Document and Entity Information
Document and Entity Information Document and Entity Information - shares | 9 Months Ended | |
Sep. 25, 2019 | Oct. 23, 2019 | |
Document Information [Line Items] | ||
Security Exchange Name | NYSE | |
Trading Symbol | SHAK | |
Title of 12(b) Security | Class A Common Stock, par value $0.001 | |
Entity Interactive Data Current | Yes | |
Local Phone Number | 747-7200 | |
City Area Code | 646 | |
Entity Address, Postal Zip Code | 10014 | |
Entity Tax Identification Number | 47-1941186 | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 001-36823 | |
Document Transition Report | false | |
Document Quarterly Report | true | |
Document type | 10-Q | |
Amendment flag | false | |
Document Period End Date | Sep. 25, 2019 | |
Document fiscal year focus | 2019 | |
Document fiscal period focus | Q3 | |
Entity registrant name | SHAKE SHACK INC. | |
Entity Address, Address Line One | 225 Varick Street | |
Entity Address, Address Line Two | Suite 301 | |
Entity Address, City or Town | New York, | |
Entity Address, State or Province | NY | |
Entity central index key | 0001620533 | |
Current fiscal year end date | --12-25 | |
Entity filer category | Large Accelerated Filer | |
Entity current reporting status | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity common stock, shares outstanding (in shares) | 33,751,698 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity common stock, shares outstanding (in shares) | 3,769,649 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 44,505 | $ 24,750 |
Marketable securities | 36,336 | 62,113 |
Accounts receivable | 15,094 | 10,523 |
Inventories | 1,782 | 1,749 |
Prepaid expenses and other current assets | 1,723 | 1,984 |
Total current assets | 99,440 | 101,119 |
Property and equipment, net | 304,350 | 261,854 |
Operating lease assets | 279,975 | 0 |
Deferred income taxes, net | 268,855 | 242,533 |
Other assets | 10,652 | 5,026 |
TOTAL ASSETS | 963,272 | 610,532 |
Current liabilities: | ||
Accounts payable | 15,865 | 12,467 |
Accrued expenses | 27,977 | 22,799 |
Accrued wages and related liabilities | 9,737 | 10,652 |
Operating Lease, Liability, Current | 26,441 | 0 |
Other current liabilities | 15,951 | 14,030 |
Total current liabilities | 95,971 | 59,948 |
Deemed landlord financing | 0 | 20,846 |
Deferred rent | 0 | 47,864 |
Operating Lease, Liability, Noncurrent | 316,161 | 0 |
Liabilities under tax receivable agreement, net of current portion | 217,935 | 197,921 |
Other long-term liabilities | 14,910 | 10,498 |
Total liabilities | 644,977 | 337,077 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of June 26, 2019 and December 26, 2018. | 0 | 0 |
Additional paid-in capital | 234,118 | 195,633 |
Retained earnings | 56,460 | 30,404 |
Total stockholders' equity attributable to Shake Shack Inc. | 290,616 | 226,075 |
Non-controlling interests | 27,679 | 47,380 |
Total equity | 318,295 | 273,455 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 963,272 | 610,532 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 34 | 30 |
Class B Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 4 | $ 8 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Sep. 25, 2019 | Dec. 26, 2018 |
Preferred Stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares, issued (in shares) | 33,651,950 | 29,520,833 |
Common stock, shares, outstanding (in shares) | 33,651,950 | 29,520,833 |
Class B Common Stock | ||
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 35,000,000 | 35,000,000 |
Common stock, shares, issued (in shares) | 3,809,347 | 7,557,347 |
Common stock, shares, outstanding (in shares) | 3,809,347 | 7,557,347 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Document Period End Date | Sep. 25, 2019 | |||
TOTAL REVENUE | $ 157,762 | $ 119,647 | $ 443,084 | $ 335,045 |
Shack-level operating expenses: | ||||
Food and paper costs | 44,159 | 32,703 | 125,049 | 91,336 |
Labor and related expenses | 41,601 | 31,232 | 118,891 | 87,651 |
Other operating expenses | 18,947 | 13,496 | 51,270 | 36,536 |
Occupancy and related expenses | 12,537 | 8,545 | 35,309 | 23,621 |
General and administrative expenses | 17,090 | 13,151 | 46,420 | 37,547 |
Depreciation expense | 10,474 | 7,439 | 29,239 | 20,905 |
Pre-opening costs | 4,487 | 3,581 | 10,678 | 8,031 |
Loss on disposal of property and equipment | 303 | 157 | 1,031 | 543 |
TOTAL EXPENSES | 149,598 | 110,304 | 417,887 | 306,170 |
OPERATING INCOME | 8,164 | 9,343 | 25,197 | 28,875 |
Other income, net | 248 | 436 | 1,259 | 1,070 |
Interest expense | (133) | (592) | (302) | (1,770) |
INCOME BEFORE INCOME TAXES | 8,279 | 9,187 | 26,154 | 28,175 |
Income tax expense | (3,144) | 2,241 | (47) | 5,679 |
NET INCOME | 11,423 | 6,946 | 26,201 | 22,496 |
Less: net income attributable to non-controlling interests | 1,079 | 1,921 | 4,281 | 6,359 |
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC. | $ 10,344 | $ 5,025 | $ 21,920 | $ 16,137 |
Earnings per share of Class A common stock: | ||||
Basic (in dollars per share) | $ 0.32 | $ 0.17 | $ 0.72 | $ 0.58 |
Diluted (in dollars per share) | $ 0.31 | $ 0.17 | $ 0.70 | $ 0.56 |
Weighted-average shares of Class A common stock outstanding: | ||||
Basic (in shares) | 31,961 | 28,954 | 30,549 | 27,930 |
Diluted (in shares) | 32,916 | 29,883 | 31,441 | 28,820 |
Shack sales | ||||
TOTAL REVENUE | $ 152,366 | $ 115,882 | $ 428,811 | $ 324,869 |
Licensing revenue | ||||
TOTAL REVENUE | $ 5,396 | $ 3,765 | $ 14,273 | $ 10,176 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net income | $ 11,423 | $ 6,946 | $ 26,201 | $ 22,496 | |
Available-for-sale securities: | |||||
Change in net unrealized holding gains (losses) | [1] | 0 | 0 | 0 | (3) |
Less: reclassification adjustments for net realized losses included in net income | [1] | 0 | 0 | 0 | 16 |
Net change | 0 | 0 | 0 | 13 | |
OTHER COMPREHENSIVE INCOME | 0 | 0 | 0 | 13 | |
COMPREHENSIVE INCOME | 11,423 | 6,946 | 26,201 | 22,509 | |
Less: comprehensive income attributable to non-controlling interest | 1,079 | 1,921 | 4,281 | 6,362 | |
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAKE SHACK INC. | $ 10,344 | $ 5,025 | $ 21,920 | $ 16,147 | |
[1] | Net of tax benefit (expense) of $0 for the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Income tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Class A Common Stock | Class B Common Stock | Common Stock [Member]Class A Common Stock | Common Stock [Member]Class B Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non- Controlling Interest |
Beginning balance (shares) at Dec. 27, 2017 | 26,527,477 | 10,250,007 | |||||||
Beginning balance at Dec. 27, 2017 | $ 224,479 | $ 27 | $ 10 | $ 153,105 | $ 16,399 | $ (49) | $ 54,987 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 22,496 | 16,137 | 6,359 | ||||||
Other comprehensive income: | |||||||||
Net change related to available-for-sale securities | 13 | 10 | 3 | ||||||
Equity-based compensation | 4,534 | 4,534 | |||||||
Activity under stock compensation plans (in shares) | 282,792 | ||||||||
Activity under stock compensation plans | 4,154 | 2,318 | 1,836 | ||||||
Redemption of LLC Interests (in shares) | (2,561,086) | (2,561,086) | |||||||
Redemption of LLC Interests | 0 | $ (2) | $ (2) | (14,633) | (14,633) | ||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 18,170 | 18,170 | |||||||
Distributions paid to non-controlling interest holders | (692) | (692) | |||||||
Ending balance (shares) at Sep. 26, 2018 | 29,371,355 | 7,688,921 | |||||||
Ending balance at Sep. 26, 2018 | 271,580 | $ 29 | $ 8 | 192,760 | 31,362 | 0 | 47,421 | ||
Beginning balance (shares) at Jun. 27, 2018 | 28,106,331 | 8,924,592 | |||||||
Beginning balance at Jun. 27, 2018 | 256,447 | $ 28 | $ 9 | 177,650 | 26,337 | 0 | 52,423 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 6,946 | 5,025 | 1,921 | ||||||
Other comprehensive income: | |||||||||
Net change related to available-for-sale securities | 0 | 0 | |||||||
Equity-based compensation | 1,661 | 1,661 | |||||||
Activity under stock compensation plans (in shares) | 29,353 | ||||||||
Activity under stock compensation plans | 588 | 215 | 373 | ||||||
Redemption of LLC Interests (in shares) | (1,235,671) | (1,235,671) | |||||||
Redemption of LLC Interests | 0 | $ (1) | $ (1) | (7,274) | (7,274) | ||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 5,960 | 5,960 | |||||||
Distributions paid to non-controlling interest holders | (22) | (22) | |||||||
Ending balance (shares) at Sep. 26, 2018 | 29,371,355 | 7,688,921 | |||||||
Ending balance at Sep. 26, 2018 | 271,580 | $ 29 | $ 8 | 192,760 | 31,362 | 0 | 47,421 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of accounting changes | Adjustments for New Accounting Pronouncement | (1,574) | (1,174) | 39 | (439) | |||||
Beginning balance (shares) at Dec. 26, 2018 | 29,520,833 | 7,557,347 | 29,520,833 | 7,557,347 | |||||
Beginning balance at Dec. 26, 2018 | 273,455 | $ 30 | $ 8 | 195,633 | 30,404 | 0 | 47,380 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 26,201 | 21,920 | 4,281 | ||||||
Other comprehensive income: | |||||||||
Net change related to available-for-sale securities | 0 | 0 | 0 | ||||||
Equity-based compensation | 5,918 | 5,918 | |||||||
Activity under stock compensation plans (in shares) | 383,117 | ||||||||
Activity under stock compensation plans | 5,716 | 2,718 | 2,998 | ||||||
Redemption of LLC Interests (in shares) | (1,057,737) | (1,057,737) | |||||||
Redemption of LLC Interests | 0 | $ (1) | $ (1) | (7,115) | (7,115) | ||||
Effect of Gramercy Tavern Merger, Shares, Conversion of Unit | 2,690,263 | (2,690,263) | |||||||
Effect of Gramercy Tavern Merger, Value, Conversion of Units | $ (3) | $ 3 | (19,218) | (19,218) | |||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 3,516 | 3,516 | |||||||
Distributions paid to non-controlling interest holders | (1,706) | (1,706) | |||||||
Ending balance (shares) at Sep. 25, 2019 | 33,651,950 | 3,809,347 | 33,651,950 | 3,809,347 | |||||
Ending balance at Sep. 25, 2019 | 318,295 | $ 34 | $ 4 | 234,118 | 56,460 | 0 | 27,679 | ||
Beginning balance (shares) at Jun. 26, 2019 | 30,557,685 | 6,731,209 | |||||||
Beginning balance at Jun. 26, 2019 | 300,673 | $ 31 | $ 7 | 208,866 | 46,116 | 0 | 45,653 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 11,423 | 10,344 | 1,079 | ||||||
Other comprehensive income: | |||||||||
Net change related to available-for-sale securities | 0 | 0 | |||||||
Equity-based compensation | 1,908 | 1,908 | |||||||
Activity under stock compensation plans (in shares) | 172,403 | ||||||||
Activity under stock compensation plans | 3,625 | 1,786 | 1,839 | ||||||
Redemption of LLC Interests (in shares) | (231,599) | (231,599) | |||||||
Redemption of LLC Interests | $ 0 | $ 0 | $ 0 | (1,635) | (1,635) | ||||
Effect of Gramercy Tavern Merger, Shares, Conversion of Unit | 2,690,263 | 2,690,263 | (2,690,263) | ||||||
Effect of Gramercy Tavern Merger, Value, Conversion of Units | $ (3) | $ 3 | (19,218) | (19,218) | |||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | $ 705 | 705 | |||||||
Distributions paid to non-controlling interest holders | (39) | (39) | |||||||
Ending balance (shares) at Sep. 25, 2019 | 33,651,950 | 3,809,347 | 33,651,950 | 3,809,347 | |||||
Ending balance at Sep. 25, 2019 | 318,295 | $ 34 | $ 4 | $ 234,118 | 56,460 | 0 | 27,679 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of accounting changes | Adjustments for New Accounting Pronouncement | $ 5,195 | $ 4,136 | $ 1,059 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2019 | Sep. 26, 2018 | |
Document Period End Date | Sep. 25, 2019 | |
Payments of Financing Costs | $ 286 | $ 0 |
Finance Lease, Principal Payments | (1,433) | 0 |
OPERATING ACTIVITIES | ||
Net income (including amounts attributable to non-controlling interests) | 26,201 | 22,496 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation expense | 29,239 | 20,905 |
Capitalized Computer Software, Amortization | 107 | $ 0 |
Non-cash operating lease cost | $ 29,329 | |
Noncontrolling Interest, Weighted Average Ownership Percentage | 17.90% | 24.40% |
Equity-based compensation | $ 5,751 | $ 4,470 |
Deferred income taxes | (1,152) | 1,996 |
Non-cash interest expense | 85 | 72 |
(Gain) loss on sale of marketable securities | (22) | 16 |
Loss on disposal of property and equipment | 1,031 | 543 |
Unrealized (gain) loss on available-for-sale securities | (231) | (1) |
Other non-cash expense | 2 | 0 |
Net loss on sublease | 0 | 672 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 8,320 | 3,015 |
Inventories | (33) | (120) |
Prepaid expenses and other current assets | 265 | (540) |
Other assets | (6,735) | (895) |
Accounts payable | 4,038 | 437 |
Accrued expenses | 2,841 | 3,860 |
Accrued wages and related liabilities | (915) | 1,768 |
Other current liabilities | 638 | 89 |
Deferred rent | 0 | 786 |
Long-term operating lease liabilities | (26,932) | 0 |
Other long-term liabilities | 1,216 | 3,216 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 73,043 | 62,785 |
INVESTING ACTIVITIES | ||
Purchases of property and equipment | (80,904) | (60,144) |
Purchases of marketable securities | (970) | (910) |
Sales of marketable securities | 27,000 | 2,144 |
NET CASH USED IN INVESTING ACTIVITIES | (54,874) | (58,910) |
FINANCING ACTIVITIES | ||
Proceeds from deemed landlord financing | 0 | 793 |
Payments on deemed landlord financing | 0 | (342) |
Distributions paid to non-controlling interest holders | (1,706) | (692) |
Payments under tax receivable agreement | (707) | 0 |
Proceeds from stock option exercises | 7,089 | 5,103 |
Payment, Tax Withholding, Share-based Payment Arrangement | (1,371) | (949) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 1,586 | 3,913 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 19,755 | 7,788 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 24,750 | 21,507 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 44,505 | $ 29,295 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 9 Months Ended |
