2 measurement within the fair value hierarchy. On or after March 6, 2025, the Company may redeem for cash all or any portion of the Convertible Notes, at the Company's option, if the last reported sale price of Class A common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. The Convertible Notes were not redeemable by the Company prior to March 6, 2025. In addition, if Shake Shack undergoes a fundamental change (as defined in the indenture governing the Convertible Notes), subject to certain conditions, holders may require it to repurchase for cash all or any portion of their Convertible Notes at a repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or if the Company delivers a notice of redemption in respect of some or all of the Convertible Notes, the Company will, in certain circumstances, increase the conversion rate of the Convertible Notes for a holder who elects to convert the Convertible Notes in connection with such a corporate event or convert the Convertible Notes called (or deemed called) for redemption during the related redemption period, as the case may be. Contemporaneously with the issuance of the Convertible Notes, Shake Shack Inc. entered into an intercompany note with SSE Holdings (“Intercompany Note”). SSE Holdings promises to pay Shake Shack Inc., for value received, the principal amount with interest of the Intercompany Note in March 2028. Shake Shack Inc. will exercise its right to convert the Intercompany Note to maintain at all times a one-to-one ratio between the number of common units, directly or indirectly, held by Shake Shack Inc. and the aggregate number of outstanding shares of common stock. Classification 2025 2024 2023 Amortization expense on Convertible Notes Interest expense $ 1,048 $ 1,047 $ 1,047 December 31 2025 December 25 2024 Convertible Notes $ 250,000 $ 250,000 Discount and debt issuance costs, net of amortization ( 2,269 ) ( 3,317 ) Long-term debt $ 247,731 $ 246,683 Revolving Credit Facility The Company maintains a revolving credit facility agreement ("Revolving Credit Facility") which permits borrowings up to $ 50,000 with the ability to increase available borrowings up to an additional $ 100,000 , subject to satisfaction of certain conditions. 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. 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 dependent upon the net lease adjusted leverage ratio. As of December 31, 2025 and December 25, 2024, no amounts were outstanding under the Revolving Credit Facility. Shake Shack Inc. Form 10-K | 87 The obligations under the Revolving Credit Facility are secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors. The obligations under the Revolving Credit Facility are guaranteed by each of SSE Holdings' direct and indirect subsidiaries, with certain exceptions. The Revolving Credit Facility requires the Company to comply with maximum net lease adjusted leverage and minimum fixed charge coverage ratios, as well as other customary affirmative and negative covenants. As of December 31, 2025, the Company was in compliance with all covenants. The Revolving Credit Facility also permits the issuance of letters of credit upon our request of up to $ 15,000 . As of December 31, 2025 and December 25, 2024, the Company had outstanding letters of credit of $ 4,839 and $ 3,894 , respectively, in connection with the Revolving Credit Facility. Classification 2025 2024 2023 Interest expense on Revolving Credit Facility Interest expense $ 61 $ 67 $ 74 Classification December 31 2025 December 25 2024 Unamortized deferred financing costs on Revolving Credit Facility Other assets $ 19 $ 23 NOTE 9: LEASES A summary of operating and finance right-of-use assets and lease liabilities were as follows: Classification December 31 2025 December 25 2024 Operating leases Operating lease assets $ 507,253 $ 424,611 Finance leases Property and equipment, net 15,056 12,225 Total right-of-use assets $ 522,309 $ 436,836 Operating leases: Operating lease liabilities, current $ 63,553 $ 55,739 Long-term operating lease liabilities 575,138 494,499 Finance leases: Other current liabilities 5,959 4,086 Other long-term liabilities 9,745 8,616 Total lease liabilities $ 654,395 $ 562,940 Shake Shack Inc. Form 10-K | 88 The components of lease expense were as follows: Classification 2025 2024 2023 Operating lease cost Occupancy and related expenses Pre-opening costs General and administrative expenses $ 88,849 $ 77,432 $ 67,781 Finance lease cost: Amortization of right-of-use assets Depreciation and amortization expense 5,721 4,181 3,324 Interest on lease liabilities Interest expense 920 770 476 Variable lease cost Occupancy and related expenses Pre-opening costs General and administrative expenses 25,128 21,694 18,305 Short-term lease cost Occupancy and related expenses 665 840 938 Total lease cost $ 121,283 $ 104,917 $ 90,824 As of December 31, 2025, future minimum lease payments for operating and finance leases consisted of the following: Operating Leases Finance Leases 2026¹ $ 82,229 $ 6,674 2027 106,097 6,086 2028 103,001 3,308 2029 95,959 500 2030 83,522 284 Thereafter 349,842 96 Total minimum payments 820,650 16,948 Less: imputed interest 199,883 1,245 Total lease liabilities $ 620,767 $ 15,703 (1) Operating leases are net of certain tenant allowance receivables that were reclassified to Other current assets as of December 31, 2025. As of December 31, 2025, the Company had additional operating lease commitments of $ 222,129 for non-cancelable leases without a possession date, which commence in 2026 or later. The terms of these lease commitments are materially consistent with leases recognized on the Consolidated Balance Sheets. A summary of lease terms and discount rates for operating and finance leases were as follows: December 31 2025 December 25 2024 Weighted average remaining lease term (years): Operating leases 8.6 8.7 Finance leases 2.8 3.3 Weighted average discount rate: Operating leases 6.3 % 6.2 % Finance leases 5.8 % 6.1 % Shake Shack Inc. Form 10-K | 89 Supplemental cash flow information related to leases was as follows: 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 100,328 $ 91,783 $ 72,128 Operating cash flows from finance leases 920 770 476 Financing cash flows from finance leases 5,511 3,964 3,272 Right-of-use assets obtained in exchange for lease obligations: Operating leases 136,882 