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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 27, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission file number: 001-36823
shak-img_shakeshacklogoa16.jpg
SHAKE SHACK INC.
(Exact name of registrant as specified in its charter)
Delaware47-1941186
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
225 Varick Street
Suite 301
New York,New York10014
(Address of principal executive offices)(Zip Code)
(646) 747-7200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of each class Trading symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001SHAKNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule-405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer  
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
As of April 24, 2024, there were 39,635,653 shares of Class A common stock outstanding and 2,801,013 shares of Class B common stock outstanding.



SHAKE SHACK INC.
TABLE OF CONTENTS



Cautionary Note Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q ("Form 10-Q") contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact included in this Form 10-Q are forward-looking statements, including, but not limited to, statements about the Company's growth, strategic plan, and liquidity. Forward-looking statements discuss the Company's current expectations and projections relating to its financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "likely," "outlook," "potential," "project," "projection," "plan," "seek," "may," "could," "would," "will," "should," "can," "can have," the negatives thereof and other similar expressions.
All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Some of the factors which could cause results to differ materially from the Company's expectations include the Company's ability to develop and open new Shacks on a timely basis, increased costs or shortages or interruptions in the supply and delivery of products, increased labor costs or shortages, inflationary pressures, the Company's management of its digital capabilities and expansion into delivery, as well as kiosk, drive-thru and multiple format investments, the Company's ability to maintain and grow sales at existing Shacks, and risks relating to the restaurant industry generally, and the impact of any material weakness in the Company's internal controls over financial reporting identified in connection with the restatement described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2024 or otherwise. You should evaluate all forward-looking statements made in this Form 10-Q in the context of the risks and uncertainties disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2023 as filed with the Securities and Exchange Commission (the "SEC").
The forward-looking statements included in this Form 10-Q are made only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 1

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
2 | Shake Shack Inc. Image3.jpg Form 10-Q


SHAKE SHACK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)
March 27
2024
December 27
2023
ASSETS
Current assets:
Cash and cash equivalents$260,203 $224,653 
Marketable securities24,570 68,561 
Accounts receivable, net14,458 16,847 
Inventories5,073 5,404 
Prepaid expenses and other current assets21,885 18,967 
Total current assets326,189 334,432 
Property and equipment, net of accumulated depreciation of $401,132 and $376,760, respectively
537,621 530,995 
Operating lease assets410,254 398,296 
Deferred income taxes, net329,956 326,208 
Other assets14,812 15,926 
TOTAL ASSETS$1,618,832 $1,605,857 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$15,163 $22,273 
Accrued expenses57,366 54,742 
Accrued wages and related liabilities19,249 20,945 
Operating lease liabilities, current50,780 49,004 
Other current liabilities18,525 17,103 
Total current liabilities161,083 164,067 
Long-term debt245,898 245,636 
Long-term operating lease liabilities476,704 464,533 
Liabilities under tax receivable agreement, net of current portion236,728 235,613 
Other long-term liabilities26,126 26,638 
Total liabilities1,146,539 1,136,487 
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of March 27, 2024 and December 27, 2023.  
Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,635,382 and
39,474,315 shares issued and outstanding as of March 27, 2024 and December 27, 2023, respectively.
40 39 
Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,801,013 and
2,834,513 shares issued and outstanding as of March 27, 2024 and December 27, 2023, respectively.
3 3 
Additional paid-in capital427,530 426,601 
Retained earnings18,817 16,777 
Accumulated other comprehensive loss(4)(3)
Total stockholders' equity attributable to Shake Shack Inc.446,386 443,417 
Non-controlling interests25,907 25,953 
Total equity472,293 469,370 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,618,832 $1,605,857 
See accompanying Notes to Condensed Consolidated Financial Statements.
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 3

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in thousands, except per share amounts)
Thirteen Weeks Ended
March 27
2024
March 29
2023
Shack sales$280,552 $244,254 
Licensing revenue9,952 9,024 
TOTAL REVENUE290,504 253,278 
Shack-level operating expenses:
Food and paper costs80,253 71,772 
Labor and related expenses81,509 74,264 
Other operating expenses41,856 34,936 
Occupancy and related expenses22,188 18,583 
General and administrative expenses35,944 31,311 
Depreciation and amortization expense25,441 21,322 
Pre-opening costs2,753 3,557 
Impairment and loss on disposal of assets526 722 
TOTAL EXPENSES290,470 256,467 
INCOME (LOSS) FROM OPERATIONS34 (3,189)
Other income, net3,206 2,837 
Interest expense(508)(403)
INCOME (LOSS) BEFORE INCOME TAXES2,732 (755)
Income tax expense518 867 
NET INCOME (LOSS)2,214 (1,622)
Less: Net income (loss) attributable to non-controlling interests174 (88)
NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.$2,040 $(1,534)
Earnings (Loss) per share of Class A common stock:
Basic$0.05 $(0.04)
Diluted$0.05 $(0.04)
Weighted-average shares of Class A common stock outstanding:
Basic39,515 39,332 
Diluted41,259 39,332 
See accompanying Notes to Condensed Consolidated Financial Statements.



