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Shake Shack’s Same-Store Sales Growth Outperformed in 4Q15

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Mar. 24 2016, Updated 4:06 a.m. ET

Same-store sales growth

Same-store sales growth, expressed as a percentage, is a measure of the rise in revenues of existing restaurants over a certain period of time.

Same-store sales growth is driven by ticket size and traffic. It’s an important metric for investors to monitor, as it increases a company’s revenues without increasing capital investment, and it’s a direct reflection of how much traffic each location is driving without simply adding more stores.

Higher same-store sales growth also indicates the company’s value proposition in attracting its customers. For 4Q15, the median same-store sales growth for the eight fast casual restaurants under review in this series was 3.3%.

During the same period, fast food and pizza companies McDonald’s (MCD), Domino’s Pizza (DPZ), and YUM! Brands (YUM) recorded same-store sales growth of 5%, 9.6%, and 1%, respectively.

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4Q15 performance

Shake Shack (SHAK), which forms 0.01% of the holdings of the iShares Russell 2000 ETF (IWM), recorded same-store sales growth of 11% in 4Q15, with an increase in traffic contributing 6.2% and ticket growth contributing 4.8%. Limited time offerings, increased brand awareness, and a 3% price rise led to a rise in the company’s same-store sales growth.

SHAK was followed by Zoe’s Kitchen (ZOES) with same-store sales growth of 7.7%. ZOES’s increase in traffic contributed 2.8% toward its same-store sales growth, while a better product mix and increased menu prices contributed 4.5% and 0.4%, respectively.

Potbelly (PBPB), Panera Bread (PNRA), and Fiesta Restaurant Group’s Taco Cabana brand (FRGI) recorded same-store sales growth of 3.7%, 3.6%, and 3.3%, respectively, in 4Q15.

Underperformers

The E. coli outbreak brought Chipotle Mexican Grill’s (CMG) same-store sales growth down to -14.6% in 4Q15. The fall was largely due to a decrease in traffic, as customers were skeptical about the food being served at CMG’s restaurants. Noodles & Company (NDLS) also recorded negative same-store sales growth of 1.1%.

Habit Grill (HABT) and the Pollo Tropical brand of FRGI recorded same-store sales growth of 0.4% and 2.9%, respectively.

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