Open the filing on EDGARShake Shack Announces Fourth Quarter and Fiscal Year 2025 Financial Results
Financial Highlights for the Fourth Quarter 2025:
- Total revenue of $400.5 million, up 21.9% versus 2024, including $385.3 million of Shack sales and $15.2 million of Licensing revenue.
- System-wide sales of $618.0 million, up 23.4% versus 2024.
- Same-Shack sales up 2.1% versus 2024.
- Operating income of $18.7 million.
- Restaurant-level profit of $87.4 million, or 22.7% of Shack sales.
- Net income of $13.0 million.
- Adjusted EBITDA of $56.1 million.
- Net income attributable to Shake Shack Inc. of $11.8 million, or earnings of $0.28 per diluted share.
- Adjusted pro forma net income of $16.6 million, or earnings of $0.37 per fully exchanged and diluted share.
- Opened 15 new Company-operated Shacks and 17 new licensed Shacks.
Financial Highlights for the Fiscal Year 2025:
- Total revenue of $1,445.3 million, up 15.4% versus 2024, including $1,391.2 million of Shack sales and $54.1 million of Licensing revenue.
- System-wide sales of $2,228.8 million, up 15.9% versus 2024.
- Same-Shack sales up 2.3% versus 2024.
- Operating income of $62.5 million.
- Restaurant-level profit of $314.5 million, or 22.6% of Shack sales.
- Net income of $49.7 million.
- Adjusted EBITDA of $209.9 million.
- Net income attributable to Shake Shack Inc. of $45.7 million, or earnings of $1.09 per diluted share.
- Adjusted pro forma net income of $58.3 million, or earnings of $1.32 per fully exchanged and diluted share.
- Opened 45 new Company-operated Shacks and 40 new licensed Shacks.
NEW YORK, NY (Business Wire) - February 26, 2026 - Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) has posted its results for the fourth quarter and the fiscal year ended December 31, 2025 in a Shareholder Letter in the Quarterly Results section of the Company's Investor Relations website, which can be found here: Q4 2025 Shareholder Letter.
Shake Shack will host a conference call at 8:00 a.m. ET. Hosting the call will be Robert Lynch, Chief Executive Officer. The conference call can be accessed live over the phone by dialing (877) 407-0792, or for international callers by dialing (201) 689-8263. A replay of the call will be available until March 5, 2026 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13757509.
The live audio webcast of the conference call will be accessible in the Events & Presentations section of the Company's Investor Relations website at investor.shakeshack.com. An archived replay of the webcast will also be available shortly after the live event has concluded.
(1)Restaurant-level profit, Adjusted EBITDA and Adjusted pro forma net income are non-GAAP measures. A reconciliation to the most directly comparable financial measures presented in accordance with GAAP is set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures” below.
About Shake Shack
Shake Shack serves elevated versions of American classics using only the best ingredients. It’s known for its delicious made-to-order Angus beef burgers, crispy chicken, hand-spun milkshakes, house-made lemonades, beer, wine, and more. With its high-quality food at a great value, warm hospitality, and a commitment to crafting uplifting experiences, Shake Shack quickly became a cult-brand with widespread appeal. Shake Shack’s purpose is to Stand For Something Good®, from its premium ingredients and employee development, to its inspiring designs and deep community investment. Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to over 670 locations system-wide, including close to 430 in 35 U.S. States and the District of Columbia, and over 240 international locations across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.
Skip the line with the Shack App, a mobile ordering app that lets you save time by ordering ahead! Guests can select their location, pick their food, choose a pickup time and their meal will be cooked-to-order and timed to arrival. Available on iOS and Android.
Definitions
The following definitions apply to these terms as used in this release:
"Shack sales" is defined as the aggregate sales of food, beverages, gift card breakage income and Shake Shack branded merchandise at Company-operated Shacks and excludes sales from licensed Shacks.
“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 revenue based on a percentage of sales from licensed Shacks, as well as certain up-front fees, such as territory fees, opening fees, and termination fees.
"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.
"Restaurant-level profit," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.
"Restaurant-level profit margin," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses as a percentage of Shack sales.
“EBITDA,” a non-GAAP measure, is defined as Net income before interest expense (net of interest income), Income tax expense, and Depreciation and amortization expense.
“Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, Impairments, loss on disposal of assets, and Shack closures, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations.
"Adjusted pro forma net income," a non-GAAP measure, represents Net income attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring items that the Company does not believe are directly reflected to its core operations and may not be indicative of its recurring business operations.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)
| | December 31 2025 | December 25 2024 |
|---|
| Cash and cash equivalents | $360,123 | $320,714 |
|---|
| Accounts receivable, net | 32,962 | 19,687 |
|---|
| Inventories | 7,182 | 6,014 |
|---|
| Prepaid expenses and other current assets | 30,080 | 21,801 |
|---|
| Total current assets | 430,347 | 368,216 |
|---|
| ASSETS | | |
| Current assets | | |
| Property and equipment, net of accumulated depreciation of $551,004 and $457,186, respectively. | 625,851 | 551,600 |
| Operating lease assets | 507,253 | 424,611 |
| Deferred income taxes, net | 322,385 | 341,586 |
| Other assets | 10,373 | 10,958 |
| TOTAL ASSETS | $1,896,209 | $1,696,971 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | |
| Current liabilities | | |
| Accounts payable | $24,747 | $23,609 |
| Accrued expenses | 103,354 | 63,005 |
| Accrued wages and related liabilities | 25,481 | 25,422 |
| Operating lease liabilities, current | 63,553 | 55,739 |
| Other current liabilities | 27,783 | 19,538 |
| Total current liabilities | 244,918 | 187,313 |
| Long-term debt | 247,731 | 246,683 |
| Long-term operating lease liabilities | 575,138 | 494,499 |
| Liabilities under tax receivable agreement, net of current portion | 244,463 | 247,017 |
| Other long-term liabilities | 30,210 | 27,833 |
| Total liabilities | 1,342,460 | 1,203,345 |
| Commitments and contingencies | | |
| Stockholders' equity: | | |
| Preferred stock, no par value - 10,000,000 shares authorized; none issued and outstanding as of December 31, 2025 and December 25, 2024. | - | - |
| Class A common stock, $0.001 par value - 200,000,000 shares authorized; 40,254,281 and 40,068,068 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. | 40 | 40 |
| Class B common stock, $0.001 par value - 35,000,000 shares authorized; 2,434,789 and 2,455,713 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. | 2 | 2 |
| Additional paid-in capital | 452,577 | 442,993 |
| Retained earnings | 72,709 | 26,984 |
| Accumulated other comprehensive loss | (1) | (1) |
| Total stockholders' equity attributable to Shake Shack Inc. | 525,327 | 470,018 |
| Non-controlling interests | 28,422 | 23,608 |
| Total equity | 553,749 | 493,626 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,896,209 | $1,696,971 |
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share amounts)
| | | Fiscal Quarter Ended | Fiscal Year Ended |
|---|
| | | December 312025 | December 25 2024 | December 312025 | December 25 2024 |
|---|
| Shack sales | $385,258 | 96.2% | $316,632 | 96.3% | $1,391,166 | 96.3% | $1,207,561 | 96.4% |
| Licensing revenue | 15,273 | 3.8% | 12,052 | 3.7% | 54,140 | 3.7% | 45,047 | 3.6% |
| TOTAL REVENUE | 400,531 | 100.0% | 328,684 | 100.0% | 1,445,306 | 100.0% | 1,252,608 | 100.0% |
| Shack-level operating expenses: | | | | | | | | |
| Food and paper costs | 110,595 | 28.7% | 88,578 | 28.0% | 396,714 | 28.5% | 339,940 | 28.2% |
| Labor and related expenses | 97,934 | 25.4% | 85,104 | 26.9% | 360,693 | 25.9% | 338,750 | 28.1% |
| Other operating expenses | 59,868 | 15.5% | 47,008 | 14.8% | 212,677 | 15.3% | 178,381 | 14.8% |
| Occupancy and related expenses | 29,413 | 7.6% | 24,047 | 7.6% | 106,632 | 7.7% | 93,069 | 7.7% |
| General and administrative expenses | 50,541 | 12.6% | 41,099 | 12.5% | 176,233 | 12.2% | 149,047 | 11.9% |
| Depreciation and amortization expense | 26,433 | 6.6% | 25,809 | 7.9% | 106,600 | 7.4% | 102,468 | 8.2% |
| Pre-opening costs | 5,203 | 1.3% | 5,118 | 1.6% | 18,001 | 1.2% | 15,547 | 1.2% |
| Impairments, loss on disposal of assets, and Shack closures | 1,800 | 0.4% | 1,711 | 0.5% | 5,248 | 0.4% | 32,368 | 2.6% |
| TOTAL EXPENSES | 381,787 | 95.3% | 318,474 | 96.9% | 1,382,798 | 95.7% | 1,249,570 | 99.8% |
| INCOME FROM OPERATIONS | 18,744 | 4.7% | 10,210 | 3.1% | 62,508 | 4.3% | 3,038 | 0.2% |
| Other income, net | 3,336 | 0.8% | 3,241 | 1.0% | 12,260 | 0.8% | 13,251 | 1.1% |
| Interest expense | (544) | (0.1)% | (512) | (0.2)% | (2,159) | (0.1)% | (2,045) | (0.2)% |
| INCOME BEFORE INCOME TAXES | 21,536 | 5.4% | 12,939 | 3.9% | 72,609 | 5.0% | 14,244 | 1.1% |
| Income tax expense | 8,537 | 2.1% | 3,606 | 1.1% | 22,903 | 1.6% | 3,424 | 0.3% |
| NET INCOME | 12,999 | 3.2% | 9,333 | 2.8% | 49,706 | 3.4% | 10,820 | 0.9% |
| Less: Net income attributable to non-controlling interests | 1,168 | 0.3% | 623 | 0.2% | 3,981 | 0.3% | 613 | - % |
| NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC. | $11,831 | 3.0% | $8,710 | 2.6% | $45,725 | 3.2% | $10,207 | 0.8% |
| Earnings per share of Class A common stock: | | | | | | | | |
| | Basic | $0.29 | | $0.22 | | $1.14 | | $0.26 | |
| | Diluted | $0.28 | | $0.21 | | $1.09 | | $0.24 | |
| Weighted-average shares of Class A common stock outstanding: | | | | | | | | |
