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| Statement |
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| However, even with the pressures we face and persistent inflation, we guide second quarter Shack-level operating profit margins to reach approximately 20%, marking the highest level of quarterly profitability that we have delivered since the onset of Covid |
| In April, we benefited from driving a strong mix of sales into our own channels and had a lesser benefit from menu price than we did in the first quarter |
| Kiosk is our highest margin channel and we are pleased with our return on investment here |
| I mean, very impressed with the 19% to 20% guidance |
| 2023 is off to a strong start with first quarter results ahead of our expectations as we grew sales, expanded margins and remain disciplined on expenses across the company, including G&A and CapEx investments |
| We are proud to report that we are executing ahead of this timeline |
| System-wide sales grew 28% year-over-year to nearly $395 million as our licensed business globally posted our strongest quarter ever |
| Finally, our balance sheet remains solid with $293.4 million in cash and cash equivalence at the end of the quarter |
| And as we've shared, the team has maintained an intense focus on growing profitability and we executed on that goal to bring restaurant margins up to 18.3%, a 310 basis point improvement over last year |
| Based on our increased pipeline and strong execution in our domestic and international license business already this year, we're raising guidance today to 30 to 35 Shacks expected to open throughout 2023 |
| Quarter-to-date solid momentum has continued with AWS and fiscal April rising to 77,000 |
| Same-Shack sales, about 4% and tracking well towards increasing our Shack-level margins back above 20%, which Katie will talk more about in a bit |
| We're really proud of the team's progress in each of our priority areas |
| We showed strong progress against that goal in the first quarter as we grew in-Shack, same store sales by more than 20% year-over-year and more than doubled our total Kiosk sales versus last year |
| And we're also really encouraged by the work that we've done around staffing and improving, retention around our team members |
| We are also pleased with April same-Shack sales of about 4% versus last year; an average weekly sales of 77,000 up versus the 76,000 in March despite shifts in the spring break calendar |
| We're really proud of the team and the way they continue to execute our strategic plan, driving sales and better profitability across our restaurants |
| So, overall very pleased with what we're seeing in Kiosk |
| Each of these metrics contributes to better throughput, optimizing sales, and increasing our operating profit while building a bench of talented leaders to achieve our growth goals and provide real advancement for the lives of our team members |
| So, I'm really excited by what this, enables our team members to accomplish in-Shacks, how it enables us to, better target the, the labor in the Shacks and provide, hopefully a better guest experience |
| As a strong foundation, we can better execute our core operations focus menu strategy, and digital tools |
| This quarter we captured strong performance and guest satisfaction with our premium white truffle menu at our innovation kitchen and throughout our supply chain, we are constantly testing new and exciting menu items for our guests that highlight our commitment to premium ingredients and the kind of menu items that only happen at Shake Shacks |
| We over-indexed to higher income consumers, we were really encouraged by that 4.8% traffic we generated in the first quarter |
| Our license Shacks also performed well this quarter as we grew sales 33.4% year-over-year to $150.5 million |
| And so it's a, it's a really amazing experience |
| We have had successful recent openings across the world and our partners have performed exceptionally well serving the strong guest demand in particular in the U.S |
| System-Wide sales reached a record high at $394.7 million, up 27.5% year-over-year with stronger sales and flow through as well as expense discipline |
| The event was [indiscernible] by Chance The Rapper and helped kick-off the extraordinary success of the movie |
| Despite margin pressure from a large number of recent Shack openings and persistent inflation, our strong performance this quarter was a direct outcome of progress on our four key priorities to improve our restaurant profitability |
| And so that together really makes that our highest margin channel |
| Statement |
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| As expected, we face profitability pressures from the 28 new Shack openings over the past six months, still working their way up to optimized staffing levels |
| But conversely, and we, we have some of this in our guidance, I would say, one of the, the biggest risks to achieving that range is, if we had macroeconomic uncertainty outside of what we're expecting today, we had a more significant fall off in the consumer |
| However, if there is more material macro, economic contraction than what we're, we're pricing in our guidance, we may miss that |
| I was a little surprised to see that, that that's what the recent store class has achieved, given the margin pressure that we've seen over the last couple of years elevated costs |
| However, we have recently started to see our beef costs increase with broad-based challenges across the supply chain, and we anticipate this to be a material pressure throughout the year |
| We're reflecting a degree of impact from potential consumer softness as well as beef inflationary pressures above and beyond what we're experiencing today |
| We've also talked about that being a pressure for our ability to replace equipment, and it was resulting in higher service costs for that equipment |
| Covid has had a larger impact on our business than many of our competitors, and its lingering impacts on consumer mobility patterns, including work from home trends, has been a challenge for us |
| Obviously this last few years has been incredibly challenging on that front |
| But as we've shared, even some of our highest volume Shacks in some of our deepest urban communities, New York, Downtown, San Francisco, some others are still impacted, still impacted |
| As we've discussed and you're seeing around the industry, persistent inflation and construction costs, permit delays and equipment availability continue to impact our openings and our near term returns |
| Food and paper costs were $71.8 million or 29.4% of Shack sales 100 basis points below last year |
| It's possible that we have more pressures on that side |
| This is resulting in mid single digit year-over-year wage pressures taken together |
| That was a year of deep impacts here at Shake Shack and for the restaurant industry |
| Our operating backdrop is not easy |
| But we're also going to be cautious |
| And then beef, beef, we've continue to say beef is the largest part of uncertainty in our basket this year |
| We'll see with a consumer softening, who knows where that will go, but we expect those trends to continue |
| And Katie, you mentioned, the uncertain macro and the short term |
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