Shake Shack’s revenue
During the fourth quarter of 2014, Shake Shack’s revenues increased to $34.8 million, which was 51.5% higher year-over-year from $23 million in the corresponding quarter a year ago. Of this revenue, about 95% came from domestic company-operated stores, which increased from $21.8 million to $33.1 million during the quarter. This revenue figure includes an extra week for 2014. Without the extra week, revenue grew 43.7% year-over-year from $82.5 million to $118.5 million.
Shake Shack also earns revenue from licensed stores. Licensing revenue increased from $1.1 million to $1.7 million, which is a 49.7% increase.
Shake Shack is in a high-growth stage
Bear in mind that Shake Shack (SHAK) is a growing company, so such high growth shouldn’t come as a surprise if you’re an investor in this company. This distinction applies to companies like Chipotle Mexican Grill (CMG) and Habit (HABT). But what sets CMG apart from the other two companies is that it’s offering a unique menu, unlike SHAK and HABT, which offer burgers like several other big players, such as McDonald’s (MCD) and Burger King (QSR). The Consumer Discretionary Select Sector SPDR ETF (XLY) holds about 4% of MCD.
What led the revenue increase?
Shake Shack’s revenue was driven primarily by new restaurant units added during the year, but the company also reintroduced its crinkle-cut fries and added the ShackMeister Burger, which drove traffic. Traffic is the number of customers visiting a restaurant and making purchases. Overall, traffic grew 1.7%. We’ll cover traffic and menu additions more in the later parts of this series. But first, let’s look at unit growth and its importance for the company in the next part of this series.