4 | Shake Shack Inc. Image3.jpg Form 10-Q

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands)
Thirteen Weeks Ended
March 27
2024
March 29
2023
Net income (loss)$2,214 $(1,622)
Other comprehensive loss, net of tax(1):
Change in foreign currency translation adjustment(1)(4)
OTHER COMPREHENSIVE LOSS(1)(4)
COMPREHENSIVE INCOME (LOSS)2,213 (1,626)
Less: Comprehensive income (loss) attributable to non-controlling interests174 (88)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.$2,039 $(1,538)
(1)Net of tax expense of $0 for the thirteen weeks ended March 27, 2024 and March 29, 2023.
See accompanying Notes to Condensed Consolidated Financial Statements.
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 5

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(in thousands, except share amounts)
For the Thirteen Weeks Ended March 27, 2024 and March 29, 2023
Class A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Retained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossNon-
Controlling
Interest
Total
Equity
SharesAmountSharesAmount
BALANCE, DECEMBER 27, 202339,474,315 $39 2,834,513 $3 $426,601 $16,777 $(3)$25,953 $469,370 
Net income— — — — — 2,040 — 174 2,214 
Other comprehensive income (loss):
Net change in foreign currency translation adjustment— — — — — — (1)— (1)
Equity-based compensation— — — — 3,718 — — — 3,718 
Activity under stock compensation plans127,567 1 — — (5,577)— — 211 (5,365)
Redemption of LLC Interests33,500 — (33,500)— 286 — — (286) 
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis— — — — 2,502 — — — 2,502 
Distributions paid to non-controlling interest holders— — — — — — — (145)(145)
BALANCE, MARCH 27, 202439,635,382 $40 2,801,013 $3 $427,530 $18,817 $(4)$25,907 $472,293 
BALANCE, DECEMBER 28, 202239,284,998 $39 2,869,513 $3 $415,649 $(3,487)$ $24,632 $436,836 
Net loss— — — — — (1,534)— (88)(1,622)
Other comprehensive income (loss):
Net change in foreign currency translation adjustment— — — — — — (4)— (4)
Equity-based compensation— — — — 3,864 — — — 3,864 
Activity under stock compensation plans94,907 — — — (2,699)— — 186 (2,513)
Redemption of LLC Interests25,000 — (25,000)— 194 — — (194) 
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis— — — — 481 — — — 481 
Distributions paid to non-controlling interest holders— — — — — — — (49)(49)
BALANCE, MARCH 29, 202339,404,905 $39 2,844,513 $3 $417,489 $(5,021)$(4)$24,487 $436,993 

6 | Shake Shack Inc. Image3.jpg Form 10-Q

SHAKE SHACK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Thirteen Weeks Ended
March 27
2024
March 29
2023
OPERATING ACTIVITIES
Net income (loss) (including amounts attributable to non-controlling interests)$2,214 $(1,622)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense25,441 21,322 
Amortization of debt issuance costs262 262 
Amortization of cloud computing asset518 439 
Non-cash operating lease cost18,490 16,075 
Equity-based compensation3,642 3,802 
Deferred income taxes(131)1,917 
Non-cash interest
(164)58 
Gain on sale of equity securities (81)
Net amortization of discount on held-to-maturity securities(370) 
Impairment and loss on disposal of assets526 722 
Changes in operating assets and liabilities:
Accounts receivable2,389 3,354 
Inventories331 (210)
Prepaid expenses and other current assets(2,757)(1,580)
Other assets(650)(1,218)
Accounts payable(3,760)(5,799)
Accrued expenses2,027 (2,018)
Accrued wages and related liabilities(1,696)1,068 
Other current liabilities709 (2,389)
Operating lease liabilities(17,213)(16,830)
Other long-term liabilities857 2,548 
NET CASH PROVIDED BY OPERATING ACTIVITIES30,665 19,820 
INVESTING ACTIVITIES
Purchases of property and equipment(33,054)(34,326)
Maturities of held-to-maturity marketable securities44,361  
Purchases of equity securities (690)
Sales of equity securities 81,478 
NET CASH PROVIDED BY INVESTING ACTIVITIES11,307 46,462 
FINANCING ACTIVITIES
Payments on principal of finance leases(910)(807)
Distributions paid to non-controlling interest holders(145)(49)
Net proceeds from stock option exercises
474 113 
Employee withholding taxes related to net settled equity awards(5,840)(2,626)
NET CASH USED IN FINANCING ACTIVITIES(6,421)(3,369)
Effect of exchange rate changes on cash and cash equivalents(1)(4)
INCREASE IN CASH AND CASH EQUIVALENTS35,550 62,909 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD224,653 230,521 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$260,203 $293,430 
See accompanying Notes to Condensed Consolidated Financial Statements.
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 7

SHAKE SHACK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
8 | Shake Shack Inc. Image3.jpg Form 10-Q

NOTE 1: NATURE OF OPERATIONS
Shake Shack Inc. 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"). Shake Shack Inc. is the sole managing member of SSE Holdings and, as sole managing member, the Company operates and controls all of the business and affairs of SSE Holdings. As a result, the Company consolidates the financial results of SSE Holdings and reports a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. As of March 27, 2024 the Company owned 93.4% 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.
The Company operates and licenses Shake Shack restaurants ("Shacks"), which serve burgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine and more. As of March 27, 2024, there were 525 Shacks in operation system-wide, of which 299 were Company-operated Shacks and 226 were licensed Shacks.
NOTE 2: 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 its Annual Report on Form 10-K for the fiscal year ended December 27, 2023 ("2023 Form 10-K"). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These interim Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes thereto included in its 2023 Form 10-K. In the Company's opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of the 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.
SSE Holdings is considered a variable interest entity. Shake Shack Inc. is the primary beneficiary as the Company has the majority economic interest in SSE Holdings and, as the sole managing member, has 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, the Company consolidates SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of the Company's consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of March 27, 2024 and December 27, 2023, the net assets of SSE Holdings were $394,523 and $388,250, respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreement.
Fiscal Year
The Company operates on a 52/53 week fiscal year ending on the last Wednesday of December. Fiscal 2024 contains 52 weeks and ends on December 25, 2024. Fiscal 2023 contained 52 weeks and ended on December 27, 2023. 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 management 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.
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 9

