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How Is Shake Shack Expanding Its Business?

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Current operations

By the end of 4Q17, Shake Shack (SHAK) operated 159 restaurants—90 domestic company-owned restaurants, ten domestic franchised restaurants, and 59 international franchised restaurants. In the last four quarters, the company has added 45 restaurants.

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Company-owned restaurants

In 2017, Shake Shack (SHAK) added 26 company-owned restaurants—11 of them opened in 4Q17. Of the 11 restaurants opened in 4Q17, three were in new markets—San Diego, St. Louis, and Milwaukee.

During the quarter, the company opened its first restaurant with kiosk-only ordering, a cashless environment, and an optimized kitchen at Astor Place in New York City.

Franchised restaurants

In 2017, Shake Shack added 19 franchised restaurants with three in the domestic market and 16 in international markets. In 4Q17, the company opened five international franchised restaurants—two restaurants in Japan, two in the Middle East, and one in the UK.

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Peer comparisons

During 2017, Shake Shack’s peers McDonald’s (MCD) and Chipotle Mexican Grill (CMG) increased their unit counts by 342 units and 158 units, respectively.

Outlook

In 2018, Shake Shack plans to open 32–35 domestic company-owned restaurants and 16–18 franchised restaurants. The company plans to reach 200 domestic company-owned restaurants and 120 franchised restaurants by the end of 2020.

Next, we’ll look at Shake Shack’s EBIT (earnings before interest and tax) margin in 4Q17.

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