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Shake Shack (NYSE:SHAK) reported first quarter financial results that missed Wall Street estimates on both earnings and revenue, prompting a sharp drop in its shares of almost 28% on Thursday morning.
The company reported break-even adjusted earnings per share, compared with analyst expectations of $0.12.
Revenue came in at $366.7 million, slightly below the $372 million consensus estimate, though still up 14.3% from the prior year. Total revenue included $354 million from Shack sales and $12.7 million from licensing revenue.
System-wide sales rose 14.1% year over year to $558.3 million, supported by new restaurant openings and growth in comparable sales. Same-Shack sales increased 4.6% year over year, driven by a 1.4% rise in traffic along with menu and marketing initiatives.
Despite top-line growth, profitability showed signs of pressure. The company posted an operating loss of $2.6 million, compared with operating income of $2.8 million a year earlier.
Adjusted EBITDA declined 9.3% year over year to $37.0 million. Restaurant-level profit totaled $75.1 million, representing a 21.2% margin, up 50 basis points from the prior year. The company attributed the margin improvement to labour management efficiencies and lower costs in certain commodity categories, partially offset by higher beef prices and other sales-related expenses.
Shake Shack opened 17 new company-operated locations and five licensed Shacks during the quarter, continuing its expansion strategy.
"I’m pleased to report that our first quarter performance showcases continued sales momentum in our Company -operated Shacks and meaningful progress against our six strategic priorities for 2026,” Shake Shack CEO Rob Lynch said in the company’s earnings release.
“While significant weather impacts pressured our comp by 240 basis points and affected our Adjusted EBITDA for the quarter, our underlying sales and traffic momentum remained str