84,887 72,403 Finance leases 9,553 4,792 8,972 NOTE 10: EMPLOYEE BENEFIT PLANS Defined Contribution Plan Team members who have completed 90 days of continuous employment and are 21 years or older are eligible to participate in a defined contribution savings plan maintained by Shake Shack. The plan is funded by participant and employer contributions. Employer contributions, made at the Company's discretion, are paid directly to the third-party trustee and match a portion of certain participants' contributions. The Company matches 100 % of certain participants' contributions for the first 3 % of eligible compensation contributed and 50 % of contributions made in excess of 3 % of eligible compensation up to 5 % of eligible compensation. Employer contributions totaled $ 2,497 , $ 2,319 and $ 1,888 , respectively, for fiscal 2025, fiscal 2024 and fiscal 2023. NOTE 11: STOCKHOLDERS' EQUITY LLC Interests The SSE Holdings LLC Agreement provides that holders of LLC Interests may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis. In connection with any redemption or exchange, the Company receives a corresponding number of LLC Interests, increasing its total ownership interest in SSE Holdings. Simultaneously, and in connection with a redemption, the corresponding number of shares of Class B common stock are surrendered and cancelled. Refer to Note 12, Non-Controlling Interests, for additional information related to LLC Interests activity. Dividend Restrictions Shake Shack Inc. is a holding company with no direct operations. As a result, its ability to pay cash dividends on its common stock, if any, is dependent upon cash dividends, distributions or other transfers from SSE Holdings. The amounts available to pay cash dividends are subject to certain covenants and restrictions set forth in the Revolving Credit Facility. As of December 31, 2025, essentially all of the net assets of SSE Holdings were restricted. NOTE 12: NON-CONTROLLING INTERESTS Shake Shack is the primary beneficiary and sole managing member of SSE Holdings and, as a result, consolidates the financial results of SSE Holdings. The Company reports a non-controlling interest representing the economic interest held by the other members of SSE Holdings. The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the Shake Shack Inc. Form 10-K | 90 "LLC Agreement") of SSE Holdings provides that holders of SSE Holdings, LLC membership interests ("LLC Interests") may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one -for-one basis. In connection with any redemption or exchange, the Company will receive a corresponding number of LLC Interests, increasing the total ownership interest in SSE Holdings. Changes in the ownership interest in SSE Holdings while the Company retains its controlling interest in SSE Holdings will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Interests in SSE Holdings by the other members of SSE Holdings will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital. The following table summarizes the ownership interest in SSE Holdings: 2025 2024 LLC Interests Ownership % LLC Interests Ownership % Number of LLC Interests held by Shake Shack Inc. 40,254,281 94.3 % 40,068,068 94.2 % Number of LLC Interests held by non-controlling interest holders 2,434,789 5.7 % 2,455,713 5.8 % Total LLC Interests outstanding 42,689,070 100.0 % 42,523,781 100.0 % The weighted average ownership percentages for the applicable reporting periods are used to attribute Net income and Other comprehensive income to the non-controlling interest holders and were as follows: 2025 2024 2023 Non-controlling interest holders' weighted average ownership percentages 5.7 % 6.2 % 6.7 % The following table summarizes the effects of changes in ownership of SSE Holdings on the Company's equity: 2025 2024 2023 Net income attributable to Shake Shack Inc. $ 45,725 $ 10,207 $ 20,264 Other comprehensive income (loss): Unrealized holding income (loss) on foreign currency translation adjustment — 2 ( 3 ) Transfers (to) from non-controlling interests: Increase (decrease) in additional paid-in capital as a result of the redemption of LLC Interests ( 271 ) 3,517 265 Decrease in additional paid-in capital as a result of activity under the stock-based compensation plan ( 12,101 ) ( 5,614 ) ( 3,271 ) Total effect of changes in ownership interest on equity attributable to Shake Shack Inc. $ 33,353 $ 8,112 $ 17,255 The following table summarizes the LLC Interests activity: 2025 2024 2023 LLC Interests activity under the Company's stock-based compensation plan Number of LLC Interests received by Shake Shack Inc. 165,289 214,953 154,317 Redemption and acquisition of LLC Interests Number of LLC Interests redeemed by non-controlling interest holders 20,924 378,800 35,000 Number of LLC Interests received by Shake Shack Inc. 20,924 378,800 35,000 Issuance of Class A common stock Shares of Class A common stock issued in connection with redemptions of LLC Interests 20,924 378,800 35,000 Cancellation of Class B common stock Shares of Class B common stock surrendered and canceled 20,924 378,800 35,000 Shake Shack Inc. Form 10-K | 91 NOTE 13: EQUITY-BASED COMPENSATION A summary of equity-based compensation expense by award type was as follows: 2025 2024 2023 Performance stock units $ 4,520 $ 2,611 $ 3,149 Restricted stock units 14,983 13,304 11,739 Equity-based compensation expense $ 19,503 $ 15,915 $ 14,888 Total income tax benefit recognized related to equity-based compensation $ 496 $ 396 $ 391 Equity-based compensation expense recognized was as follows: 2025 2024 2023 General and administrative expenses $ 17,514 $ 14,339 $ 13,587 Labor and related expenses 1,989 1,576 1,301 Equity-based compensation expense $ 19,503 $ 15,915 $ 14,888 The Company capitalized $ 450 , $ 371 and $ 286 of equity-based compensation expense associated with the construction cost of our Shacks and certain digital and technology projects, during fiscal 2025, fiscal 2024 and fiscal 2023, respectively. Restricted Stock Units The Company is authorized to grant up to 6,707,843 restricted stock units and other equity-based awards to team members, directors and officers under the 2025 Incentive Award Plan (the “2025 Plan”). The restricted stock units granted generally vest equally over periods ranging from one to five years . The fair value of restricted stock units is determined based