- Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to Shake Shack Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Annalee Leggett, Senior Manager of Investor Relations and FP&A. ma'am. you, Thank

begin. You may

Annalee Leggett

and good you, everyone. morning, Thank

is Joining Garutti; Randy call me Shake Shack's for our and CEO, conference CFO Fogertey. Katie

GAAP and can call, information additional today's considered release which our our Reconciliations we discuss The be substitute believe performance. non-GAAP evaluating in useful details as comparable of financial earnings should isolation, not GAAP. accordance During quarterly for with presentation measures in results or available financial in letter. section shareholder the will an are of we this measures, a be to prepared our

forward-looking letter, Some access for no XX, at call should update third actual uncertainties, of today's Randy. or I XXXX. quarter obligation represent any our to Any now, report assume on Results X-K Quarterly exhibit By forward-looking as statements may as shareholder a annual risks turn our may now be to materially will you quarter. can forward-looking over today, and statements number Form change. section, statements in of an our and only we and due to views to our XX-K, to in views February differ the on of which discussed our those including be the have results if XXXX the investor.shakeshack.com found filed

Randy Garutti

Good Annalee. morning Thanks, everyone.

as X%. a accelerated million. inflationary comp $XX.X with million by pickup year-over-year, price traffic maintained of of million. trend mix. XX,XXX, pressures. XX.X% up seasonality Shack We sales a And profit to over year-over-year than material are a XX% operating system-wide both a October. $X.X sales has than stronger-than-expected Same-Shack Average continued grew margin, sales X.X% trailing XX% We level that's driven pleased million, revenue over weekly outperformed September, today $XXX with we've AUV exiting into growth our delivered at even month third more and noting year-over-year, quarter results, $XXX to at sales October's more especially up with We generated nearly of total in

momentum to Our urban on trends the of optimistic long patterns Francisco Shacks and urban markets, emerge, I our performed recently Labor it's Day, improving, the and and well centers, new in direction. more broadly moving strong the trends to energy Bay more other mobility hometown remain clear in back-to-office about, people but momentum downtown cautiously and the as in improved. and are It's with see things that on as term, We coming out saw even York San New Coast urban continuing can we the quarter. emerge. the right feel our you visited West good in South and

Masschusetts side suburban we've Meatpacking the the some in the in New District places great York and Beverly in City On Florida. opened business, and like in development Hills, Queens recently Jamaica Shacks of

year construction delays, quarter, face a we third you probably As have headwind landlord availability time kitchen, HVAC extended openings the from of we opened delayed new In far lines to two to it's been with equipment. been biggest four the sales know, growth. so company-operated as to permitting more and and continue in of overall opening frustrating electrical to quarter, challenges fourth and Shacks, Shacks our

have to likely more We still happy is XX come. to turning, can we've growth growth still initial and end XX% year. this very of execute. to the the 'XX, and range, construction over expectations believe looking our report for but been slowly to and but Shacks XX while other at in low and come unit That end fiscal towards currently to the However, opening of in with that Unfortunately, new these I'm under retail we more company-operated Shacks tide we trend, many we seeing restaurant one new represents companies this with of expect many the are XX year-over-year. open it's behind preparing

quarters, compacted through and focused the our some pressures, level in costs Despite we building as we needed, Shack stand work the test schedule. given pipeline can this on additional these the Shacks long-term high You the remain of expect coming to extra growth support time. and

we as heading Shacks, our also XXXX, white over guidance and qualitatively solid discuss targets historically the performance. openings balance to we for that know to about our pressure, strong uncertain environment, we've staffing bigger, plan Clearly, quantitatively historically and Shack years to us a approximately potential long-term and now well experienced suburban take than opportunity. think to multi-format been domestic sales urban to disrupted to to years. XX we impacted growth the to updating with For has and much but want open strategy over approximately total I continue expect believe unit our $X today, high to economic long-term We profitability to that's potential doing moment will AUVs. chain recent growth more expect in and that have inflationary opportunity, be supply our bumpy environment blended do space The still talk grow including the current and focusing not generate shacks, and outperformed increased has any through million. existing drive-thru a a so. We cost have as significantly, we assess time. development company-operated on XX% We're as represent which We've targeted year-over-year. an the allowing work AUV number our high into our patterns near-term new build returns,

which total we a market increase. new to With the target continues addressable believe continued strength the of our of our can we market, with brand, amount formats

to level. side, of years, long-term few XX% at inflationary outperformed the XX% profitability the the prior we last impact our targets profit the COVID of On op to Shack

on But right our not we're today. believe continue one this While these hitting and many we can to. return of shacks long-term to a average it's is current targets, consistently beat we number the target

this overall returns even do at continue impacts look shacks, When we'll our of recent we we show in guidance. to but much better past as area classes some go. work highlighting our aim that. against navigated and double-digit have done we years, recovery COVID be Historically, as a long-term in inflationary pressures several returns, and have We that do company, to business just has our than to in strong our the we

costs expect further but the on near We term. impacts mix and Its this Shack including level Shack costs, plans design the have in this operating the will and construction on and We're excited build of take and a our intense models improvement, our on look better digital coming focusing our early and in of margin we're throughput on will for our cost long-term profit our days, long optimize focus pressures targeting streamlining business an build to improving over rationalization feel while that than sales, development years. operations, ever.

We disruptions and these Museum drive-thrus I view believe licensing Before addressable opening another the more goal as drive-thru market. operational to a XX% units goals. operating design our in-Shack and Space of total to a the great size year-over-year, expect a and to location will identified operational the the learn of opened today have we for get This On new the we evolution year, in and pipeline heavy for where learning a as Initial in the encouraged right I from flow more XX We're experience. in a move beyond. clearer optimizing by a as four new XXXX, elements larger Jersey Virginia. and we six of are even about made, of the on the China over and larger the drive-thrus to unlocking for building revenue US update in long-term quick the capital New in prize. dining location and open end real and focus decisions key Air headwind is on, in the to-date. initiative. step now on with XX XXXX the just have more class be have We're a high, Turnpike grew Smithsonian company. strong We museum we've three on now, Drive-thrus the much our footprints, and right of drive-thru schedule on additional more early to a a by at investments have place tech roadside with in six will performance our COVID quarter, the continue year, next our first-ever business, the including have new estate, and lapped shacks dollar. and faced strong XXXX

markets which we're happy the long plans towards our is to in during into relationships the pause just newest our at term week. part We to in open Korea, opening that our agreement recently In in our of XXXX and Malaysia and markets. nearing Shack a Thailand Bahamas. new Shack opening partners Universal market. excited Greater After announced to schedule, our the COVID, of last future We're and in looking to Shack are our at XXth after premier eighth growth, expanded leaning and and XXrd opened Osaka our return early in Japan this see even Shack Atlantis Shanghai we market. also of in a our in extended go quarter, ahead Shack Studios the in XXXX completion revenue profitability with in operating this important will and and we've location development the deepen We're deeper the current China and