Sep. 25, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Shake Shack Inc. ("we," "us," "our," "Shake Shack" and the "Company") was formed on September 23, 2014 as a Delaware corporation for the purpose of facilitating an initial public offering and other related transactions in order to carry on the business of SSE Holdings, LLC and its subsidiaries ("SSE Holdings"). W e are the sole managing member of SSE Holdings and, as sole managing member, we operate and control all of the business and affairs of SSE Holdings. As a result, we consolidate the financial results of SSE Holdings and report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. As of September 25, 2019 we owned 89.8% of SSE Holdings. Unless the context otherwise requires, "we," "us," "our," "Shake Shack," the "Company" and other similar references, refer to Shake Shack Inc. and, unless otherwise stated, all of its subsidiaries, including SSE Holdings. We operate and license Shake Shack restaurants ("Shacks"), which serve hamburgers, hot dogs, chicken, crinkle-cut fries, shakes, frozen custard, beer, wine and more. As of September 25, 2019 , there were 254 Shacks in operation, system-wide, of which 151 were domestic company-operated Shacks, 17 were domestic licensed Shacks and 86 were international licensed Shacks. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 25, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Shake Shack Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and on a basis consistent in all material respects with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 26, 2018 ("2018 Form 10-K"). In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The accompanying Condensed Consolidated Balance Sheet as of December 26, 2018 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our 2018 Form 10-K. SSE Holdings is considered a variable interest entity. Shake Shack Inc. is the primary beneficiary as we have the majority economic interest in SSE Holdings and, as the sole managing member, have decision making authority that significantly affects the economic performance of the entity, while the limited partners have no substantive kick-out or participating rights. As a result, we consolidate SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of our consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of September 25, 2019 and December 26, 2018 , the net assets of SSE Holdings were $272,947 and $232,711 , respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreement. See Note 8 for more information. Fiscal Year We operate on a 52/53 week fiscal year ending on the last Wednesday in December. Fiscal 2019 contains 52 weeks and ends on December 25, 2019 . Fiscal 2018 contained 52 weeks and ended on December 26, 2018 . Unless otherwise stated, references to years in this report relate to fiscal years. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Recently Adopted Accounting Pronouncements We adopted the Accounting Standards Updates (“ASUs”) summarized below in fiscal 2019. Accounting Standards Update (“ASU”) Description Date Adopted Leases (ASU's 2016-02, 2018-01, 2018-10, 2018-11) This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It was applied using a modified retrospective approach applied at the adoption date with the election of various practical expedients. See Note 9 Leases for more information. December 27, 2018 |
REVENUE
REVENUE | 9 Months Ended |
Sep. 25, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Revenue Recognition Revenue consists of Shack sales and licensing revenue. Generally, revenue is recognized as promised goods or services transfer to the guest or customer in an amount that reflects the consideration we expect to be entitled in exchange for those goods or services. Revenue from Shack sales is presented net of discounts and recognized when food, beverage and retail products are sold. Sales tax collected from customers is excluded from Shack sales and the obligation is included in sales tax payable until the taxes are remitted to the appropriate taxing authorities. Revenue from our gift cards is deferred and recognized upon redemption. Licensing revenues include initial territory fees, Shack opening fees, and ongoing sales-based royalty fees from licensed Shacks. Generally, the licenses granted to develop, open and operate each Shack in a specified territory are the predominant goods or services transferred to the licensee in our contracts, and represent distinct performance obligations. Ancillary promised services, such as training and assistance during the initial opening of a Shack, are typically combined with the licenses and considered as one performance obligation per Shack. We determine the transaction price for each contract, which is comprised of the initial territory fee, and an estimate of the total Shack opening fees we expect to be entitled to. The calculation of total Shack opening fees included in the transaction price requires judgment, as it is based on an estimate of the number of Shacks we expect the licensee to open. The transaction price is then allocated equally to each Shack expected to open. The performance obligations are satisfied over time, starting when a Shack opens, through the end of the term of the license granted to the Shack. Because we are transferring licenses to access our intellectual property during a contractual term, revenue is recognized on a straight-line basis over the license term. Generally, payment for the initial territory fee is received upon execution of the licensing agreement, and payment for the restaurant opening fees are received either in advance of or upon opening the related restaurant. These payments are initially deferred and recognized as revenue as the performance obligations are satisfied, which occurs over a long-term period. Revenue from sales-based royalties is recognized as the related sales occur. Revenue recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 , disaggregated by type is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Shack sales $ 152,366 $ 115,882 $ 428,811 $ 324,869 Licensing revenue: Sales-based royalties 5,293 3,660 13,938 9,951 Initial territory and opening fees 103 105 335 225 Total revenue $ 157,762 $ 119,647 $ 443,084 $ 335,045 The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of September 25, 2019 is $16,573 . We expect to recognize this amount as revenue over a long-term period, as the license term for each Shack ranges from 5 to 20 years. This amount excludes any variable consideration related to sales-based royalties. Contract Balances Opening and closing balances of contract liabilities and receivables from contracts with customers is as follows: September 25 2019 December 27 Shack sales receivables $ 2,945 $ 2,550 Licensing receivables 4,494 2,616 Gift card liability 1,770 1,796 Deferred revenue, current 421 307 Deferred revenue, long-term 11,197 10,026 Revenue recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 that was included in their respective liability balances at the beginning of the period is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Gift card liability $ 84 $ 59 $ 467 $ 467 Deferred revenue, current 86 67 305 185 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 25, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis as of September 25, 2019 and December 26, 2018 , and indicate the classification within the fair value hierarchy. Cash, Cash Equivalents and Marketable Securities The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of September 25, 2019 and December 26, 2018 : September 25, 2019 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 39,499 $ — $ — $ 39,499 $ 39,499 $ — Level 1: Money market funds 5,006 — — 5,006 5,006 — Mutual funds 36,227 109 36,336 — 36,336 Total $ 80,732 $ 109 $ — $ 80,841 $ 44,505 $ 36,336 December 26, 2018 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 19,746 $ — $ — $ 19,746 $ 19,746 $ — Level 1: Money market funds 5,004 — — 5,004 5,004 — Mutual funds 62,235 — (122 ) 62,113 — 62,113 Total $ 86,985 $ — $ (122 ) $ 86,863 $ 24,750 $ 62,113 Net un realized gains on available-for-sale equity securities totaling $231 were included on the Condensed Consolidated Statements of Income during the thirty-nine weeks ended September 25, 2019 . No unrealized gains or losses were recognized during the thirteen weeks ended September 25, 2019 . Net unrealized gains on available-for-sale equity securities totaling $62 and $1 were included on the Condensed Consolidated Statements of Income during the thirteen and thirty-nine weeks ended September 26, 2018 , respectively. A summary of other income from available-for-sale securities recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Available-for-sale securities: Dividend income $ 254 $ 373 $ 997 $ 977 Interest income — — — 7 Realized gain (loss) on sale of investments — 1 22 (15 ) Unrealized gain on available-for-sale equity securities — 62 231 1 Total other income, net $ 254 $ 436 $ 1,250 $ 970 A summary of available-for-sale securities sold and gross realized gains and losses recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Available-for-sale securities: Gross proceeds from sales and redemptions $ — $ — $ 27,000 $ 2,144 Cost basis of sales and redemptions — — 26,978 2,160 Gross realized gains included in net income — — 36 2 Gross realized losses included in net income — — (14 ) (18 ) Amounts reclassified out of accumulated other comprehensive loss — — — 16 Realized gains and losses are determined on a specific identification method and are included in other income, net on the Condensed Consolidated Statements of Income . We periodically review our marketable securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and our intent to sell. As of September 25, 2019 and December 26, 2018 , the decline in the market value of our marketable securities investment portfolio was considered to be temporary in nature. Other Financial Instruments The carrying value of our other financial instruments, including accounts receivable, accounts payable, and accrued expenses as of September 25, 2019 and December 26, 2018 approximated their fair value due to the short-term nature of these financial instruments. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis Assets and liabilities that are measured at fair value on a non-recurring basis include our long-lived assets and indefinite-lived intangible assets. There were no impairments recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 . |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 25, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories as of September 25, 2019 and December 26, 2018 consisted of the following: September 25 December 26 Food $ 1,344 $ 1,291 Wine 95 83 Beer 100 95 Beverages 211 203 Retail merchandise 32 77 Inventories $ 1,782 $ 1,749 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 25, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment as of September 25, 2019 and December 26, 2018 consisted of the following: September 25 December 26 Leasehold improvements $ 278,585 $ 228,453 Landlord funded assets — 15,595 Equipment 50,853 40,716 Furniture and fixtures 16,868 14,055 Computer equipment and software 22,813 19,008 Financing equipment lease assets 6,537 — Construction in progress (1) 39,927 29,474 Property and equipment, gross 415,583 347,301 Less: accumulated depreciation 111,233 85,447 Property and equipment, net $ 304,350 $ 261,854 ( |
SUPPLEMENTAL BALANCE SHEET INFO
SUPPLEMENTAL BALANCE SHEET INFORMATION | 9 Months Ended |
Sep. 25, 2019 | |
Supplemental Balance Sheet Disclosures [Abstract] | |
SUPPLEMENTAL BALANCE SHEET INFORMATION | SUPPLEMENTAL BALANCE SHEET INFORMATION The components of other current liabilities as of September 25, 2019 and December 26, 2018 are as follows: September 25 December 26 Sales tax payable $ 3,810 $ 3,143 Current portion of liabilities under tax receivable agreement 5,177 5,804 Gift card liability 1,770 1,796 Current portion of financing equipment lease liabilities 1,796 — Other 3,398 3,287 Other current liabilities $ 15,951 $ 14,030 The components of other long-term liabilities as of September 25, 2019 and December 26, 2018 are as follows: September 25 December 26 Deferred licensing revenue $ 11,197 $ 10,026 Long-term portion of financing equipment lease liabilities 3,310 — Other 403 472 Other long-term liabilities $ 14,910 $ 10,498 |
DEBT
DEBT | 9 Months Ended |
Sep. 25, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT In August 2019, we terminated our previous revolving credit facility and entered into a new revolving credit facility pursuant to a Credit Agreement. Our Credit Agreement provides for a revolving credit facility of $50,000 , of which the entire commitment is available immediately, with the ability to increase available borrowings up to an additional $100,000 , to be made available subject to satisfaction of certain conditions. The Credit Agreement will mature and all amounts outstanding will be due and payable in August 2024 and permits the issuance of letters of credit upon our request of up to $15,000 . Borrowings under the facility will bear interest at either: (i) LIBOR plus a percentage ranging from 1.0% to 1.5% or (ii) the base rate plus a percentage ranging from 0.0% to 0.5% , in each case depending on our net lease adjusted leverage ratio. To the extent the LIBOR reference rate is no longer available, the administrative agent, in consultation with us, will determine a replacement rate which will be generally in accordance with similar transactions in which it serves as administrative agent. As of September 25, 2019 , no amounts were outstanding under the revolving credit facility. As of December 26, 2018 , no amounts were outstanding under the previous facility. The obligations under the Credit Agreement are secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors. The obligations under the Credit Agreement were guaranteed by each of SSE Holdings' direct and indirect subsidiaries (with certain exceptions). The Credit Agreement requires us to comply with maximum net lease adjusted leverage and minimum fixed charge coverage ratios. In addition, the Credit Agreement contains other customary affirmative and negative covenants, including those which (subject to certain exceptions and dollar thresholds) limit our ability to incur debt; incur liens; make investments; engage in mergers, consolidations, liquidations or acquisitions; dispose of assets; make distributions on or repurchase equity securities; engage in transactions with affiliates; and prohibits us, with certain exceptions, from engaging in any line of business not related to our current line of business. As of September 25, 2019 we were in compliance with all covenants. As of December 26, 2018 we had deemed landlord financing liabilities of $20,846 , for certain leases where we were involved in the construction of leased assets and were considered the accounting owner of the construction project. Upon adoption of ASU 2016-02, Leases (Topic 842) on December 27, 2018, we were no longer considered to be the accounting owner of these construction projects and had no deemed landlord financing liabilities on the Condensed Consolidated Balance Sheets as of September 25, 2019 . As of September 25, 2019 we had $342,602 of operating lease liabilities and $5,106 of finance lease liabilities on the Condensed Consolidated Balance Sheets, refer to Note 9 Leases for further details. Total interest costs incurred were $133 and $302 for the thirteen and thirty-nine weeks ended September 25, 2019 , respectively and $633 and $1,897 for the thirteen and thirty-nine weeks ended and September 26, 2018 , respectively. Total amounts capitalized into property and equipment were $41 and $127 for the thirteen and thirty-nine weeks ended September 26, 2018 , respectively. No amounts were capitalized into property and equipment for the thirteen and thirty-nine weeks ended September 25, 2019 . |