on the closing market price of our Class A common stock on the date of grant. Compensation expense related to the restricted stock units is recognized using a straight-line attribution method over the vesting period. Shake Shack Inc. Form 10-K | 92 A summary of restricted stock unit activity was as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding and unvested as of December 28, 2022 395,853 $ 76.82 Granted 326,692 58.26 Vested ( 147,163 ) 70.29 Forfeited ( 63,838 ) 68.94 Outstanding and unvested as of December 27, 2023 511,544 67.82 Granted 199,345 102.77 Vested ( 185,649 ) 70.31 Forfeited ( 82,436 ) 73.41 Outstanding and unvested as of December 25, 2024 442,804 81.47 Granted 201,723 109.32 Vested ( 162,408 ) 81.80 Forfeited ( 86,337 ) 86.81 Outstanding and unvested as of December 31, 2025 395,782 $ 94.37 The total fair value of shares vested during fiscal 2025, fiscal 2024 and fiscal 2023 was $ 13,285 , $ 13,021 and $ 10,382 , respectively. As of December 31, 2025, total unrecognized compensation expense related to unvested restricted stock units was $ 25,071 , which is expected to be recognized over a weighted average period of 2.0 years. Performance Stock Units Under the 2025 Plan, the Company may grant performance stock units and other types of performance-based equity awards that vest based on the outcome of certain performance criteria that are established and approved by the Compensation Committee of the Board of Directors. The actual number of equity awards earned is based on the level of performance achieved over a predetermined performance period, relative to established financial goals. Performance stock units granted during fiscal 2025 are subject to a requisite service period and the awards cliff vest over three years . The amount of awards that can be earned ranges from 0 % to 200 % of the number of performance stock units granted, based on the achievement of approved financial goals over a three-year performance period. Performance stock units granted during fiscal 2024 are subject to a requisite service period and the awards vest ratably over four years or cliff vest over three years . The amount of awards that can be earned ranges from 0 % to 200 % of the number of performance stock units granted, based on the achievement of approved financial goals over a one -year or three -year performance period. No performance stock units were granted during fiscal 2023. Performance stock units containing market conditions are based on a Monte Carlo simulation, and related compensation expense is recognized using a graded attribution method over the vesting period and does not change regardless of the amount of shares received by the recipient based on achievement of the awards. The fair value of performance stock units not containing a market condition is determined based on the closing market price of the Company's Class A common stock on the date of grant. Compensation expense related to the performance stock units not containing a market condition is recognized using either a graded-vesting attribution method or straight-line over the vesting period based on the most probable outcome of the performance conditions. Shake Shack Inc. Form 10-K | 93 A summary of performance stock unit activity was as follows: Performance Stock Units Weighted Average Grant Date Fair Value Outstanding and unvested as of December 28, 2022 159,822 $ 92.22 Vested ( 25,494 ) 91.36 Forfeited ( 12,903 ) 88.70 Outstanding and unvested as of December 27, 2023 121,425 92.77 Granted 95,624 103.98 Vested ( 10,646 ) 129.68 Forfeited ( 33,957 ) 91.73 Outstanding and unvested as of December 25, 2024 172,446 96.82 Granted 73,057 106.87 Performance achievement (1) 3,093 107.25 Vested ( 85,408 ) 89.85 Forfeited ( 9,225 ) 107.84 Outstanding and unvested as of December 31, 2025 153,963 $ 105.00 (1) Represents the incremental awards earned and/or awards forfeited based on the achievement of performance conditions. The total fair value of awards that vested during fiscal 2025, fiscal 2024 and fiscal 2023 was $ 9,136 , $ 1,104 and $ 1,441 , respectively. The weighted average grant date fair value of performance stock units granted during fiscal 2023 was nil . As of December 31, 2025, total unrecognized compensation expense related to unvested performance stock units was $ 8,471 , which is expected to be recognized over a weighted average period of 2.0 years. NOTE 14: INCOME TAXES Shake Shack is the sole managing member of SSE Holdings, which is classified as a partnership for U.S federal and most applicable state and local income tax purposes. As the managing member, the Company consolidates SSE Holdings financial results. As a partnership, SSE Holdings is not subject to U.S. federal and certain state and local income taxes. Instead, any taxable income or loss generated by SSE Holdings is allocated to its members, including the Company, on a pro rata basis. The Company is subject to U.S. federal, state and local income taxes with respect to its allocable share of taxable income or loss from SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc. The Company is also subject to withholding taxes in foreign jurisdictions. Income Tax Expense The components of Income before income taxes were as follows: 2025 2024 2023 Domestic $ 18,469 $ ( 18,247 ) $ ( 13,427 ) Foreign 54,140 32,491 30,407 Income before income taxes $ 72,609 $ 14,244 $ 16,980 Shake Shack Inc. Form 10-K | 94 The components of Income tax expense (benefit) were as follows: 2025 2024 2023 Current income taxes: State and local $ 3,155 $ 554 $ 1,271 Foreign 3,132 3,924 3,793 Total current income taxes 6,287 4,478 5,064 Deferred income taxes: Federal 10,237 ( 2,731 ) ( 12,427 ) State and local 6,379 1,677 3,353 Total deferred income taxes 16,616 ( 1,054 ) ( 9,074 ) Income tax expense (benefit) $ 22,903 $ 3,424 $ ( 4,010 ) A reconciliation of Income tax expense (benefit) computed at the U.S. federal statutory income tax rate to the recognized Income tax expense (benefit) and the U.S. statutory income tax rate to our effective tax rate after the adoption of ASU 2023-09 was as follows: 2025 Expected U.S. federal income taxes at statutory rate $ 15,248 21.0 % State and local income taxes, net of federal benefit (1) 8,216 11.3 % Foreign Tax Effects: Foreign withholding taxes 3,052 4.2 % Tax credits: Federal employer tip credit ( 2,613 ) ( 3.6 ) % Other credits ( 1,490 ) ( 2.1 ) % Non-taxable or non-deductible items: Non-deductible compensation 926 1.3 % Equity-based compensation ( 1,461 ) ( 2.0 ) % Other 1,341 1.8 % Changes in unrecognized tax benefits 14 — % Other ( 330 ) ( 0.4 ) % Income tax expense (benefit) $ 22,903 31.5 % (1) For fiscal 2025, the states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York State and City. Shake Shack Inc. Form 10-K | 95 Reconciliations of Income tax expense (benefit) computed at the U.S. federal statutory income tax rate to the recognized Income tax expense (benefit) and the U.S. statutory income tax rate to our effective tax rates before the adoption of ASU 2023-09 were as follows: 2024 2023 Expected U.S. federal income taxes at statutory rate $ 2,991 21.0 % $ 3,565 21.0 % State and local income taxes, net of federal benefit 2,166 15.2 % 2,090 12.3 % Foreign withholding taxes 3,924 27.6 % 3,792 22.3 % Tax credits ( 7,033 ) ( 49.4 ) % ( 7,060 ) ( 41.6 ) % Non-controlling interest ( 166 ) ( 1.2 ) % ( 196 ) ( 1.2 ) % Non-deductible expenses 2,240 15.7 % 1,169 6.9 % Reserve for uncertain tax positions — — % 154 0.9 % Remeasurement of deferred tax assets in connection with other tax rate changes 392 2.8 % 1,547 9.1 % Return to provision adjustment ( 650 ) ( 4.6 ) % ( 519 ) ( 3.0 ) % Change in valuation allowance ( 97 ) ( 0.7 ) % ( 9,195 ) ( 54.1 ) % Other ( 343 ) ( 2.4 ) % 643 3.8 % Income tax expense (benefit) $ 3,424 24.0 % $ ( 4,010 ) ( 23.6 ) % Shake Shack's effective income tax rates for fiscal 2025, fiscal 2024 and fiscal 2023 were 31.5 %, 24.0 % and ( 23.6 )%, respectively. The increase in the effective income tax rate from fiscal 2024 to fiscal 2025 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. The following table sets forth the total income taxes paid, net of refunds after the adoption of ASU 2023-09: 2025 U.S. state and local: New York $ 609 Tennessee 282 Other 237 Total U.S. state and local 1,128 Foreign: China 511 Mexico 327 Philippines 220 Singapore 220 South Korea 737 Other 1,117 Total foreign 3,132 Total $ 4,260 Before to the adoption of ASU 2023-09, income taxes paid, net of refunds for fiscal 2024 and fiscal 2023 were $ 6,531 and $ 4,056 , respectively. Shake Shack Inc. Form 10-K | 96 Deferred Tax Assets and Liabilities The components of deferred tax assets and liabilities were as follows: December 31 2025 December 25 2024 Deferred tax assets: Investment in partnership $ 74,094 $ 89,397 Tax Receivable Agreement 66,053 67,192 Operating lease liability 6,281 5,264 Financing lease liability 159 124 Deferred revenue 251 209 Equity-based compensation 423 357 Net operating loss carryforwards 146,137 148,700 Tax credits 34,731 33,643 Other assets 1,117 1,772 Total gross deferred tax assets 329,246 346,658 Valuation allowance ( 980 ) ( 260 ) Total deferred tax assets, net of valuation allowance 328,266 346,398 Deferred tax liabilities: Property and equipment ( 652 ) ( 537 ) Operating lease right-of-use asset ( 5,064 ) ( 4,147 ) Financing lease right-of-use asset ( 152 ) ( 119 ) Other liabilities ( 13 ) ( 9 ) Total gross deferred tax liabilities ( 5,881 ) ( 4,812 ) Net deferred tax assets $ 322,385 $ 341,586 As of December 31, 2025, the Company's federal and state net operating loss carryforwards for income tax purposes were $ 606,837 and $ 370,203 , respectively. Of the federal net operating loss carryforwards, $ 554,970 can be carried forward indefinitely, while the remaining $ 51,867 will begin to expire in 2035. Similarly, of the state net operating loss carryforwards, $ 48,536 can be carried forward indefinitely, while the remaining $ 321,667 will begin to expire in 2026. As of December 31, 2025, the Company had federal tax credit carryforwards, including a capital loss carryforward of $ 33,871 , which will begin to expire in 2026 and gross state tax credit carryforwards of $ 1,175 , which will begin to expire in 2030. As described in Note 12, Non-controlling Interests, the Company acquired a total of 186,213 LLC Interests during fiscal 2025 through LLC Interest redemptions and stock-based compensation plan activity. Upon acquiring these LLC Interests, the Company recognized a deferred tax asset of $ 1,279 related to the basis difference in its investment in SSE Holdings. As of December 31, 2025, the total deferred tax asset associated with the basis difference was $ 74,094 . The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of December 31, 2025, the Company concluded, based on the valuation of all available positive and negative evidence, that all of its deferred tax assets are more likely than not to be realized, except certain state credits and state net operating losses that are not expected to be utilized before expiration. Accordingly, the Company maintained a valuation allowance of $ 980 . The net change in valuation allowance for fiscal 2025 was an increase of $ 720 . New Tax Legislation On July 4, 2025, bill H.R. 1, commonly referred to as the "One Big Beautiful Bill Act" or "OBBBA," was signed into law, with certain provisions effective in 2025 and others in 2026. The Act provides for changes to U.S. federal tax law, including the Shake Shack Inc. Form 10-K | 97 expensing of U.S. research expenditures and certain eligible capital expenditures, among other provisions. We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the 2025 tax year. Uncertain Tax Positions Pursuant to ASC 740, the Company provides for uncertain tax positions based upon our assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. In 2025, no new uncertain tax positions were identified. Reconciliations of the beginning to the ending accounts of gross unrecognized tax benefits for fiscal 2025, fiscal 2024, and fiscal 2023 were as follows: 2025 2024 2023 Beginning balance $ 147 $ 147 $ — Additions for tax positions of prior years — — 263 Settlements — — ( 116 ) Ending balance $ 147 $ 147 $ 147 The Company files U.S. federal, state and local, and foreign tax returns. Generally, the Company's state and local income tax returns from 2018 to 2024 remain open to examination. The Company’s foreign income tax returns generally remain open to examination for the 2019 through 2024 tax years. Statutes of limitation in the United States and various state and foreign jurisdictions are generally three to six years from the date of filing but may be extended in certain