New our York new just as we've first Lastly, roadside Thruway both we format the look and Shack opportunities, unlock on here opened abroad. to ever

of recruiting, team people also new to our earning can We're the how XX pipeline on We elevating people, optimize else, retention the committed focus XXXX. for a we generous training a times key is expect We're our position. an to availability, our management hours sixth grow on over for we and A licensed year pipeline opportunity and of retaining shacks hourly updates with through top question, members focused required more in just Above key opening challenging. hour to with our improved in have heavily members, Staffing and relentless developing few with open a our as slightly, have plan. It's we staffing pillar Shift but at to In of guests all grow receive shacks, looking have be the some improve development a a and and our more to to our strategic next to something on Up new an in and graduate good new remained our culture members our our rest than time. tipping our patterns competitive on intend people, of program. benefits There's worldwide proud our elevate offer robust opportunities. who XX workforce. wages. standing total remain class pay team manager no to team $XX of throughput teams to our and

strength contribution digital guests dynamic Apollo even Currently, evolution other we successful hottest through working clean, So, with dining. channels. ingredients or Pepper continue continue team and the in guests reception digital comes million traditional cheese welcoming of Dab option even attitude potential all-important to current beverage, hot menu's Pepper Shack burger, how guest extra packet at Last running global concepts career just a can't offered was on well-operating Hot a food, innovation, LTO, menu on to the persistent Ones These digital providing to see we're lemonades. scale. experience, only. X.X demand the great channels and hybrid Dab an more focused the be premium gains increasing path. spicy check we're sauce for that Hot a this we elevated a chicken way with spicy than And X with up collaboration fast products happening. Ones casual us. own bacon channels, they to see In a a to our the with bacon bacon sensation satisfaction made The the also are ever to towards Shake high-quality examples members fast long-term When are find strive and continued few where industry-leading we're of and can those casual of while fund shacks most restaurants. our our committing of also as strong for and and seasonal the Reaper it we landing and employer. average had is partnering Last bravest We and YouTube our on buy the from our sauce to a latest and on our This particularly guest On menu results California lead we're

We Shake which a cookie, also chocolate has been historically year we're milk just and shakes. favorite. trio, fan launched our peppermint offering This cookies, Holiday and chocolate Christmas

shacks performance a test of attract a to XX at Veggie over non-dairy now Shack we'll year. new more the I'll to financial continue be end detail. our we new look this more long-term, of Lastly, in we about as frequency even pass chocolate to version towards Katie shake testing discuss our to and

Katie Fogertey

good Great. Thank you, Randy morning. and

We our of are pleased in Day. realized This coincided we continued urban return in the out a coming strong business work shacks a the led with recovery still business. to momentum with driver trends sales would inflection our positive potential Labor of in remain by

premiums meaningful basis costs Food year-over-year high-single-digits benefits wages higher and for income year-over-year generated these Our better Consumer in last in up to In grew $XX,XXX. revenue year-over-year price Labor and our traditional We we historically of see trends consumer relative year-over-year sales X.X% XX.X% $XXX.X XX% $XXX.X for we XX.X% $XXX.X of sales. falling X% the revenue inflationary when -- after which margin third $XX,XXX the XX.X% X.X% sales record. average total March business by performance high the in the to stable and at month, and license were to grew grew made over rose month-over-month outperform Shack lower sales even members in channels. and utility XX.X% profit AWS million grew grew million, improved by We sales. system-wide in headwinds. the in significant traffic sales we sales increase sales on and mobility highest urban million. double-digit to inclusive XX.X% in urban consistent weekly seasonality, pricing operating Overall Licensing past $X.X just AWS August centers months. from to Shack-level generated of third $X.X we quarter we we million. year-over-year Day costs and paper is traditional $XX,XXX. We had food our quarterly than However team guests. revenue to to throughout nearly fast quarter, by a over-indexed face X% same-shack saw different led grew XX the billion are continue price System-wide surpassed and growth and July marking September, trends We were by across same-shack points have XX to and mobility year.

in across to XXXX. single orders are was performance groups. XXXX groups Our all channels, the more our more guests orders by in-shack channels and in that larger ordering quarter to And single led and smaller skew versus compared

Labor and return same-Shack the raised tourism transit and price our the year-over-year, mid-October compares. rose despite urban sales by urban comp positive and grew and throughout menu office X% traffic have tiers urban and a to of traffic strong as throughout D.C. believe and positive XX% stronger and third sales quarter. same-shack check New Suburban trends address So, our the to shakes we sales and all nearly pressures. to were that Shacks. cold menu they in quarter trends in showing beverage X% grew value grew XX% we coming stronger and out our Urban showing remained and Trends up our this guests elevated cold adjusting was and are these of consistent positive lapping XXXX for strong time items to inflections. shakes for mobility us sales Manhattan growth beverage same-Shack XX% embrace more premium Mix price dynamic, October stayed XXXX really realized In Chicago burgers urban versus approach City, offerings strong. our the even in prices innovation. the limited were inflationary notably improved across recovery across premium positive trading in quarter to would Day and We X%. York if with XX% year-over-year namely challenging been quarter Washington

channels We and expect to a of recognize XXXX. maintain increase X% blended to high across X% price this price single-digit into

As average beverage below our is fries a or with other by and lunch price March raised burger cost XXXX. on well we and menu priced X.X% in the reminder increase within Shack nearby. options approximately $XX, often of Even a dinner this under prices

strong our that Our by continue up from reception traffic we was LTOs. price year-over-year, sales the year-over-year X% guests for even unchanged in accelerated challenging September Truffle among mid-single-digit X.X% gate. urban of AWS the right levels the Black remains October and menu levels. see led premium value of growth business. performing September middle launch as we from to our October urban out $XX,XXX of This had in rose guest demand lap and perception is Black and was strongest Shacks. a for same-Shack Truffle our and XXXX LTOs of our one strong compare

September. consistent continue adjust expected delays two in the had to strong what than September less to better than in-Shack we was a remained quarter and expected. the trends be we and Additionally, sales in had Development price, with October our headwind than we for seasonality. progression opened saw as we When to later historical Shacks we