NON-CONTROLLING INTERESTS
NON-CONTROLLING INTERESTS | 9 Months Ended |
Sep. 25, 2019 | |
Noncontrolling Interest [Abstract] | |
NON-CONTROLLING INTERESTS | NON-CONTROLLING INTERESTS We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. We report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the "LLC Agreement") of SSE Holdings provides that holders of LLC Interests may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis. In connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in SSE Holdings. Changes in our ownership interest in SSE Holdings while we retain our controlling interest in SSE Holdings will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Interests in SSE Holdings by the other members of SSE Holdings will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital. The following table summarizes the ownership interest in SSE Holdings as of September 25, 2019 and December 26, 2018 . September 25, 2019 December 26, 2018 LLC Interests Ownership% LLC Interests Ownership % Number of LLC Interests held by Shake Shack Inc. 33,651,950 89.8 % 29,520,833 79.6 % Number of LLC Interests held by non-controlling interest holders 3,809,347 10.2 % 7,557,347 20.4 % Total LLC Interests outstanding 37,461,297 100.0 % 37,078,180 100.0 % The weighted average ownership percentages for the applicable reporting periods are used to attribute net income and other comprehensive income to Shake Shack Inc. and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the thirteen and thirty-nine weeks ended September 25, 2019 was 14.4% and 17.9% , respectively. The non-controlling interest holders' weighted average ownership percentage for the thirteen and thirty-nine weeks ended September 26, 2018 was 21.8% and 24.4% , respectively. The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 . Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Net income attributable to Shake Shack Inc. $ 10,344 $ 5,025 $ 21,920 $ 16,137 Other comprehensive income: Net change related to available-for-sale securities — — — 10 Transfers (to) from non-controlling interests: Increase in additional paid-in capital as a result of the redemption of LLC Interests 1,634 7,274 7,115 14,633 Increase in additional paid-in-capital as a result of the GTC Merger 19,218 — 19,218 — Increase (decrease) in additional paid-in capital as a result of activity under stock compensation plans 1,789 215 2,718 2,318 Total effect of changes in ownership interest on equity attributable to Shake Shack Inc. $ 32,985 $ 12,514 $ 50,971 $ 33,098 During the thirteen and thirty-nine weeks ended September 25, 2019 , an aggregate of 231,599 and 1,057,737 LLC Interests, respectively, were redeemed by non-controlling interest holders for newly-issued shares of Class A common stock, and we received 231,599 and 1,057,737 LLC Interests in connection with these redemptions for the thirteen and thirty-nine weeks ended September 25, 2019 , respectively, increasing our total ownership interest in SSE Holdings. During the thirteen and thirty-nine weeks ended September 26, 2018 , an aggregate of 1,235,671 and 2,561,086 LLC Interests, respectively, were redeemed by non-controlling interest holders for newly-issued shares of Class A common stock, and we received 1,235,671 and 2,561,086 LLC Interests in connection with these redemptions for the thirteen and thirty-nine weeks ended September 26, 2018 , respectively, increasing our total ownership interest in SSE Holdings. During the thirteen and thirty-nine weeks ended September 25, 2019 , we received an aggregate of 172,403 and 383,117 LLC Interests, respectively, in connection with the activity under our stock compensation plan and 29,353 and 282,792 LLC Interests, respectively, during the thirteen and thirty-nine weeks ended September 26, 2018 . Gramercy Tavern Corp. Merger Pursuant to a Stockholders Agreement, dated as of February 4, 2015, as amended, by and among Daniel H. Meyer, the Daniel H. Meyer 2012 Gift Trust dtd 10/31/12 (the "Gift Trust"), other affiliates (collectively, the "Meyer Stockholders") and other parties thereto, the Meyer Stockholders had the right to cause all of the shares of Gramercy Tavern Corp. ("GTC") to be exchanged for shares of our Class A common stock pursuant to a tax-free reorganization. In August 2019, the Meyer Stockholders exercised their right with respect to GTC (the "GTC Merger"). To effect the GTC Merger, a newly-formed wholly-owned subsidiary of Shake Shack Inc. merged with and into GTC, with GTC as the surviving entity, which was then merged with and into Shake Shack Inc. Prior to the GTC Merger, GTC owned 2,690,263 LLC Interests and an equivalent number of shares of our Class B common stock. The stockholders of GTC, received on a one-for-one basis, 2,690,263 shares of Class A common stock based upon the amount of shares of GTC held by the stockholders; all of the shares of Class B common stock held by GTC were cancelled; and all of the LLC Interests held by GTC were transferred to us. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 9 Months Ended |
Sep. 25, 2019 | |
Share-based Payment Arrangement [Abstract] | |
EQUITY-BASED COMPENSATION | EQUITY-BASED COMPENSATION A summary of equity-based compensation expense recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Stock options $ 637 $ 719 $ 1,974 $ 2,319 Performance stock units 720 750 2,439 1,668 Restricted stock units 522 167 1,338 483 Equity-based compensation expense $ 1,879 $ 1,636 $ 5,751 $ 4,470 Total income tax benefit recognized related to equity-based compensation $ 48 $ 46 $ 141 $ 126 Equity-based compensation expense is included in general and administrative expenses and labor and related expenses on the Condensed Consolidated Statements of Income during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 General and administrative expenses $ 1,795 $ 1,598 $ 5,521 $ 4,358 Labor and related expenses 84 38 230 112 Equity-based compensation expense $ 1,879 $ 1,636 $ 5,751 $ 4,470 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 25, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. SSE Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, SSE Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc. We are also subject to withholding taxes in foreign jurisdictions. Income Tax Expense A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax expense is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Expected U.S. federal income taxes at statutory rate $ 1,738 21.0 % $ 1,930 21.0 % $ 5,492 21.0 % $ 5,917 21.0 % State and local income taxes, net of federal benefit 505 6.1 % 643 7.0 % 1,746 6.7 % 1,885 6.7 % Foreign withholding taxes 655 7.9 % 298 3.2 % 1,624 6.2 % 1,100 3.9 % Tax credits and adjustments to forecasted rate (2,874 ) (34.7 )% (181 ) (2.0 )% (4,697 ) (18.0 )% (1,378 ) (4.9 )% Return to provision adjustment (153 ) (1.8 )% — — % (153 ) (0.6 )% — — % Non-controlling interest (346 ) (4.2 )% (430 ) (4.7 )% (1,291 ) (4.9 )% (1,615 ) (5.7 )% Tax effect of change in basis related to the adoption of ASC 842 — — % — — % 1,161 4.4 % — — % Change in valuation allowance (2,587 ) (31.3 )% — — % (3,847 ) (14.7 )% — — % Other (82 ) (1.0 )% (19 ) (0.2 )% (82 ) (0.3 )% (230 ) (0.8 )% Income tax expense $ (3,144 ) (38.0 )% $ 2,241 24.4 % $ (47 ) (0.2 )% $ 5,679 20.2 % Our effective income tax rates for the thirteen weeks ended September 25, 2019 and September 26, 2018 were (38.0)% and 24.4% , respectively. The decrease was primarily driven by higher foreign tax credits, an increase of windfall tax benefits in equity-based compensation and a decrease in valuation allowance, partially offset by an increase in our ownership interest in SSE Holdings, which increases our share of the taxable income of SSE Holdings. Our weighted-average ownership interest in SSE Holdings was 85.6% and 78.2% for the thirteen weeks ended September 25, 2019 and September 26, 2018 , respectively. Our effective income tax rates for the thirty-nine weeks ended September 25, 2019 and September 26, 2018 were (0.2)% and 20.2% , respectively. The decrease was primarily driven by higher foreign tax credits, an increase of windfall tax benefits in equity-based compensation and a decrease in valuation allowance, partially offset by the tax effect of a change in tax basis relating to the adoption of ASC 842 on December 27, 2018 and an increase in our ownership interest in SSE Holdings, which increases our share of the taxable income of SSE Holdings. Our weighted-average ownership interest in SSE Holdings was 82.1% and 75.6% for the thirty-nine weeks ended September 25, 2019 and September 26, 2018 , respectively. Deferred Tax Assets and Liabilities During the thirty-nine weeks ended September 25, 2019 , we acquired an aggregate of 4,131,117 LLC Interests in connection with the redemption of LLC Interests, and activity relating to our stock compensation plan and the GTC merger, which represented 2,690,263 of the total LLC Interests acquired (refer to Note 10 for further details). We recognized a deferred tax asset in the amount o f $16,319 associated with the basis difference in our investment in SSE Holdings upon acquisition of these LLC Interests. As of September 25, 2019 , the total deferred tax asset related to the basis difference in our investment in SSE Holdings was $181,620 . However, a portion of the total basis difference will only reverse upon the eventual sale of our interest in SSE Holdings, which we expect would result in a capital loss. As of September 25, 2019 , the total valuation allowance established against the deferred tax asset to which this portion relates was $763 . During the thirty-nine weeks ended September 25, 2019 , we also recognized $5,624 of deferred tax assets related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement and related deductions for imputed interest on such payments. See "—Tax Receivable Agreement" for more information. We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of September 25, 2019 , we concluded, based on the weight of all available positive and negative evidence, that all of our deferred tax assets (except for those deferred tax assets described above relating to basis differences that are expected to result in a capital loss upon the eventual sale of our interest in SSE Holdings) are more likely than not to be realized. As such, no additional valuation allowance was recognized. Uncertain Tax Positions No uncertain tax positions existed as of September 25, 2019 . Shake Shack Inc. was formed in September 2014 and did not engage in any operations prior to our initial public offering in February of 2015 and related organizational transactions. Shake Shack Inc. first filed tax returns for tax year 2014, which is the first tax year subject to examination by taxing authorities for U.S. federal and state income tax purposes. Additionally, although SSE Holdings is treated as a partnership for U.S. federal and state income taxes purposes, it is still required to file an annual U.S. Return of Partnership Income, which is subject to examination by the Internal Revenue Service ("IRS"). The statute of limitations has expired for tax years through 2015 for SSE Holdings. Tax Receivable Agreement Pursuant to our election under Section 754 of the Internal Revenue Code (the "Code"), we expect to obtain an increase in our share of the tax basis in the net assets of SSE Holdings when LLC Interests are redeemed or exchanged by the other members of SSE Holdings. We plan to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interest occurs. We intend to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. On February 4, 2015, we entered into a tax receivable agreement with certain of the then-existing members of SSE Holdings (the "Tax Receivable Agreement") that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of SSE Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the "TRA Payments"). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or us. The rights of each member of SSE Holdings, that is a party to the Tax Receivable Agreement, are assignable to transferees of their respective LLC Interests. During the thirty-nine weeks ended September 25, 2019 , we acquired an aggregate of 1,057,737 LLC Interests in connection with the redemption of LLC Interests, which resulted in an increase in the tax basis of our investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement. We recognized an additional liability in the amount of $20,027 for the TRA Payments due to the redeeming members, representing 85% of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemption of LLC Interests, after concluding it was probable that such TRA Payments would be paid based on our estimates of future taxable income. During the thirty-nine weeks ended September 25, 2019 , payments of $707 , inclusive of interest, were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement. No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the thirty-nine weeks ended September 26, 2018 . As of September 25, 2019 , the total amount of TRA Payments due under the Tax Receivable Agreement, was $223,112 , of which $5,177 was included in other current liabilities on the Condensed Consolidated Balance Sheet. See Note 15 for more information relating to our liabilities under the Tax Receivable Agreement. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 25, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share of Class A common stock is computed by dividing net income attributable to Shake Shack Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to Shake Shack Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 . Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Numerator: Net income $ 11,423 $ 6,946 $ 26,201 $ 22,496 Less: net income attributable to non-controlling interests 1,079 1,921 4,281 6,359 Net income attributable to Shake Shack Inc. $ 10,344 $ 5,025 $ 21,920 $ 16,137 Denominator: Weighted-average shares of Class A common stock outstanding—basic 31,961 28,954 30,549 27,930 Effect of dilutive securities: Stock options 824 857 777 809 Performance stock units 50 51 64 63 Restricted stock units 81 21 51 18 Weighted-average shares of Class A common stock outstanding—diluted 32,916 29,883 31,441 28,820 Earnings per share of Class A common stock—basic $ 0.32 $ 0.17 $ 0.72 $ 0.58 Earnings per share of Class A common stock—diluted $ 0.31 $ 0.17 $ 0.70 $ 0.56 Shares of our Class B common stock do not share in the earnings or losses of Shake Shack and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. The following table presents potentially dilutive securities, as of the end of the period,excluded from the computations of diluted earnings per share of Class A common stock for the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 . Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Performance stock units 66,101 (1) 59,341 (1) 66,101 (1) 59,341 (1) Shares of Class B common stock 3,809,347 (2) 7,688,921 (2) 3,809,347 (2) 7,688,921 (2) (1) Excluded from the computation of diluted earnings per share of Class A common stock because the performance conditions associated with these awards were not met assuming the end of the reporting period was the end of the performance period. (2) Shares of our Class B common stock outstanding as of the end of the period are considered potentially dilutive shares of Class A common stock. Amounts have been excluded from the computations of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive under the if-converted and two-class methods. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 9 Months Ended |
Sep. 25, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION The following table sets forth supplemental cash flow information for the thirty-nine weeks ended September 25, 2019 and September 26, 2018 : Thirty-Nine Weeks Ended September 25 September 26 Cash paid for: Income taxes, net of refunds $ 2,483 $ 2,015 Interest, net of amounts capitalized 157 1,601 Non-cash investing activities: Accrued purchases of property and equipment 17,394 17,697 Capitalized landlord assets for leases where we are deemed the accounting owner — 4,478 Capitalized equity-based compensation 79 64 Non-cash financing activities: Class A common stock issued in connection with the redemption of LLC Interests 1 2 Class A common stock issued in connection with the GTC merger 3 — Cancellation of Class B common stock in connection with the redemption of LLC Interests (1 ) (2 ) Cancellation of Class B common stock in connection with the GTC Merger (3 ) — Establishment of liabilities under tax receivable agreement 20,027 42,641 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 25, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Lease Commitments We are obligated under various operating leases for Shacks and our home office space, expiring in various years through 2035. Under certain of these leases, we are liable for contingent rent based on a percentage of sales in excess of specified thresholds and are typically responsible for our proportionate share of real estate taxes, common area maintenance charges and utilities. See Note 9, Leases. As security under the terms of one of our leases, we are obligated under a letter of credit totaling $130 as of September 25, 2019 , which expires in February 2026. Additionally, in September 2017, we entered into a letter of credit in conjunction with our new Home Office lease in the amount of $603 , which expires in August 2020 and renews automatically for one-year periods through January 31, 2034. Purchase Commitments Purchase obligations include legally binding contracts, including commitments for the purchase, construction or remodeling of real estate and facilities, firm minimum commitments for inventory purchases, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts. These obligations are generally short-term in nature and are recorded as liabilities when the related goods are received or services rendered. We also enter into long-term, exclusive contracts with certain vendors to supply us with food, beverages and paper goods, obligating us to purchase specified quantities. Legal Contingencies In February 2018, a claim was filed against Shake Shack in California state court alleging certain violations of the California Labor Code. At a mediation between the parties, we agreed to settle the matter with the plaintiff and all other California employees who elect to participate in the settlement for $1,200 . As of September 25, 2019 , an accrual in the amount of $1,200 was recorded for this matter and related expenses. We are subject to various legal proceedings, claims and liabilities, such as employment-related claims and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance. As of September 25, 2019 , the amount of the ultimate liability with respect to these matters was not material. Liabilities under Tax Receivable Agreement As described in Note 12 , we are a party to the Tax Receivable Agreement under which we are contractually committed to pay certain of the members of SSE Holdings 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions. We are not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized. Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then we would not be required to make the related TRA Payments. During the thirty-nine weeks ended September 25, 2019 and September 26, 2018 , we recognized liabilities totaling $20,027 and $42,641 , respectively, relating to our obligations under the Tax Receivable Agreement, after concluding that it was probable that we would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits. As of September 25, 2019 and December 26, 2018 , our total obligations under the Tax Receivable Agreement were $223,112 and $203,725 , respectively. There were no transactions subject to the Tax Receivable Agreement for |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 25, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Union Square Hospitality Group The Chairman of our Board of Directors serves as the Chief Executive Officer of Union Square Hospitality Group, LLC. As a result, Union Square Hospitality Group, LLC and its subsidiaries, set forth below, are considered related parties. USHG, LLC Effective January 2015, we entered into an Amended and Restated Management Services Agreement with USHG, LLC ("USHG"), in which USHG agreed to provide, at our election, certain management services to SSE Holdings. The initial term of the Amended and Restated Management Services Agreement is through December 31, 2019, and SSE Holdings notified USHG of its intention not to renew the term thereafter. Hudson Yards Sports and Entertainment In fiscal 2011, we entered into a Master License Agreement (as amended, "MLA") with Hudson Yards Sports and Entertainment LLC ("HYSE") to operate Shake Shack branded limited menu concession stands in sports and entertainment venues within the United States. In February 2019, the agreement was assigned to Hudson Yards Catering ("HYC"), the parent of HYSE. The agreement expires in January 2027 and includes five consecutive five -year renewal options at HYC's option. As consideration for these rights, HYC pays us a license fee based on a percentage of net food sales, as defined in the MLA. HYC also pays us a percentage of profits on sales of branded beverages, as defined in the MLA. Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts received from HYC Licensing revenue $ 250 $ 200 $ 401 $ 311 Classification September 25 December 26 Amounts due from HYC Accounts Receivable Prepaid expenses and other current assets $ 92 $ 37 Madison Square Park Conservancy The Chairman of our Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which we have a license agreement and pay license fees to operate our Madison Square Park Shack. Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts paid to MSP Conservancy Occupancy and related expenses $ 138 $ 203 $ 692 $ 673 Classification September 25 December 26 Amounts due to MSP Conservancy Accrued expenses $ 75 $ 70 Share Our Strength The Chairman of our Board of Directors serves as a director of Share Our Strength, for which Shake Shack holds the "Great American Shake Sale" every year to raise money and awareness for childhood hunger. During the Great American Shake Sale, we encourage guests to donate money to Share Our Strength's No Kid Hungry campaign in exchange for a coupon for a free shake. All of the guest donations we collect go directly to Share Our Strength. Amounts raised through donations during the thirteen weeks ended September 25, 2019 , were payable to Share Our Strength as of September 25, 2019 . Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts raised through donations — $ 190 $ — $ 190 $ 343 Costs incurred for free shakes redeemed General and administrative expenses $ 30 $ — 30 53 Mobo Systems, Inc. The Chairman of our Board of Directors serves as a director of Mobo Systems, Inc. (also known as "Olo"), a platform we use in connection with our mobile ordering application. No amounts were due to Olo as of September 25, 2019 and December 26, 2018 , respectively. Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts paid to Olo Other operating expenses $ 44 $ 28 $ 122 $ 80 Square, Inc. Our Chief Executive Officer is a member of the Board of Directors of Square, Inc. ("Square"). We currently use certain point-of-sale applications, payment processing services, hardware and other enterprise platform services in connection with the processing of a limited amount of sales at certain of our locations, sales for certain off-site events and in connection with our kiosk technology. Additionally, we partnered with Caviar, Square’s food ordering delivery service, to allow guests to order Shake Shack in select markets as well as participated in Square’s new Boost offers, providing assets and permission for Square to run select offers to their cash card users. No amounts were due to Square as of September 25, 2019 and December 26, 2018 , respectively. Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts paid to Square Other operating expenses $ 487 $ 122 $ 1,195 $ 250 Tax Receivable Agreement As described in Note 12 , we entered into a tax receivable agreement with certain members of SSE Holdings that provides for the payment by us of 85% of the amount of tax benefits, if any, that Shake Shack actually realizes or in some cases is deemed to realize as a result of certain transactions. Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts paid to members (inclusive of interest) Other current liabilities $ — $ — $ 707 $ — Classification September 25 December 26 Amounts due under the Tax Receivable Agreement Other current liabilities Liabilities under tax receivable agreement, net of current portion $ 223,112 $ 203,725 Distributions to Members of SSE Holdings Under the terms of the SSE Holdings LLC Agreement, SSE Holdings is obligated to make tax distributions to its members . No tax distributions were payable to non-controlling interest holders as of September 25, 2019 and December 26, 2018 , respectively. Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 2019 September 26 September 25 September 26 Amounts paid to non-controlling interest holders Net income attributable to non-controlling interests $ 39 $ 22 $ 1,706 $ 692 Gramercy Tavern Corp. Merger Pursuant to a Stockholders Agreement, dated as of February 4, 2015, as amended, by and among Daniel H. Meyer, the Daniel H. Meyer 2012 Gift Trust dtd 10/31/12 (the "Gift Trust"), other affiliates (collectively, the "Meyer Stockholders") and other parties thereto, the Meyer Stockholders had the right to cause all of the shares of Gramercy Tavern Corp. ("GTC") to be exchanged for shares of our Class A common stock pursuant to a tax-free reorganization. In August 2019, the Meyer Stockholders exercised their right with respect to GTC (the "GTC Merger"). To effect the GTC Merger, a newly-formed wholly-owned subsidiary of Shake Shack Inc. merged with and into GTC, with GTC as the surviving entity, which was then merged with and into Shake Shack Inc. The stockholders of GTC received on a one-for-one basis shares of Class A common stock based upon the amount of shares of GTC held by the stockholders; all of the shares of Class B common stock held by GTC were cancelled; and all of the LLC Interests held by GTC were transferred to us. See Note 10 for more information. |
LEASES
LEASES | 9 Months Ended |
Sep. 25, 2019 | |