Recently Issued Accounting Pronouncements
The Company reviewed all recently issued accounting pronouncements and concluded that they were not applicable or not expected to have a significant impact on its Condensed Consolidated Financial Statements.
NOTE 3: REVENUE
Revenue Recognition
Revenue primarily 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 the Company expects to be entitled to in exchange for those goods or services.
Shack Sales
Revenue from Shack sales is recognized when payment is tendered at the point of sale, net of discounts as the performance obligation has been satisfied at that time. Sales tax collected from guests is excluded from Shack sales and the obligation is included as sales tax payable until the taxes are remitted to the appropriate taxing authorities.
Delivery services are fulfilled by third-party delivery partners whether ordered through the Shack app, website ("Company-owned platforms") or through third-party delivery platforms. Revenue from orders through Company-owned platforms includes delivery fees and is recognized when the delivery partner transfers the order to the guest as the Company controls the delivery. For these sales, the Company receives payment directly from the guest at the time of sale. Revenue from orders through third-party delivery platforms is recognized when the order is transferred to the third-party delivery partner and excludes delivery fees collected by the delivery partner as the Company does not control the delivery. The Company receives payment from the delivery partner subsequent to the transfer of the order and the payment terms are short-term in nature. For all delivery sales, the Company is considered the principal and recognizes revenue on a gross basis.
The Company sells gift cards which do not have expiration dates. Revenue from gift cards is recognized when gift cards are redeemed by the customer or, in the event a gift card is not expected to be redeemed, in proportion to actual redemptions of gift cards ("gift card breakage"). The gift card breakage rate is determined from historical gift card redemption patterns. Gift card breakage income for the thirteen weeks ended March 27, 2024 and March 29, 2023 was $134 and $106, respectively. Gift card breakage income is included in Shack sales in the Condensed Consolidated Statements of Income (Loss).
Licensing Revenue
Licensing revenue includes 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 good or service transferred to the licensee 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 license and considered one performance obligation per Shack.
The Company determines the transaction price for each contract, which is comprised of the initial territory fee and an estimate of the total Shack opening fees the Company expects to be entitled to. The calculation of total Shack opening fees requires judgment, as it is based on an estimated number of Shacks the Company expects the licensee to open. The transaction price is then allocated equally to each Shack expected to open. The performance obligation is satisfied over time, starting when a Shack opens through the end of the license term for the related Shack, therefore 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 license agreement and payment for the Shack opening fees is received either in advance of or upon opening the related Shack. These payments are initially deferred and
10 | Shake Shack Inc. Image3.jpg Form 10-Q

recognized in revenue as the performance obligations are satisfied. Revenue from sales-based royalties is recognized as the related sales occur.
Revenue disaggregated by type was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Shack sales$280,552 $244,254 
Licensing revenue:
Sales-based royalties9,633 8,778 
Initial territory and opening fees319 246 
Total revenue$290,504 $253,278 
The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of March 27, 2024 was $23,370. The Company expects 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
Contract liabilities and receivables from contracts with customers were as follows:
March 27
2024
December 27
2023
Shack sales receivables$9,012 $9,884 
Licensing receivables, net of allowance for doubtful accounts3,880 4,610 
Gift card liability2,325 2,603 
Deferred revenue, current1,261 1,192 
Deferred revenue, long-term16,919 17,157 
Revenue recognized that was included in the respective liability balances at the beginning of the period was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Gift card liability
$419 $333 
Deferred revenue317 244 
NOTE 4: FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying values of the Company's Cash and cash equivalents, Accounts receivable, net, Accounts payable and Accrued expenses approximate fair value due to the short-term nature of these financial instruments.
The Company's marketable securities were as follows:
March 27
2024
December 27
2023
Held-to-maturity securities24,570 68,561 
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 11

The Company classified its held-to-maturity securities as Level 1 measurements within the fair value hierarchy. Refer to Note 6, Debt, for additional information relating to the fair value of the Company's outstanding debt instruments.
The Company's held-to-maturity securities were as follows:
March 27, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
U.S. Treasuries$24,570 $505 $ $25,075 
As of March 27, 2024, the contractual maturities of held-to-maturity securities were less than 12 months. Any expected credit losses would not be material to the Condensed Consolidated Statements of Income (Loss).
A summary of other income (expense) from marketable securities was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Income from marketable securities
$535 $495 
Realized gain on sale of equity securities 81 
Total$535 $576 
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Assets and liabilities measured at fair value on a non-recurring basis include long-lived assets, operating lease right-of-use assets and indefinite-lived intangible assets. The Company performs its impairment analysis at least annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairment charges recognized during the thirteen weeks ended March 27, 2024 and March 29, 2023.
NOTE 5: SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of Prepaid expenses and other current assets were as follows:
March 27
2024
December 27
2023
Prepaid expenses
$8,263 $5,641 
Tenant allowance receivables
12,297 12,136 
Other
1,325 1,190 
Prepaid expenses and other current assets
$21,885 $18,967 
The components of Other current liabilities were as follows:
March 27
2024
December 27
2023
Sales tax payable$6,453 $6,076 
Current portion of financing equipment lease liabilities3,532 3,435 
Gift card liability2,325 2,603 
Other6,215 4,989 
Other current liabilities$18,525 $17,103 
12 | Shake Shack Inc. Image3.jpg Form 10-Q