While business retained recovery digital business. of a large signs our our we strong is portion in-Shack showing of

tools more occasions expand growth. laying our for the digital reach channels long-term with Our and convenient sustainable groundwork

continue We digital of our million target new the unique users year-over-year. within app Since grew we digital expanding more base. digital purchasers our third XXXX, than now app and XX% frequency first-time acquiring quarter, by more purchasers. X.X we gathered have driving March app to In

both year. our to business. new guests of This And early for check. world finding marketing and the of us our good in our the example other our digital initiatives checks digital out are our guest utilization. most our on by long-term labor how menu through better to including our roll in days nearly enjoying are encouraged ways end next by and Shacks developing experience dayparts. users our is track our profitable Jack strong kiosks we for is the communicate the digital are journey We to with omnichannel we is This guests. an with us Kiosk a digital-only and engagement in-chat are channel. the we and of and hotlines of we more building to focusing on and compared bridging digital channels when still higher we see growth limited and reach remain thing all And are and offering first digitally time promotions digital base successful our to It's

year-over-year. about Now, on $XXX.X to of million licensing business sales our where XX% rose

We select Shacks These impacted well. market China operating currency and remain fourth and the was Shacks $XX.X faced Mainland from disruptions sales. Total profit from and stronger headwinds lockdowns level Shack performed markets domestic Shack intermittent Our international COVID the that in pressures headwinds dollar. XX.X% million of or quarter.

improved Shack basis Our profit despite XX points pressures. inflationary level margin year-over-year operating

custard. oil led nearly XX% costs costs by This or up higher packaging by rose high existing our points near-term were paper basis Shack XX% XXX costs reminder, a grew costs. costs year-over-year. and had costs were and level As R&M operating in our food elevated benefit nearly operating utilities sponsorship Dairy well percent run was quarter's and new inflationary some pressures incremental and slightly impacted did sales. declined support a point the Other for our temporary paper million Other basis instances, expectations. fries Fryer and XX.X% as second single-digit food from cheese, exceeded of and including favorable These and materially expectations. restaurants as leadership in $XX.X This margin paper versus over some year. Shack butter, credit onetime some was XX paper by costs expenses year-over-year. pressures to retreat Food profit and as an were were from openings.

markets XX.X% total basis sales, million Other quarter having includes and lots of other maintenance expense letter. details Also, we're of in where this up quarter teams hourly to staffing our were down points from facing Shack more to bring shareholder and in or inflationary up support new XX pressures in the openings room. XX of third expenses as the needed down or where or have $XX.X operating $XX from local are in some and repair XX.X% XXXX at time, to our certain on we costs build dining on XX.X% XXXX openings are aspects the in-Shack the and and pressures Shack we business energy markets third of to management team. quarter-over-quarter. XX.X% bringing costs of page of We sales, total we're operate from new same in was maintain Labor Shacks million and facing the

negative and points we G&A scenarios to million approach was have T&E We Occupancy the measured to schedule costs we our more $X are on shown Preopening new development normalized our and prepared upcoming of $XX.X quarter fourth for total as down foreseeable of in openings of range are Shacks or opening in opened more some sales, was up as quarter revenue, million we to the or long-term, business ahead. in Depreciation support reflective was the wide busy two XXXX investments, for we X.X% expense points light was for a an and delays. from net XX.X% years. elevated $XX.X and expense more loss potential of we $X.XX in of is total or planning $X.X quarter the up exchanged Shake share. XX On total million. basis third realized per a share. to of diluted revenue the fully typical negative earnings basis a a This $X million reported expect reach million We million adjusted or prior new future, Shack quarter. Shack line $X.XX openings. from $XX.X and levels expense this support targeting in forma But prior of Inc. a basis, per G&A attributable XX.X% loss XX travel net pro quarter-over-quarter. of of

rate was in third tax the XX%. pro Excluding compensation, the of stock-based our impact forma quarter

is our Shacks sheet cash usage primary in our remains initiatives. supporting $XXX strong and marketable as million securities, ended quarter company-wide and cash the new opening we of balance other with and Our

as some guidance as for to initial on Now XXXX, thoughts XXXX. fourth quarter well the year and on full

or supply major inflationary in spending. pressures no shifts chain-related guidance COVID Our or consumer disruptions, additional unknown assumes new

third about to consumer that what the and consistent, with of much XX% are trends price realized factoring and we mobility remain for we realized are of suburban urban mid-October in We increase. XX% that quarter assuming our

quarter, we sales are For million. of million guiding to total $XXX the fourth $XXX Shack

expect expect we approximately mid-single-digit sales year-over-year company-operated percent to XX to Shack We and grow Shacks. new to open by open

we We openings occur planning the opened and quarter. so many four for quarter to are of at have up end far this the

As such, impact a revenue. they will have limited quarter on fourth

While mobility, include trends development risks range macro to amidst are unknown operational the consumer the as unforeseen backdrop. teams recent and sales a encouraging, disruptions Uneven continued of wide unearned impacts consumer support many openings new delays.

are certain that Licensing in million New by recovery XXXX. York trends We the in of fourth performance as as and City of to $X.X strong openings. is guidance were strong markets new well mindful our also in quarter international really supported domestic Shack million revenue $X.X

markets, reach guidance in quarter XXXX, broad-based the range Shacks This COVID guidance closures fourth to to in to does raised licensed macro or new anticipating are pressures assume opening headwinds XX and of seven not certain licensing of to and currency our new reflects We XX continue. pressures XXXX opening XX.

We million $XXX.X million profit of XX%. Shack expect XX% revenue to XX% and level operating margin year-over-year, to $XXX.X growing XX% total to about of

As of pricing pressures third quarter. This the we are quarter shown and versus compression nearly have address margin AWS the full menu fourth new quarter pre-COVID, in a quarter, we benefit reminder inflationary we the some to a help will of fourth had facing.

inflation pressures double-digit packaging. fries dairy, costs of oil the paper and cost led year, paper through planning rest high in inflation high fryer in in accelerating ketchup food the continued and are We and for in inflation low and by single-digit,

cost the While high backdrop inflationary year-over-year. to by our uncertain, mid- expect single we portion largest basket the de remains to of digits decline

fourth percent at of pressures level restaurants, to to quarter inflationary expenses expense operating given as sales other on quarter. R&M the a including elevated higher similar Shack run openings. and utilities be support to third expect and new T&E in We to the a our cost

some and profitability drive We environment world. sales growth challenging improving elevate people to Shake time long-term right we investing the pipeline our across robust place operating and these remain as is we likely our are believe our for waters. we growth The ahead navigate plan driving of and of uncertain committed Shack in to to the the have

to tightened $XXX G&A investments wide and pertains and now to approach our the of planning legal $XXX consideration end the for we As to into business minded in our the guidance taking CapEx range of growth G&A we range of disciplined expenses scenarios. XXXX towards the but million, of lower unknown expect first a incurred land macro for XXXX. and into it have development to million $X.X excluding impacts, of XXXX delays account rest the we of million With half a

