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Analysts Expect Shake Shack to Maintain Revenue Growth in 2019

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Dec. 24 2018, Updated 11:35 a.m. ET

2018 revenue expectations

Shake Shack’s (SHAK) revenue rose by 27.6% to $335.0 million in the first three quarters of 2018. The revenue growth was largely driven by the addition of 17 new company-owned restaurants and 12 franchised restaurants. Also, the company’s SSSG (same-store sales growth) of 0.6% during the same period contributed to the company’s revenue growth.

For 2018, Shake Shack’s management has set revenue guidance to be in the range of $450 million–$452 million. The management expects to add 33–34 company-owned restaurants and 14–16 franchised restaurants in 2018, while its SSSG is forecasted to be in the range of 0%-1%. Analysts are expecting the company to post revenue of $453.6 million in 2018, which represents an increase of 26.4% from $358.8 million in 2017. In comparison, peer Chipotle Mexican Grill (CMG) is expected to post revenue growth of 7.3%, while the revenues of McDonald’s (MCD) are expected to fall 7.8%.

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2019 revenue expectations

For 2019, analysts expect Shake Shack to post revenues of $576.0 million, which represents growth of 27.0% from $453.6 million in 2018. The company’s management plans to open 36–40 company-owned restaurants and 16–18 franchised restaurants in 2019, which is largely expected to drive the company’s revenue growth during the period.

To drive its SSSG, Shake Shack is focusing on menu innovations and enhancing customers’ experience through implementing digital advancements. Shake Shack opened its first innovation kitchen at its home office in Manhattan in the third quarter of 2018 where the company tests new menu items, kitchen designs, and digital initiatives. If testing is successful, the company implements changes across its restaurants. Chick’n Bites, which was introduced in mid-September, was the first item to come out of the innovation kitchen.

To improve the speed of service and also enhance the customer experience, Shake Shack plans to have 20 hybrid model restaurants, which will have self-order kiosks and cashiers by the end of 2018. Along with these initiatives, the company continues to test its delivery service.

Peer comparisons

For 2019, analysts expect Chipotle Mexican Grill’s revenue to rise by 7.9%, while McDonald’s revenues are expected to fall 1.2%.

Analysts’ EPS expectations

Analysts are expecting Shake Shack’s EPS to rise by 19.4% to $0.68 in 2018. For 2019, they expect the company’s EPS to grow by 7.1% to $0.73.

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