NOTE 6: DEBT
Convertible Notes
The Company's $250,000 aggregate principal amount of 0% Convertible Senior Notes due 2028 (“Convertible Notes”) will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances. Upon conversion, the Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election.
The Convertible Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 1, 2027, only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on June 30, 2021 (and only during such fiscal quarter), if the last reported sale price of the Company's Class A common stock, par value $0.001 per share, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price for the Convertible Notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per one thousand dollar principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Class A common stock and the conversion rate for the Convertible Notes on each such trading day; (3) if the Company calls such Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Convertible Notes called (or deemed called) for redemption; and (4) upon the occurrence of specified corporate events as set forth in the Indenture. On or after December 1, 2027, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Notes may convert all or any portion of their Convertible Notes at any time, regardless of the foregoing circumstances.
The Convertible Notes had an initial conversion rate of 5.8679 shares of Class A common stock per one thousand dollar principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $170.42 per share of Class A common stock. The fair value of the Convertible Notes was approximately $226,795 and $205,000, respectively, as of March 27, 2024 and December 27, 2023, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as a Level 2 measurement within the fair value hierarchy.
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Amortization expense on Convertible NotesInterest expense$262 $262 
March 27
2024
December 27
2023
Convertible Notes$250,000 $250,000 
Discount and debt issuance costs, net of amortization(4,102)(4,364)
Long-term debt$245,898 $245,636 
Revolving Credit Facility
The Company maintains a revolving credit facility agreement ("Revolving Credit Facility") which permits borrowings up to $50,000 with the ability to increase available borrowings up to an additional $100,000, subject to satisfaction of certain conditions. The Revolving Credit Facility has a maturity date of March 5, 2026.
In June 2023, the Company entered into the fourth amendment to the Revolving Credit Facility ("Fourth Amendment"), which, among other things, modified the benchmark interest rate to either: (i) the base rate plus applicable margin ranging from 0.0% to 1.5% or (ii) the Secured Overnight Financing Rate (“SOFR”) plus applicable margin ranging from 1.0% to 2.5%, in each case
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 13

dependent upon the net lease adjusted leverage ratio. As of March 27, 2024 and December 27, 2023, no amounts were outstanding under the Revolving Credit Facility.
The obligations under the Revolving Credit Facility are secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors. The obligations under the Revolving Credit Facility are guaranteed by each of SSE Holdings' direct and indirect subsidiaries, with certain exceptions. The Revolving Credit Facility requires the Company to comply with maximum net lease adjusted leverage and minimum fixed charge coverage ratios, as well as other customary affirmative and negative covenants. As of March 27, 2024, the Company was in compliance with all covenants.
The Revolving Credit Facility also permits the issuance of letters of credit upon our request of up to $15,000. As of March 27, 2024 and December 27, 2023, the Company had outstanding letters of credit of $3,310 and $3,147, respectively, in connection with the Revolving Credit Facility.
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Interest expense on Revolving Credit FacilityInterest expense$17 $24 
ClassificationMarch 27
2024
December 27
2023
Unamortized deferred financing costs on Revolving Credit FacilityOther assets$38 $42 
NOTE 7: LEASES
Nature of Leases
Shake Shack currently leases all of its Company-operated Shacks, the home office and certain equipment under various non-cancelable lease agreements that expire on various dates through 2045. The Company evaluates 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. The Company evaluates whether it controls the use of the asset, which is determined by assessing whether substantially all economic benefit from the use of the asset is obtained, and whether the Company has the right to direct the use of the asset. If these criteria are met, the Company has identified a lease within the contract, and therefore a right of use asset and lease liability are recorded on the Condensed Consolidated Balance Sheet. Upon possession of a leased asset, the Company determines whether the lease is an operating or finance lease. All of the Company's real estate leases are classified as operating leases and most equipment leases are classified as finance leases.
Generally, 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 the Company would exercise the renewal options. Real estate leases typically contain fixed minimum rent payments and/or contingent rent payments which are 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, fixed lease payments are recognized as operating lease costs on a straight-line basis over the lease term within the Condensed Consolidated Statements of Income (Loss) in the following line items. Lease expense incurred before a Shack opens is recorded in Pre-opening costs. Once a Company-operated Shack opens, the straight-line lease expense and contingent rent, if applicable, are recorded in Occupancy and related expenses. Many of these leases also require the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in Occupancy and related expenses. Finance leases are recognized in depreciation expense on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability.
14 | Shake Shack Inc. Image3.jpg Form 10-Q

For both operating and finance leases that contain lease and non-lease components, the components are combined and accounted for as a single lease component. Variable lease costs for both operating and finance leases, if any, are recognized as incurred. Leases with a term of 12 months or less are deemed short-term and are not recognized on the Condensed Consolidated Balance Sheets. Fixed lease payments for short-term leases are recognized on a straight-line basis over the lease term.
The Company calculates operating lease assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. The Company uses its incremental borrowing rate ("IBR") in determining the present value of future lease payments as there are no explicit rates provided in the leases. The IBR used to measure the lease liability is 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 IBR is the Company's credit rating and is subject to judgment. The credit rating used to develop the IBR is determined by utilizing the credit ratings of other public companies with similar financial information as SSE Holdings.

