Same-store sales growth
An 11.7% increase in same-store sales growth during the calendar year drove Shake Shack’s (SHAK) earnings per share in the first quarter. An increase in pricing in the months of September 2014 and January 2015 is credited for this same-store sales growth.
The effect of higher commodity costs
Offsetting the benefits of strong-same store sales growth were pressures from rising commodity costs and the Madison Square Park store closure during the quarter. Keep in mind that Shake Shack stores in the Manhattan district bring in higher average unit volumes than stores elsewhere. So any store closure in that area has a much more pronounced impact on sales.
According to the company, same-store sales also got a lift from greater public interest following its IPO (initial public offering), as well as from menu items such as crinkle-cut fries and the ShackMeister Burger, which was offered for a limited time. The company now intends to offer the burger in the second quarter as well.
During the same quarter, Chipotle Mexican Grill (CMG) reported same-store sales growth of 10.4%. Fast-food chains are facing major competition from fast-casual concepts, which younger diners find more appealing because of their healthier offerings. McDonald’s (MCD), for example, reported -2.6% same-store sales growth in the US during the quarter.