We continue to pre-opening expect depreciation million full million million. $XX to updating year million and to of are $XX to $XX $XX.X

level than accruing delays and the are pre-open We more experiencing. that given expense normal rent of we're

to We expect XX%. impact our adjusted be XX% pro forma tax rate excluding the of stock-based to compensation

about to to XX by will the expect operated around XX as Looking Shacks grow Shacks plan XX% XX We system. be XX entire be open XX year-over-year system-wide operated our and partners. to licensed count we that out total to to XXXX, Shack across our we by will company anticipate

beginning the continued of it back year. in interest your detail provide And the can and for business. will our more Thank for you Randy. with expectations We I XXXX to our turn on that

Randy Garutti

be market of continued EBITDA. focus ahead our we're our also overall Thanks would drive today's Katie. team possible next we We're I for quarters And returns. landscape. planning wanted fees growing addressable members call remarks strong and Shack as the varied pipeline squarely resilience economic on scenarios about coming on with and remains range sales macro uncertain. that a wide Shake the Shack at increase this The and profitability a end strength bigger the globe. with can to just of focused solid level of here I in a think business None on the opportunity adjusted formats with quick around of the some without Shacks the and

preparation we that for Over few Hope for leaders time That's meets spent chicken. real-time can plan and members building And please who of build Session the been weeks in we're investing when I've operator, as call a seen I've this open keep hard hot the as in happen ones began of you last all a company with questions. ahead. and team and people Question-and-Answer the work of to witnessed to have opportunity soon road a number promotions see Shacks opportunity. lot in our up the for we what

Operator

a Thank from Piper this Nicole you. time, we comes Please first proceed Our your question. question conducting Miller be At Sandler. [Operator Instructions] with session. will with question-and-answer

Nicole Miller

wanted signed And are could under next LOIs and you I could Thank you under the good but on stores color that on talk around cadence. much, company-owned little the if did, give people so for then identified to about with a little I year. that about morning. you -- or the and side ask leases bit But suppose context the the side. and a maybe more even you pipeline

So stores the if do is managers to so little what you do they How in you delayed, material where interim? the are do And Thank that now? do you much. how bench right a on the in G&A these hold them?

Randy Garutti

Thanks Nicole.

like leases. kind still general are the we're and number cost have we those than of now further that it's in the roughly line. XX feel with for ahead. said, of the about Shacks permitting construction, of last XX we the them year. feel time think the And coming same challenges better start time and thing signed class just this a about next is much we Let's in nearly year all We company-owned. we're That Right experiencing

be for XX construction at see largest had and built today. the year Shacks that. well of things under to formats. And we've don't got we'll a thinking of number We've That's next have different know that's we've that fourth that good the start as why dispersed what they're for that is us year. to have my remarks, year. a seems we're year. a than we quarter how of So number ever half being But in We really crunch. first said hope But thrus. a class this challenge XX better every such I We with Within time. XX total bodes part go hopefully you got number a to stronger XX drive next for one

So drive some the you'll build see that costs thrus. elevated in with

that's Shacks built core we that some know see company. this love and You'll

up models. see You'll some drive

You'll see court or a food two.

deliberate think it. right it's got think to we and really really, a the You've intentional mix way

Now right on thing how these do we hardest heck the is the staff going now. this shacks

I costs and our actually called the hitting op the profit we now Shack-level out Katie that are right of of have. remarks in and part pressure that Some new that's

We've be think the Shack does quarter okay? in Well, new don't that I what that's that And up clear. That's new Rouge, a in Now exists forever. mean? to we've opening fourth is me a Coming here. a pressure us. got up This Baton let out some need market to We're brand build to we while. the our out building for in people where got brand. bench. our employee building our for keep a and us. management there, fly Shacks in there Bay them We've got Area

our its certainly of part We as what guide -- into have of part our quarter, hits some That to in part part what its and help. guide this in op our And happen for for the will people us from Shack-level next the to bring QX of part -- early year. of happened profit. that's of regions other

talented With the to just harder bit challenges now never we've people. of been commitment right our all of more. little more our a it around we to our staffing when move And kind comes of that, it's innovative With got to levels. have all teams at

we're industry fully all and an we about by advertising the do that XX that's increasing of teams, of spend where And G&A our We feels new in the going our In going need size recruiting this some starting big at up is thinking are the days staffed is recruiting is -- that in to where there process, better to the some our improvements. recruiting teams. on application know build and certainly really that moment in first to way industry. We those way making and not ways employment. the starting they're we're

compounded been good have is we do. of to going and execute we None But it's place. So macro work feel what been in We're by plan. does. challenges. a lot Shack a We're to Shake it's this this of like easy

Operator

Garber Our with Please comes next question with your Goldman question. Sachs. from proceed Jared

Unidentified Analyst

is on This Good Jared. morning. Ben for

trends? seeing what new then day to follow are urban operationally you wondering you've these guess adapt could in I to remarks detail Is was And Thanks. new your emerging. been you prepared trends related on if bit I mentioned to any these You more a the changes provide part? to up making trends? of week that if this day new

Katie Fogertey

Labor Yes. and then market hit, pretty And inflected really to saw positively July and there's were August. weekday what us a than it continue the lunch a of, urban prior our kind still as mostly, dinner of here we when Shacks in But in we recover mobility in more of, centric the in that dinner Labor more Manhattan, And I we traffic great number lunch it and quarter mean well. in mobility saw with was there's so really particular was that the still trends in a throughout workplace there what Day. Day and opportunity quarter kind second consistent And even have was pretty to greatest pre-COVID. locations big those impact. saw for Midtown to and the impact --

the trends saw particular urban transit encouraging, while and Manhattan the in to particular strength still New road recovery. we're in So we our York City were on in

Randy Garutti

Shack, to like but going just right And a that going right? for really and is daily, an it. bunch of on people think trying the just look this direction a that we're understand like seeing mix cities. As about Midtown think even it's in Friday in have we've in what going pretty kind about. I urban to moving of new thing to It's nice look to day. good Shacks encouraged we urban We've this is And going us. clear Manhattan in momentum and I around suburban. of was setting of the trends adjust is Shake And what last spent and I kind about emerge by seen I now talked Friday saw for

Operator

question. from proceed next with question your Please Oppenheimer. Michael comes Tamas with Our

Michael Tamas

those Good I'm of morning. one Hi. Thanks. great customers.

You mentioned up getting to the name. last step and I can lives confirm it its

Randy Garutti

Thank Michael. be It’s you, okay.