| | Basic | 40,254 | | 40,047 | | 40,212 | | 39,830 | |
| | Diluted | 41,831 | | 41,872 | | 41,847 | | 44,203 | |
(1)The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
(2)As a percentage of Shack sales.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| | | Fiscal Year Ended |
|---|
| | | December 31 2025 | December 25 2024 |
|---|
| OPERATING ACTIVITIES | | |
| Net income (including amounts attributable to non-controlling interests) | $49,706 | $10,820 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | |
| Depreciation and amortization expense | 106,600 | 102,468 |
| Amortization of debt issuance costs | 1,048 | 1,047 |
| Amortization of cloud computing assets | 2,188 | 2,138 |
| Non-cash operating lease cost | 88,849 | 77,432 |
| Equity-based compensation | 19,503 | 15,915 |
| Deferred income taxes | 16,616 | (1,054) |
| Non-cash interest | 45 | (102) |
| Net amortization of discount on held-to-maturity securities | - | (440) |
| Impairments, loss on disposal of assets, and Shack closures | 5,248 | 32,368 |
| Changes in operating assets and liabilities: | | |
| | Accounts receivable | (9,546) | (2,839) |
| | Inventories | (1,168) | (610) |
| | Prepaid expenses and other current assets | (3,115) | (2,629) |
| | Other assets | (5,959) | (2,896) |
| | Accounts payable | (1,527) | 3,356 |
| | Accrued expenses | 29,902 | 6,644 |
| | Accrued wages and related liabilities | 59 | 4,477 |
| | Other current liabilities | 3,436 | (712) |
| | Operating lease liabilities | (82,683) | (77,167) |
| | Other long-term liabilities | 3,153 | 2,939 |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 222,355 | 171,155 |
| INVESTING ACTIVITIES | | |
| Purchases of property and equipment | (165,849) | (135,499) |
| Maturities of held-to-maturity marketable securities | - | 69,420 |
| NET CASH USED IN INVESTING ACTIVITIES | (165,849) | (66,079) |
| FINANCING ACTIVITIES | | |
| Payments on principal of finance leases | (5,511) | (3,964) |
| Deferred financing costs | (10) | - |
| Distributions paid to non-controlling interest holders | (1,842) | (482) |
| Payments under tax receivable agreement | (37) | - |
| Net proceeds from stock option exercises | 123 | 1,627 |
| Employee withholding taxes related to net settled equity awards | (9,820) | (6,198) |
| NET CASH USED IN FINANCING ACTIVITIES | (17,097) | (9,017) |
| Effect of exchange rate changes on cash and cash equivalents | - | 2 |
| INCREASE IN CASH AND CASH EQUIVALENTS | 39,409 | 96,061 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 320,714 | 224,653 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $360,123 | $320,714 |
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
To supplement the Consolidated Financial Statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses the following non-GAAP financial measures: Restaurant-level profit, Restaurant-level profit margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share (collectively the "non-GAAP financial measures").
Restaurant-Level Profit
Restaurant-level profit is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.
How This Measure Is Useful
When used in conjunction with GAAP financial measures, Restaurant-level profit and Restaurant-level profit margin are supplemental measures of operating performance that the Company believes are useful measures to evaluate the performance and profitability of its Shacks. Additionally, Restaurant-level profit and Restaurant-level profit margin are key metrics used internally by management to develop internal budgets and forecasts, as well as assess the performance of its Shacks relative to budget and against prior periods. It is also used to evaluate employee compensation as it serves as a metric in certain performance-based employee bonus arrangements. The Company believes presentation of Restaurant-level profit and Restaurant-level profit margin provides investors with a supplemental view of its operating performance that can provide meaningful insights to the underlying operating performance of the Shacks, as these measures depict the operating results that are directly impacted by the Shacks and exclude items that may not be indicative of, or are unrelated to, the ongoing operations of the Shacks. It may also assist investors to evaluate the Company's performance relative to peers of various sizes and maturities and provides greater transparency with respect to how management evaluates the business, as well as the financial and operational decision-making.
Limitations of the Usefulness of this Measure
Restaurant-level profit and Restaurant-level profit margin may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of Restaurant-level profit and Restaurant-level profit margin is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Restaurant-level profit excludes certain costs, such as General and administrative expenses and Pre-opening costs, which are considered normal, recurring cash operating expenses and are essential to support the operation and development of the Company's Shacks. Therefore, this measure may not provide a complete understanding of the Company's operating results as a whole and Restaurant-level profit and Restaurant-level profit margin should be reviewed in conjunction with the Company's GAAP financial results. A reconciliation of Restaurant-level profit to Income from Operations, the most directly comparable GAAP financial measure, is set forth below.
| | Fiscal Quarter Ended | Fiscal Year Ended |
|---|
| (dollar amounts in thousands) | December 312025 | December 25 2024 | December 312025 | December 25 2024 |
| Income from operations | $18,744 | $10,210 | $62,508 | $3,038 |
| Less: | | | | |
| Licensing revenue | 15,273 | 12,052 | 54,140 | 45,047 |
| Add: | | | | |
| General and administrative expenses | 50,541 | 41,099 | 176,233 | 149,047 |
| Depreciation and amortization expense | 26,433 | 25,809 | 106,600 | 102,468 |
| Pre-opening costs | 5,203 | 5,118 | 18,001 | 15,547 |
| Impairments, loss on disposal of assets, and Shack closures | 1,800 | 1,711 | 5,248 | 32,368 |
| Adjustment: | | | | |
| Employee benefit charges | - | - | - | 453 |
| Restaurant-level profit | $87,448 | $71,895 | $314,450 | $257,874 |
| Total revenue | $400,531 | $328,684 | $1,445,306 | $1,252,608 |
| Less: Licensing revenue | 15,273 | 12,052 | 54,140 | 45,047 |
| Shack sales | $385,258 | $316,632 | $1,391,166 | $1,207,561 |
| Restaurant-level profit margin | 22.7% | 22.7% | 22.6% | 21.4% |
(1)The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
(2)Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
(3)As a percentage of Shack sales.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
EBITDA and Adjusted EBITDA
EBITDA, a non-GAAP measure, is defined as Net income before interest expense (net of interest income), Income tax expense and Depreciation and amortization expense. Adjusted EBITDA, a non-GAAP measure, is defined as EBITDA excluding equity-based compensation expense, Impairments, loss on the disposal of assets, and Shack closures, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations.
How These Measures Are Useful
When used in conjunction with GAAP financial measures, EBITDA and adjusted EBITDA are supplemental measures of operating performance that the Company believes are useful measures to facilitate comparisons to historical performance and competitors' operating results. Adjusted EBITDA is a key metric used internally by management to develop internal budgets and forecasts and also serves as a metric in its performance-based equity incentive programs and certain bonus arrangements. The Company believes presentation of EBITDA and adjusted EBITDA provides investors with a supplemental view of the Company's operating performance that facilitates analysis and comparisons of its ongoing business operations because they exclude items that may not be indicative of the Company's ongoing operating performance.
Limitations of the Usefulness of These Measures
EBITDA and adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of EBITDA and adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA and adjusted EBITDA exclude certain normal recurring expenses. Therefore, these measures may not provide a complete understanding of the Company's performance and should be reviewed in conjunction with the GAAP financial measures.
| Fiscal Quarter Ended | Fiscal Year Ended |
|---|
| (dollar amounts in thousands) | December 312025 | December 25 2024 | December 312025 | December 25 2024 |
| Net income | $12,999 | | $9,333 | | $49,706 | | $10,820 | |
| Depreciation and amortization expense | 26,433 | | 25,809 | | 106,600 | | 102,468 | |
| Interest expense, net | 499 | | 474 | | 1,994 | | 1,284 | |
| Income tax expense | 8,537 | | 3,606 | | 22,903 | | 3,424 | |
| EBITDA | 48,468 | | 39,222 | | 181,203 | | 117,996 | |
| Equity-based compensation | 5,330 | | 4,376 | | 19,503 | | 15,915 | |
| Amortization of cloud-based software implementation costs | 512 | | 561 | | 2,188 | | 2,138 | |
| Impairments, loss on disposal of assets, and Shack closures | 1,800 | | 1,711 | | 5,248 | | 32,368 | |
| Legal settlements | - | | - | | 983 | | - | |
| Severance | - | | - | | 379 | | - | |
| Restatement costs | - | | 778 | | 354 | | 2,378 | |
| CEO transition costs | - | | 38 | | 35 | | 679 | |
| Employee benefit charges | - | | - | | - | | 453 | |
| Other | - | | 8 | | 3 | | 3,652 | |
| Adjusted EBITDA | $56,110 | | $46,694 | | $209,896 | | $175,579 | |
| Adjusted EBITDA margin | | 14.0% | | 14.2% | | 14.5% | | 14.0% |
(1)The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
(2)Expenses incurred to establish accruals related to the settlements of legal matters.
(3)Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K.
(4)Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
(5)Expenses incurred for professional fees related to non-recurring matters.
(6)Calculated as a percentage of Total revenue, which was $400.5 million and $1,445.3 million for the fiscal quarter and fiscal year ended December 31, 2025, respectively, and $328.7 million and $1,252.6 million for the fiscal quarter and fiscal year ended December 25, 2024, respectively.