The Company expends cash for leasehold improvements to build out and equip leased properties. Generally, a portion of the leasehold improvements and building costs are reimbursed by the landlords through landlord incentives pursuant to agreed-upon terms in the lease agreements. Landlord incentives usually take the form of cash, full or partial credits against future minimum or contingent rents otherwise payable by the Company, or a combination thereof. In most cases, landlord incentives are received after the Company takes possession of the property and as milestones are met during the construction of the property. The Company includes these amounts in the measurement of the initial operating lease liability, and lease asset.
A summary of operating and finance right-of-use assets and lease liabilities were as follows:
ClassificationMarch 27
2024
December 27
2023
Operating leasesOperating lease assets$410,254 $398,296 
Finance leasesProperty and equipment, net11,637 11,801 
Total right-of-use assets$421,891 $410,097 
Operating leases:
Operating lease liabilities, current$50,780 $49,004 
Long-term operating lease liabilities476,704 464,533 
Finance leases:
Other current liabilities3,532 3,435 
Other long-term liabilities8,519 8,721 
Total lease liabilities$539,535 $525,693 
The components of lease expense were as follows:
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Operating lease costOccupancy and related expenses
Pre-opening costs
General and administrative expenses
$18,490 $16,075 
Finance lease cost:
Amortization of right-of-use assetsDepreciation and amortization expense968 737 
Interest on lease liabilitiesInterest expense180 70 
Variable lease costOccupancy and related expenses
Pre-opening costs
General and administrative expenses
5,206 3,770 
Short-term lease costOccupancy and related expenses216 240 
Total lease cost$25,060 $20,892 
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 15


As of March 27, 2024, future minimum lease payments for operating and finance leases consisted of the following:
Operating LeasesFinance Leases
2024(1)
$46,721 $3,183 
202586,077 3,696 
202682,830 2,926 
202778,181 2,331 
202873,834 1,251 
Thereafter316,485 139 
Total minimum payments684,128 13,526 
Less: imputed interest168,941 1,475 
Total lease liabilities$515,187 $12,051 
(1)Operating leases are net of certain tenant allowance receivables that were reclassified to Other current assets as of March 27, 2024.
As of March 27, 2024, the Company had additional operating lease commitments of $148,440 for non-cancelable leases without a possession date, which commence in 2024 or later. These lease commitments are materially consistent with the leases that have been executed thus far.
A summary of lease terms and discount rates for operating and finance leases were as follows:
March 27
2024
December 27
2023
Weighted average remaining lease term (years):
Operating leases8.98.9
Finance leases4.54.7
Weighted average discount rate:
Operating leases6.2 %6.2 %
Finance leases5.6 %5.6 %
Supplemental cash flow information related to leases was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$19,775 $16,830 
Operating cash flows from finance leases180 70 
Financing cash flows from finance leases910 807 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases23,319 21,414 
Finance leases804 701 
NOTE 8: NON-CONTROLLING INTERESTS
Shake Shack is the primary beneficiary and sole managing member of SSE Holdings and, as a result, consolidates the financial results of SSE Holdings. The Company reports 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
16 | Shake Shack Inc. Image3.jpg Form 10-Q

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, the Company will receive a corresponding number of LLC Interests, increasing the total ownership interest in SSE Holdings. Changes in the ownership interest in SSE Holdings while the Company retains its 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:
March 27, 2024December 27, 2023
LLC InterestsOwnership %LLC InterestsOwnership %
Number of LLC Interests held by Shake Shack Inc.39,635,382 93.4 %39,474,315 93.3 %
Number of LLC Interests held by non-controlling interest holders2,801,013 6.6 %2,834,513 6.7 %
Total LLC Interests outstanding42,436,395 100.0 %42,308,828 100.0 %
The weighted average ownership percentages for the applicable reporting periods are used to attribute Net income (loss) and Other comprehensive income (loss) to the non-controlling interest holders and were as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Non-controlling interest holders' weighted average ownership percentages6.7 %6.8 %
The following table summarizes the effects of changes in ownership of SSE Holdings on the Company's equity:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Net income (loss) attributable to Shake Shack Inc.$2,040 $(1,534)
Other comprehensive loss:
Unrealized holding loss on foreign currency translation adjustment(1)(4)
Transfers (to) from non-controlling interests:
Increase in additional paid-in capital as a result of the redemption of LLC Interests286 194 
Decrease in additional paid-in capital as a result of activity under stock compensation plan(5,577)(2,699)
Total effect of changes in ownership interest on loss attributable to Shake Shack Inc.$(3,252)$(4,043)
The following table summarizes the LLC Interests activity:
Thirteen Weeks Ended
March 27
2024
March 29
2023
LLC Interests activity under the Company's stock compensation plan
Number of LLC Interests received by Shake Shack Inc.127,567 94,907 
Redemption and acquisition of LLC Interests
Number of LLC Interests redeemed by non-controlling interest holders33,500 25,000 
Number of LLC Interests received by Shake Shack Inc.33,500 25,000 
Issuance of Class A common stock
Shares of Class A common stock issued in connection with redemptions of LLC Interests33,500 25,000 
Cancellation of Class B common stock
Shares of Class B common stock surrendered and canceled33,500 25,000 
Shake Shack Inc. shak-img_burgersmalla09.jpg Form 10-Q | 17

