Shake Shack’s (SHAK) second-quarter EPS reached $0.26. Removing special or one-time items, the company’s adjusted EPS stood at $0.29, outperforming analysts’ expectations of $0.18.
Year-over-year, the company’s EPS rose 45.0%, driven by revenue growth and lower effective tax rates and partially offset by a decline in its adjusted EBITDA margin.
Shake Shack’s adjusted EBITDA margin declined from 21.2% in the second quarter of 2017 to 18.8% in the second quarter. This decrease was due to increased labor-related expenses, other operating expenses, other operating costs, and G&A (general and administrative) expenses. These expenses were partially offset by lower occupancy-related expenses.
The company’s labor expenses increased from 25.5% of total revenues to 26.3% due to an increase in the minimum wage and the opening of new restaurants. Other operating expenses rose 1.3% to 10.9% due to delivery commissions paid for its pilot projects as well as repair and maintenance expenses.
Shake Shack’s G&A expenses rose 0.2% to 10.8% due to the implementation of various growth initiatives. The company’s occupancy-related costs fell 1.4% to 6.6%.
During the second quarter, Shake Shack’s effective tax rate stood at 16.7%, compared to 39.9% in the second quarter of 2017.