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Adjusted Pro Forma Net Income (Loss) and Adjusted Pro Forma Earnings (Loss) Per Fully Exchanged and Diluted Share
Adjusted pro forma net income represents Net income attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring items that the Company does not believe are directly related to its core operations and may not be indicative of recurring business operations. Adjusted pro forma earnings per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards.
How These Measures Are Useful
When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share are supplemental measures of operating performance that the Company believes are useful measures to evaluate performance period-over-period and relative to its competitors. By assuming the full exchange of all outstanding LLC Interests, the Company believes these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in Net income attributable to Shake Shack Inc. driven by increases in its ownership of SSE Holdings, which are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance.
Limitations of the Usefulness of These Measures
Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should not be considered alternatives to Net income and earnings (loss) per share, as determined under GAAP. While these measures are useful in evaluating the Company's performance, it does not account for the earnings (loss) attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the Net income attributable to Shake Shack Inc. Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should be evaluated in conjunction with GAAP financial results. A reconciliation of adjusted pro forma net income to Net income attributable to Shake Shack Inc., the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully exchanged and diluted share are set forth below.
| | | Fiscal Quarter Ended | Fiscal Year Ended |
|---|
| (in thousands, except per share amounts) | December 312025 | December 25 2024 | December 312025 | December 25 2024 |
| Numerator: | | | | |
| Net income attributable to Shake Shack Inc. | $11,831 | $8,710 | $45,725 | $10,207 |
| Adjustments: | | | | |
| | Reallocation of Net income attributable to non-controlling interests from the assumed exchange of LLC Interests | 1,168 | 623 | 3,981 | 613 |
| | Impairment charges and Shack closures | 1,045 | 1,191 | 2,949 | 29,348 |
| | Legal settlements | - | - | 983 | - |
| | Severance | - | - | 379 | - |
| | Restatement costs | - | 778 | 354 | 2,378 |
| | CEO transition costs | - | 38 | 35 | 679 |
| | Employee benefit charges | - | - | - | 453 |
| | Other | - | 8 | 3 | 3,652 |
| | Tax impact of above adjustments | 2,543 | 269 | 3,906 | (6,785) |
| Adjusted pro forma net income | $16,587 | $11,617 | $58,315 | $40,545 |
| Denominator: | | | | |
| Weighted-average shares of Class A common stock outstanding - diluted | 41,831 | 41,872 | 41,847 | 44,203 |
| Adjustments: | | | | |
| | Assumed exchange of LLC Interests for shares of Class A common stock | 2,434 | 2,456 | 2,441 | - |
| Adjusted pro forma fully exchanged weighted-average shares of Class A common stock outstanding - diluted | 44,265 | 44,328 | 44,288 | 44,203 |
| Adjusted pro forma loss per fully exchanged share - diluted | $0.37 | $0.26 | $1.32 | $0.92 |
| | Fiscal Quarter Ended | Fiscal Year Ended |
|---|
| December 312025 | December 25 2024 | December 312025 | December 25 2024 |
|---|
| Earnings per share of Class A common stock - diluted | $0.28 | $0.21 | $1.09 | $0.24 |
| Assumed exchange of LLC Interests for shares of Class A common stock | 0.01 | - | 0.03 | - |
| Non-GAAP adjustments | 0.08 | 0.05 | 0.20 | 0.68 |
| Adjusted pro forma earnings per fully exchanged share - diluted | $0.37 | $0.26 | $1.32 | $0.92 |
(1)The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
(2)Assumes the exchange of all outstanding LLC Interests for shares of Class A common stock, resulting in the elimination of the non-controlling interest and recognition of the net income attributable to non-controlling interests.
(3)Expenses incurred related to Shack closures and impairment charges during fiscal 2024 and fiscal 2025.
(4)Expenses incurred to establish accruals related to the settlements of legal matters.
(5)Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K.
(6)Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
(7)Expenses incurred for professional fees related to non-recurring matters.
(8)Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 26.5% and 24.6% for the fiscal quarter and fiscal year ended December 31, 2025, respectively, and 22.3% and 20.1% for the fiscal quarter and fiscal year ended December 25, 2024, respectively. Amounts include provisions for U.S. federal income taxes, certain LLC entity-level taxes and foreign withholding taxes, assuming the highest statutory rates apportioned to each applicable state, local and foreign jurisdiction.
(9)Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation of Adjusted pro forma net income above, for additional information.
Contacts
Meg Davis, Shake Shack mcastranova@shakeshack.com
Alison Sternberg, Shake Shack
Head of Investor Relations
(844) SHACK-04 (844-742-2504)
investor@shakeshack.com
Open the filing on EDGARFourth Quarter 2025 Shareholder Letter
“2025 was a year of strong execution and disciplined growth that demonstrated our focus on the right strategic priorities. Despite an uncertain macroeconomic environment, our team delivered solid financial results, expanded our footprint with our largest class yet, and made important strides in improving our unit economics and guest value proposition. For the year, we grew Total revenue by more than 15%, delivered positive same-Shack sales growth with 2.3% comps, expanded our Restaurant-level profit margin by 120 bps to 22.6%, and drove 20% year-over-year growth in Adjusted EBITDA.
Our success reflects the disciplined execution of operational excellence, supply chain optimization, compelling culinary innovation, and enhanced unit economics through margin expansion and meaningful reductions in build costs, positioning the business for more durable and profitable growth," said Chief Executive Officer, Rob Lynch. “Our solid fourth-quarter resultsmarks our 20th consecutive quarter of positive same-Shack sales with growth of 2.1%, alongside strongRestaurant-level margins at 22.7% and double-digit Adjusted EBITDA growth of over 20% year-over-year. We delivered these results while navigating challenging commodity pressures, particularly in beef.
We are entering 2026 with confidence, guided by a clear strategy and a disciplined focus on creating long-term value for our guests, team members, and shareholders," concluded Mr. Lynch. Q4 2025 HIGHLIGHTS System -wide Sales $618.0m 23.4% growth year-over-year driven by new Shack openings and SSS% growth in existing Shacks.
Same -Shack Sales (SSS) Growth +2.1% With +50 bps traffic growth year-over- year and same-Shack sales improving sequentially each month despite weather headwinds the last six weeks of the quarter. Restaurant -level Profit Margin 1 22.7% In-line withlast year as benefits fromlabor productivityhelped offset higher beef costs and marketing investments. 2 BUSINESS OVERVIEW 1. Restaurant-level profit, Restaurant-level profit margin, Adjusted EBITDA and Adjusted pro forma net income are non-GAAP measures.
Reconciliations to the most directly comparable financial measures presented in accordance with GAAP are set forth in the financial details section of this Shareholder Letter. FOURTH QUARTER 2025 HIGHLIGHTS:
- Total revenue grew 21.9% year-over-year to $400.5m.
- Shack sales grew 21.7% year-over-year to $385.3m.
- Licensing revenue grew 26.7% year-over-year to $15.2m.
- System-wide sales grew 23.4% year-over-year to $618.0m.
- Average weekly sales (AWS) decreased 2.5% year-over-year to $77k.
- Same-Shack sales (SSS) grew 2.1% year-over-year.
- Operating income of $18.7m versus $10.2m last year.
- Restaurant-level profit margin1 of 22.7% of Shack sales, flat year-over-year.
- Net income of $13.0m versus $9.3m last year.
- Adjusted EBITDA1 of $56.1m, up 20.2% year-over-year.
- Net income attributable to Shake Shack Inc. of $11.8m, or earnings of $0.28 per diluted share.
- Adjusted pro forma netincome1 of $16.6m, or earnings of $0.37 per fully exchanged and diluted share.
- Opened 15 new Company-operated Shacks and 17 new licensed Shacks.
$72M $64M $82M $81M $87M 22.7% 20.7% 23.9% 22.8% 22.7% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 4Q24 1Q25 2Q25 3Q25 4Q25 $79K $72K $78K $78K $77K 4Q24 1Q25 2Q25 3Q25 4Q25 $329M $321M $356M $367M $401M 4Q24 1Q25 2Q25 3Q25 4Q25 579 589 610 630 659 4Q24 1Q25 2Q25 3Q25 4Q25 $501M $489M $550M $572M $618M 4Q24 1Q25 2Q25 3Q25 4Q25 1. Restaurant-level profit, Restaurant-level profit margin, and Adjusted EBITDA are non-GAAP measures. Reconciliations to the most directly comparable financial measur s presented in accordance with GAAP are set forth in the financial details section of this Shareholder Letter.
Adjusted EBITDA 1 Average Weekly Sales (AWS) System -wide Shack Count System -wide Sales Q4 2025 HIGHLIGHTS Q4 2025 marked the 20th consecutive quarter of positive same -Shack sales with +2.1 % growth, along with Total revenue +21.9% and Adjusted EBITDA +20.2% year -over -year, while Restaurant -level profit margin was flat to last year. 3 Total revenue grew 21.9% year-over-year. System-wide sales grew 23.4% year-over-year. AWS decreased 2.5% year-over-year.