NOTE 9: EQUITY-BASED COMPENSATION
A summary of equity-based compensation expense by award type was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Performance stock units$783 $1,310 
Restricted stock units2,859 2,492 
Equity-based compensation expense$3,642 $3,802 
Total income tax benefit recognized related to equity-based compensation$104 $102 
Equity-based compensation expense recognized was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
General and administrative expenses$3,316 $3,529 
Labor and related expenses326 273 
Equity-based compensation expense$3,642 $3,802 
NOTE 10: INCOME TAXES
Shake Shack is the sole managing member of SSE Holdings and, as a result, consolidates 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 the Company, on a pro rata basis. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its 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. The Company is also subject to withholding taxes in foreign jurisdictions.
Effective Income Tax Rates
The following table presents the Company’s effective income tax rates:

Thirteen Weeks Ended
March 27
2024
March 29
2023
Effective income tax rates19.0 %(114.8)%
The increase in the effective income tax rate for the thirteen weeks ended March 27, 2024 was primarily driven by the change in pre-tax income for the period compared to a pre-tax loss for the same period last year and the impact of discrete items which had a disproportionate effect on the minimal pre-tax loss in the prior year. Additionally, an increase in the Company's ownership interest in SSE Holdings increases its share of the taxable income (loss) of SSE Holdings.
18 | Shake Shack Inc. Image3.jpg Form 10-Q

The Company's weighted average ownership interest in SSE Holdings was as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Shake Shack's weighted average ownership percentages
93.3 %93.2 %
Deferred Tax Assets and Liabilities
The Company acquires LLC Interests in connection with the redemption of LLC Interests and activity relating to its stock compensation plan and recognizes deferred tax assets associated with the basis difference in its investment in SSE Holdings upon acquisition of these LLC Interests.
The following table summarizes the LLC Interests acquired by the Company:
Thirteen Weeks Ended
March 27
2024
March 29
2023
LLC Interests activity under the Company's stock compensation plan127,567 94,907 
LLC Interests activity from redemptions of LLC Interests33,500 25,000 
Total LLC Interests acquired by the Company
161,067 119,907 
Deferred tax assets related to the basis difference in the Company's investment in SSE Holdings were as follows:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Deferred tax assets recognized upon acquisition of LLC Interests
$3,314 $824 
March 27
2024
December 27
2023
Total deferred tax assets related to the acquisition of LLC Interests
$95,228 $90,419 
The Company also recognizes 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. Refer to "Tax Receivable Agreement," herein for additional information.
Thirteen Weeks Ended
March 27
2024
March 29
2023
Deferred tax assets recognized under the Tax Receivable Agreement
$303 $129 
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes 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 March 27, 2024, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets (except for those deferred tax assets relating to certain state tax credits and net operating losses) are more likely than not to be realized. As such, no additional valuation allowance was recognized.
Tax Receivable Agreement
On February 4, 2015, the Company 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 the Company of 85% of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of (i) increases in the Company's share of the tax basis in the net assets of SSE Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis
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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"). The Company expects to benefit from the remaining 15% of any tax benefits that may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or the Company. 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.
Pursuant to the Company's election under Section 754 of the Internal Revenue Code (the "Code"), the Company expects to obtain an increase in its 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. The Company plans to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interest occurs. The Company intends 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 would otherwise be paid 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.
There were no transactions subject to the Tax Receivable Agreement for which the Company did not recognize the related liability, as the Company concluded that it would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred during the thirteen weeks ended March 27, 2024 and March 29, 2023.
A summary of obligations under the Tax Receivable Agreement were as follows:

Thirteen Weeks Ended
March 27
2024
March 29
2023
Additional liabilities recognized under the Tax Receivable Agreement
$1,115 $472 
March 27
2024
December 27
2023
Total obligations under the Tax Receivable Agreement
$236,728 $235,613 
During the thirteen weeks ended March 27, 2024 and March 29, 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement.
NOTE 11: EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share of Class A common stock is computed by dividing Net income (loss) attributable to Shake Shack Inc. by the weighted average number of shares of Class A common stock outstanding during the period. Diluted earnings (loss) per share of Class A common stock is computed by dividing Net income (loss) 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.
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The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) per share of Class A common stock (in thousands, except per share amounts):
Thirteen Weeks Ended
March 27
2024
March 29
2023
Numerator:
Net income (loss) attributable to Shake Shack Inc.—basic$2,040 $(1,534)
Net income (loss) attributable to Shake Shack Inc.—diluted$2,040 $(1,534)
Denominator:
Weighted average shares of Class A common stock outstanding—basic39,515 39,332 
Effect of dilutive securities:
Stock options70  
Performance stock units15  
Restricted stock units192  
Convertible Notes1,467  
Weighted average shares of Class A common stock outstanding—diluted41,259 39,332 
Earnings (loss) per share of Class A common stock—basic$0.05 $(0.04)
Earnings (loss) per share of Class A common stock—diluted$0.05 $(0.04)
The effect of potential share settlement of the Convertible Notes outstanding for the period is included as potentially dilutive shares of Class A common stock under application of the if-converted method in the computation of diluted earnings (loss) per share, except when the effect would be anti-dilutive. Refer to Note 6, Debt, for additional information.
Shares of 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 (loss) per share of Class B common stock under the two-class method has not been presented. However, shares of Class B common stock outstanding for the period are considered potentially dilutive shares of Class A common stock under application of the if-converted method and are included in the computation of diluted earnings (loss) per share, except when the effect would be anti-dilutive.
The following table presents potentially dilutive securities excluded from the computations of diluted earnings (loss) per share of Class A common stock:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Stock options 128,656 (2)
Performance stock units123,969 (1)134,659 (2)
Restricted stock units 576,227 (2)
Shares of Class B common stock2,801,013 (2)2,844,513 (2)
Convertible notes 1,466,975 (2)
(1)Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings (loss) 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)Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings (loss) per share of Class A common stock because the effect would have been anti-dilutive.