Leases [Abstract] | |
LEASES | LEASES Effect of Standard Adoption On December 27, 2018 we adopted ASU 2016-02, Leases (Topic 842) , using a modified retrospective approach. We elected the package of practical expedients permitted under the transition guidance within Accounting Standards Codification Topic 842 ("ASC 842") which, among other items, allowed us to carry forward the historical lease classifications. As such, we applied the modified retrospective approach as of the adoption date to those lease contracts for which we have taken possession of the property as of December 26, 2018. As part of the transition, we derecognized all landlord funded assets and deemed landlord financing liabilities as of December 26, 2018 and determined the classification as either operating or finance leases. In addition to the aforementioned practical expedient, we have also elected to: ▪ Adopt the short-term lease exception for leases with terms of twelve months or less and account for them as if they were operating leases under ASC 840; and ▪ Apply the practic al expedient of combining lease and non-lease components. Results for reporting periods beginning on or after December 27, 2018 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 ("ASC 840"), the accounting standard then in effect. Upon transition, on December 27, 2018, we recorded the following increases (decreases) to the respective line items on the Condensed Consolidated Balance Sheet: Adjustment as of December 27, 2018 Prepaid expenses and other current assets $ 6 Property and equipment, net (11,448 ) Operating lease assets 229,885 Deferred income taxes, net (121 ) Deemed landlord financing (20,846 ) Deferred rent (47,862 ) Long-term operating lease liabilities 277,224 Other long-term liabilities 4,611 Retained earnings 4,136 Non-controlling interests 1,059 Nature of Leases We lease all of our domestic company-operated Shacks, our Home Office and certain equipment under various non-cancelable lease agreements that expire on various dates through 2035. We evaluate contracts entered into to determine whether the contract involves the use of property or equipment, which is either explicitly or implicitly identified in the contract. We evaluate whether we control the use of the asset, which is determined by assessing whether we obtain substantially all economic benefits from the use of the asset, and whether we have the right to direct the use of the asset. If these criteria are met and we have identified a lease, we account for the contract under the requirements of ASC 842. Upon the possession of a leased asset, we determine its classification as an operating or finance lease. Most of our real estate leases are classified as operating leases and most of our equipment leases are classified as finance leases. Generally, our real estate leases have initial terms ranging from 10 to 15 years and typically include two five -year renewal options. Renewal options are generally not recognized as part of the right-of-use assets and lease liabilities as it is not reasonably certain at commencement date that we would exercise the options to extend the lease. Our real estate leases typically provide for fixed minimum rent payments and/or contingent rent payments based upon sales in excess of specified thresholds. When the achievement of such sales thresholds are deemed to be probable, contingent rent is accrued in proportion to the sales recognized during the period. For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date we take possession of the leased property. Lease expense incurred before a Shack opens is recorded in pre-opening costs. Once a domestic company-operated Shack opens, we record the straight-line lease expense and any contingent rent, if applicable, in occupancy and related expenses on the Consolidated Statements of Income. Many of our leases also require us to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in occupancy and related expenses on the Consolidated Statements of Income. As there were no explicit rates provided in our leases, we used our incremental borrowing rate in determining the present value of future lease payments. The discount rate used to measure the lease liability at the transition date was derived from the average of the yield curves obtained from using the notching method and the recovery rate method. The most significant assumption in calculating the incremental borrowing rate is our credit rating and subject to judgment. We determined our credit rating based on a comparison of the financial information of SSE Holdings to 800 other public companies and then used their respective credit ratings to develop our own. We expend cash for leasehold improvements to build out and equip our leased premises. Generally, a portion of the leasehold improvements and building costs are reimbursed by our landlords as landlord incentives pursuant to agreed-upon terms in our lease agreements. If obtained, landlord incentives usually take the form of cash, full or partial credits against our future minimum or contingent rents otherwise payable by us, or a combination thereof. In most cases, landlord incentives are received after we take possession of the property, as we meet required milestones during the construction of the property. We include these amounts in the measurement of the initial operating lease liability, which are also reflected as a reduction to the initial measurement of the right-of-use asset. A summary of finance and operating lease right-of-use assets and liabilities as of September 25, 2019 is as follows: Classification September 25 2019 Finance leases Property and equipment, net $ 5,046 Operating leases Operating lease assets 279,975 Total right-of-use assets $ 285,021 Finance leases: Other current liabilities 1,796 Other long-term liabilities 3,310 Operating leases: Operating lease liabilities, current 26,441 Long-term operating lease liabilities 316,161 Total lease liabilities $ 347,708 The components of lease expense for the thirteen and thirty-nine weeks ended September 25, 2019 were as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 September 25 Finance lease cost: Amortization of right-of-use assets Depreciation expense $ 538 $ 1,491 Interest on lease liabilities Interest expense 52 148 Operating lease cost Occupancy and related expenses General and administrative expenses Pre-opening costs 10,564 29,329 Short-term lease cost Occupancy and related expenses 279 313 Variable lease cost Occupancy and related expenses General and administrative expenses Pre-opening costs 4,338 11,636 Total lease cost $ 15,771 $ 42,917 As of September 25, 2019 , future minimum lease payments for finance and operating leases consisted of the following: Finance Leases Operating Leases 2019 $ 538 $ 23,285 2020 1,791 45,901 2021 1,194 45,408 2022 804 47,261 2023 620 47,315 Thereafter 587 278,647 Total minimum payments 5,534 487,817 Less: imputed interest 428 145,215 Total lease liabilities $ 5,106 $ 342,602 As of September 25, 2019 we had additional operating lease commitments of $85,583 for non-cancelable leases without a possession date, which will begin to commence in 2019 . These lease commitments are consistent with the leases that we have executed thus far and include a number of real estates leases where we are involved in the construction and design. A summary of lease terms and discount rates for finance and operating leases as of September 25, 2019 is as follows: September 25 Weighted-average remaining lease term (years): Finance leases 5.2 Operating leases 10.0 Weighted-average discount rate: Finance leases 3.9 % Operating leases 4.7 % Supplemental cash flow information related to leases as of September 25, 2019 is as follows: September 25 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 148 Operating cash flows from operating leases 27,238 Financing cash flows from finance leases 1,433 Right-of-use assets obtained in exchange for lease obligations: Finance leases 1,927 Operating leases 65,773 |
LEASES | LEASES Effect of Standard Adoption On December 27, 2018 we adopted ASU 2016-02, Leases (Topic 842) , using a modified retrospective approach. We elected the package of practical expedients permitted under the transition guidance within Accounting Standards Codification Topic 842 ("ASC 842") which, among other items, allowed us to carry forward the historical lease classifications. As such, we applied the modified retrospective approach as of the adoption date to those lease contracts for which we have taken possession of the property as of December 26, 2018. As part of the transition, we derecognized all landlord funded assets and deemed landlord financing liabilities as of December 26, 2018 and determined the classification as either operating or finance leases. In addition to the aforementioned practical expedient, we have also elected to: ▪ Adopt the short-term lease exception for leases with terms of twelve months or less and account for them as if they were operating leases under ASC 840; and ▪ Apply the practic al expedient of combining lease and non-lease components. Results for reporting periods beginning on or after December 27, 2018 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 ("ASC 840"), the accounting standard then in effect. Upon transition, on December 27, 2018, we recorded the following increases (decreases) to the respective line items on the Condensed Consolidated Balance Sheet: Adjustment as of December 27, 2018 Prepaid expenses and other current assets $ 6 Property and equipment, net (11,448 ) Operating lease assets 229,885 Deferred income taxes, net (121 ) Deemed landlord financing (20,846 ) Deferred rent (47,862 ) Long-term operating lease liabilities 277,224 Other long-term liabilities 4,611 Retained earnings 4,136 Non-controlling interests 1,059 Nature of Leases We lease all of our domestic company-operated Shacks, our Home Office and certain equipment under various non-cancelable lease agreements that expire on various dates through 2035. We evaluate contracts entered into to determine whether the contract involves the use of property or equipment, which is either explicitly or implicitly identified in the contract. We evaluate whether we control the use of the asset, which is determined by assessing whether we obtain substantially all economic benefits from the use of the asset, and whether we have the right to direct the use of the asset. If these criteria are met and we have identified a lease, we account for the contract under the requirements of ASC 842. Upon the possession of a leased asset, we determine its classification as an operating or finance lease. Most of our real estate leases are classified as operating leases and most of our equipment leases are classified as finance leases. Generally, our real estate leases have initial terms ranging from 10 to 15 years and typically include two five -year renewal options. Renewal options are generally not recognized as part of the right-of-use assets and lease liabilities as it is not reasonably certain at commencement date that we would exercise the options to extend the lease. Our real estate leases typically provide for fixed minimum rent payments and/or contingent rent payments based upon sales in excess of specified thresholds. When the achievement of such sales thresholds are deemed to be probable, contingent rent is accrued in proportion to the sales recognized during the period. For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date we take possession of the leased property. Lease expense incurred before a Shack opens is recorded in pre-opening costs. Once a domestic company-operated Shack opens, we record the straight-line lease expense and any contingent rent, if applicable, in occupancy and related expenses on the Consolidated Statements of Income. Many of our leases also require us to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in occupancy and related expenses on the Consolidated Statements of Income. As there were no explicit rates provided in our leases, we used our incremental borrowing rate in determining the present value of future lease payments. The discount rate used to measure the lease liability at the transition date was derived from the average of the yield curves obtained from using the notching method and the recovery rate method. The most significant assumption in calculating the incremental borrowing rate is our credit rating and subject to judgment. We determined our credit rating based on a comparison of the financial information of SSE Holdings to 800 other public companies and then used their respective credit ratings to develop our own. We expend cash for leasehold improvements to build out and equip our leased premises. Generally, a portion of the leasehold improvements and building costs are reimbursed by our landlords as landlord incentives pursuant to agreed-upon terms in our lease agreements. If obtained, landlord incentives usually take the form of cash, full or partial credits against our future minimum or contingent rents otherwise payable by us, or a combination thereof. In most cases, landlord incentives are received after we take possession of the property, as we meet required milestones during the construction of the property. We include these amounts in the measurement of the initial operating lease liability, which are also reflected as a reduction to the initial measurement of the right-of-use asset. A summary of finance and operating lease right-of-use assets and liabilities as of September 25, 2019 is as follows: Classification September 25 2019 Finance leases Property and equipment, net $ 5,046 Operating leases Operating lease assets 279,975 Total right-of-use assets $ 285,021 Finance leases: Other current liabilities 1,796 Other long-term liabilities 3,310 Operating leases: Operating lease liabilities, current 26,441 Long-term operating lease liabilities 316,161 Total lease liabilities $ 347,708 The components of lease expense for the thirteen and thirty-nine weeks ended September 25, 2019 were as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 