Latest news with #RobLynch
Yahoo
4 days ago
- Business
- Yahoo
Jim Cramer on Shake Shack: 'Terrific Company With a Stock That Took a Real Header'
Shake Shack Inc. (NYSE:SHAK) is one of the stocks that Jim Cramer spoke about. Cramer mentioned the stock during the episode and said: 'Or what about Shake Shack? Terrific company with a stock that took a real header today, down 14%. As I go over the conference call, I came across this fly in the ointment, 'The majority of the commodity situation is in beef, and obviously we sell a lot of beef.' Boom.' Photo by jason briscoe on Unsplash Shake Shack (NYSE:SHAK) operates and licenses restaurants providing a menu of burgers, chicken, hot dogs, fries, shakes, frozen custard, and beverages. Cramer mentioned the company in a January episode of Squawk on the Street and commented: '[how market viewed ex-Mag 7 on the day of the sell off] I mean, it is interesting, by the way, that Rob Lynch moved over to Shake Shack, and he's done a great job. But I will say that not the right day to ring the opening bell, in the sense of its line of focus. But a good sense that he's brought the company to a growth pattern that's far in excess of we thought it was going to have. He, Papa John's, turnaround guy.' Since the above comment, SHAK stock is up 1.5%. While we acknowledge the potential of SHAK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey
Yahoo
5 days ago
- Business
- Yahoo
Shake Shack Inc. (SHAK): A Bear Case Theory
We came across a bearish thesis on Shake Shack Inc. on Valueinvesting subreddit by stressed_senior110. In this article, we will summarize the bulls' thesis on SHAK. Shake Shack Inc.'s share was trading at $138.18 as of July 28th. SHAK's trailing and forward P/E were 476.48 and 99.01, respectively according to Yahoo Finance. Shake Shack (SHAK) has surged ~72% since April 2025, driven by optimism around margin expansion, store growth guidance, and marketing under CEO Rob Lynch, but the rally rests on shaky fundamentals. Comparable sales (SSS) have recovered to low single-digit growth post-April due largely to aggressive promotions and limited-time offers (LTOs), masking longer-term traffic declines. Management's plan to grow to 1,500 company-owned stores by 2037 appears overly ambitious given intensifying competition and the limited whitespace in Tier 1 markets, where rivals like Five Guys have already slowed expansion. The Street is also overly optimistic on margin expansion, forecasting a 220 bps increase through 2027, but most gains to date have come from low-hanging cost cuts such as labor reductions. Promotional deals touted as margin accretive, like free items with modest minimum spend, risk cannibalizing average order value rather than driving incremental revenue. Heavy reliance on LTOs, exemplified by the Dubai Chocolate Shake temporarily accounting for 5% of sales, creates a vulnerability as colder months approach and seasonal demand fades. Analyst extrapolations of these outsized results appear unrealistic, setting up for negative revisions. Meanwhile, Lynch's operational track record raises concerns: his tenure at Papa John's saw deteriorating product quality, strained franchisee relations, and a 50% stock decline post-COVID, all blamed on external pressures but widely attributed to cost-cutting that compromised brand equity. SHAK's value proposition hinges on quality ingredients, making further erosion of this core differentiator particularly risky. Any guidance cut, LTO pullback, or quality misstep could trigger a sharp rerating from current levels. Previously, we covered a bullish thesis on Wingstop Inc. (WING) by Monopolistic Investor in March 2025, which highlighted strong operating efficiency, rapid expansion plans, and upside potential despite high leverage. The company's stock price has appreciated by approximately 29% since our coverage, as growth and margins continued to impress. The thesis still stands on long-term expansion. stressed_senior110 shares a contrarian view on Shake Shack Inc. (SHAK), emphasizing ambitious growth and heavy reliance on promotions in the same fast-casual space. Shake Shack Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held SHAK at the end of the first quarter which was 43 in the previous quarter. While we acknowledge the potential of SHAK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-08-2025
- Business
- Yahoo
Shake Shack to accelerate restaurant openings
You can find original article here Nrn. Subscribe to our free daily Nrn newsletter. Shake Shack is putting restaurant openings into overdrive, with 80-90 units slated to open this year, executives reported Thursday in their earnings call for the second quarter, ended June 24. The New York City-based fast-casual chain started the year with 574 units globally, meaning that if it achieves its goal, it will expand its footprint by between 14% and 15.7%. With more than half of those new restaurants, 45-50, being company-owned, that would be 'our largest class on record,' chief financial officer Katie Fogertey told investors. 