System-wide unit count grew 13.8% year-over-year versus 4Q24, including:
- 45 new Company-operated Shack openings
- 40 new licensed Shack openings
- 4 licensed Shack closures
- 1 Company-operated Shack closure Adjusted EBITDA grew 20.2% year-over-year and was 14.0% of Total revenue. % label indicates Adjusted EBITDA margin. % label indicates Restaurant-level profit margin.1 Restaurant-level profit grew 21.6% year-over-year and was 22.7% of Shack sales. $47M $41M $59M $54M $56M 14.2% 12.7% 16.5% 14.7% 14.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $0 $10 $20 $30 $40 $50 $60 4Q24 1Q25 2Q25 3Q25 4Q25 Total Revenue Restaurant -level Profit
$740M $900M $1.09B $1.25B $1.45B FY21 FY22 FY23 FY24 FY25 369 436 518 579 659 FY21 FY22 FY23 FY24 FY25 $1.12B $1.38B $1.70B $1.92B $2.23B FY21 FY22 FY23 FY24 FY25 Total Revenue Adjusted EBITDA 1 Restaurant -level Profit 1 System -wide Shack Count System -wide Sales FY2025 HIGHLIGHTS TOTAL REVENUE GREW >15 %, RESTAURANT - LEVEL PROFIT MARGIN EXPANDED 120 BPS, WE OPENED 45 COMPANY - OPERATED SHACKS 4 Total revenue grew 15.4% year-over-year. System-wide sales grew 15.9% year-over-year. System-wide unit count grew 13.8% year-over-year, including versus FY24:
- 45 new Company-operated Shack openings.
- 40 new licensed Shack openings. Adjusted EBITDA grew 19.5% year-over-year to 14.5% of Total revenue. $120M $152M $208M $258M $314M 16.8% 17.5% 19.9% 21.4% 22.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $10 $60 $110 $160 $210 $260 $310 $360 FY21 FY22 FY23 FY24 FY25 Average Weekly Sales (AWS) % label indicates Restaurant-level profit margin.1 Restaurant-level profit grew 21.9% year-over-year. % label indicates Adjusted EBITDA margin. $71K $73K $75K $76K $76K FY21 FY22 FY23 FY24 FY25 1. Restaurant-level profit, Restaurant-level profit margin, and Adjusted EBITDA are non-GAAP measures. Reconciliations to the most directly comparable financial measur s presented in accordance with GAAP are set forth in the financial details section of this Shareholder Letter. $56M $73M $132M $176M $210M 7.5% 8.1% 12.1% 14.0% 14.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% $0 $50 $100 $150 $200 $250 FY21 FY22 FY23 FY24 FY25 AWS was flat year-over-year.
5 TO OUR SHAREHOLDERS We are proud of the work that our teams did to deliver solid fourth quarter results, while continuing to build the foundation for sustainable, long-term growth. In the fourth quarter 2025, Total revenue reached $400.5 million, up nearly 22% year-over-year, with Shack sales growing approximately 22% year-over-year to $385.3 million and Licensing revenue reaching $15.2 million, along with 23% year-over-year growth in System-wide sales. We grew same-Shack sales 2.1% - marking the 20th consecutive quarter of positive growth for our Company.
We delivered 0.5% positive traffic growth and 1.6% price/mix. Same-Shack sales grew sequentially each month of the quarter, however the last six weeks of the quarter did not meet our expectations due to inclement weather in some of our most heavily penetrated markets like the Northeast. D spite weather-related headwinds, we maintained positive same-Shack sales and positive traffic.
With our strong sales and operational improvements, we sustained our Restaurant-level profit margin at 22.7% - demonstrating our ability to maintain profitability despite macroeconomic headwinds and higher beef costs that rose by low-teens. We continue to strengthen our culinary development process through our disciplined stage-ga e framework, ensuring every item meets our gold standard of culinary innovation and quality, resonates with our guests, and is operationally friendly. Our enhanced approach delivered tangible results throughout the year, including one of our most successful LTO shakes, the Dubai Chocolate Shake, and successful side innovations like onion rings, which resonated so strongly with guests the item was added to our core menu.
Building a strong culture of leaders remains essential to how we open our pipeline with excellence and execute against our long-term growth objectives. We opened 15 new Company-operated Shacks and 17 new licensed Shacks in the fourth quarter. For the full year 2025, we opened 45 Company-operated Shacks - our largest class to date - and 40 licensed Shacks.
We made significant progress in optimizing our build model, reducing the average net build cost for new Shacks to under $2 million in 2025, a reduction of approximately 20% compared to the prior year. In 2025, we grew Total revenue by more than 15% to $1.45 billion, delivered positive same-Shack sales growth of 2.3%, expanded our Restaurant-level profit margin by 120 basis points to 22.6%, and drove 20% year-over-year growth in Adjusted EBITDA, reaching approximately $210 million. Looking ahead to 2026, we are building off our strong 2025 foundation with clear strategic priorities and disciplined execution.
We plan to open 55 to 60 new Company-operated Shacks, primarily in markets outside of our historical footprint. We remain focused on becoming a best-in-class restaurant operations company, supporting our team members to accurately and expediently serve guests the highest-quality food in the industry at great value with enlightened hospitality. February 26, 2026
WE ARE BUILDING A PIPELINE OF LEADERS TO SUPPORT OUR ROAD TO 1,500 SHACKS.
- Supported managers with improved data and analytics, and recruiting and training tools.
- Average team member tenure has increased nearly 40% since 2023
- Delivered culinary innovation through menu platforms - Summer BBQ and French Onion both with new premium sides like fried pickles and onion rings - and LTO offers like Dubai Shake and The Big Shack.
- Drove guest acquisition and frequency through our “dollar sodas” offer and “$1, $3, $5” in -app promotion increasing app downloads by approximately 50% since launch.
- Reduced average net build cost for new Shacks to under $2 million in 2025, down ~20% year -over-year, through disciplined design simplification, value engineering, and procurement strategies.
- We opened45 Company-operated Shacks in 2025 and plan to open 55 to 60 in 2026.
- We opened 40 licensed Shacks in 2025 and plan to open 40 to 45 licensed Shacks in 2026.
- Announced strategic partnerships, including Hawaii, PENN Entertainment casinos, andentry into Vietnam and Panama.
- Expanded our global reach while reinforcing Shake Shack as a premium, internationally recognized brand.
- Our Kitchen Innovation Lab in Atlanta is developing solutions to make our operations even more efficient while improving product quality, consistency, and speed.
- Continuing to invest in our technology infrastructure to enhance Shack operations, enable guest recognition and lay the groundwork for a future loyalty platform. 2025 STRATEGIC PRIORITIES 2025 ACHIEVEMENTS
- Grew Restaurant-level profit margin by 120 bps year-over-year, led by improved labor productivity and operational enhancements.
- Our “performance scorecard” implemented across the system provided greater visibility and accountability across people, performance, and profits. (6) INVEST IN OUR FUTURE & LONG-TERM STRATEGIC CAPABILITIES (5) ACCELERATE OUR LICENSED BUSINESS (4) BUILD AND OPERATE OUR SHACKS WITH BEST-IN-CLASS RETURNS (3) DRIVE COMP SALES BY INCREASING GUEST FREQUENCY (1) BUILD A CULTURE OF LEADERS WE ARE DRIVING PROFITABILTIY WITH A FOCUS ON DEVELOPING OUR PEOPLE AND ACCOUNTABILITY ON PERFORMANCE. OUR GREATEST OPPORTUNITY TO GROW SAME -SHACK SALES IS THROUGH FREQUENCY. WE ARE GROWING OUR INDUSTRY LEADING CASH -ON -CASH RETURNS. WE ARE BUILDING THE PIPELINE FOR GROWTH AROUND THE GLOBE. WE ARE ACCELERATING OUR PACE OF INNOVATION. ROAD TO 1500 (2) OPTIMIZE RESTAURANT OPERATIONS
LICENSED BUSINESS HIGHLIGHTS 1. Licensing sales is an operating measure and consists of sales from licensed Shacks. The Company does not recognize the sales from licensed Shacks as revenue.
Of these amounts, revenue is limited to Licensing revenue based on a percentage of sales from licensed Shacks, as well as certain fees, such as territory fees, opening fees, and termination fees. 7 $184.1M $179.6M $206.7M $218.7M $232.7M Licensing Sales 26% WE GREW LICENSING SALES 26% VERSUS LAST YEAR 11% 10% YoY Licensing Sales Growth 16% 15% 9 7 9 7NSOs Our Licensing revenue grew 26.7% year -over -year to $15.2m. Licensing sales1 grew by 26.4% to $232.7m and we opened 17 new licensed Shacks in the quarter. We are proud of the continued momentum we have seen in our licensed business.
Sales growth this quarter was driven by new Shack openings and continued strength in new markets we have opened in the past two years such as Canada and Israel. We achieved our goal to open 40 new licensed Shacks in 2025 and expect to open 40 to 45 more in 2026. We ended the year with 286 licensed Shacks across 20 markets.
In 2026, we look forward to opening our firstShacks in Panama and Vietnamas well as opening in regional casinos through our partnership with PENN Entertainment. 4Q24 1Q25 2Q25 3Q25 4Q25 17 Fiscal November 2025 Fiscal December 2025 Fiscal January 2026 Vaughan Mills, Toronto, Canada Kiryat Ono, Tel Aviv, Israel Elements, Hong Kong Pedregal, Mexico City, Mexico Monmouth Park, New Jersey, USA Robinsons Magnolia, Quezon City, Philippines Kings Cross, London, United Kingdom Pavilion KL, Kuala Lumpur, Malaysia Estancia Capitol Commons, Manila, Philippines JungCeylon, Phuket, Thailand Da Rong Cheng Art Park, Beijing Paju Premium Outlet, Gyeonggi, Korea Langham Place, Hong Kong Shanghai Century Link Tower, Shanghai Big Ashdod, Ashdod, Israel JungCeylon, ThailandRobinsons Magnolia, PhilippinesYonge & Eglinton, Canada
4% 0% 2% 5% 2% (1%) (5%) (1%) 1% 1% 5% 5% 3% 4% 2% Fourth Quarter 2024 First Quarter 2025 Second Quarter 2025 Third Quarter 2025 Fourth Quarter 2025 Total SSS % Traffic % Price/Mix % Same -Shack sales grew 2.1% year -over -year in 4Q25. We delivered strong performance this quarter, achieving positive comps in nearly all regions. However, ongoing macro pressures, especially in the New York City / DC Metro areas, continued to impact our overall results.