circumstances, including when tax attributes such as net operating losses and tax credit carryforwards are involved. Tax authorities may also review returns for years otherwise closed by statute to adjust related tax attributes arising in prior years. Tax Receivable Agreement Pursuant to the Company's election under Section 754 of the Internal Revenue Code (the "Code"), the Company expects to obtain an increase in its share of the tax basis in the net assets of SSE Holdings when LLC Interests are redeemed or exchanged by the other members of SSE Holdings. The Company plans to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interest occurs. The Company intends to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that would otherwise be paid in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. On February 4, 2015, the Company entered into a tax receivable agreement with certain then-existing non-controlling members of SSE Holdings (the "Tax Receivable Agreement"). This agreement obligates the Company to pay the non-controlling interest holders 85 % of any tax benefits that the Company may actually realize, or deemed to realize, from (i) increases in the Company's share of the tax basis of SSE Holdings due to redemptions or exchanges of LLC Interests, (ii) tax basis increases resulting from payments made under the Tax Receivable Agreement, and (iii) deductions from imputed interest under the agreement (the "TRA Payments"). The Company expects to benefit from the remaining 15 % of any realized tax benefits. The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or us. Additionally, the rights of each non-controlling interest holder under the Tax Receivable Agreement, are assignable to transferees of its LLC Interests. During fiscal 2025, the Company acquired a total of 20,924 LLC Interests in connection with the redemption of LLC Interests, which led to an increase in the tax basis of its investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement. The Company recognized an additional asset of $ 1,279 for the TRA Payments due to the redeeming members, representing 85 % of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemption of LLC Interests. This estimate was based on our conclusion that it was probable that such TRA Payments would be made, considering our projections of future taxable income. During fiscal 2025 payments of $ 37 , inclusive of interest, were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement. No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement in fiscal 2024. As of December 31, 2025, the total amount of TRA Payments due under the Tax Receivable Agreement was $ 246,835 , of which $ 2,372 amount was included in Other current liabilities on the Consolidated Balance Sheets. Shake Shack Inc. Form 10-K | 98 NOTE 15: EARNINGS PER SHARE Basic earnings per share of Class A common stock is computed by dividing Net income attributable to Shake Shack Inc. by the weighted average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing Net income attributable to Shake Shack Inc. by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock (in thousands, except per share amounts): 2025 2024 2023 Numerator: Net income attributable to Shake Shack Inc.—basic $ 45,725 $ 10,207 $ 20,264 Reallocation of net income attributable to non-controlling interests from the assumed conversion of Class B shares — 613 726 Net income attributable to Shake Shack Inc.—diluted $ 45,725 $ 10,820 $ 20,990 Denominator: Weighted average shares of Class A common stock outstanding—basic 40,212 39,830 39,419 Effect of dilutive securities: Stock options 2 52 75 Performance stock units 35 69 11 Restricted stock units 131 173 85 Convertible Notes 1,467 1,467 1,467 Shares of Class B common stock — 2,612 2,842 Weighted average shares of Class A common stock outstanding—diluted 41,847 44,203 43,899 Earnings per share of Class A common stock—basic $ 1.14 $ 0.26 $ 0.51 Earnings per share of Class A common stock—diluted $ 1.09 $ 0.24 $ 0.48 The effect of potential share settlement of the Convertible Notes outstanding for the period is included as potentially dilutive shares of Class A common stock under application of the if-converted method in the computation of diluted earnings per share, except when the effect would be anti-dilutive. Refer to Note 8, Debt, for additional information. Shares of Class B common stock do not share in the earnings or losses of Shake Shack and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. However, shares of Class B common stock outstanding for the period are considered potentially dilutive shares of Class A common stock under application of the if-converted method and are included in the computation of diluted earnings per share, except when the effect would be anti-dilutive. Shake Shack Inc. Form 10-K | 99 The following table presents potentially dilutive securities excluded from the computations of diluted earnings per share of Class A common stock: 2025 2024 2023 Performance stock units 120,706 (1) 50,556 (1) 99,718 (1) Shares of Class B common stock 2,434,789 (2) — — (1) Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings per share of Class A common stock because the performance conditions associated with these awards were not met assuming the end of the reporting period was the end of the performance period. (2) Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive. NOTE 16: SUPPLEMENTAL CASH FLOW INFORMATION The following table sets forth supplemental cash flow information: 2025 2024 2023 Cash paid for: Income taxes, net of refunds $ 4,260 $ 6,531 $ 4,056 Interest, net of amounts capitalized 820 882 537 Non-cash investing activities: Accrued purchases of property and equipment 34,727 19,226 24,999 Capitalized equity-based compensation 208 217 181 Non-cash financing activities: Establishment of liabilities under Tax Receivable Agreement 861 12,121 720 NOTE 17: COMMITMENTS AND CONTINGENCIES Lease Commitments The Company is obligated under various operating leases for Shacks and Shack Support Centers, expiring in various years through 2045. Under certain of these leases, the Company is liable for contingent rent based on a percentage of sales in excess of specified thresholds and typically responsible for its proportionate share of real estate taxes, common area maintenance costs and other occupancy costs. Refer to Note 9, Leases, for additional information. Certain leases require the Company to obtain letters of credit. As of December 31, 2025, the Company held three letters of credit totaling $ 695 . Purchase Commitments Purchase obligations include legally binding contracts, including commitments for the purchase, construction or remodeling of real estate and facilities, firm minimum commitments for inventory purchases, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts. These obligations are generally short-term in nature and are recorded as liabilities when the related goods are received or services rendered. 