'And we are already deep in the work to open even more shacks next year.' At the beginning of the year, chief executive officer Rob Lynch had set a goal of reaching a total of 1,500 domestic, company-owned restaurants, and he has been working to create operational efficiencies to make that happen. As a result, for the quarter, the restaurant-level profit margin improved by 190 basis points to 23.9% and same-store sales were up by 1.8%, the 18th consecutive quarter of comparable sales growth. The chain opened 13 company-owned restaurants, including two drive-thrus, bringing the total to 46. Nine licensed restaurants opened during the quarter. Lynch stressed that the same-store sales growth for this quarter was much less dependent on price increases than last year, when comps for the year were 3.6% but pricing was up by 7%. For this quarter, the nearly 2% increase was achieved on around a 3% price increase. 'We are building a different, more sustainable, value-enhancing model that still delivers the premium experience that sets us apart,' Lynch said. 'We're doing … the heavy lifting to be able to compete in good times and bad,' he added, sustaining growth even when customer sensitivity to raising prices makes that an impractical lever to pull. 'We're building a model that can sustain itself and drive consistent traffic growth moving forward,' he added. 'And that's all around the culinary innovation and the marketing that we're putting behind it.' He also said that improved operations were improving guest satisfaction scores, which would improve traffic. Indeed, though traffic was down by 70 basis points for the quarter, it improved sequentially each month and turned positive toward the end of the quarter and into July, 'driven by successful marketing activations, operational improvements, compelling menu innovation, and further improving the guest experience,' Fogertey told investors. That menu innovation includes the launch in late April of a barbecue menu, available through summer, of burgers and fried chicken sandwiches with a choice of two sauces — a traditional smoky-tangy variety and a South Carolina-style mustard-based sauce — as well as the permanent addition of fried pickles. And for July, that innovation included the June 24 launch of the Dubai Chocolate Pistachio Shake, which is being sold for around $9.99. That's about $3 more than regular shakes, reflecting premium ingredients such as pistachio paste and toasted kataifi, and operational complexity, such as hand-painting dark chocolate shells on the inside of cups and freezing them, Fogertey told NRN. She added that they're selling well. 'We surprise [our customers] with so much care and so much thought that goes into these products,' she said, adding that same-store sales for fiscal July, ending on the 23rd of the month, were up 3.2%. 'Some of that was helped by the Dubai Shake,' she said. 'However, we also had broad strength across our portfolio,' including the barbecue menu. 'We also had a nice benefit from operational improvements and merchandising improvements on how we're showing up at the (ordering) kiosks,' she added. Lynch said that, as the chain grows, it will use its added financial muscle to advertise more. 'With our increased scale, we are in the initial stages of testing a paid media component of our business model,' he said. We expect to realize the full potential of this brand by clearly defining how Shake Shack is different than fast food and bringing that to life in every market we compete in. 'As a company, we've historically underinvested in advertising versus many of our larger peers,' he added, 'and while Shake Shack sales growth has been positive for many quarters now, this (lack of advertising) has been a limiting factor to achieving our true potential. 'Moving forward, we will support our amazing culinary offerings with traffic-driving media. This has never been the case for Shake Shack. We have historically relied on our word-of-mouth promotions and other bottom-of-the-funnel marketing initiatives to drive traffic.' Those initiatives started last week with paid media promoting the Dubai shake and an ongoing promotion of $1 soda, of any size, when ordered via the app. Fogertey told NRN that the marketing has included out-of-home advertising, paid social media, and TV spots intended to reach new guests as well as remind existing guests of what's on offer. She said the $1 soda promotion has been particularly successful, resulting not only in an increase in app downloads, but also in steady sales despite the discounted drink. 'The average spend with these dollar soda tickets is actually on par, sometimes even slightly better, than our overall average ticket,' she said. And once they're using the app, the chain can engage with customers more personally. 'Those app users are at the highest lifetime value,' she said. 'We are able to provide our digital version of 'Enlightened Hospitality' through that channel,' she said, referring to the service approach of Shake Shack founder Danny Meyer. Industry-wide, digital orders also tend to be higher than other orders. Another innovation is underway at Shake Shack's 46 drive-thru locations, which now all have combo meals, something the chain started testing last year and rolled out during the first quarter of 2025. Lynch said the combo meals weren't an attempt to discount, although he said they did improve value perception. Rather, they allow for faster delivery and improved order accuracy. 