Michael Tamas

better Randy, as time. focus for improvements XX% target you And of talked pretty last margins achieve back about over a called getting restaurant weeks. XX% to operational over couple the still to you the It believe you cost. tighter you hot. out getting on and was can a potential historical I'm

impactful might like either order So are? think Thanks. bucket those the versus or nearer-term a to some things rank where opportunities bit take that opportunities most unfold? you longer little And can you those of what are maybe

Randy Garutti

going this There's time. going few look increase happen. we're continue believe to over a things Yes Michael. Thanks, we to to

macro for our it our and with we're factors okay? our around for These and start those need buy to just restaurants fact. paper impacting company offset to of way but same that have almost And are tough a some to We wait world. double-digit Let's our go fries packaging. in going that is oil taking it's not and When price we're increase to we whether we everything inflation french not the fully. things yet

been weeks a that's than more aggressive going ago in see After continue We've we've X out range eyes we we being price. that of So help on settles of go future wide things will that. we we're to couple price need have just this this just think and doing to on our between bit think will we of to we price. keep XX% a about we in we're more and the that and pressure inflationary And to Well, And aggressive obviously range to raises. a X% it? more kind X that our past. way. If the done what taken couple are we've take little

that's staffed. our There's got of continue company up. just missing not to it. on So got part to opportunity we've We've to that. absolutely do in staffed get being

during has challenge challenge. peak And have years. few It last remains We total a that open we have not not been and the hours hours. for optimized a our optimized our throughput

are teams we So, to at bulking and staffing this. look towards massive be things. And putting that's little easy. able to efforts our None handle of you up then

more package then are Katie we are will channels less preordering called out Those near-term see. and that We continue packaging there we packaging And and openings world. up. believe It's going things up. in are we about last forever. that's less the we we're is some That to get don't to the evolve that happening the Hopefully the us. more our forever. not up continue we return These to on to that talked way are are is travel impact The up. in-shack support right? that hit to as things Utilities an profitable for see evolve need those trends orders things happen

time. but the those you returns. continue to do, to we get think There's root about back targets So, seeing work clearly when some can long to in it's there we and to take be us believe going the to going term

Katie Fogertey

there thing on One add is more just kiosks. to on

labor our So out challenges kiosk that It is the rolling margin highest we're performance channel. and to address drive Shacks year the here. also nearly going to our by highest We're check of next to way margin all another help and in in and some has leaning that's of channel. kiosks performance be that had. end we've

Randy Garutti

or take through And XX of XX And continue of that There's XX kiosks this about rollout. the the then convert end year after to we'll will add XX me existing end That kiosks excuse this that. left year. have I think Shacks by year. before about next we'll

Operator

Our with proceed Sharon you comes next with William Zackfia Blair. from question Please question.

Sharon Zackfia

Sorry for just voice. cold. the have my I I think It a wasn't sauce. hot

maybe more that. actually I And through do the kiosks the to of leverage I'm where value-added thoughts the streamlining are had orders, and what those just labor labor how working or So, to is on then reallocating people more because incremental you do you taking a Is you've see tasks at going throughput more and kiosks. curious like I it in manage is have than locations kiosks I I guess percent for labor? bit better a business delve into the more mean kiosks. want locations. on little while labor guess you

I potential then other think know looking but that. robotics menu And know that at there itself help avenues? I are other companies and opportunities? as about are like your us much lend automation. may to not are Just those

Katie Fogertey

help Shacks. to six on the two about great of labor portion broad-based channel. kiosks you a kind good have locations of here mean I in Shacks it's for kiosks front-of-house broad is many really us and we of lever addressing we'll go a lean streamline We're In really kiosk. maybe now And yes And maybe five to people the that prefer that Sharon number cash opportunity. kiosk right speaking do where a towards one instantly have guests in actually or that registers. the see

you highly If encourage you before used to I do. haven't one

they the Shack that going So the they see They it's menu of fry translate having order guests to able through things. opportunity flow more just our whole be shake and with that. to and the adding our sit and a to burger have for we're they're our visually lemonade see we're entire a where within order and LTOs great really can see their through on our page all premium we our to

as there from with from a what kind benefiting hit how of perspective check perspective on a And really and we're the as labor So it's head the that. far both we're definitely accretive. you nail seeing

other kind if instances, at and like out there, helping it's But value-added that just So able tasks a dedicate extra to in also, it orders guests just some well. more we're it's bit some in the greeting to Expo run labor room to expedite dining take of leaner. able we're little as

forward looking kiosks So to in we're out and seen really excited short we've what by order. rolling these

Sharon Zackfia

is on something automation you that And then or the Thanks. robotics explore?

Randy Garutti

the yet. I of think don't time. best use our Yeah. Nothing it's

ordering about frontrunners the closely. app I'm our to our it's don't and talked think in and Today, use time the automation web that we other future. terms be think digital it in about for and the we're just of and I way we watching think channels. excited of on best I kiosks

now. companies think in how to away I interesting that But from We seeing it ways a right that us. little who could are seeing and continue we're impact like work doing a with Shack something meet

Sharon Zackfia

Thank you.

Operator

Securities. Jake from is Truist question proceed your with Please Bartlett with next Our question.

Jake Bartlett

into Thanks My average December. What seasonality the versus taking coming I'm context put happens from world October Great. of in And and the typically is November you question. pre-COVID sales. a weekly to for weekly October just on sales the October average can into the first hoping months?

Katie Fogertey

has to a and Yeah. third XXXX, kind I'm lumpy. talk headwinds faced we which back, in comp little bit company, some younger Well, sure see of just in we as much have bit a of about But the a you to that being changed seasonality quarter. remember, fourth don't more bit a dramatically. fourth speaking our of quarter quarter part little little of you us than base And broadly of makes more softer XXXX of looking tend a history

Jake Bartlett

Got it.

-- of cover don't like trying that just you is So back to of December seasonality? typically make -- going in in terms stronger the years just traffic put context have would kind holiday than something that or October. I'm of

Katie Fogertey

You seasonal increase a have December. just in

of However, November on where it more has depending kind been fall holidays flattish. be can bit little a

Jake Bartlett

aggressive or growth on less in the just getting is back on current kind you're development. if maybe a the bit headwinds. bit you're of in spending pause this whether in change that? reflection the less why to your fast focusing less temporary existing is base is XXXX, expecting and just just understand on I just what than Or trying is this long-term XXXX? of a a expectations I'm the lower a Great. kind I kind just more really the the step macro more in little of of -- just a to dig then in end of I of you energy of part on the maybe this it for that's originally -- Got wanted little XXXX. development a focusing philosophy to want on more mentioned really is environment this and understand growth on to it. lower

Randy Garutti

Well, There's thanks, things Jake. that. a in few

that's we the guided that of class numbers ever. First Shacks the would largest be of all,

anything we're So down. not slowing

comparator. we got really I make new formats to hope to with have how down. can sure is those cost for spending committed that number over certainly in capital, also XX% with country, an we right we got this XXX-ish build going margin, said costs longer-term cost some significant capital, the We're to in more to and think XX%, a great our inflationary significant all That's can class look we're I I we'll the there's Shacks Within year We're think of work in about time absorb we growth when next restaurants also environment as think for to many expectations that when come we're I've years to These approach class the more reason And really a subject, each own of strong, a some open like. what on in. strong growth. think year, more to to here, the we lot to race as current spending class, to while for right? live we XX is of on working a increased that Shacks Shacks. next we're still And an that we think our still said showing a continue next no lot drive-thru. we should Well, environment. that good But that next of about this year do building. that, to we've feel we build. operate about period At work on