Traffic increased for the second consecutive quarter, up 50bps. We drove this traffic momentum through targeted initiatives such as our $1, $3, $5 in-app promotion, which has proven to be an effective tool for both guest acquisition and engagement. Price / mix grew 1.6%.
For the quarter, we had approximately 2% in-Shack menu price and approximately 4% blended menu price across all channels. This compares to approximately blended 6% price in Q4 2024. Negative mix in the quarter was driven by our additional traffic driving initiatives.
January SSS% 2 grew 4.3% year -over -year. Despitemeaningful weather headwinds in January, we’ve generated solid sales growth fueled by continued traction in our in-app value platform, increased hours of operations in our Shacks, and the launch of compelling culinary innovation. 4Q25 SSS 1 UP 2.1% VERSUS PRIOR YEAR AWS AND SAME - SHACK SALES 1 8 1. Same-Shack sales, or “SSS”, and same-Shack sales growth are key metrics.
As a reminder, SSS excludes the impact of closures that are two consecutive days or more, but one day closures and the impact of operating with fewer hours are included. 2. To normalize for the 53rd week in fiscal 2025, the compare periods for 2025 have been shifted forward one week from the fiscal calendar, in order to show a more like-for-like comparison SSS 1 BY REGION VERSUS PRIOR YEAR 0% -2% 3% 1% 9% 5% 3% 2% 5% 2% Fourth Quarter 2024 First Quarter 2025 Second Quarter 2025 Third Quarter 2025 Fourth Quarter 2025 NYC (incl. Manhattan) Northeast South West Midwest Fourth quarter AWS was $77k.
We finished off the year strong with positive traffic in the fourth quarter, despite unfavorable weather towards the end of the quarter. Sales benefited from marketing promotions, an increase in operating hours, and check driving strategies on our digital channels. $79K $72K $78K $78K $75K $74K $80K $68K Q4 2025 AWS $77K Total YoY Shack Sales Growth Fiscal December 2025 15% First Quarter 2025 16% 13% Second Quarter 2025 10% Third Quarter 2025 12% Fourth Quarter 2024 35% Fiscal November 2025 13% Fiscal October 2025 Fiscal January 2026 5%
9 RESTAURANT - LEVEL PROFIT Fourth quarter Restaurant -level profit 1 grew 21.6% year -over -year to $87.4m, with Restaurant -level profit margin flat at 22.7% of Shack sales. Restaurant -level costs in the fourth quarter (covered in more detail on the following pages) were as follows:
- Food and paper costs were 28.7% of Shack sales.
- Labor and related expenses were 25.4% of Shack sales.
- Other operating expenses were 15.5% of Shack sales.
- Occupancy and related expenses were 7.6% of Shack sales. Our success this past year reflects the disciplined execution of a focused set of strategic priorities. We strengthened the fundamentals of the business while continuing to elevate the guest experience - driving improvements in operational excellence, laying the foundation for greater cost discipline within our supply chain, and delivering compelling culinary innovation and value. 1. Restaurant-level profit and Restaurant-level profit margin are non-GAAP measures. A reconciliation to the most directly comparable financial measure presented in accordance with GAAP is set forth in the financial details section of this Shareholder Letter. $72M $64M $82M $81M $87M 4Q24 1Q25 2Q25 3Q25 4Q25 Restaurant -level Profit 1 ($) Restaurant -level Profit Margin 1 (%) Restaurant-level profit grew 21.6% year-over-year. Restaurant-level profit margin was flat year-over-year. 22.7% 20.7% 23.9% 22.8% 22.7% 4Q24 1Q25 2Q25 3Q25 4Q25
10 RESTAURANT - LEVEL PROFIT FOOD & PAPER COSTS Food and paper costs (“COGS”) were 28.7% of Shack sales in the fourth quarter, up 70 bps year - over -year. Inflation in food and paper increased by low single-digits year-over-year, with beef up by low-teens year- over-year. Our focus on diversification and logistics helped to mitigate rising costs and protect margins, without taking outsized price.
We conducted the most comprehensive RFPs in our history across key categories and onboarded additional suppliers to foster competition, reduce business risk, and of course, to augment quality. COGS as a % of Shack Sales Food and Paper Inflationary Pressures Commodities Basket Range 4Q2025 YoY Actual Inflation 1Q2026 YoY Inflation Outlook* FY2026 YoY Inflation Outlook* Beef Approx. 30%2 + Low Teens % + Mid Teens % + HSD % Total Food1 ~ 90% 3 + LSD % + LSD% + LSD % Paper and Packaging ~ 10% 4 Flat - LSD % - LSD % Blended Food & Paper 100% + LSD % + LSD% + LSD% We expect food and paper inflation to be in the low single -digits into 2026, despite higher beef costs, through continued focus and resilience of our supply chain initiatives . In 2026, beef inflation is expected to continue at the high single-digit levels.
Excluding our supply chain initiatives, food and paper cost inflation would be up mid to high single-digits. *Our basket can change due to product and sales channel mix. Additionally, we do not contract many components of our basket, and those that we do have different contracted periods throughout the year. We are providing our current expectations for our basket; however, the blended weight and the individual components are subject to change for a variety of reasons. 1.
Total Food includes food and beverage. 2. Beef basket range calculated as a % of Total Blended Food & Paper. 3. Total Food basket range calculated as a % of Total Blended Food & Paper. 4.
Paper & Packaging basket range calculated as a % of Total Blended Food & Paper. 28.0% 27.8% 28.2% 29.3% 28.7% 4Q24 1Q25 2Q25 3Q25 4Q25
Occupancy and related expenses (“Occupancy”) were 7.6% of Shack sales in the fourth quarter, flat year-over-year. Other operating expenses (“Other opex ”) were 15.5% of Shack sales in the fourth quarter, up 70 bps year-over-year. The increase was partially driven by higher delivery sales mix.
Digital sales accounted for 39.1% of Shack sales, compared to 36.6% last year. 7.6% 7.9% 7.5% 7.7% 7.6% 4Q24 1Q25 2Q25 3Q25 4Q25 14.8% 15.6% 14.8% 15.2% 15.5% 4Q24 1Q25 2Q25 3Q25 4Q25 RESTAURANT - LEVEL PROFIT LABOR, OTHER OPEX & OCCUPANCY 26.9% 28.0% 25.7% 24.9% 25.4% 4Q24 1Q25 2Q25 3Q25 4Q25 Labor as a % of Shack Sales Labor and related expenses (“Labor”) were25.4% of Shack sales in the fourth quarter, down 150 bps year -over -year . Our new labor model continued to deliver year-over-year benefits to labor expense by ensuring we have the right team members in the right roles at the right time. This approach drove greater efficiency while enhancing the hospitality experience in our Shacks.
In addition, throughout 2025 we implemented our performance scorecard, which has increased visibility and accountability by tracking key metrics across people, performance, and profits. Occupancy as a % of Shack Sales Other Opex as a % of Shack Sales
G&A Expenses 2 Fourth quarter General and administrative (“G&A”) expenses were $50.5m. G&A was 12.6% of Total revenue in the quarter, 10 bps higher than last year, with growth driven by incremental marketing investments to drive our sales. $26M $27M $27M $27M $26M 4Q24 1Q25 2Q25 3Q25 4Q25 Depreciation and Amortization Expense $5M $3M $5M $5M $5M 4Q24 1Q25 2Q25 3Q25 4Q25 Pre -opening Costs ADDITIONAL EXPENSES & ADJUSTED EBITDA 1. Adjusted EBITDA is a non-GAAP measure.
A reconciliation to the most directly comparable financial measures presented in accordance with GAAP are set forth in the financial details section of this Shareholder Letter. Adjusted EBITDA grew 20.2% year -over -year to $56.1m, or 14.0% of Total revenue - 20 bps lower than last year . EBITDA adjustments for 4Q25 totaled $7.6m, consisting of (i) equity-based compensation of $5.3m, (ii) impairments, loss on disposal of assets, and Shack closures of $1.8m, and (iii) $0.5m of amortization of cloud-based software implementation costs.
Adjusted EBITDA 1 12 2. 4Q24 $0.8M professional fees and executive transition costs, 1Q25 $1.2M legal settlement and restatement costs to related to prior periods and 2Q25 $0.6m of severance and restatement costs related to prior periods. Depreciation and amortization expense was $26.4m. Our Depreciation and amortization expense increases as we place development and other IT assets into service.
Pre -opening costs were $5.2m. Pre-opening cost per Shack were flat year-over-year despite incurring more costs for future openings as we accelerate our development pipeline. $40M $39M $40M $44M $51M 4Q24 1Q25 2Q25 3Q25 4Q25 $41M $41M excl. one- time adjustments excl. one- time adjustments excl. one- time adjustments $41M $44M $47M $41M $59M $54M $56M 14.2% 12.7% 16.5% 14.7% 14.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% $0 $10 $20 $30 $40 $50 $60 $70 4Q24 1Q25 2Q25 3Q25 4Q25 % label indicates Adjusted EBITDA margin $51M
Fiscal first quarter and fiscal year 2026 guidance is derived from preliminary, unaudited results based on information currently available to the Company. We factor in an assumption around a degree of pressure on the consumer spending landscape and ongoing inflationary headwinds and do not reflect any change in the current environment including potential changes to tariff, amongst other factors. While the Company believes these estimates are meaningful, they could differ from the actual results that the Company ultimatelyreports in its Quarterly Report on Form 10-Q for the fiscal quarter ending April 1, 2026 and its Annual Report on Form 10-K for the fiscal year ending December 30, 2026.
FINANCIAL OUTLOOK 14 1. Equity-based compensation is comprised of $25m in G&A and $3m in Restaurant-level profit . 2. To normalize for the 53rd week in fiscal 2025, the compare periods for 2025 have been shifted forward one week from the fiscal calendar, in order to show a more like-for-like comparison. 3.
