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What Drove Shake Shack’s Revenue in 2017?

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Mar. 20 2018, Published 2:06 p.m. ET

2017 revenue

In 2017, Shake Shack (SHAK) posted revenues of $358.81 million, which represents growth of 33.6% from $268.5 million in 2016. The company has posted revenue growth of 40.9%, 60.8%, 43.7%, and 44.6% in 2016, 2015, 2014, and 2013, respectively.

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Company-owned restaurants

In 2017, the company-owned restaurant segment posted revenues of $346.4 million, which represents growth of 33.6% from $259.4 million in 2016. The revenue growth was driven by the addition of 26 new domestic company-owned restaurants. However, some of the revenue growth was offset by SSSG of -1.2%. Also, the company’s average unit volumes (or AUV) for company-owned restaurants stood at $4.6 million in 2017 compared to $5.0 million in 2016. The decline was due to the addition of restaurants with lower unit volumes.

Franchised restaurants

The segment posted a revenue of $12.4 million, which represents a rise of 36.1% from $9.1 million in 2016. The revenue growth was driven by the opening of 19 new franchised restaurants in 2017. The 2017 revenue includes deferred royalty revenue of $0.5 million collected from the initial publication of the Shake Shack book. Some of the revenue growth was offset by softness in sales in Middle East restaurants due to macroeconomic and geopolitical conditions. The AUV of franchised restaurants declined from $3.3 million in 2016 to $3.2 million in 2017.

Peer comparison

In 2017, Chipotle Mexican Grill (CMG) posted revenue growth of 14.7%, while the revenue of Jack in the Box (JACK) and Wendy’s (WEN) fell 15.8% and 14.8%, respectively.

Next, we will look at Shake Shack’s 2017 SSSG.

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