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Shake Shack raises wages in D.C. market

Though its labor costs for the second quarter decreased year over year, Shake Shack expects future costs in that area to rise, as the fast-casual burger company last month raised starting wages at its four Washington, D.C., locations to $12 an hour, Shake Shack said Monday.

Increasing wages at those units is part of a proactive strategy for employee compensation, recruiting and development, Shake Shack CFO Jeff Uttz told investors.

“We have always taken care of our team and offered competitive compensation packages,” Uttz said, noting that pressure to increase restaurant wages won’t likely ease “anytime soon.”

Same-store sales at Shake Shack rose 12.9 percent year over year during Q2, beating analysts’ estimates by more than 4 percentage points.

Shack Shack credited higher menu prices, the return of its crinkle-cut fries offering, a positive menu-mix shift and heightened brand awareness due to press surrounding the company’s IPO with driving this stronger-than-anticipated growth. 

Net income for the company fell 40 percent during the quarter ended July 1, to $1.1 million, on revenues of $48.5 million—a 74.7 percent increase from the same period last year.

Buoyed by its Q2 performance, the company raised its guidance for the remainder of the fiscal year, anticipating comp sales in the mid- to high-single digits, up from the low- to mid-single digit increase it had previously expected.

Shake Shack has also added two new restaurants to its development schedule, with the intention of adding 12 new domestic locations by the end of the fiscal year. During Q2, the concept added its first location in Austin, Texas, and additional units in Chicago and New Jersey.
 

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