These targets reflect metrics for fiscal years 2025, 2026 and 2027. FY2025 has 53 weeks, and these targets have been adjusted to exclude the 53rd week. These forward-looking projections are subject to known and unknown risks, uncertainties and other important factors that may cause ctu l results to be materially different from these projections.
Factors that may cause such differences include those discussed inthe Company's Form 10-K for the fiscal year ended December 31, 2025 , and our Cautionary Note On Forward-Looking Statements herein. These forward-looking projections should be reviewed in conjunction with the consolidated financial statements and the section titl d “Cautionary Note Regarding Forward-Looking Statements”, within the Company’s Form 10-K, which form the basis of our assumptions used to prepare these forward-looking projections. You should not attribute undue certainty to hese projections, and we undertake no obligation to revise or update any forward-looking information, except as required by law.
Company-operated openings Licensed openings Total revenue Licensing revenue Same-Shack sales versus 2025 Restaurant-level profit margin Company-operated openings Licensed openings Total revenue Licensing revenue Same-Shack sales2 versus 2025 Restaurant-level profit margin General and administrative expenses Equity-based compensation1 Depreciation and amortization expense Pre-opening costs Net income Adjusted EBITDA Adjusted Pro Forma Tax Rate 12 - 14 Approx. 4 $366m - $370m $12.8m - $13.2m 3.0% - 5.0% 21.5% - 22.0% 55 - 60 40 - 45 $1.6b - 1.7b $59.0m - $61.0m + LSD % 23.0% - 23.5% 12.0% to 13.0% of Total revenue $28m $128m - $132m $25m - $27m $50m - $60m $237m - $245m 24% - 25% Q1 2026 Guidance FY 2026 Guidance Three Year Financial Targets 3 Low Teens % Low Teens % At least 50 bps expansion / year Low - High Teens % Total revenue growth System-wide unit growth Restaurant-level profit margin Adjusted EBITDA growth
Financial Details & Definitions
CAUTIONARY NOTE ON FORWARD -LOOKING STATEMENTS 16 This presentation contains forward -looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, 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 presentation are forward-looking statements, including, but not limited to, the Company's growth, including its long-term growth goals, strategic initiatives and priorities, and liquidity. Forward looking statements discuss the Company's current expectations, targets and projections relating to the Company's financial position, results of operations, plans, objectives, future performance and business, including expected financial results and operating performance for fiscal 2025, strategic priorities, expected development targets, and fiscal firstquarter and full year 2026 guidance and three-year financial targets.
Forward-looking statements reflectthe Company’s current expectations and projections with respect to future events and are based on certain assumptions and are subject to risks and uncertainties that could cause the Company's actual results to differ materially from trends, plans, or expectations set forth in the forward-looking statements. 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," "outlook," "potential," "preliminary," "project," "projection," "plan," "seek," "targets," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar express ons.
Forward-looking statements notice
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 the Company's products, increased labor costs or shortages, inflationary pressures, the impact of tariffs, the impact of Shack closures, the Company'smanagement of its digital capabilities and expansion into delivery, as well as its kiosk, drive-thru and multiple format investments, the Company's ability to maintain and grow sales at its existing Shacks,and risks relating to the restaurant industry generally. You should evaluate all forward-looking statements made in this presentation 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 25, 2024 as filed with the Securities and Exchange Commission ("SEC") and the Company's other SECfilings.All of the Company's SECfilings are available online at www.sec.gov, www.shakeshack.com or upon request from Shake Shack Inc.
The forward-looking statements included in this presentation 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.
DEFINITIONS 17 The following definitions, and definitions on the subsequent pages, apply to terms as used in this shareholder letter: "Shack sales" is defined as the aggregate sales of food, beverages, gift card breakage income, and Shake Shack branded merchandise at Company-operated Shacks and excludes sales from licensed Shacks. “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 revenue based on a percentage of sales from licensed Shacks, as well as certain up-front fees, such as territory fees, opening fees, and termination fees. "Same-Shack sales" or “SSS” 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.
"Average weekly sales" or “AWS” 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. “Adjusted pro forma net income," a non-GAAP measure, represents Net income attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring and other items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.
“EBITDA,” a non-GAAP measure, is defined as Net income before interest expense (net of interest income), Income tax expense, and Depreciation and amortization expense. “Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, Impairments, loss on disposal of assets and Shack closures, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations. “Adjusted EBITDA margin,” a non-GAAP measure, is defined as Net income before interest expense (net of interest income), Income tax expense and Depreciation and amortization expense, which also excludes equity-based compensation expense, Impairments, loss on disposal of assets and Shack closures, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations, as a percentage of Total revenue.
“Restaurant-level profit,” a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses, including Food and paper costs, Labor and related expenses, Other operating expenses, and Occupancy and related expenses. "Restaurant-level profit margin," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses, including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses as a percentage of Shack sales.
DEVELOPMENT HIGHLIGHTS 18 Development Highlights During the fourth quarter of 2025, we opened 15 new Company-operated Shacks and 17new licensed Shacks. Below are Shacks opened during the fourth quarter of 2025. Location Type Opening Date Istanbul, Turkey - Kozyatagi City Mall Licensed 9/25/2025 Phoenix, AZ - Avondale Company-operated 9/30/2025 Siheung, South Korea - Siheung Premium Outlet Licensed 10/2/2025 Toronto, Canada - Yonge & Eglinton Licensed 10/3/2025 Pittsburgh, PA - Pittsburgh Airport Dining Concourse Licensed 10/7/2025 Syracuse, NY - Dewitt Company-operated 10/14/2025 Zionsville, IN - Zionsville Company-operated 10/28/2025 Jenkintown, PA - Jenkintown Company-operated 10/28/2025 Vaughan, Canada - Vaughan Mills Licensed 10/28/2025 Staten Island, NY - Hylan Blvd Company-operated 10/30/2025 Tel Aviv, Israel - Kiryat Ono Licensed 10/30/2025 Hong Kong, China - Elements Mall Licensed 11/4/2025 Mexico City, Mexico - Pedregal Licensed 11/6/2025 Tacoma, WA - Tacoma Mall Company-operated 11/10/2025 Oceanport, NJ - Monmouth Park Licensed 11/13/2025 Quezon City, Philippines - Robinsons Magnolia Licensed 11/13/2025 Oklahoma City, OK - Oak OKC Company-operated 11/18/2025 Perrysburg, OH - Levis Commons Company-operated 11/18/2025 London, UK - Kings Cross Licensed 11/18/2025 Selden, NY - Selden Company-operated 11/19/2025 Manila, Philippines - Capitol Commons Licensed 11/28/2025 Kuala Lumpur, Malaysia - Pavilion KL Licensed 11/28/2025 Pikesville, MD - Festival at Woodholme Company-operated 11/30/2025 Phuket, Thailand - JungCeylon Licensed 12/1/2025 Pittsburgh, PA - East Liberty Company-operated 12/3/2025 Cheshire, CT - Shops at Stone Bridge Company-operated 12/9/2025 Beijing, China - Da Rong Cheng Art Park Licensed 12/12/2025 Mason, OH - Mason Company-operated 12/17/2025 Hong Kong, China - Langham Place Licensed 12/23/2025 Gyeonggi, South Korea - Paju Premium Outlet Licensed 12/23/2025 Orlando, FL - Colonial Marketplace Company-operated 12/30/2025 Pittsburgh, PA - Ross Park Mall Company-operated 12/30/2025 December 31, 2025 December 25, 2024 Shacks in the comparable base 278 235 Shack counts (at the end of the period) System-wide total 659 579 Company-operated 373 329 Licensed total 286 250 Domestic Licensed 47 44 International Licensed 239 206 Fiscal Year Ended
BALANCE SHEETS (UNAUDITED) 19 December 31, December 25, 2025 2024 ASSETS Current assets: Cash and cash equivalents 360,123$ 320,714$ Accounts receivable, net 32,962 19,687 Inventories 7,182 6,014 Prepaid expenses and other current assets 30,080 21,801 Total current assets 430,347 368,216 Property and equipment, net of accumulated depreciation of $551,004 and $457,186 respectively. 625,851 551,600 Operating lease assets 507,253 424,611 Deferred income taxes, net 322,385 341,586 Other assets 10,373 10,958 TOTAL ASSETS 1,896,209$ 1,696,971$ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 24,747$ 23,609$ Accrued expenses 103,354 63,005 Accrued wages and related liabilities 25,481 25,422 Operating lease liabilities, current 63,553 55,739 Other current liabilities 27,783 19,538 Total current liabilities 244,918 187,313 Long-term debt 247,731 246,683 Long-term operating lease liabilities 575,138 494,499 Liabilities under tax receivable agreement, net of current portion 244,463 247,017 Other long-term liabilities 30,210 27,833 Total liabilities 1,342,460 1,203,345 Commitments and contingencies Stockholders' equity: Preferred stock, no par value - 10,000,000 shares authorized; none issued and outstanding as of December 31, 2025 and December 25, 2024. - - Class A common stock, $0.001 par value - 200,000,000 shares authorized; 40,254,281 and 40,068,068 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. 40 40 Class B common stock, $0.001 par value - 35,000,000 shares authorized; 2,434,789 and 2,455,713 shares issued and outstanding as of December 31, 2025 and December 25, 2024, respectively. 2 2 Additional paid-in capital 452,577 442,993 Retained earnings 72,709 26,984 Accumulated other comprehensive loss (1) (1) Total stockholders' equity attributable to Shake Shack, Inc. 525,327 470,018 Non-controlling interests 28,422 23,608 Total equity 553,749 493,626 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,896,209$ 1,696,971$ (in thousands, except share and per share amounts)
