In the last part of this series, we learned about Shake Shack’s revenues and overall growth. Revenues and overall growth are driven by same-store sales and unit growth. Investors closely track these units’ sales over a period of time. Unit sales are known as “same-store sales”—or “same Shack sales” as Shake Shack calls them.
Current and historic same-store sales
In the above chart you can see that Shakes Shack’s same-store sales growth in 2012 was 7.1%. Same-store sales declined to 5.9% in 2013. For the 39 weeks ending in September 2014, or 3Q14, the same-store sales growth declined to 3%—compared to 5.5% year-over-year, or YoY.
In comparison, Chipotle Mexican Grill (CMG) had same-store sales growth of ~19% in 3Q14. This is a little concerning since Shake Shack is in a high growth stage and its same-store sales growth declined. In other words, the revenue contribution from Shake Shack’s existing stores declined.
The average unit volume, or AUV, is calculated as sales divided by the restaurant units. The AUV for domestic company-operated Shake Shack restaurants declined by 6.7% in 2013. We’ll discuss Shake Shack’s AUV in more detail in the next part of this series.
Peers are equal
The Habit (HABT) had same-store sales growth of 3.6% in 2013. It had same-store sales growth of 6.1% year-to-date, or YTD, in 2Q14. In 3Q14, McDonald’s (MCD) same-store sales declined by 3.3%. KFC—under the umbrella of Yum! Brands (YUM)—had same-store sales growth of 3% over the same period.
Most of these companies are part of the Consumer Discretionary Select Sector SPDR (XLY).
The overall revenue grew 44% in 2013. It grew 40% over the 39 weeks ending 2014. This growth is due to Shake Shack adding new units. Also, management stated in its SEC (US Securities and Exchange Commission) filing that it expects the same-store sales to be low for the “foreseeable future.” Most of the growth will come from adding units. We’ll discuss unit growth later in this series.
In the next part of this series, we’ll look at AUV in more detail.