XX next class And opposite what can preparing sure way up, because growth happened look XX be. of this do of things appropriately certainly things look Now But year to and a right great can and amount of our the that. we that our make go out pull we the are want we to factors guiding we'll control year. Shacks worldwide to for if should the some that's and

Jake Bartlett

That’s Great. it. I helpful. appreciate

Operator

with Please Our question. Haskett. next your Jeff Farmer from with proceed comes question Gordon

Jeff Farmer

morning. Good

on to staffing. up quickly wanted follow Just

interesting it across – fully roughly that indicate restaurants. XX% those hourly $X simply last that ensure guess could system. about to $X I staff wage was hear to the raised us that starting week did So they to it by recently They the was of they

curious need met. staffing wage rate markets in of seen ensure you've meaning just bump potential I'm similar a So levels to your a if in the appropriately some are

Randy Garutti

quarter. bump happening certain we Shacks, up that similar talking about, are a to some There to this likely Yes. at mid them you some need That's We've we up. continue who cadence heard been year bump even absolutely markets already to this right? what doing

So expect that. can you yes,

inflationary for and continued more. our expect have going increase that's cost into members starting Our to team teams it. no about The wages year. finding doubt is great to we going to next continue and pressure There's

dollars a guests our we've tip be Shack teams few that per time our to a little said asked long With have doing as earnings their more total now, addition opportunity In opportunity competitive the and in hour for for ways. making while functionality, are teams. lot well on competitive for depending a up jumping really the added to really and of above our a

So hopefully, is tide. about still in will It And ways. no turn there. challenging different environment got doubt and investing to There's new keep it. that a out help we've the

that So you Shacks we can payroll year. look as expect our the at on continued pressure into next

Jeff Farmer

follow-up. just And one quick That's helpful.

might you those influence planned? seen sort have bad operations the the from drive-thru to So in I'm would initial those future but seen already of interesting six drive-thru learnings these terms of of terms you've or just of that key and just So hear you've again, restaurants? be how you've surprises or months the sort from provided it are good development learnings what potentially some color, in as of your openings curious the restaurants

Randy Garutti

investing to take format Yes we're exactly the I why we to the Of more in think a on the it's while are. hone way really best going drive-thrus and a and lot that's that the ways real different decisions. first kind kitchen through. different just estate move we that flows, of external to Not design and very internal are six multiple we food open have and mention

keep and using capital we prize because right. spending as we're we're optimized that bigger there's much, much learned learn So about a what as we're term I the get excited for it learning,

We've about this four the in all the I year, think area super with some others that with more. is in next another in the we going excited to one Ohio, three just XX% by the to got hope. and to learning And accelerate. we're going Baltimore coming that next end year we're XX%, opened that week Michigan or learn next new things. So got of in We've opening

We're take when we peak need learning about outside. So how learning what you learning orders, are for like. is best cars We're learning? space what not have it people much how need to do when we to hours look outside, people best on

lot boards the should are honing that? and learning way. how that protect we think flow should We a maintain work the in on serve so we better We're they a ingredients premium big look menu what kitchen like. can we So every when totally things kind How we sell, should about put and model. of it's do up shakes sell, should what different So be we it's they right? really what vast and there

drive-thru. We these So I continue is It's work to over we it's we and time. to try out to going but there with think cool them of really to do a lots take years. our dynamic that's next everyone share that We be what there think going of a lot have with we've to super think can to exciting. happen got few optimize product

Jeff Farmer

you. Thank it. Appreciate

Operator

comes question your from next with Please Andy question. Barish Our proceed Jefferies. with

Andy Barish

guys. morning, good Hey,

could. of couple expense you a Just items, if

be here regulated is you're that suburban That inefficiencies can mean the would kind opening to this Thanks. then markets? if been few earnings be First utilities, that quarters? expecting quantify Is next over differences and the fine And urban I willing that's anything there of season. mean helpful. unregulated just I between you're done or on restaurant there there? new

Katie Fogertey

I Yeah, by vary mean Sure. expenses market. do utilities

busier than Some of others. are our Shacks

based higher just and the consistent we're utility been located I just more have But energy where very requirements. really demand what them costs that's seeing that's is they're here. think And of theme I overall. Some zoning overall on mean

us points XXX will basis added that but highlighted. and is hitting We a in that cyclical expect be OpEx other the we it of is portion that

but the there's T&D look handful, to a this several support to a we're uncertainty opening support of the On side, wide of openings require range there. added level, new expecting

about going Shack we've the sales as you're of we So it's same third in the other probably OpEx level thinking when about percentage total to what is quarter. about talked a be realized

Andy Barish

the Thanks team. color Excellent. for

Katie Fogertey

Yeah.

Operator

comes Please question proceed O'Cull with question. next with your Our Stifel. from Chris

Chris O'Cull

look sales to seem And And Katie experiencing does guys. XXXX other that locations? labor in operating nature? compared sales suburban of some or as or of to Thanks. more the more cost probably going does how be are weekly percentage just morning Good permanent compare these locations I'm maybe in growth? be at these do how suburban those those costs costs, the How stores XXXX? normalized wondering, a to comp to average

Katie Fogertey

not contextualize front consistent on pressures just Yeah. say call suburban locations. I our in help what that that a very of on locations and would seeing It is the locations urban to staffing an to our markets trend just bit. really that out. But and with that impact the we've always discussed, of each more depends There's we a the are little

Randy Garutti

is income brand may remember or and right, that part the and real because gift but like of is that not we to have Shack of made areas. you higher Which to generally the challenge interesting, for you, estate be may the tend in intuitive decisions Shake we've more be

in makes environment. it what in have head shared especially suburban. many part to have We as -- income recessionary the we've higher a in we been actually especially That's more That guest. staff of we made generally a decisions of harder

some where to comes it So income hiring in some them locations in call are higher most acute guess. our, I our of “best” challenges of when

So different that urban got everyone its our some challenges. is than of some traditional environments. Again has own

hard. Some very urban are environments

are easier. much Some

an we and suburban can just mix type all continue best as -- doesn't causes these formats is a sites. mix of And interesting sites learn, the of always target which kinds different why said where we're Katie it's of that out it's building because the acts it that's for So which just same. volumes Chris that to it's mean And pressure.