STATEMENTS OF INCOME (UNAUDITED) 20 Shack sales 385,258$ 96.2% 316,632$ 96.3% 1,391,166$ 96.3% 1,207,561$ 96.4% Licensing revenue 15,273 3.8% 12,052 3.7% 54,140 3.7% 45,047 3.6% TOTAL REVENUE 400,531 100.0% 328,684 100.0% 1,445,306 100.0% 1,252,608 100.0% Shack-level operating expenses(2): Food and paper costs 110,595 28.7% 88,578 28.0% 396,714 28.5% 339,940 28.2% Labor and related expenses 97,934 25.4% 85,104 26.9% 360,693 25.9% 338,750 28.1% Other operating expenses 59,868 15.5% 47,008 14.8% 212,677 15.3% 178,381 14.8% Occupancy and related expenses 29,413 7.6% 24,047 7.6% 106,632 7.7% 93,069 7.7% General and administrative expenses 50,541 12.6% 41,099 12.5% 176,233 12.2% 149,047 11.9% Depreciation and amortization expense 26,433 6.6% 25,809 7.9% 106,600 7.4% 102,468 8.2% Pre-opening costs 5,203 1.3% 5,118 1.6% 18,001 1.2% 15,547 1.2% Impairments, loss on disposal of assets, and Shack closures 1,800 0.4% 1,711 0.5% 5,248 0.4% 32,368 2.6% TOTAL EXPENSES 381,787 95.3% 318,474 96.9% 1,382,798 95.7% 1,249,570 99.8% INCOME FROM OPERATIONS 18,744 4.7% 10,210 3.1% 62,508 4.3% 3,038 0.2% Other income, net 3,336 0.8% 3,241 1.0% 12,260 0.8% 13,251 1.1% Interest expense (544) (0.1)% (512) (0.2)% (2,159) (0.1)% (2,045) (0.2)% INCOME BEFORE INCOME TAXES 21,536 5.4% 12,939 3.9% 72,609 5.0% 14,244 1.1% Income tax expense 8,537 2.1% 3,606 1.1% 22,903 1.6% 3,424 0.3% NET INCOME 12,999 3.2% 9,333 2.8% 49,706 3.4% 10,820 0.9% Less: Net income attributable to non-controlling interests 1,168 0.3% 623 0.2% 3,981 0.3% 613 0.0% NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC. 11,831$ 3.0% 8,710$ 2.6% 45,725$ 3.2% 10,207$ 0.8% Earnings per share of Class A common stock: Basic $ 0.29 $ 0.22 $ 1.14 $ 0.26 Diluted $ 0.28 $ 0.21 $ 1.09 $ 0.24 Weighted-average shares of Class A common stock outstanding: Basic 40,254 40,047 40,212 39,830 Diluted 41,831 41,872 41,847 44,203 _______________ (1) (2) As a percentage of Shack sales. December 25, December 25, Fiscal Quarter Ended Fiscal Year Ended (in thousands, except per share amounts) 2025 (1) 2024 2025 (1) 2024 December 31, December 31, The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
CASH FLOW STATEMENTS (UNAUDITED) 21 December 31, December 25, (in thousands) 2025 2024 OPERATING ACTIVITIES Net income (including amounts attributable to non-controlling interests) 49,706$ 10,820$ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 106,600 102,468 Amortization of debt issuance costs 1,048 1,047 Amortization of cloud computing assets 2,188 2,138 Non-cash operating lease cost 88,849 77,432 Equity-based compensation 19,503 15,915 Deferred income taxes 16,616 (1,054) Non-cash interest 45 (102) Net amortization of discount on held-to-maturity securities - (440) Impairments, loss on disposal of assets, and Shack closures 5,248 32,368 Changes in operating assets and liabilities: Accounts receivable (9,546) (2,839) Inventories (1,168) (610) Prepaid expenses and other current assets (3,115) (2,629) Other assets (5,959) (2,896) Accounts payable (1,527) 3,356 Accrued expenses 29,902 6,644 Accrued wages and related liabilities 59 4,477 Other current liabilities 3,436 (712) Operating lease liabilities (82,683) (77,167) Other long-term liabilities 3,153 2,939 NET CASH PROVIDED BY OPERATING ACTIVITIES 222,355 171,155 INVESTING ACTIVITIES Purchases of property and equipment (165,849) (135,499) Maturities of held-to-maturity marketable securities - 69,420 NET CASH USED IN INVESTING ACTIVITIES (165,849) (66,079) FINANCING ACTIVITIES Payments on principal of finance leases (5,511) (3,964) Deferred financing costs (10) - Distributions paid to non-controlling interest holders (1,842) (482) Payments under tax receivable agreement (37) - Net proceeds from stock option exercises 123 1,627 Employee withholding taxes related to net settled equity awards (9,820) (6,198) NET CASH USED IN FINANCING ACTIVITIES (17,097) (9,017) Effect of exchange rate changes on cash and cash equivalents - 2 INCREASE IN CASH AND CASH EQUIVALENTS 39,409 96,061 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 320,714 224,653 CASH AND CASH EQUIVALENTS AT END OF PERIOD 360,123$ 320,714$ Fiscal Year Ended
RESTAURANT -LEVEL PROFIT DEFINITIONS 22 Restaurant -Level Profit “Restaurant-level profit,” a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses, including Food and paper costs, Labor and related expenses, Other operating expenses, and Occupancy and related expenses. Restaurant -level Profit Margin "Restaurant-level profit margin," a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses, including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses as a percentage of Shack sales. How This Measure Is Useful When used in conjunction with GAAP financial measures, Restaurant-level profit and Restaurant-level profit margin are supplemental measures of operating performance that the Company believes are useful measures to evaluate the performance and profitability of its Shacks.
Additionally, Restaurant-level profit and Restaurant-level profit margin are key metrics used interally by management to develop internal budgets and forecasts, as well as assess the performance of its Shacks relative to budget and against prior periods. It is also used to evaluate employee compensation as it serves as a metric in certain performance-based employee bonus arrangements. The Company believes presentation of Restaurant-level profit and Restaurant-level profit margin provides investors with a supplemental view of its operating performance that can provide meaningful insights to the underlying operating performance of the Shacks, as these measures depict the operating results that are directly impacted by the Shacks and exclude items that may not be indicative of, or are unrelated to, the ongoing operations of the Shacks.
It may also assist investors to evaluate the Company's performance relative to peers of various sizes and maturities and provides greater transparency with respect to how management evaluates the business, as well as the financial and operational decision-maki g. Limitations of the Usefulness of this Measure Restaurant-level profit and Restaurant-level profit margin may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of Restaurant-level profit and Restaurant-level profit margin is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
Restaurant-level profit excludes certain costs, such as General and administrative expenses and Pre-opening costs, which are considered normal, recurring cash operating expenses and are essential to support the operation and development of the Company's Shacks. Therefore, this measure may not provide a complete understanding of the Company's operating results as a whole and Restaurant-level profit and Restaurant-level profit margin should be reviewed in conjunction with the Company’s GAAP financial results. A reconciliation of Restaurant-level profit to operating income, the most directly comparable GAAP financial measure, is set forth on next slide.
RESTAURANT -LEVEL PROFIT 23 (dollar amounts in thousands) December 31, 2025 (1) December 25, 2024 December 31, 2025 (1) December 25, 2024 Income from operations 18,744$ 10,210$ 62,508$ 3,038$ Less: Licensing revenue 15,273 12,052 54,140 45,047 Add: General and administrative expenses 50,541 41,099 176,233 149,047 Depreciation and amortization expense 26,433 25,809 106,600 102,468 Pre-opening costs 5,203 5,118 18,001 15,547 Impairments, loss on disposal of assets, and Shack closures 1,800 1,711 5,248 32,368 Adjustment: Employee benefit charges(2) - - - 453 Restaurant-level profit 87,448$ 71,895$ 314,450$ 257,874$ Total revenue 400,531$ 328,684$ 1,445,306$ 1,252,608$ Less: Licensing revenue 15,273 12,052 54,140 45,047 Shack sales 385,258$ 316,632$ 1,391,166$ 1,207,561$ Restaurant-level profit margin(3) 22.7% 22.7% 22.6% 21.4% (1) (2) (3) As a percentage of Shack sales. Fiscal Quarter Ended Fiscal Year Ended Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses. The Company operates on a 52/53 week fiscal year.
Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
EBITDA and Adjusted EBITDA EBITDA, a non-GAAP measure, is defined as Net income before interest expense (net of interest income), Income tax expense and Depreciation and amortization expense. Adjusted EBITDA, a non-GAAP measure, is defined as EBITDA (as defined above) excluding equity-based compensation expense, Impairments, loss on disposal of assets and Shack closures, amortization of cloud- based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company's recurring business operations. How These Measures Are Useful When used in conjunction with GAAP financial measures, EBITDA and adjusted EBITDA are supplemental measures of operating performance that the Company believes are useful measures to facilitate comparisons to historical performance and competitors' operating results.
Adjusted EBITDA is a key metric used internally by management to develop internal budgets and forecasts and also serves as a metric in its performance-based equity incentive programs and certain bonus arrangements. The Company believes presentation of EBITDA and adjusted EBITDA provides investors with a supplemental view of the Company's operating performance that facilitates analysis and comparisons of its ongoing business operations because they exclude items that may not be indicative of the Company's ongoing operating performance. Limitations of the Usefulness of These Measures EBITDA and adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation.
Presentation of EBITDA and adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA and adjusted EBITDA exclude certain normal recurring expenses. Therefore, these measures may not provide a complete understanding of the Company's performance and should be reviewed in conjunction with the GAAP financial measures.
