Published on 28 May 2024 on Zacks via Yahoo Finance

Shake Shack (SHAK) Gains From Same-Shack Sales Amid High Costs

Shake Shack Inc. SHAK has experienced remarkable success, fueled by strong same-shack sales, strategic expansion and innovative menu offerings. These initiatives have propelled the company's shares upward by an impressive 49.1% over the past year, in stark contrast to the industry’s 4.8% decline.However, in the past month, the stock has declined 7.8%. The decline was primarily due to inflationary pressure. Its premium ingredients have witnessed a significant increase in price in a very short period. Total expenses during the first quarter came in at $290.5 million compared with $256.5 million in the prior-year quarter. The company anticipates inflationary pressures, on wages, food and paper to persist for some time.Despite the stock's poor performance, let's take a closer look to understand why investors should consider holding onto it.

Robust Same-Shack Sales

Shake Shack continues to impress investors with strong global same-shack sales growth. During the first, second, third and fourth quarters of fiscal 2023, the metric improved 10.3%, 3%, 2.3% and 2.8%, respectively, year over year. The uptrend continued in first-quarter fiscal 2024, with the metric improving 1.6% year over year. For fiscal 2024, same-shack sales are expected to grow by low single digits year over year. Notably, the first quarter of fiscal 2024 marks the 13th consecutive quarter of same-shack sales improvement. Our model projects a 2.2% year-over-year increase in same-shack sales for 2024.