September 25 Finance lease cost: Amortization of right-of-use assets Depreciation expense $ 538 $ 1,491 Interest on lease liabilities Interest expense 52 148 Operating lease cost Occupancy and related expenses General and administrative expenses Pre-opening costs 10,564 29,329 Short-term lease cost Occupancy and related expenses 279 313 Variable lease cost Occupancy and related expenses General and administrative expenses Pre-opening costs 4,338 11,636 Total lease cost $ 15,771 $ 42,917 As of September 25, 2019 , future minimum lease payments for finance and operating leases consisted of the following: Finance Leases Operating Leases 2019 $ 538 $ 23,285 2020 1,791 45,901 2021 1,194 45,408 2022 804 47,261 2023 620 47,315 Thereafter 587 278,647 Total minimum payments 5,534 487,817 Less: imputed interest 428 145,215 Total lease liabilities $ 5,106 $ 342,602 As of September 25, 2019 we had additional operating lease commitments of $85,583 for non-cancelable leases without a possession date, which will begin to commence in 2019 . These lease commitments are consistent with the leases that we have executed thus far and include a number of real estates leases where we are involved in the construction and design. A summary of lease terms and discount rates for finance and operating leases as of September 25, 2019 is as follows: September 25 Weighted-average remaining lease term (years): Finance leases 5.2 Operating leases 10.0 Weighted-average discount rate: Finance leases 3.9 % Operating leases 4.7 % Supplemental cash flow information related to leases as of September 25, 2019 is as follows: September 25 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 148 Operating cash flows from operating leases 27,238 Financing cash flows from finance leases 1,433 Right-of-use assets obtained in exchange for lease obligations: Finance leases 1,927 Operating leases 65,773 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 25, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Shake Shack Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and on a basis consistent in all material respects with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 26, 2018 ("2018 Form 10-K"). In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The accompanying Condensed Consolidated Balance Sheet as of December 26, 2018 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our 2018 Form 10-K. SSE Holdings is considered a variable interest entity. Shake Shack Inc. is the primary beneficiary as we have the majority economic interest in SSE Holdings and, as the sole managing member, have decision making authority that significantly affects the economic performance of the entity, while the limited partners have no substantive kick-out or participating rights. As a result, we consolidate SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of our consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of September 25, 2019 and December 26, 2018 , the net assets of SSE Holdings were $272,947 and $232,711 , respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreement. See Note 8 for more information. |
Fiscal Year | Fiscal Year We operate on a 52/53 week fiscal year ending on the last Wednesday in December. Fiscal 2019 contains 52 weeks and ends on December 25, 2019 . Fiscal 2018 contained 52 weeks and ended on December 26, 2018 . Unless otherwise stated, references to years in this report relate to fiscal years. |
Use of Estimates | Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements We adopted the Accounting Standards Updates (“ASUs”) summarized below in fiscal 2019. Accounting Standards Update (“ASU”) Description Date Adopted Leases (ASU's 2016-02, 2018-01, 2018-10, 2018-11) This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It was applied using a modified retrospective approach applied at the adoption date with the election of various practical expedients. See Note 9 Leases for more information. December 27, 2018 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Revenue recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 , disaggregated by type is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Shack sales $ 152,366 $ 115,882 $ 428,811 $ 324,869 Licensing revenue: Sales-based royalties 5,293 3,660 13,938 9,951 Initial territory and opening fees 103 105 335 225 Total revenue $ 157,762 $ 119,647 $ 443,084 $ 335,045 |
Schedule of Contract with Customer, Asset and Liability | Opening and closing balances of contract liabilities and receivables from contracts with customers is as follows: September 25 2019 December 27 Shack sales receivables $ 2,945 $ 2,550 Licensing receivables 4,494 2,616 Gift card liability 1,770 1,796 Deferred revenue, current 421 307 Deferred revenue, long-term 11,197 10,026 Revenue recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 that was included in their respective liability balances at the beginning of the period is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Gift card liability $ 84 $ 59 $ 467 $ 467 Deferred revenue, current 86 67 305 185 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Cash and Cash Equivalents | The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of September 25, 2019 and December 26, 2018 : September 25, 2019 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 39,499 $ — $ — $ 39,499 $ 39,499 $ — Level 1: Money market funds 5,006 — — 5,006 5,006 — Mutual funds 36,227 109 36,336 — 36,336 Total $ 80,732 $ 109 $ — $ 80,841 $ 44,505 $ 36,336 December 26, 2018 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 19,746 $ — $ — $ 19,746 $ 19,746 $ — Level 1: Money market funds 5,004 — — 5,004 5,004 — Mutual funds 62,235 — (122 ) 62,113 — 62,113 Total $ 86,985 $ — $ (122 ) $ 86,863 $ 24,750 $ 62,113 |
Schedule of Unrealized Loss on Investments | |
Schedule of Other Income From Available for Sale Securities | A summary of other income from available-for-sale securities recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Available-for-sale securities: Dividend income $ 254 $ 373 $ 997 $ 977 Interest income — — — 7 Realized gain (loss) on sale of investments — 1 22 (15 ) Unrealized gain on available-for-sale equity securities — 62 231 1 Total other income, net $ 254 $ 436 $ 1,250 $ 970 |
Schedule of Available-for-sale Securities and Gross Realized Gains and Losses | A summary of available-for-sale securities sold and gross realized gains and losses recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 2019 September 26 September 25 2019 September 26 Available-for-sale securities: Gross proceeds from sales and redemptions $ — $ — $ 27,000 $ 2,144 Cost basis of sales and redemptions — — 26,978 2,160 Gross realized gains included in net income — — 36 2 Gross realized losses included in net income — — (14 ) (18 ) Amounts reclassified out of accumulated other comprehensive loss — — — 16 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories as of September 25, 2019 and December 26, 2018 consisted of the following: September 25 December 26 Food $ 1,344 $ 1,291 Wine 95 83 Beer 100 95 Beverages 211 203 Retail merchandise 32 77 Inventories $ 1,782 $ 1,749 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property and equipment as of September 25, 2019 and December 26, 2018 consisted of the following: September 25 December 26 Leasehold improvements $ 278,585 $ 228,453 Landlord funded assets — 15,595 Equipment 50,853 40,716 Furniture and fixtures 16,868 14,055 Computer equipment and software 22,813 19,008 Financing equipment lease assets 6,537 — Construction in progress (1) 39,927 29,474 Property and equipment, gross 415,583 347,301 Less: accumulated depreciation 111,233 85,447 Property and equipment, net $ 304,350 $ 261,854 ( |
SUPPLEMENTAL BALANCE SHEET IN_2
SUPPLEMENTAL BALANCE SHEET INFORMATION (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Supplemental Balance Sheet Disclosures [Abstract] | |
Supplemental Balance Sheet Information | The components of other current liabilities as of September 25, 2019 and December 26, 2018 are as follows: September 25 December 26 Sales tax payable $ 3,810 $ 3,143 Current portion of liabilities under tax receivable agreement 5,177 5,804 Gift card liability 1,770 1,796 Current portion of financing equipment lease liabilities 1,796 — Other 3,398 3,287 Other current liabilities $ 15,951 $ 14,030 |
NON-CONTROLLING INTERESTS (Tabl
NON-CONTROLLING INTERESTS (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Noncontrolling Interest [Abstract] | |
Schedule of Ownership Interests in SSE Holdings | The following table summarizes the ownership interest in SSE Holdings as of September 25, 2019 and December 26, 2018 . September 25, 2019 December 26, 2018 LLC Interests Ownership% LLC Interests Ownership % Number of LLC Interests held by Shake Shack Inc. 33,651,950 89.8 % 29,520,833 79.6 % Number of LLC Interests held by non-controlling interest holders 3,809,347 10.2 % 7,557,347 20.4 % Total LLC Interests outstanding 37,461,297 100.0 % 37,078,180 100.0 % |
Schedule of Non-Controlling Interest | The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 . Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Net income attributable to Shake Shack Inc. $ 10,344 $ 5,025 $ 21,920 $ 16,137 Other comprehensive income: Net change related to available-for-sale securities — — — 10 Transfers (to) from non-controlling interests: Increase in additional paid-in capital as a result of the redemption of LLC Interests 1,634 7,274 7,115 14,633 Increase in additional paid-in-capital as a result of the GTC Merger 19,218 — 19,218 — Increase (decrease) in additional paid-in capital as a result of activity under stock compensation plans 1,789 215 2,718 2,318 Total effect of changes in ownership interest on equity attributable to Shake Shack Inc. $ 32,985 $ 12,514 $ 50,971 $ 33,098 |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Equity-Based Compensation Expense Recognized | A summary of equity-based compensation expense recognized during the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Stock options $ 637 $ 719 $ 1,974 $ 2,319 Performance stock units 720 750 2,439 1,668 Restricted stock units 522 167 1,338 483 Equity-based compensation expense $ 1,879 $ 1,636 $ 5,751 $ 4,470 Total income tax benefit recognized related to equity-based compensation $ 48 $ 46 $ 141 $ 126 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax expense is as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Expected U.S. federal income taxes at statutory rate $ 1,738 21.0 % $ 1,930 21.0 % $ 5,492 21.0 % $ 5,917 21.0 % State and local income taxes, net of federal benefit 505 6.1 % 643 7.0 % 1,746 6.7 % 1,885 6.7 % Foreign withholding taxes 655 7.9 % 298 3.2 % 1,624 6.2 % 1,100 3.9 % Tax credits and adjustments to forecasted rate (2,874 ) (34.7 )% (181 ) (2.0 )% (4,697 ) (18.0 )% (1,378 ) (4.9 )% Return to provision adjustment (153 ) (1.8 )% — — % (153 ) (0.6 )% — — % Non-controlling interest (346 ) (4.2 )% (430 ) (4.7 )% (1,291 ) (4.9 )% (1,615 ) (5.7 )% Tax effect of change in basis related to the adoption of ASC 842 — — % — — % 1,161 4.4 % — — % Change in valuation allowance (2,587 ) (31.3 )% — — % (3,847 ) (14.7 )% — — % Other (82 ) (1.0 )% (19 ) (0.2 )% (82 ) (0.3 )% (230 ) (0.8 )% Income tax expense $ (3,144 ) (38.0 )% $ 2,241 24.4 % $ (47 ) (0.2 )% $ 5,679 20.2 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 . Thirteen Weeks Ended Thirty-Nine Weeks Ended September 25 September 26 September 25 September 26 Numerator: Net income $ 11,423 $ 6,946 $ 26,201 $ 22,496 Less: net income attributable to non-controlling interests 1,079 1,921 4,281 6,359 Net income attributable to Shake Shack Inc. $ 10,344 $ 5,025 $ 21,920 $ 16,137 Denominator: Weighted-average shares of Class A common stock outstanding—basic 31,961 28,954 30,549 27,930 Effect of dilutive securities: Stock options 824 857 777 809 Performance stock units 50 51 64 63 Restricted stock units 81 21 51 18 Weighted-average shares of Class A common stock outstanding—diluted 32,916 29,883 31,441 28,820 Earnings per share of Class A common stock—basic $ 0.32 $ 0.17 $ 0.72 $ 0.58 Earnings per share of Class A common stock—diluted $ 0.31 $ 0.17 $ 0.70 $ 0.56 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow Information | The following table sets forth supplemental cash flow information for the thirty-nine weeks ended September 25, 2019 and September 26, 2018 : Thirty-Nine Weeks Ended September 25 September 26 Cash paid for: Income taxes, net of refunds $ 2,483 $ 2,015 Interest, net of amounts capitalized 157 1,601 Non-cash investing activities: Accrued purchases of property and equipment 17,394 17,697 Capitalized landlord assets for leases where we are deemed the accounting owner — 4,478 Capitalized equity-based compensation 79 64 Non-cash financing activities: Class A common stock issued in connection with the redemption of LLC Interests 1 2 Class A common stock issued in connection with the GTC merger 3 — Cancellation of Class B common stock in connection with the redemption of LLC Interests (1 ) (2 ) Cancellation of Class B common stock in connection with the GTC Merger (3 ) — Establishment of liabilities under tax receivable agreement 20,027 42,641 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 25, 2019 | |
Leases [Abstract] | |
New Accounting Pronouncements | Upon transition, on December 27, 2018, we recorded the following increases (decreases) to the respective line items on the Condensed Consolidated Balance Sheet: Adjustment as of December 27, 2018 Prepaid expenses and other current assets $ 6 Property and equipment, net (11,448 ) Operating lease assets 229,885 Deferred income taxes, net (121 ) Deemed landlord financing (20,846 ) Deferred rent (47,862 ) Long-term operating lease liabilities 277,224 Other long-term liabilities 4,611 Retained earnings 4,136 Non-controlling interests 1,059 |