'We see potential for combos to drive throughput and frequency,' Lynch said. Although the current focus on menu innovation is on the barbecue line and the Dubai shakes, Lynch said the chain has an 18-month culinary innovation calendar that's 'locked and loaded.' Without going into specifics, Fogertey told NRN there was a lot to look forward to in menu innovation. 'Once Dubai Shake is over, we are going to come with brand new innovation on our sandwiches, we have new innovation coming on sides. We've got some very exciting new products never before seen at Shake Shack,' she said. As for financial guidance for the rest of the year, Fogertey said same-store sales were expected to be in the low single digits. For the third quarter, she anticipates opening 20-25 restaurants — 13-16 company-owned and 7-9 licensed. Revenue is expected to rise between 13% and 15% to $358 million to $364 million, with a profit margin up 100-150 basis points to 22%-22.5%. For the year, margins are expected to be up by around 110 basis points to 22.5% on total revenue of $1.4 billion to $1.5 billion. Contact Bret Thorn at Related Articles Shake Shack is testing combo meals and desserts at select locations Shake Shack's Dubai Chocolate Pistachio Shake to roll out nationwide June 24
Yahoo
01-08-2025
- Business
- Yahoo
Shake Shack to spend more on ads to sustain sales growth
This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. Dive Brief: Shake Shack same-store sales rose 1.8% in Q2 2025, driven by a shifting order mix and increased prices, but partly offset by a decrease in traffic, according to the brand's Q2 shareholder letter. The brand will increase its paid media ad spend as a strategic component of its business, CEO Rob Lynch said during the chain's earnings call. An early use of that ad spend, CFO Katie Fogerty said, would be to support promotions like the chain's Dubai Chocolate Shake. Dive Insight: To capitalize on the success of its core operations and the buzz driven by limited-time menu items, Lynch said the brand was looking to launch paid media advertising at scale. An emphasis on paid media is a departure from the brand's pervious strategies, Lynch said. 'It's hard to believe, but all of the marketing has always been word of mouth, earned media and bottom of the funnel promo activations,' Lynch said. The chain began testing paid media programs in select markets over the last two weeks. While test results aren't recorded in the brand's Q2 earnings report, Lynch said the company was 'ecstatic' with the results. Lynch said Shake Shack's marketing focus would be on setting the chain apart from fast food competitors. A focus on the brand's identity and premium menu items could help the chain take occasions from QSR burger brands, which have struggled to grow same-store sales as pricing pressure has eroded QSR's traditional value edge over both casual dining and fast casual competitors. Chili's, in particular, has seen its efforts to contrast its burgers with fast food drive astronomical traffic growth. 'We're making these investments because we do believe that they will drive sales and margin expansion, but that is not in the guidance today,' Fogerty said. Recommended Reading Shake Shack's CFO talks 1,500-unit goal, drive-thru and restaurant optimization Sign in to access your portfolio
Yahoo
21-07-2025
- Business
- Yahoo
Shake Shack Inc. (SHAK): It's Not Expensive At All, Sayd Jim Cramer
We recently published . Shake Shack Inc. (NYSE:SHAK) is one of the stocks Jim Cramer recently discussed. Shake Shack Inc. (NYSE:SHAK) is an American fast food chain. Its shares have gained a modest 1.3% year-to-date as worries about consumer spending have made investors hesitant to pile into the stock. In his previous comments about Shake Shack Inc. (NYSE:SHAK), Cramer was exasperated with the negativity surrounding the firm. This time, he praised the firm's CEO and continued to oppose the detractors: '[On whether he though SHAK's expensive]Nooo, you know that's, no one. I mean I read these things and I just say, okay look, look whoever it is don't they know that this is Rob Lynch. Now, Rob Lynch who saved PapaJohn's, has he spent any time with Rob? I mean Rob Lynch has turned this Shake Shack around. He has huge ambitions. It's only a 5.8 billion dollar company. And everyone knew it was undermanaged. I think he's crushing it. So is it overvalued? Against what? This guy's doing a remarkable job. Pay attention to the CEO. Look at the CEO. This is not some guy who just walked in and said you know what, how do I make a milkshake? You have Lynch, one of the greatest managers in restaurants.' A cook in a busy kitchen preparing a delicious cooking of burgers and fries. Previously, Cramer remarked on Shake Shack Inc. (NYSE:SHAK)'s share price performance: 'But I will say this. We have a new theme going on here. And the theme is, if we thought it was going to be bad, and it's bad, we buy. Shake-Shack, down six. Well we knew it was gonna be bad. Will you give me a break? Now it's up.' While we acknowledge the potential of SHAK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey.