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. Shake Shack Inc. Form 10-K | 100 Legal Contingencies The Company is subject to various legal proceedings, claims and liabilities, involving employees and guests alike, which arise in the ordinary course of business and are generally covered by insurance. As of December 31, 2025, the amount of the ultimate liability with respect to these matters was not material. Liabilities under Tax Receivable Agreement The Company is a party to the Tax Receivable Agreement under which it is contractually committed to pay certain of the members of SSE Holdings 85 % of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of certain transactions. The Company is not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized. Refer to Note 14, Income Taxes, for additional information relating to the Tax Receivable Agreement. NOTE 18: RELATED PARTY TRANSACTIONS Madison Square Park Conservancy The Chairman of the Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which Shake Shack has a license agreement and pays license fees to operate the Madison Square Park Shack. No amounts were due to MSP Conservancy as of December 31, 2025 and December 25, 2024. Classification 2025 2024 2023 Amounts paid to MSP Conservancy Occupancy and related expenses $ 945 $ 937 $ 898 Shake Shack Inc. Form 10-K | 101 Olo, Inc. The Chairman of the Board of Directors served as a director of Olo, Inc., a platform the Company uses in connection with its mobile ordering application through September 2025. Classification 2025 2024 2023 Amounts paid to Olo, Inc. Other operating expenses $ 1,142 $ 838 $ 595 Classification December 31 2025 December 25 2024 Amounts due to Olo, Inc. Accounts payable Accrued expenses $ 334 $ 227 Tax Receivable Agreement The Company entered into a Tax Receivable Agreement that provides for the payment by the Company of 85 % of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of certain transactions. Refer to Note 14, Income Taxes, for additional information. Classification 2025 2024 2023 Amounts paid under the Tax Receivable Agreement Other current liabilities $ 37 $ — $ — Classification December 31 2025 December 25 2024 Amounts due under the Tax Receivable Agreement Other current liabilities Liabilities under Tax Receivable Agreement, net of current portion $ 246,835 $ 247,734 Distributions to Members of SSE Holdings Under the terms of the SSE Holdings LLC Agreement, SSE Holdings is obligated to make tax distributions to its members. No tax distributions were payable to non-controlling interest holders as of December 31, 2025 and December 25, 2024, respectively. Classification 2025 2024 2023 Amounts paid to non-controlling interest holders Non-controlling interests $ 1,842 $ 482 $ 162 NOTE 19: SEGMENT REPORTING Shake Shack operates and licenses Shake Shack restaurants, which serve burgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine and more. The Company operates Shacks in the United States and has both domestic and international licensed Shacks. The chief operating decision maker (the "CODM") is the Chief Executive Officer. The Company determined it has one operating segment and one reportable segment, as the CODM regularly reviews Shack operations and financial performance at a consolidated level. The CODM also allocates resources at a consolidated level. The CODM uses net income to allocate resources (including labor, technology, and capital resources) for the single segment to make decisions regarding annual budget, new Shack openings, entering new geographic markets, landlord and vendor negotiations, marketing decisions, pursuing new business ventures, and driving the Company's mission. Shake Shack Inc. Form 10-K | 102 2025 2024 2023 Segment revenue (1) $ 1,445,306 $ 1,252,608 $ 1,087,533 Less: Food and paper costs 396,714 339,940 305,041 Labor and related expenses 360,693 338,750 304,254 Other operating expenses (2) 212,677 178,381 149,449 Occupancy and related expenses 106,632 93,069 79,846 General and administrative expenses 176,233 149,047 129,542 Depreciation and amortization expense 106,600 102,468 91,242 Pre-opening costs 18,001 15,547 19,231 Impairments, loss on disposal of assets, and Shack closures 5,248 32,368 3,007 Interest expense 2,159 2,045 1,717 Income tax expense (benefit) 22,903 3,424 ( 4,010 ) Other (income) loss, net (3) ( 12,260 ) ( 13,251 ) ( 12,776 ) Segment income (loss) 49,706 10,820 20,990 Reconciliation of profit or loss: Adjustments and reconciling items — — — Consolidated net income (loss) $ 49,706 $ 10,820 $ 20,990 December 31 2025 December 25 2024 Total Assets $ 1,896,209 $ 1,696,971 (1) Refer to Note 20, for geographic information and breakdown of revenue and long-lived assets by geographic area. (2) Other operating expenses consist of delivery commissions, Shack-level marketing expenses, repairs and maintenance, utilities, and other operating expenses incidental to operating our Company-operated Shacks, such as non-perishable supplies, credit card fees, and property insurance. (3) Other (income) loss, net primarily includes interest and dividend income, adjustments to liabilities under the Tax Receivable Agreement, and net unrealized and realized gains and losses from marketable securities. Interest income was $ 165 , $ 761 and $ 2,443 , respectively in fiscal 2025, 2024 and 2023. NOTE 20: GEOGRAPHIC INFORMATION Revenues by geographic area were as follows: 2025 2024 2023 United States $ 1,407,094 $ 1,219,356 $ 1,056,753 Other countries 38,212 33,252 30,780 Total revenue $ 1,445,306 $ 1,252,608 $ 1,087,533 Revenues are shown based on the geographic location of the Company's customers and licensees. The Company's long-lived assets are primarily located in the United States. Shake Shack Inc. Form 10-K | 103 Schedule