Lease, Cost | A summary of finance and operating lease right-of-use assets and liabilities as of September 25, 2019 is as follows: Classification September 25 2019 Finance leases Property and equipment, net $ 5,046 Operating leases Operating lease assets 279,975 Total right-of-use assets $ 285,021 Finance leases: Other current liabilities 1,796 Other long-term liabilities 3,310 Operating leases: Operating lease liabilities, current 26,441 Long-term operating lease liabilities 316,161 Total lease liabilities $ 347,708 The components of lease expense for the thirteen and thirty-nine weeks ended September 25, 2019 were as follows: Thirteen Weeks Ended Thirty-Nine Weeks Ended Classification September 25 September 25 Finance lease cost: Amortization of right-of-use assets Depreciation expense $ 538 $ 1,491 Interest on lease liabilities Interest expense 52 148 Operating lease cost Occupancy and related expenses General and administrative expenses Pre-opening costs 10,564 29,329 Short-term lease cost Occupancy and related expenses 279 313 Variable lease cost Occupancy and related expenses General and administrative expenses Pre-opening costs 4,338 11,636 Total lease cost $ 15,771 $ 42,917 A summary of lease terms and discount rates for finance and operating leases as of September 25, 2019 is as follows: September 25 Weighted-average remaining lease term (years): Finance leases 5.2 Operating leases 10.0 Weighted-average discount rate: Finance leases 3.9 % Operating leases 4.7 % Supplemental cash flow information related to leases as of September 25, 2019 is as follows: September 25 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 148 Operating cash flows from operating leases 27,238 Financing cash flows from finance leases 1,433 Right-of-use assets obtained in exchange for lease obligations: Finance leases 1,927 Operating leases 65,773 |
Lessee, Operating Lease, Liability, Maturity | As of September 25, 2019 , future minimum lease payments for finance and operating leases consisted of the following: Finance Leases Operating Leases 2019 $ 538 $ 23,285 2020 1,791 45,901 2021 1,194 45,408 2022 804 47,261 2023 620 47,315 Thereafter 587 278,647 Total minimum payments 5,534 487,817 Less: imputed interest 428 145,215 Total lease liabilities $ 5,106 $ 342,602 |
Finance Lease, Liability, Maturity | As of September 25, 2019 , future minimum lease payments for finance and operating leases consisted of the following: Finance Leases Operating Leases 2019 $ 538 $ 23,285 2020 1,791 45,901 2021 1,194 45,408 2022 804 47,261 2023 620 47,315 Thereafter 587 278,647 Total minimum payments 5,534 487,817 Less: imputed interest 428 145,215 Total lease liabilities $ 5,106 $ 342,602 |
Leases Schedule of Accounting P
Leases Schedule of Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 27, 2018 | Dec. 26, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid Expense and Other Assets, Current | $ 1,723 | $ 1,984 | |
Property and equipment, net | (304,350) | (261,854) | |
Operating lease assets | 279,975 | 0 | |
Deferred income taxes, net | (268,855) | (242,533) | |
Deemed landlord financing | 0 | (20,846) | |
Deferred rent | 0 | 47,864 | |
Long-term operating lease liabilities | 316,161 | 0 | |
Other long-term liabilities | 14,910 | 10,498 | |
Retained earnings | 56,460 | 30,404 | |
Non-controlling interests | $ 27,679 | $ 47,380 | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid Expense and Other Assets, Current | $ (6) | ||
Property and equipment, net | (11,448) | ||
Operating lease assets | 229,885 | ||
Deferred income taxes, net | (121) | ||
Deemed landlord financing | (20,846) | ||
Deferred rent | (47,862) | ||
Long-term operating lease liabilities | 277,224 | ||
Other long-term liabilities | 4,611 | ||
Retained earnings | 4,136 | ||
Non-controlling interests | $ 1,059 |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) - Restaurant | Sep. 25, 2019 | Dec. 26, 2018 |
Class of Stock [Line Items] | ||
Ownership percent of noncontrolling interest | 89.80% | 79.60% |
Number of restaurants | 254 | |
United States | Company-operated | ||
Class of Stock [Line Items] | ||
Number of restaurants | 151 | |
United States | Licensed | ||
Class of Stock [Line Items] | ||
Number of restaurants | 17 | |
Non-United States | Licensed | ||
Class of Stock [Line Items] | ||
Number of restaurants | 86 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Net assets held by SSE holders | $ 272,947 | $ 232,711 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other long-term liabilities | $ 14,910 | $ 10,498 |
Other current liabilities | 15,951 | $ 14,030 |
Revenue, remaining performance obligation | $ 16,573 |
REVENUE - Schedule of Revenue R
REVENUE - Schedule of Revenue Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 157,762 | $ 119,647 | $ 443,084 | $ 335,045 |
REVENUE - Schedule of Disaggreg
REVENUE - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Document Period End Date | Sep. 25, 2019 | |||
Revenue from contract with customer | $ 157,762 | $ 119,647 | $ 443,084 | $ 335,045 |
Shack Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 152,366 | 115,882 | 428,811 | 324,869 |
Sales-Based Royalties [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 5,293 | 3,660 | 13,938 | 9,951 |
Initial territory and opening fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 103 | $ 105 | $ 335 | $ 225 |
REVENUE - Schedule of Respectiv
REVENUE - Schedule of Respective Liability Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2019 | Dec. 26, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Document Period End Date | Sep. 25, 2019 | |
Gift card liability | $ 1,770 | $ 1,796 |
Deferred revenue, current | 421 | 307 |
Deferred revenue, long-term | 11,197 | 10,026 |
Shack Sales [Member] | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract with customer, asset, net | 2,945 | 2,550 |
Licensing receivables | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract with customer, asset, net | $ 4,494 | $ 2,616 |
REVENUE - Liability Balance (De
REVENUE - Liability Balance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Document Period End Date | Sep. 25, 2019 | |||
Gift card liability | $ 84 | $ 59 | $ 467 | $ 467 |
Deferred revenue, current | $ 86 | $ 67 | $ 305 | $ 185 |
FAIR VALUE MEASUREMENTS - Cash,
FAIR VALUE MEASUREMENTS - Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 25, 2019 | Dec. 26, 2018 | Sep. 26, 2018 | Dec. 27, 2017 | |
Debt Securities, Available-for-sale [Line Items] | ||||
Document Period End Date | Sep. 25, 2019 | |||
Cost Basis | $ 44,505 | $ 24,750 | $ 29,295 | $ 21,507 |
Total cost basis including Mutual Funds | 80,732 | 86,985 | ||
Gross Unrealized Gains | 109 | 0 | ||
Gross Unrealized Losses | 0 | (122) | ||
Cash and cash equivalents fair value | 44,505 | 24,750 | ||
Fair value of marketable securities | 36,336 | 62,113 | ||
Fair Value | 80,841 | 86,863 | ||
Level 1 | Mutual funds | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Mutual funds | 36,227 | 62,235 | ||
Gross Unrealized Gains | 109 | 0 | ||
Gross Unrealized Losses | (122) | |||
Fair value of marketable securities | 36,336 | 62,113 | ||
Cash | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Cost Basis | 39,499 | 19,746 | ||
Cash and cash equivalents fair value | 39,499 | 19,746 | ||
Money market funds | Level 1 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Cost Basis | 5,006 | 5,004 | ||
Cash and cash equivalents fair value | $ 5,006 | $ 5,004 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Fair Value Disclosures [Abstract] | ||||
Unrealized Gain (Loss) on Securities | $ 0 | $ (62,000) | $ 231,000 | $ 1,000 |
Asset impairment charges | $ 0 | $ 0 | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Unrea
FAIR VALUE MEASUREMENTS - Unrealized Loss on Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Gain (Loss) on Securities [Line Items] | ||||
Document Period End Date | Sep. 25, 2019 | |||
Unrealized Gain (Loss) on Securities | $ 0 | $ (62) | $ 231 | $ 1 |
FAIR VALUE MEASUREMENTS - Other
FAIR VALUE MEASUREMENTS - Other Income From Available For Sale Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Available-for-sale securities | ||||
Document Period End Date | Sep. 25, 2019 | |||
Unrealized Gain (Loss) on Securities | $ 0 | $ (62) | $ 231 | $ 1 |
Total other income, net | 248 | 436 | 1,259 | 1,070 |
Available-for-sale Securities | ||||
Available-for-sale securities | ||||
Dividend income | 254 | 373 | 997 | 977 |
Interest income | 0 | 0 | 0 | 7 |
Realized gain (loss) on sale of investments | 0 | 1 | 22 | (15) |
Unrealized Gain (Loss) on Securities | 0 | 62 | ||
Unrealized gain (loss) on available-for-sale equity securities | 231 | 1 | ||
Total other income, net | $ 254 | $ 436 | $ 1,250 | $ 970 |
FAIR VALUE MEASUREMENTS - Avail
FAIR VALUE MEASUREMENTS - Available for Sale Securities and Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | ||
Fair Value Disclosures [Abstract] | |||||
Document Period End Date | Sep. 25, 2019 | ||||
Available-for-sale securities: | |||||
Gross proceeds from sales and redemptions | $ 0 | $ 0 | $ 27,000 | $ 2,144 | |
Cost basis of sales and redemptions | 0 | 0 | 26,978 | 2,160 | |
Gross realized gains included in net income | 0 | 0 | 36 | 2 | |
Gross realized losses included in net income | 0 | 0 | (14) | (18) | |
Amounts reclassified out of accumulated other comprehensive loss | [1] | $ 0 | $ 0 | $ 0 | $ 16 |
[1] | Net of tax benefit (expense) of $0 for the thirteen and thirty-nine weeks ended September 25, 2019 and September 26, 2018 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
Inventory [Line Items] | ||
Inventories | $ 1,782 | $ 1,749 |
Food | ||
Inventory [Line Items] | ||
Inventories | 1,344 | 1,291 |
Wine | ||
Inventory [Line Items] | ||
Inventories | 95 | 83 |
Beer | ||
Inventory [Line Items] | ||
Inventories | 100 | 95 |
Beverages | ||
Inventory [Line Items] | ||
Inventories | 211 | 203 |
Retail merchandise | ||
Inventory [Line Items] | ||
Inventories | $ 32 | $ 77 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 415,583 | $ 347,301 |
Less: accumulated depreciation | 111,233 | 85,447 |
Property and equipment, net | 304,350 | 261,854 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 278,585 | 228,453 |
Landlord funded assets | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 0 | 15,595 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 50,853 | 40,716 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 16,868 | 14,055 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 22,813 | 19,008 |
Financing equipment lease assets [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 6,537 | 0 |
Construction in progress(1) | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 39,927 | $ 29,474 |
SUPPLEMENTAL BALANCE SHEET IN_3
SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
Supplemental Balance Sheet Disclosures [Abstract] | ||
Finance Lease, Liability, Current | $ 1,796 | $ 0 |
Other Liabilities, Current | ||
Sales tax payable | 3,810 | 3,143 |
Current portion of liabilities under tax receivable agreement | 5,177 | 5,804 |
Gift card liability | 1,770 | 1,796 |
Other | 3,398 | 3,287 |
Other current liabilities | $ 15,951 | $ 14,030 |
SUPPLEMENTAL BALANCE SHEET IN_4
SUPPLEMENTAL BALANCE SHEET INFORMATION Other long-term liabilities (Details) - USD ($) $ in Thousands | Sep. 25, 2019 | Dec. 26, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Contract with Customer, Liability, Noncurrent | $ 11,197 | $ 10,026 |
Finance Lease, Liability, Noncurrent | 3,310 | 0 |
Other Sundry Liabilities, Noncurrent | 403 | 472 |
Other Liabilities, Noncurrent | $ 14,910 | $ 10,498 |
DEBT (Details)
DEBT (Details) - USD ($) | Feb. 04, 2015 | Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | Dec. 26, 2018 |
Debt Instrument [Line Items] | ||||||
Document Period End Date | Sep. 25, 2019 | |||||
Deemed landlord financing | $ 0 | $ 0 | $ 20,846,000 | |||
Interest costs incurred | 133,000 | $ 633,000 | 302,000 | $ 1,897,000 | ||
Interest costs capitalized | 0 | $ 41,000 | $ 127,000 | |||
Notes payable | ||||||
Debt Instrument [Line Items] | ||||||
Notes payable | $ 0 | |||||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 50,000,000 | 50,000,000 | ||||
Line of Credit Facility, Incremental Borrowing Capacity | 100,000,000 | 100,000,000 | ||||
Third Amendment and Restated Credit Arrangement | Line of credit | ||||||
Debt Instrument [Line Items] | ||||||
Term to maturity | 5 years | |||||
Third Amendment and Restated Credit Arrangement | Letter of credit | Line of credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 15,000,000 | $ 15,000,000 | ||||
Third Amendment and Restated Credit Arrangement | Minimum | Line of credit | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.00% | |||||
Third Amendment and Restated Credit Arrangement | Minimum | Line of credit | Prime rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.00% | |||||
Third Amendment and Restated Credit Arrangement | Maximum | Line of credit | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.50% | |||||
Third Amendment and Restated Credit Arrangement | Maximum | Line of credit | Prime rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.50% |
NON-CONTROLLING INTERESTS - Own
NON-CONTROLLING INTERESTS - Ownership Interest in SSE Holdings (Details) - shares | 9 Months Ended | |
Sep. 25, 2019 | Dec. 26, 2018 | |
Noncontrolling Interest [Abstract] | ||
Document Period End Date | Sep. 25, 2019 | |
Number of LLC Interests held by Shake Shack Inc. (in shares) | 33,651,950 | 29,520,833 |
Number of LLC Interests held by non-controlling interest holders (in shares) | 3,809,347 | 7,557,347 |
Total LLC Interests outstanding (in shares) | 37,461,297 | 37,078,180 |
Number of LLC Interests held by Shake Shack Inc. (as a percentage) | 89.80% | 79.60% |
Number of LLC Interests held by non-controlling interest holders (as a percentage) | 10.20% | 20.40% |
Total LLC Interests outstanding (as a percentage) | 100.00% | 100.00% |
NON-CONTROLLING INTERESTS - Nar
NON-CONTROLLING INTERESTS - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Noncontrolling Interest [Line Items] | ||||
Document Period End Date | Sep. 25, 2019 | |||
Non-controlling interest holders' weighted average ownership percentage | 14.40% | 21.80% | 17.90% | 24.40% |
Number of units redeemed (in shares) | 231,599 | 1,235,671 | 1,057,737 | 2,561,086 |