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NOTE 12: SUPPLEMENTAL CASH FLOW INFORMATION
The following table sets forth supplemental cash flow information:
Thirteen Weeks Ended
March 27
2024
March 29
2023
Cash paid for:
Income taxes, net of refunds$1,214 $782 
Interest, net of amounts capitalized350 83 
Non-cash investing activities:
Accrued purchases of property and equipment22,415 25,752 
Capitalized equity-based compensation49 43 
Non-cash financing activities:
Establishment of liabilities under Tax Receivable Agreement
1,115 472 
NOTE 13: COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company is obligated under various operating leases for Shacks and the home office space, expiring in various years through 2045. Under certain of these leases, the Company is liable for contingent rent based on a percentage of sales in excess of specified thresholds and typically responsible for its proportionate share of real estate taxes, common area maintenance costs and other occupancy costs. Refer to Note 7, Leases, for additional information.
Certain leases require the Company to obtain letters of credit. As of March 27, 2024, the Company held three letters of credit, one for $402, which expires in August 2024 and renews automatically for one-year periods through January 2034, one for $163, which expires in December 2024 and renews automatically for one-year periods through December 2029 and one for $130 which expires in February 2026.
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. The Company also enters into long-term, exclusive contracts with certain vendors to supply food, beverages and paper goods, obligating the Company to purchase specified quantities.
Legal Contingencies
The Company is subject to various legal proceedings, claims and liabilities, involving employees and guests alike, which arise in the ordinary course of business and are generally covered by insurance. As of March 27, 2024, the amount of the ultimate liability with respect to these matters was not material.
Liabilities under Tax Receivable Agreement
The Company is a party to the Tax Receivable Agreement under which it is contractually committed to pay certain of the members of SSE Holdings 85% of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of certain transactions.
The Company is 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
22 | Shake Shack Inc. Image3.jpg Form 10-Q

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 the Company does not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then it would not be required to make the related TRA Payments.
The Company recognizes liabilities relating to the obligations under the Tax Receivable Agreement if concluding that it is probable that it would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits. Refer to Note 10, Income Taxes, for additional information relating to the Tax Receivable Agreement.
NOTE 14: RELATED PARTY TRANSACTIONS
Union Square Hospitality Group
The Chairman of the Board of Directors serves as the Executive Chairman of Union Square Hospitality Group, LLC. As a result, Union Square Hospitality Group, LLC and its subsidiary, set forth below, are considered related parties.
Hudson Yards Sports and Entertainment
In fiscal 2011, Shake Shack 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 the Company a license fee based on a percentage of net food sales, as defined in the MLA. HYC also pays a percentage of profits on sales of branded beverages, as defined in the MLA.
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Amounts received from HYCLicensing revenue$98 $146 
ClassificationMarch 27
2024
December 27
2023
Amounts due from HYCAccounts receivable, net$61 $57 
Madison Square Park Conservancy
The Chairman of the Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which Shake Shack has a license agreement and pays license fees to operate the Madison Square Park Shack. No amounts were due to MSP Conservancy as of March 27, 2024 and December 27, 2023.
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Amounts paid to MSP ConservancyOccupancy and related expenses$229 $224 
Olo, Inc.
The Chairman of the Board of Directors serves as a director of Olo, Inc., a platform the Company uses in connection with its mobile ordering application.
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Amounts paid to Olo, Inc.Other operating expenses$181 $124 
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ClassificationMarch 27
2024
December 27
2023
Amounts due to Olo, Inc.Accounts payable
Accrued expenses
$178 $116 
Block, Inc.
The Company's Chief Executive Officer is a member of the board of directors of Block, Inc. (formerly known as "Square, Inc."). The Company currently uses certain point-of-sale applications, payment processing services, hardware and other enterprise platform services in connection with its kiosk technology, sales for certain off-site events and the processing of a limited amount of sales at certain locations.

Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Amounts paid to Block, Inc.Other operating expenses$2,705 $1,571 
ClassificationMarch 27
2024
December 27
2023
Amounts due to Block, Inc.Accounts payable
Accrued expenses
$14 $59 
Tax Receivable Agreement
The Company entered into a Tax Receivable Agreement that provides for the payment by the Company of 85% of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of certain transactions. Refer to Note 10, Income Taxes, for additional information. No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the thirteen weeks ended March 27, 2024 and March 29, 2023.
ClassificationMarch 27
2024
December 27
2023
Amounts due under the Tax Receivable AgreementOther current liabilities
Liabilities under Tax Receivable Agreement, net of current portion
$236,728 $235,613 
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 March 27, 2024 and December 27, 2023, respectively.
Thirteen Weeks Ended
ClassificationMarch 27
2024
March 29
2023
Amounts paid to non-controlling interest holdersNon-controlling interests$145 $49 

24 | Shake Shack Inc. Image3.jpg Form 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact are forward-looking statements including, but not limited to, statements about the Company's growth, strategic plan, and liquidity. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "likely," "outlook," "potential," "project," "projection," "plan," "seek," "may," "could," "would," "will," "should," "can," "can have," the negatives thereof and other similar expressions.

All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this Form 10-Q in the context of the risks and uncertainties disclosed in our Annual Report on Form 10-K for the fiscal year ended December 27, 2023 ("2023 Form 10-K").