I: Condensed Financial Information of Registrant SHAKE SHACK INC. CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY) (in thousands, except share and per share amounts) December 31 2025 December 25 2024 ASSETS Current assets: Cash $ 8,553 $ 9,271 Accounts receivable 3,728 — Prepaid expenses 954 1,405 Total current assets 13,235 10,676 Deferred income taxes, net 322,788 336,588 Investment in SSE Holdings 472,310 390,184 Note receivable from SSE Holdings 232,812 224,879 Note receivable - conversion option 7,000 33,500 Due from SSE Holdings 9,927 9,695 TOTAL ASSETS $ 1,058,072 $ 1,005,522 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 2 — Accrued expenses 1,371 87 Due to SSE Holdings 42,611 32,482 Other current liabilities 2,372 717 Total current liabilities 46,356 33,286 Long-term debt 247,731 246,683 Liabilities under tax receivable agreement, net of current portion 244,463 247,017 Total liabilities 538,550 526,986 Commitments and contingencies Stockholders' equity: Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of December 31, 2025 and December 25, 2024. — — Class A common stock, $0.001 par value—200,000,000 shares authorized; 40,254,281 and 40,068,068 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. 40 40 Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,434,789 and 2,455,713 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. 2 2 Additional paid-in capital 452,577 442,993 Retained earnings 66,904 35,502 Accumulated other comprehensive loss ( 1 ) ( 1 ) Total stockholders' equity 519,522 478,536 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,058,072 $ 1,005,522 See accompanying Notes to Condensed Financial Statements. Shake Shack Inc. Form 10-K | 104 Schedule I: Condensed Financial Information of Registrant (continued) SHAKE SHACK INC. CONDENSED STATEMENTS OF INCOME (PARENT COMPANY ONLY) (in thousands) Fiscal Year Ended December 31 2025 December 25 2024 December 27 2023 Intercompany revenue $ 3,674 $ 6,476 $ 7,971 TOTAL REVENUE 3,674 6,476 7,971 General and administrative expenses 2,832 5,647 6,663 Intercompany expenses 3,192 45 54 TOTAL EXPENSES 6,024 5,692 6,717 INCOME (LOSS) FROM OPERATIONS ( 2,350 ) 784 1,254 Equity in net income from SSE Holdings 65,672 8,558 10,091 Other income (expense), net ( 18,557 ) 28,533 14,533 Interest expense ( 1,048 ) ( 1,047 ) ( 1,047 ) INCOME BEFORE INCOME TAXES 43,717 36,828 24,831 Income tax expense (benefit) 12,315 6,603 ( 5,203 ) NET INCOME $ 31,402 $ 30,225 $ 30,034 See accompanying Notes to Condensed Financial Statements. Shake Shack Inc. Form 10-K | 105 Schedule I: Condensed Financial Information of Registrant (continued) SHAKE SHACK INC. CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (PARENT COMPANY ONLY) (in thousands) Fiscal Year Ended December 31 2025 December 25 2024 December 27 2023 Net income $ 31,402 $ 30,225 $ 30,034 Other comprehensive income (loss), net of tax (1) : Change in foreign currency translation adjustment — 2 ( 3 ) OTHER COMPREHENSIVE INCOME (LOSS) — 2 ( 3 ) COMPREHENSIVE INCOME $ 31,402 $ 30,227 $ 30,031 (1) Net of tax benefit of $ 0 for fiscal years ended December 31, 2025, December 25, 2024 and December 27, 2023. See accompanying Notes to Condensed Financial Statements. Shake Shack Inc. Form 10-K | 106 Schedule I: Condensed Financial Information of Registrant (continued) SHAKE SHACK INC. CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in thousands) Fiscal Year Ended December 31 2025 December 25 2024 December 27 2023 OPERATING ACTIVITIES Net income $ 31,402 $ 30,225 $ 30,034 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in net income from SSE Holdings ( 65,672 ) ( 8,558 ) ( 10,091 ) Amortization of debt issuance costs 1,048 1,047 1,047 Equity-based compensation 1,152 920 894 Deferred income taxes 11,170 6,606 ( 5,249 ) (Gain) loss on note receivable - conversion option 26,500 ( 20,600 ) ( 6,600 ) Other non-cash income ( 7,933 ) ( 7,933 ) ( 7,933 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets 312 ( 1,342 ) ( 1 ) Due (to) from SSE Holdings ( 179 ) 1,153 ( 3,944 ) Accounts payable 2 ( 146 ) 107 Accrued expenses 1,328 ( 395 ) 515 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 870 ) 977 ( 1,221 ) INVESTING ACTIVITIES Purchases of LLC Interests from SSE Holdings ( 28,040 ) ( 27,618 ) ( 11,731 ) NET CASH USED IN INVESTING ACTIVITIES ( 28,040 ) ( 27,618 ) ( 11,731 ) FINANCING ACTIVITIES Proceeds from issuance of Class A common stock to SSE Holdings upon settlement of equity awards 28,040 27,618 11,731 Proceeds from stock option exercises 189 1,620 744 Payments under tax receivable agreement ( 37 ) — — NET CASH PROVIDED BY FINANCING ACTIVITIES 28,192 29,238 12,475 Effect of exchange rate changes on cash and cash equivalents — 2 ( 3 ) INCREASE (DECREASE) IN CASH ( 718 ) 2,599 ( 480 ) CASH AT BEGINNING OF PERIOD 9,271 6,672 7,152 CASH AT END OF PERIOD $ 8,553 $ 9,271 $ 6,672 See accompanying Notes to Condensed Financial Statements. Shake Shack Inc. Form 10-K | 107 Schedule I: Condensed Financial Information of Registrant (continued) SHAKE SHACK INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) (in thousands, except share and per share amounts) NOTE 1: ORGANIZATION Shake Shack Inc. (the "Parent Company") was formed on September 23, 2014 as a Delaware corporation and is a holding company with no direct operations. The Parent Company's assets consist primarily of its equity interest in SSE Holdings, LLC ("SSE Holdings"), certain deferred tax assets and its note receivable from SSE Holdings. The Parent Company's cash inflows are primarily from cash dividends or distributions and other transfers from SSE Holdings. The amounts available to the Parent Company to fulfill cash commitments and pay cash dividends on its common stock are subject to certain restrictions in SSE Holdings' Revolving Credit Facility. Refer to Note 8, Debt, in the accompanying Consolidated Financial Statements, for additional information. NOTE 2: BASIS OF PRESENTATION These Condensed Parent Company financial statements should be read in conjunction with the Consolidated Financial Statements of Shake Shack Inc. and the accompanying notes thereto, included in Part II, Item 8. For purposes of these condensed financial statements, the Parent Company's interest in SSE Holdings is recorded based upon its proportionate share of SSE Holdings' net assets (similar to presenting them