Today, Shake Shack (NYSE:SHAK) provided a business update. The company reported that its total revenue for the second quarter, which ended on June 24, was $91.8 million. The amount includes revenue of $2.3 million from franchised restaurants. Nationwide protests and curfews resulted in temporary restaurant closures and operating hour restrictions. These developments resulted in a decline of approximately $3.2 million in the second-quarter revenue.
The second-quarter sales represent a decline of 39.9% from $152.7 million in the same quarter of the previous year. The decline in the SSSG of 49% dragged the company’s sales down. The company’s traffic declined by 60.1%, which dragged the company’s SSSG down. However, an increase in the price mix of 11.1% offset some of the declines. Meanwhile, the company’s SSSG improved during the quarter. Shake Shack reported a decline of 64% in April, 42% in May, and 42% in June.
Shake Shack’s operation improved
Shake Shack announced that as of July 6, only six of its company-owned restaurants were closed. Meanwhile, the company had 17 of its restaurants closed at the end of the first quarter. Also, most of the restaurants were only operating the “to-go” capacity. All of the dining rooms were closed. As of Monday, the company has opened 60% of its dining rooms with limited capacity.
In the franchise business, Shake Shack has opened 95 of its 121 licensed restaurants, which is a massive improvement from just 59 open restaurants as of April 29. Despite the challenges, the company opened four new restaurants in the US during the second quarter. The company also opened two franchised restaurants in China.
Meanwhile, Shake Shack has reported a decline of 39% in its SSSG for the week ended on July 1—an improvement from a decline of 42% in June. However, Shake Shack blamed the slow recovery on weak sales in New York, which generates approximately 20% of the company’s sales. For the week ended on July 1, the company’s SSSG in New York was down by 58%.
Shake Shack’s liquidity
As of July 6, Shake Shack had $184 million in cash and cash equivalents. The company stated that it’s generating positive cash flows at the restaurant level. However, the company has been burning approximately $200,000 per week at the enterprise-level. Shake Shack has also started its expansion efforts by identifying a pipeline of leases for continued growth.
Investors were disappointed after the company’s update. Today, the company was trading 4.3% down at 10:25 AM ET. Meanwhile, the company has lost 10.3% of its stock value this year as of July 6. The temporary closure of restaurants and the weak first-quarter performance dragged the stock price down. Recently, Shake Shack announced its expansion plans in China, which limited its downside.