The forward-looking statements included in this Form 10-Q are made only as of the date hereof. We undertake no obligation to publicly update any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

The following discussion should be read in conjunction with our 2023 Form 10-K and the Condensed Consolidated Financial Statements and notes thereto included in Part I, Item 1 of this Form 10-Q. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years and the associated quarters, months and periods of those fiscal years.
OVERVIEW
Shake Shack serves modern, fun and elevated versions of American classics using only premium ingredients. We are known for our made-to-order 100% Angus beef burgers, crispy chicken, hand-spun milkshakes, house-made lemonades, beer, wine, and more. With our fine-dining roots and a commitment to crafting uplifting experiences, Shake Shack has become a cult-brand and created a new category, fine-casual.

Our mission is to Stand For Something Good in all aspects of our business, including the talented team we hire and train, the premium ingredients making up our menu, our community engagement and the design of our Shacks. Stand For Something Good is a call to action for all of our stakeholders — our team, guests, communities, suppliers and investors — and we actively invite them all to share in this philosophy with us. This commitment drives our integration into the local communities in which we operate and fosters a deep and lasting connection with our guests.

The following definitions apply to these terms as used herein:

"Average weekly sales" is calculated by dividing total Shack sales by the number of operating weeks for all Shacks in operation during the period. For Shacks that are not open for the entire period, fractional adjustments are made to the number of operating weeks open such that it corresponds to the period of associated sales.
"Same-Shack sales" represents Shack sales for the comparable Shack base, which is defined as the number of Company-operated Shacks open for 24 full fiscal months or longer. For consecutive days that Shacks were temporarily closed, the comparative period was also adjusted.
“System-wide sales” is an operating measure and consists of sales from Company-operated Shacks and licensed Shacks. The Company does not recognize the sales from licensed Shacks as revenue. Of these amounts, revenue is limited to licensing
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revenue based on a percentage of sales from licensed Shacks, as well as certain up-front fees, such as territory fees and opening fees.
Key Operating Metrics
Same-Shack sales for the thirteen weeks ended March 27, 2024 increased 1.6% compared to the same period last year, driven by a 3.7% increase in price mix partially offset by a 2.1% decrease in guest traffic. For the purpose of calculating same-Shack sales for the thirteen weeks ended March 27, 2024, Shack sales for 224 Shacks were included in the comparable Shack base.
Average weekly sales were $73,000 for the thirteen weeks ended March 27, 2024, which was flat compared to the same period last year, primarily driven by higher menu prices, partially offset by a decline in guest traffic.
System-wide sales for the thirteen weeks ended March 27, 2024 increased 12.3% to $443.3 million compared to the same period last year.
Digital sales for the thirteen weeks ended March 27, 2024 increased 15.3% to $103.2 million compared to the same period last year. Digital sales includes orders placed on the Shake Shack app, website and third-party delivery platforms, which represented 36.8% of Shack sales during the thirteen weeks ended March 27, 2024.
Development Highlights
During the thirteen weeks ended March 27, 2024, we opened four new Company-operated Shacks and four new licensed Shacks. There was one permanent licensed Shack closure in the first quarter of 2024.
The following table presents the Shacks opened during the thirteen weeks ended March 27, 2024:

LocationTypeOpening Date
Nanjing, China — Nanjing IFCLicensed1/3/2024
North Brunswick Township, NJ — North BrunswickCompany-operated1/10/2024
Seoul, Korea — YeouidoLicensed1/12/2024
Vienna, VA — Pike 7Company-operated2/20/2024
Tel Aviv, Israel — DizengoffLicensed2/27/2024
Santa Rosa, CA — Montgomery VillageCompany-operated2/28/2024
Bloomingdale, IL — BloomingdaleCompany-operated3/7/2024
Muharraq, Bahrain — Marassi Galleria MallLicensed3/14/2024
As of March 27, 2024, there were 525 Shacks in operation system-wide, of which 299 were Company-operated Shacks and 226 were licensed Shacks.
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RESULTS OF OPERATIONS
The following table summarizes our results of operations for the thirteen weeks ended March 27, 2024 and March 29, 2023:
Thirteen Weeks Ended
(dollar amounts in thousands)March 27
2024
March 29
2023
Shack sales$280,552 96.6 %$244,254 96.4 %
Licensing revenue9,952 3.4 %9,024 3.6 %
TOTAL REVENUE290,504 100.0 %253,278 100.0 %
Shack-level operating expenses(1):
Food and paper costs80,253 28.6 %71,772 29.4 %
Labor and related expenses81,509 29.1 %74,264 30.4 %
Other operating expenses41,856 14.9 %34,936 14.3 %
Occupancy and related expenses22,188 7.9 %18,583 7.6 %
General and administrative expenses35,944 12.4 %31,311 12.4 %
Depreciation and amortization expense25,441 8.8 %21,322 8.4 %
Pre-opening costs2,753 0.9 %3,557 1.4 %
Impairment and loss on disposal of assets526 0.2 %722 0.3 %
TOTAL EXPENSES290,470 100.0 %256,467 101.3 %
INCOME (LOSS) FROM OPERATIONS34 — %(3,189)(1.3)%
Other income, net3,206 1.1 %2,837 1.1 %
Interest expense(508)(0.2)%(403)(0.2)%
INCOME (LOSS) BEFORE INCOME TAXES2,732 0.9 %(755)(0.3)%
Income tax expense518 0.2 %867 0.3 %
NET INCOME (LOSS)2,214 0.8 %(1,622)(0.6)%
Less: Net income (loss) attributable to non-controlling interests174 0.1 %(88)— %
NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.$2,040 0.7 %$(1,534)