Chris O'Cull

the revenue but the margin third the if quarter end of guidance. missed at high of apologize And end came in then helpful. this, the That's at Shack Okay. the guidance, I I low but company

So I'm what curious what just caused surprised the quarter? caused the or you during most

Katie Fogertey

Sure. basis OpEx added other that we points I of it's mean, out. really XXX called

items time to of all support to the ketchup. at energy more number are persist dairy, that new like So R&M able little are just these the fast line but COGS, just additional deflation, be pretty fourth We're pressures we price beef sharply in than then a running on issues, here bit work slightly through over a address expecting that we openings. of a with clip up higher of into was higher took oil, we'll there's quarter. and we really to think which had that that's fries, rising And anticipated cost up is availability These the fryer all and XX% to inflationary why had a we couple October. here equipment then

Chris O'Cull

Thanks guys. Perfect.

Katie Fogertey

Yeah.

Operator

and question. Co. question proceed Andrew Our next from with is with Charles Cowen your Please

Unidentified Analyst

question My on you. in is also you you Thank [ph] impact Can Zack Thank what Hi. on about operating and Andrew. XXXX? talk is is the CapEx for kiosk. to expenses This question. for the

Katie Fogertey

level more this And that a to part have really better. And don't. Shacks and then to We're is able we do going the comments not do and labor utilize is sales efficient said But to -- of We're to kiosks that in-Shack use we're orders. at kiosk with and it. we in out run I'll we finally to reiterate like have see able guests granularity on we our that of kiosk where I Yeah. we where meaningful where a the time. break kiosk before it higher check

Unidentified Analyst

you. Great. Thank

Katie Fogertey

Yeah.

Operator

comes question. Please Vaccaro James. with Our Raymond from Brian question proceed next your with

Brian Vaccaro

as out into could topic proposition. maybe if different average taking you circle markets fries that the suburbs? move morning, and proposition little Good drink wanted for value you And back relative I'm curious burger and reaching to even markets. and you're and noted bit, value the or a on more thanks that $XX. question. of I you you you suburban across the like below types of And my And Hi. that looks of is the what broadly view urban comment relative price maybe brand's consumers how between quantify break

Randy Garutti

Yeah.

kind a everything at pricing we've opportunities this in generally our the strong to a may that very our have some good way, it's to way than up By think a and in market. better more. we and years too urban, that's we them we we those in look where pricing I we strategy guests each have and may at and recent raise, much in think raise. don't see around be XX% more it need doing better important and come we're shared X% we tiers a opportunity. of also gotten And the be suburban. of range think Two we of over And maybe And we and understanding some raise where ever. we're our competitors high-income demand from

boat in spend of that price. this. about is had a of the to taking haven't We inflationary this But same thinking everybody environment in lot time

up good you is, pretty that's Shack when to see it it solid, choose deal. of pretty more drink might price look that takes range who you in the the XX% XX-plus burger we're expensive you go see compare after. I think fries who So that's yeah, when value at XX%, you some that might making below point about with and larger our you places. But in to a a might think we range,

that for amount see. time we're food highest experience lifetimes. feel keep sure not. different great on compete honestly, with Look, we're to And going keep going not that work. and premium and not in totally that we being to our right And No we're traditional value. serving brand. of ingredients going to a us to never we're level the And of going all like, that. the have been all we'll and are fast for seen costs watching can't inflation, going That's We're a Now, that's in we're the new charge with restaurants going. in money, to we've to our consumers our bundles? and we that measuring We're

Katie Fogertey

that There's that. number below facts a the there average about XX% of while are talk we below – also are

more that fact And great As approach in their Randy to our encouraged seeing talked kind our returning trade us All positive to leave of elevated to with price groups people in, for mix seeing will cold things smaller or we and more here about, we've the here check. we premium does people value innovation. to strength the signs cleared We're and menu adjusting increase. have look at taken times. really of and a up approach orders coming guests just very pricing. COVID their like that habits single normal are menu in the add We're beverage. differentiated We're guests, on these seeing attempt to

Brian Vaccaro

to second down to could one at way is even sales, of is favorable comment on, year-on-year I little if it starting Are anything that And is inflation. versus little there still, starting line? driving in And on a as you labor average I pieces year-over-year look it. labor moderate than trend a better But investing moving kiosk with Katie wage all year-on-year understand, onetime at more Thanks. in a at that line, the guess, wage you're tight It highlighting? up? sales. look and on I quarter elaborate is that just can line. in are follow-up, to inflation basis? lower could. it sort expected. there of show a that's could worth you a you weekly I or Is came But was on bit percent the then guess Okay. just one also specific any

Katie Fogertey

Yeah.

as seasonally on for we in speaking, nice did not September. much that – we were broadly labor see be quarter, we line as the the would down – we So

a that's up more to running And understaffed more drive an a really was – we're offset. of also and for we an that little sales. bit have we're and So But thing to opportunity good historically continue and step than run. efficient we us

was is our in talked wages that teams concerned, July. $XX happened inflation last wage big about made that lot we investment. A investments as far higher talked of – we We As in year. million that

a the our here, with continuing hour. invest that over our it's bit they're seeing lapping team benefit in tips $XX some are appropriate. are definitely teams we there we're where some wages making to here but of raising And markets of So members. – we're think an where We're little

Operator

proceed question. comes with question next Please your from Bernstein with Barclays. Our Jeffrey

Jeffrey Bernstein

attract for always never see your Question Great. I potential courts. time QSR? think national meals, for know casual you units demand to But wherever some been Shack we is be you're it. very much. bundle we'd sales consumer Obviously, the fine thought the see the or evolution? gap then, broader further embracing I traditional fast do to at I same have you food said units television. mean, you or income highway Shake QSRs. and sort and Shack, going Thank where And what's has value But mean, trends. on not and clear. drive-thru further perhaps broader Randy, for consumer seemingly a Shake versus mentioned, but may I segment or lines offering one follow-up. lower between looking you're blurring you the had of I the

Randy Garutti

Series keep stadiums. because type disrupt But to environments, whether than I go from Korea Series in all way, by was to we say we when ride, a what court. of that to it's I think, teams brands their something places stadiums. their Shack get Yes. ingredient these around just -- we Well, it's the are do Shack and stadium the we're to pull things long evolving, gas think does over on I here's how lifetime. or I made a teams people wouldn't World I got That unwilling think, doesn't do Shake selling to I'm never there's that's we Shake and elated brand we things when mean here. drive those a are wouldn't road a right? that doing, has or expecting side. healthy have want. said expand. a think better constantly their level whoever don't like, see the those whole quality And places a that there. food I oh, of baseball whether about diet and But I an other that are the it's our see Yes, to opportunity never an traditionally World of Malaysia or unable that We both think my huge accident And that the in do. Shack burgers want or We you in the

to are I places us is we what these drive-thru we the categories generation traditional of about. elevated that is a a huge we're abandon like place should We're there's It's do we've It's doesn't this about. and where food deal of great. going to kids, all so opportunity our opportunity expectation are to keep at has a -- they what it So food. to think, the to that, expansion fast in for that. question higher get. a premium. who continue place. an be next -- being what It's never It's continue is people and of vast. leaders, your burger trying a can my to for do a been mean think has can That fast And it's I This great

Sorry, go ahead on your second question.