A reconciliation of EBITDA and adjusted EBITDA to Net income, the most directly comparable GAAP measure, is set forth on next slide. ADJUSTED EBITDA DEFINITIONS
ADJUSTED EBITDA 25 (dollar amounts in thousands) December 31, 2025 (1) December 25, 2024 December 31, 2025 (1) December 25, 2024 Net income 12,999$ 9,333$ 49,706$ 10,820$ Depreciation and amortization expense 26,433 25,809 106,600 102,468 Interest expense, net 499 474 1,994 1,284 Income tax expense 8,537 3,606 22,903 3,424 EBITDA 48,468$ 39,222$ 181,203$ 117,996$ EBITDA margin 12.1% 11.9% 12.5% 9.4% Equity-based compensation 5,330 4,376 19,503 15,915 Amortization of cloud-based software implementation costs 512 561 2,188 2,138 Impairments, loss on disposal of assets, and Shack closures 1,800 1,711 5,248 32,368 Legal settlements(2) - - 983 - Severance - - 379 - Restatement costs(3) - 778 354 2,378 CEO transition costs - 38 35 679 Employee benefit charges(4) - - - 453 Other(5) - 833,652 Adjusted EBITDA 56,110$ 46,694$ 209,896$ 175,579$ Adjusted EBITDA margin (6) 14.0% 14.2% 14.5% 14.0% (1) (2) (3) Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K. (4) (5) Expenses incurred for professional fees related to non-recurring matters. (6) Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses. Calculated as a percentage of Total revenue, which was $400.5 million and $1,445.3 million for the fiscal quarter and fiscal year ended December 31, 2025, respectively, and $328.7 million and $1,252.6 million for the fiscal quarter and fiscal year ended December 25, 2024, respectively. Fiscal Quarter Ended Fiscal Year Ended Expenses incurred to establish accruals related to the settlements of legal matters.
The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share Adjusted pro forma net income represents Net income attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non- recurring items that the Company does not believe are directly related to its core operations and may not be indicative of recurring business operations. Adjusted pro forma earnings per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards. How These Measures Are Useful When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share are supplemental measures of operating performance that the Company believes are useful measures to evaluate performance period over period and relative to its competitors.
By assuming the full exchange of all outstanding LLC Interests, the Company believes these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in Net income attributable to Shake Shack Inc. driven by increases in its ownership of SSE Holdings, which are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance. Limitations of the Usefulness of These Measures Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should not be considered alternatives to Net income and earnings per share, as determined under GAAP.
While these measures are useful in evaluating the Company's performance, it does not account for the earnings attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the Net income attributable to Shake Shack Inc. Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should be evaluated in conjunction with GAAP financial results. ADJUSTED PRO FORMA NET INCOME AND INCOME PER SHARE DEFINITIONS
ADJUSTED PRO FORMA NET INCOME AND EARNINGS PER SHARE 27 (in thousands, except per share amounts) December 31, 2025 (1) December 25, 2024 December 31, 2025 (1) December 25, 2024 Numerator: Net income attributable to Shake Shack Inc. 11,831$ 8,710$ 45,725$ 10,207$ Adjustments: Reallocation of Net income attributable to non-controlling interests from the assumed exchange of LLC Interests(2) 1,168 623 3,981 613 Impairment charges and Shack closures(3) 1,045 1,191 2,949 29,348 Legal settlements(4) - - 983 - Severance - - 379 - Restatement costs(5) - 778 354 2,378 CEO transition costs - 38 35 679 Employee benefit charges(6) - - - 453 Other(7) - 833,652 Tax impact of above adjustments(8) 2,543 269 3,906 (6,785) Adjusted pro forma net income 16,587$ 11,617$ 58,315$ 40,545$ Denominator: Weighted-average shares of Class A common stock outstanding - diluted 41,831 41,872 41,847 44,203 Adjustments: Assumed exchange of LLC Interests for shares of Class A common stock(2) 2,434 2,456 2,441 - 44,265 44,328 44,288 44,203 Adjusted pro forma earnings per fully exchanged share - diluted 0.37$ 0.26$ 1.32$ 0.92$ December 31, 2025 December 25, 2024 December 31, 2025 December 25, 2024 Earnings per share of Class A common stock - diluted 0.28$ 0.21$ 1.09$ 0.24$ Assumed exchange of LLC Interests for shares of Class A common stock(2) 0.01 - 0.03 - Non-GAAP adjustments(9) 0.08 0.05 0.20 0.68 Adjusted pro forma earnings per fully exchanged share - diluted 0.37$ 0.26$ 1.32$ 0.92$ (1) (2) (3) (4) (5) (6) (7) (8) (9) Expenses incurred for professional fees related to non-recurring matters. Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 26.5% and 24.6% for the fiscal quarter and fiscal year ended December 31, 2025, respectively, and 22.3% and 20.1% for the fiscal quarter and fiscal year ended December 25, 2024, respectively. Amounts include provisions for U.S. federal income taxes, certain LLC entity-level taxes and foreign withholding taxes, assuming the highest statutory rates apportioned to each applicable state, local and foreign jurisdiction.
Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation of Adjusted pro forma net income above, for additional information. Expenses incurred related to Shack closures and impairment charges during fiscal 2024 and fiscal 2025.
Expenses incurred to establish accruals related to the settlements of legal matters. Expenses incurred related to the restatement of prior periods in the 2023 Form 10-K. Expenses related to California healthcare charges for fiscal 2020 through 2023 which do not represent fiscal 2024 Labor and related expenses.
Fiscal Quarter Ended Fiscal Year Ended Adjusted pro forma fully exchanged weighted-average shares of Class A common stock outstanding - diluted Assumes the exchange of all outstanding LLC Interests for shares of Class A common stock, resulting in the elimination of the non-controlling interest and recognition of the net income attributable to non-controlling interests. Fiscal Quarter Ended Fiscal Year Ended The Company operates on a 52/53 week fiscal year. Fiscal year 2025 had 53 weeks with the extra operating week occurring in fiscal fourth quarter 2025.
Adjusted Pro Forma Effective Tax Rate Adjusted pro forma effective tax rate represents the effective tax rate assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurri g items that the Company does not believe are directly related to its core operations and may not be indicative of its recurring business operations. How This Measure Is Useful When used in conjunction with GAAP financial measures, adjusted pro forma effective tax rate is a supplemental measure of operating performance that the Company believes is useful to evaluate its performance period over period and relative to its competitors. By assuming the full exchange of all outstanding LLC Interests, the Company believes this measure facilitates comparisons with other companies that have different organizational and tax structures, as well as comparisons period over peri d because it eliminates the effect of any changes in effective tax rate driven by increases in its ownership of SSE Holdings, wh ch are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance.
Limitations of the Usefulness of this Measure Adjusted pro forma effective tax rate may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma effective tax rate should not be considered an alternative to effective tax ra e, as determined under GAAP. While this measure is useful in evaluating the Company's performance, itdo s not account for the effective tax rate attributable to the non-c trolling interest holders and therefore does not provide a complete understanding of effective tax rate.
Adjusted pro forma effective tax rate should be evaluated in conjunction with GAAP financial results. A reconciliation of adjusted pro forma effective tax rate, the most directly comparable GAAP measure, is set forth on next slide. ADJUSTED PRO FORMA EFFECTIVE TAX RATE DEFINITIONS
2025 ADJUSTED PRO FORMA EFFECTIVE TAX RATE 29 2024 ADJUSTED PRO FORMA EFFECTIVE TAX RATE (dollar amounts in thousands) Income Tax Expense (Benefit) Income (Loss) Before Income Taxes Effective Tax Rate Income Tax Expense (Benefit) Income Before Income Taxes Effective Tax Rate As reported 8,537$ 21,536$ 39.6% 22,903$ 72,609$ 31.5% Non-GAAP adjustments (before tax): Legal settlements - - - - 983 - Severance - - - - 379 - Impairment charge and Shack closures - 1,045 - - 2,949 - CEO transition costs - - - - 35 - Restatement costs - - - - 354 - Other adjustments - - - - 3 - Tax effect of non-GAAP adjustments and assumed exchange of outstanding LLC Interests (2,543) - - (3,906) - - Adjusted pro forma 5,994$ 22,581$ 26.5% 18,997$ 77,312$ 24.6% Less: Net tax impact from stock-based compensation (92) - - 475 - - Adjusted pro forma (excluding windfall tax benefits) 5,902$ 22,581$ 26.1% 19,472$ 77,312$ 25.2% Fiscal Quarter Ended Fiscal Year Ended December 31, 2025 December 31, 2025 (dollar amounts in thousands) Income Tax Expense (Benefit) Income (Loss) Before Income Taxes Effective Tax Rate Income Tax Expense (Benefit) Income (Loss) Before Income Taxes Effective Tax Rate As reported 3,606$ 12,939$ 27.9% 3,424$ 14,244$ 24.0% Non-GAAP adjustments (before tax): Impairment charge and Shack closures - 1,191 - - 29,348 - CEO transition costs - 38 - - 679 - Professional fees for non-recurring matters - 8 - - 3,652 - Restatement costs - 778 - - 2,378 - Employee benefit charges - - - - 453 - Tax effect of non-GAAP adjustments and assumed exchange of outstanding LLC Interests (269) - - 6,785 - - Adjusted pro forma 3,337$ 14,954$ 22.3% 10,209$ 50,754$ 20.1% Less: Net tax impact from stock-based compensation 1,115 - - 2,275 - - Adjusted pro forma (excluding windfall tax benefits) 4,452$ 14,954$ 29.8% 12,484$ 50,754$ 24.6% December 25, 2024 December 25, 2024 Fiscal Quarter Ended Fiscal Year Ended
INVESTOR CONTACT Alison Sternberg, Shake Shack Head of Investor Relations (844) Shack -04 (844 -742 -2504) investor@shakeshack.com MEDIA CONTACT Meg Davis, Shake Shack mcastranova@shakeshack.com CONTACT INFORMATION