Shake Shack (SHAK) earns its revenue through company-owned restaurant sales and franchisee fees and royalties collected from domestic and international franchised restaurants.
In 1Q16, revenue from company-owned restaurants formed 96% of SHAK’s total revenue.
In 1Q16, Shake Shack (SHAK), which forms 0.02% of the holdings of the iShares Russell 2000 Growth ETF (IWO), saw a 43.3% rise in revenue over $37.8 million in 1Q15. SHAK’s revenue rise was driven by unit growth and same-store sales growth.
For 1Q16, SHAK reported revenue of $52.2 million from its company-owned restaurants, a rise of 44.7% compared to $36 million in 1Q15. The revenue rise was driven by 9.9% same-store sales growth and an increase of 13 company-owned restaurants.
In 1Q16, SHAK’s revenue from franchised restaurants stood at $2 million, a rise of 14.3% compared to $1.8 million in 1Q15. Compared to 1Q15, SHAK increased its franchised restaurant count by nine, which was a major driver of revenue growth in the segment.
However, SHAK experienced a slowdown in energy-related markets such as the Middle East. The strong dollar also negatively affected SHAK’s revenue from its international operations.
Strong 1Q16 results have prompted SHAK’s management to raise its revenue guidance for 2016 to $245 million–$249 million from its earlier guidance of $237 million–$242 million. However, analysts have forecast SHAK’s revenue to be $251.1 million, a rise of 31.8% compared to $190.6 million in 2015.
In the next few articles, we’ll discuss SHAK’s revenue drivers.