Jeffrey Bernstein

just follow up, quarter the seems just the I macro October, to from and was the accelerate challenges to standpoint. into going a about through impressive like its everyone see all because third clearly to comps talks counter

slowing some for of mean, an Just about, by or seems wave that's but to the trend, you relative Day to traffic I markets. like consigns be looking could you talked Labor I guys post Thank a are accelerating I maybe the mean, you traditional are clearly. than what signs office macro, wondering to you. more return there led like any in mean, macro distorted the some mix? somewhat return whether see, because that slowing to unique, you're think a just by, different what of of restaurant. you again, acceleration a on major are it's office.

Randy Garutti

going more that supported a income lot certainly again, I trade-outs. be to our have lower-income no bit that a There's going quarters. think we've distorted, be are office. Well, shop think, way. to and I'd of stronger guests for than people it's at by return But, say, wind income People got to think, to as it's be little I prepare There's make higher we that we rather question. now be right our trend next of tends few we -- got than to That's decisions. in to -- to And a generally little But, who I lower careful, said, there's back. guest scenarios we've bit this because a to going weakness. these

of got continued dollar to balance. And tailwinds that us, with to balanced places kind assumes that some more blend destination, see down. some right? strong trade require of guidance the urban our be So of isn't return the travel a you'll helping Also, our there's that -- related mobility, of to in

in there that it's Christmas not, kind against Omicron believe the kind with measured for year. some last those of PE accelerating in both happening led others and XX comp then, on hit last puts line all we it as a But So fell guidance And actually XX. takes mid-single-digit that forget, people and know, really around of up November strong knew I actually comps or that about. that our positive, year, a us to an time Year, frame. headwind the right off We're many testing feel trend was it for New business and And think in things December was the as we Omicron and in November-December trend. QX comp look we you of good and our everybody is of at QX That's before right? and

Jeffrey Bernstein

Thank you.

Operator

Baird. Our Please from next with with North proceed your question. is Drew question

Drew North

the Great. for the on Thanks margin I had outlook. question. taking a follow-up

year? I current inflation about based now? exit annualized clear, the or is Not some but latest the right how seeing labor be rate and you're price outlook we early and on you hoping was perspective, specifically, how sales thinking inflammation of thinking cost the XXXX, indication asking guidance Thanks. Given the trajectory XXXX. could thinking provide about about of maybe what about next any that increase, QX maybe into margin how you're should commodity And you're

Katie Fogertey

Yes.

those come of to we we just price XX% not of and XXXX I question Look that of to And puts as to expect T&E The assuming with Shacks conservative XX% these play opening we going finally, overarching We've those mobility price mention, we price the to then we open, to and be our some a expectations. XQ where we're and overall how trends specifically it's ahead out. approach end sales, will our an can we year. now contribute system the giving to just up margin the having most have are outlook increase. to impact approach we're possible realization new landing, any that thinking today. taking takes support well, to And XX that more have fall guidance XX% how to that have of of conservative also taken our between supporting our ends teams and some of now we're about So the between but in where had about urban borrow on XX%. capture profits, come open. from of increase, about much appropriately how on recent a could that were as the that revenue some and our all and openings to

So XXXX. pressures We're paper the that probably our to do likely food puts the And thinking persist. bottom inflationary that's kind that how to on range to some line to cost, going but end and we I expect be then of to probably be more and team more top investing in going our of is inflationary on year. front. takes inflation would end there's And the for be next members into be about

Operator

question Ivankoe JPMorgan. Please next with from is Our John proceed with your question.

John Ivankoe

are to, a in you on have But about you have maybe you're of don't at for term? the that what And I couple perspective. comment I staffing call, the have like talk a Thank think stores. past I'm just don't something beginning if in Hi. guess, see I the maybe you as exactly than Could know you. levels means? that that Randy what your your And focus. less would I not is haven't of consistent. but customers? various want the service heard food driven quality parts goal or hearing is years, that to the you'd wanted and certain it. call the what of are it exactly from changed see near Things little touched in and I to mentioned really what increase what hours on that operationally the you'd from what maybe bit already brand you that mean, operational intense I opportunities you sorry, would major an the addressed if that be

Randy Garutti

John. this. Thanks start Yes, let's with

It to last are quarters, said, back. our --obviously, but hang couple come you and increased most all top time On to restaurant. We're Shake want how you've to channels and traffic I years to the As people staffed the got and a right? of of our really that with with in foot the digital the gains never return to be. gains a to what you So of said staffing. out. With coming want our got return out want there in Our we've in we few not everywhere Shack that starts of People Shack, the It is retaining work more things right? just we've get existed Shacks. strong, started are -- of digital in and coming tells better. hang coming to the ago, are where

with there are there, Now it out Shacks do are every it and almost that out, on of sure on a incredibly staffed. crushing what to are That's and aware and lot being very not, are, that I'm proud better about. self And clean keeping some day making aspect up restaurants. there's some with day And of also R&M. where goals. need about of about ends that. just fully in, it's we begins it's we that are we're But those always we It's

that saw elevated quarter. this little be a You

in evolving. COVID-related And our move How that as as ups all flow, and to to kind older. drivers packaging, focus. we've food? of all going You're how digital restaurants operational are with flow, that bit or they're do of going. some these a of that and in and of them it's working get flow. clean, to continue our about do a evolve things restaurants whether delivery or pickup downs continue to It's of about got keep It's keep And little we see decisions, these just we and we from

to return, for as our get And execute. remain call so another on about we and of be but digital in us there, how to been focus our it's much relentless people will just has action restaurant and

recommend over question to So scores to kind guess our about likelihood improved or time. your of expectations, measure only have we that

feel So we're that. our -- will spending where time. need a still We to but satisfied. about And we be really be lot to good we of That's better. not going

John Ivankoe

Helpful. Thank you.

Operator

for reached over the now closing Randy Garutti, turn of have to question-and-answer CEO our now End end We Q&A comments. I would And to session. call of the like back

Randy Garutti

Thanks time everybody. hope see and the you We Be care. I so Shacks soon. to Take much your well. appreciate all

Operator

This concludes today's teleconference.

time. You participation. your may this for you disconnect your lines Thank at

Shake Shack (SHAK) 3 Nov 222022 Q3 Earnings call transcript