Units acquired during the period (in shares) | 4,131,117 | |||
Effect of Gramercy Tavern Merger, Shares, Conversion of Unit | 2,690,263 | |||
Redemption or Exchange of Units | ||||
Noncontrolling Interest [Line Items] | ||||
Units acquired during the period (in shares) | 231,599 | 1,235,671 | 1,057,737 | 2,561,086 |
Employee Stock Option | ||||
Noncontrolling Interest [Line Items] | ||||
Units acquired during the period (in shares) | 172,403 | 29,353 | 383,117 | 282,792 |
NON-CONTROLLING INTERESTS - Ch
NON-CONTROLLING INTERESTS - Changes in Ownership Interests in SSE Holdings (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Noncontrolling Interest [Line Items] | ||||
Net income attributable to Shake Shack Inc. | $ 10,344 | $ 5,025 | $ 21,920 | $ 16,137 |
Other comprehensive income: | ||||
Net change related to available-for-sale securities | 0 | 0 | 0 | 13 |
Transfers (to) from non-controlling interests: | ||||
Total effect of changes in ownership interest on equity attributable to Shake Shack Inc. | 32,985 | 12,514 | 50,971 | 33,098 |
Gramercy Tavern [Member] | ||||
Transfers (to) from non-controlling interests: | ||||
Increase (decrease) in additional paid-in capital | 19,218 | 0 | 19,218 | 0 |
Redemption or Exchange of Units | ||||
Transfers (to) from non-controlling interests: | ||||
Increase (decrease) in additional paid-in capital | 1,634 | 7,274 | 7,115 | 14,633 |
Employee Stock Option | ||||
Transfers (to) from non-controlling interests: | ||||
Increase (decrease) in additional paid-in capital | 1,789 | 215 | 2,718 | 2,318 |
Net change related to available-for-sale securities | ||||
Other comprehensive income: | ||||
Net change related to available-for-sale securities | $ 0 | $ 0 | $ 0 | $ 10 |
EQUITY-BASED COMPENSATION - Sch
EQUITY-BASED COMPENSATION - Schedule of compensation expense recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 1,879 | $ 1,636 | $ 5,751 | $ 4,470 |
Total income tax benefit recognized related to equity-based compensation | 48 | 46 | 141 | 126 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | 637 | 719 | 1,974 | 2,319 |
Performance stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | 720 | 750 | 2,439 | 1,668 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | 522 | 167 | 1,338 | 483 |
General and Administrative Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | 1,795 | 1,598 | 5,521 | 4,358 |
Labor And Related Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 84 | $ 38 | $ 230 | $ 112 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Expected U.S. federal income taxes at statutory rate | $ 1,738 | $ 1,930 | $ 5,492 | $ 5,917 |
Expected U.S. federal income taxes at statutory rate, percentage | 21.00% | 21.00% | 21.00% | 21.00% |
State and local income taxes, net of federal benefit | $ 505 | $ 643 | $ 1,746 | $ 1,885 |
State and local income taxes, net of federal benefit, percentage | 6.10% | 7.00% | 6.70% | 6.70% |
Foreign withholding taxes | $ 655 | $ 298 | $ 1,624 | $ 1,100 |
Foreign withholding taxes, percentage | 7.90% | 3.20% | 6.20% | 3.90% |
Tax credits | $ (2,874) | $ (181) | $ (4,697) | $ (1,378) |
Tax credits, percentage | (34.70%) | (2.00%) | (18.00%) | (4.90%) |
Effective Income Tax Rate Reconciliation, Return To Provision Adjustment, Amount | $ 153 | $ 0 | $ 153 | $ 0 |
Effective Income Tax Rate Reconciliation, Return To Provision Adjustment, Percent | 1.80% | 0.00% | 0.60% | 0.00% |
Non-controlling interest | $ (346) | $ (430) | $ (1,291) | $ (1,615) |
Non-controlling interest, percentage | (4.20%) | (4.70%) | (4.90%) | (5.70%) |
Tax effect of change in basis related to ASC 842 adoption | $ 0 | $ 0 | $ 1,161 | $ 0 |
Tax effect of change in basis related to ASC 842 adoption, percent | 0.00% | 0.00% | 4.40% | 0.00% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ (2,587) | $ 0 | $ (3,847) | $ 0 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | (31.30%) | 0.00% | (14.70%) | 0.00% |
Other | $ (82) | $ (19) | $ (82) | $ (230) |
Other, percentage | (1.00%) | (0.20%) | (0.30%) | (0.80%) |
Income tax expense | $ (3,144) | $ 2,241 | $ (47) | $ 5,679 |
Income tax expense, percentage | (38.00%) | 24.40% | (0.20%) | 20.20% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | Dec. 26, 2018 | |
Income Tax Contingency [Line Items] | |||||
Effective income tax rate reconciliation (in percentage) | (38.00%) | 24.40% | (0.20%) | 20.20% | |
Ownership percentage, weighted average | 85.60% | 78.20% | 82.10% | 75.60% | |
Units acquired during the period (in shares) | 4,131,117 | ||||
Deferred tax asset recognized as a result of investment in partnership | $ 16,319,000 | ||||
Deferred tax asset, investment in partnership | $ 181,620,000 | 181,620,000 | |||
Valuation allowance, deferred tax asset | 763,000 | 763,000 | |||
Deferred tax asset related to additional tax basis | 5,624,000 | ||||
Uncertain tax positions | $ 0 | $ 0 | |||
Percentage of tax benefits due to equity owners | 85.00% | 85.00% | |||
Percentage of tax benefits expected to be realized | 15.00% | 15.00% | |||
Establishment of liabilities under tax receivable agreement | $ 20,027,000 | $ 42,641,000 | |||
Tax receivable agreement payments to related parties | $ 0 | $ 0 | 707,000 | $ 0 | |
Liabilities under tax receivable agreement | 223,112,000 | 223,112,000 | $ 203,725,000 | ||
Current portion of liabilities under tax receivable agreement | $ 5,177,000 | $ 5,177,000 | $ 5,804,000 | ||
Redemption or Exchange of Units | |||||
Income Tax Contingency [Line Items] | |||||
Units acquired during the period (in shares) | 231,599 | 1,235,671 | 1,057,737 | 2,561,086 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Numerator: | ||||
Net income | $ 11,423 | $ 6,946 | $ 26,201 | $ 22,496 |
Less: net income attributable to non-controlling interests | 1,079 | 1,921 | 4,281 | 6,359 |
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC. | $ 10,344 | $ 5,025 | $ 21,920 | $ 16,137 |
Denominator: | ||||
Weighted-average shares of Class A common stock outstanding—basic (in shares) | 31,961 | 28,954 | 30,549 | 27,930 |
Effect of dilutive securities: | ||||
Weighted-average shares of Class A common stock outstanding—diluted (in shares) | 32,916 | 29,883 | 31,441 | 28,820 |
Earnings per share of Class A common stock—basic (in dollars per share) | $ 0.32 | $ 0.17 | $ 0.72 | $ 0.58 |
Earnings per share of Class A common stock—diluted (in dollars per share) | $ 0.31 | $ 0.17 | $ 0.70 | $ 0.56 |
Performance stock units | ||||
Effect of dilutive securities: | ||||
Stock options (in shares) | 50 | 51 | 64 | 63 |
Restricted stock units | ||||
Effect of dilutive securities: | ||||
Stock options (in shares) | 81 | 21 | 51 | 18 |
Stock options | ||||
Effect of dilutive securities: | ||||
Stock options (in shares) | 824 | 857 | 777 | 809 |
EARNINGS PER SHARE - Antidilut
EARNINGS PER SHARE - Antidilutive Securities (Details) - Common Stock [Member] - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2019 | Sep. 26, 2018 | Sep. 25, 2019 | Sep. 26, 2018 | |
Performance stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 66,101 | 59,341 | 66,101 | 59,341 |
Shares of Class B common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 3,809,347 | 7,688,921 | 3,809,347 | 7,688,921 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 25, 2019 | Sep. 26, 2018 | |
Cash paid for: | ||
Income taxes, net of refunds | $ 2,483 | $ 2,015 |
Interest, net of amounts capitalized | 157 | 1,601 |
Non-cash investing activities: | ||
Accrued purchases of property and equipment | 17,394 | 17,697 |
Capitalized landlord assets for leases where we are deemed the accounting owner | 0 | 4,478 |
Capitalized equity-based compensation | 79 | 64 |
Non-cash financing activities: | ||
Establishment of liabilities under tax receivable agreement | 20,027 | 42,641 |
Redemption or Exchange of Units | Class A Common Stock | ||
Non-cash financing activities: | ||
Class A common stock issued in connection with the redemption of LLC Interests | 1 | 2 |
Redemption or Exchange of Units | Class B Common Stock | ||
Non-cash financing activities: | ||
Cancellation of Class B common stock in connection with the redemption of LLC Interests | (1) | (2) |
Gramercy Tavern [Member] | Class A Common Stock | ||
Non-cash financing activities: | ||
Class A common stock issued in connection with the redemption of LLC Interests | 3 | 0 |
Gramercy Tavern [Member] | Class B Common Stock | ||
Non-cash financing activities: | ||
Cancellation of Class B common stock in connection with the redemption of LLC Interests | $ (3) | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 9 Months Ended | |||
Sep. 25, 2019 | Sep. 26, 2018 | Dec. 26, 2018 | Sep. 30, 2017 | |
Loss Contingencies [Line Items] | ||||
Litigation Settlement, Expense | $ 1,200,000 | |||
Document Period End Date | Sep. 25, 2019 | |||
Loss Contingency Accrual | $ 1,200,000 | |||
Percentage of tax benefits due to equity owners | 85.00% | |||
Establishment of liabilities under tax receivable agreement | $ 20,027,000 | $ 42,641,000 | ||
Tax receivable agreement liability | 223,112,000 | $ 203,725,000 | ||
Retail site | ||||
Loss Contingencies [Line Items] | ||||
Letters of credit outstanding | $ 130,000 | |||
Office building | ||||
Loss Contingencies [Line Items] | ||||
Letters of credit outstanding | $ 603,000 | |||
Renewal term | 1 year |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2019USD ($) | Sep. 26, 2018USD ($) | Sep. 25, 2019USD ($)renewal_option | Sep. 26, 2018USD ($) | Dec. 26, 2018USD ($) | |
Related Party Transaction [Line Items] | |||||
Document Period End Date | Sep. 25, 2019 | ||||
Percentage of tax benefits due to equity owners | 85.00% | 85.00% | |||
Tax receivable agreement payments to related parties | $ 0 | $ 0 | $ 707,000 | $ 0 | |
Distributions paid to non-controlling interest holders | 39,000 | 22,000 | 1,706,000 | $ 692,000 | |
Tax distributions payable to non-controlling interest holders | 0 | $ 0 | $ 0 | ||
Subsidiary to Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Number of renewal terms | renewal_option | 5 | ||||
Renewal option period | 5 years | ||||
Share Our Strength | |||||
Related Party Transaction [Line Items] | |||||
Charitable campaign flow through | 190,000 | 0 | $ 190,000 | $ 343,000 | |
Expenses from transactions with related party | 30,000 | 0 | 30,000 | 53,000 | |
Mobo Systems, Inc. [Member] | Board of Directors Chairman | |||||
Related Party Transaction [Line Items] | |||||
Amounts due to related parties, current | 0 | 0 | 0 | ||
Expenses from transactions with related party | 44,000 | 28,000 | 122,000 | 80,000 | |
Concession Income | Subsidiary to Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Due from related parties, current | 92,000 | 92,000 | 37,000 | ||
Revenue from related parties | 250,000 | 200,000 | 401,000 | 311,000 | |
Rent Expense | Madison Square Park Conservancy | |||||
Related Party Transaction [Line Items] | |||||
Amounts due to related parties, current | 75,000 | 75,000 | 70,000 | ||
Expenses from transactions with related party | 138,000 | 203,000 | 692,000 | 673,000 | |
Mobo Systems, Inc. | Board of Directors Chairman | |||||
Related Party Transaction [Line Items] | |||||
Amounts due to related parties, current | 0 | 0 | $ 0 | ||
Expenses from transactions with related party | $ 487,000 | $ 122,000 | $ 1,195,000 | $ 250,000 |
Lease Narrative (Details)
Lease Narrative (Details) | 9 Months Ended |
Sep. 25, 2019option | |
Operating Leased Assets [Line Items] | |
Number of renewal options | 2 |
Renewal term | 5 years |
Minimum | |
Operating Leased Assets [Line Items] | |
Term of contract | 10 years |
Maximum | |
Operating Leased Assets [Line Items] | |
Term of contract | 15 years |
Lease Cost (Details)
Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 25, 2019 | Sep. 25, 2019 | Dec. 26, 2018 | |
Finance lease liabilities [Line Items] | |||
Document Period End Date | Sep. 25, 2019 | ||
Right-of-use assets: | |||
Finance leases | $ 5,046 | $ 5,046 | |
Operating leases | 279,975 | 279,975 | $ 0 |
Total right-of-use assets | 285,021 | 285,021 | |
Other current liabilities, finance leases | 1,796 | 1,796 | |
Other long-term liabilities, finance leases | 3,310 | 3,310 | |
Operating Lease, Liability, Current | 26,441 | 26,441 | 0 |
Operating Lease, Liability, Noncurrent | 316,161 | 316,161 | $ 0 |
Lease liabilities: | |||
Finance leases | 5,106 | 5,106 | |
Operating leases | 342,602 | 342,602 | |
Total lease liabilities | 347,708 | 347,708 | |
Finance lease cost: | |||
Amortization of right-of-use assets | 538 | 1,491 | |
Interest on lease liabilities | 52 | 148 | |
Operating lease cost | 10,564 | 29,329 | |
Short-term lease cost | 279 | 313 | |
Variable lease cost | 4,338 | 11,636 | |
Total lease cost | $ 15,771 | $ 42,917 | |
Weighted Average Lease Term [Abstract] | |||
Finance leases | 5 years 2 months 12 days | 5 years 2 months 12 days | |
Operating leases | 10 years | 10 years | |
Weighted Average Discount Rate [Abstract] | |||
Finance leases | 3.90% | 3.90% | |
Operating leases | 4.70% | 4.70% | |
Operating cash flows from finance leases | $ 148 | ||
Operating cash flows from operating leases | 27,238 | ||
Financing cash flows from finance leases | 1,433 | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | 1,927 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 65,773 |
Lease Maturity (Details)
Lease Maturity (Details) $ in Thousands | Sep. 25, 2019USD ($) |
Leases [Abstract] | |
Operating lease for non-cancellable leases | $ 85,583 |
Finance Lease, Liability, Payment, Due [Abstract] | |
2019 | 538 |
2020 | 1,791 |
2021 | 1,194 |
2022 | 804 |
2023 | 620 |
Thereafter | 587 |
Total minimum payments | 5,534 |
Less: imputed interest | 428 |
Total lease liabilities | 5,106 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 | 23,285 |
2020 | 45,901 |
2021 | 45,408 |
2022 | 47,261 |
2023 | 47,315 |
Thereafter | 278,647 |
Total minimum payments | 487,817 |
Less: imputed interest | 145,215 |
Total lease liabilities | $ 342,602 |
Uncategorized Items - shak-2019
Label | Element | Value |
Amortization of operating lease assets | shak_Amortizationofoperatingleaseassets | $ 0 |