on the equity method). The Parent Company is the sole managing member of SSE Holdings, and pursuant to the Third Amended and Restated LLC Agreement of SSE Holdings (the “SSE Holdings LLC Agreement”), receives compensation in the form of reimbursements for all costs associated with being a public company and maintaining its existence. Intercompany revenue consists of these reimbursement payments and is recognized when the corresponding expense to which it relates is recognized. Certain intercompany balances presented in these Condensed Parent Company financial statements are eliminated in the Company's Consolidated Financial Statements. The following table presents amounts in the Parent Company's Condensed Balance Sheets that were eliminated in consolidation: December 31 2025 December 25 2024 Assets Due from SSE Holdings $ 9,927 $ 9,695 Deferred income taxes, net 2,114 ( 3,177 ) Note receivable from SSE Holdings 232,812 224,879 Note receivable - conversion option 7,000 33,500 Liabilities Due to SSE Holdings 42,611 32,482 Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $ 246,835 and $ 247,734 , respectively as of December 31, 2025 and December 25, 2024. Shake Shack Inc. Form 10-K | 108 The following table presents amounts in the Parent Company's Condensed Statements of Income that were eliminated in consolidation: 2025 2024 2023 Intercompany revenue $ 3,674 $ 6,476 $ 7,971 Intercompany expenses 3,192 45 54 Equity in net income from SSE Holdings 65,672 8,558 10,091 Other income (expense), net 18,566 28,533 14,533 Income tax expense (benefit) ( 5,291 ) 7,466 3,715 NOTE 3: NOTE RECEIVABLE FROM SSE HOLDINGS In March 2021, contemporaneously with the issuance of the Convertible Notes described in Note 4, Debt, below, the Parent Company entered into a $ 250,000 intercompany note with SSE Holdings (the "Intercompany Note"). The Intercompany Note will mature in March 2028 unless the Parent Company exercises its right to convert the Intercompany Note to maintain at all times a one-to-one ratio between the number of common units, directly or indirectly, held by the Parent Company and the aggregate number of outstanding shares of Class A common stock. As of December 31, 2025 and December 25, 2024, the balance of the Note receivable from SSE Holdings was $ 232,812 and $ 224,879 , respectively, net of accretion. The Parent Company's right to convert the Intercompany Note into common units of SSE Holdings (the "Conversion Option") is required to be bifurcated from the Intercompany Note and shown separately on the Parent Company's Condensed Balance Sheets. The Conversion Option is to be recorded at fair value and remeasured at each subsequent reporting date. As of December 31, 2025 and December 25, 2024, the fair value of the Conversion Option was $ 7,000 and $ 33,500 , respectively. The following table presents amounts in the Parent Company's Condensed Statements of Income related to the change in value and accretion on the Conversion Option: Classification 2025 2024 2023 Unrealized gain (loss) Other income (expense), net $ ( 26,500 ) $ 20,600 $ 6,600 Interest income Other income (expense), net $ 7,933 $ 7,933 $ 7,933 NOTE 4: DEBT In March 2021, the Parent Company issued $ 250,000 aggregate principal amount of 0 % Convertible Senior Notes (“Convertible Notes”) which will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances. Upon conversion, the Parent Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election. Refer to Note 8, Debt, in the accompanying Consolidated Financial Statements, for additional information. NOTE 5: COMMITMENTS AND CONTINGENCIES On February 4, 2015, the Parent Company entered into a tax receivable agreement with the non-controlling interest holders that provides for payments to the non-controlling interest holders of 85 % of the amount of any tax benefits that the Parent Company actually realizes, or in some cases is deemed to realize, as a result of certain transactions. Refer to Note 14, Income Taxes,in the accompanying Consolidated Financial Statements, for additional information relating to the Parent Company's Tax Receivable Agreement. As described in Note 14, Income Taxes, in the accompanying Consolidated Financial Statements, the Company is obligated to pay the non-controlling interest holders 85 % of any tax benefits that the Company may actually realize, or deemed to realize, from (i) increases in the Company's share of the tax basis of SSE Holdings due to redemptions or exchanges of LLC Interests, (ii) tax basis increases resulting from payments made under the Tax Receivable Agreement, and (iii) deductions from imputed interest under the agreement (the "TRA Payments"). As of December 31, 2025 and December 25, 2024, liabilities under the Tax Receivable Agreement totaled $ 246,835 and $ 247,734 , respectively. Shake Shack Inc. Form 10-K | 109 NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION The following table sets forth supplemental cash flow information: 2025 2024 2023 Cash paid for: Income taxes $ 163 $ 832 $ 9 Non-cash investing activities: Accrued contribution related to stock option exercises 189 1,625 744 Class A common stock issued in connection with the acquisition of LLC Interests upon redemption by the non-controlling interest holders ( 271 ) 3,517 265 Non-cash contribution made in connection with equity awards granted to employees of SSE Holdings 27,041 20,406 10,305 Non-cash financing activities: Establishment of liabilities under tax receivable agreement 861 12,121 720 The following table sets forth the total income taxes paid, net of refunds received after the adoption of ASU 2023-09: 2025 U.S. state and local: New York $ 97 Florida 45 Other 21 Total U.S. state and local $ 163 Shake Shack Inc. Form 10-K | 110 Schedule II: Valuation and Qualifying Accounts Balance at beginning of period Additions Balance at end of period (in thousands) Charged to costs and expenses (1) Charged to other accounts Deferred tax asset valuation allowance: Fiscal year ended December 27, 2023 $ 9,560 $ ( 9,203 ) $ — $ 357 Fiscal year ended December 25, 2024 $ 357 $ ( 97 ) $ — $ 260 Fiscal year ended December 31, 2025 $ 260 $ 720 $ — $ 980 (1) Amount relates to a valuation allowance established on deferred tax assets related to our investment in SSE Holdings. Shake Shack Inc. Form 10-K | 111 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.