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What Drove Shake Shack’s Same-Store Sales Growth in 2017?

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2017 same-store sales growth

In 2017, Shake Shack’s (SHAK) SSSG (same-store sales growth) declined by 1.2%, as a decline in guest traffic lowered the company’s SSSG by 3.2%. However, some of the declines were offset by favorable pricing and sales mix, which contributed 2.0% to the company’s SSSG in 2017.

From the above graph, we can see that the 2017 SSSG was the lowest in the last five years. The company posted SSSG of -2.5%, -1.8%, -1.6%, and 0.8% in 1Q17, 2Q17, 3Q17, and 4Q17, respectively. The company’s management blamed unfavorable weather conditions for negative SSSG in the first three quarters of 2017.

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Shake Shack has been focusing on menu innovations, and the enhancement of the customer experience through the implementation of digital advancements to drive its SSSG. In 2017, the company introduced new menu items such as the Barbecue ShackMeister Burger, Barbecue Fries, the Barbecue ChickenShack, and the Bacon Cheeseburger. Also, it introduced its Hot Chick’n sandwich and Texas-Style Chili, and a multicategory approach for hot dogs, fries, and burgers as limited time offerings.

Shake Shack launched Shack App in January 2017. In 4Q17, the company introduced self-serve kiosks in several restaurants in New York City. Shake Shack stated that its app has helped the company to engage its customers better through more personalized marketing initiatives.

During 4Q17, the company also conducted pilot delivery projects with third-party delivery services providers such as Postmates, DoorDash, and Caviar.

Peers comparisons

In 2017, Chipotle Mexican Grill (CMG) and Wendy’s (WEN) posted SSSG of 6.4% and 2.0%, respectively.

Next, we’ll look at Shake Shack’s unit growth.

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