Shake Shack announced Monday it is borrowing $225 million to fund ventures such as drive-thrus, new store formats and unit growth.
The fast casual is offering $225 million of convertible senior notes, due in 2028, to private investors. Those buyers will have the option of purchasing up to an additional $25 million of the notes.
The notes will be converted into cash, stock or a combination of both, Shake Shack said in a Securities and Exchange Commission filing.
“Shake Shack expects to use the net proceeds from the offering to support its growth and development plans,” the company said in the filing. “Investments may include, but not be limited to, the opening of new Shacks, Shack format evolution, such as drive-thru, Shack Track, the digital guest experience and continued investment in talent. Other uses of proceeds include working capital and general corporate purposes.”
Shake Shack has previously said it plans to open its first drive-thru, in Orlando, by the middle to later half of the year. The New York City-based chain has also announce plans to operate five to eight drive-thru locations around the country by the end of 2022.
The chain, with a portfolio heavily weighted toward urban restaurants, is eyeing new locations and service models as the pandemic continues. In addition to drive-thrus, Shake Shack has added pickup windows, curbside capabilities, app-based delivery and more.
Same-store sales were down 17.4% systemwide in Q4, with suburban units roughly flat and urban same-store sales declining 31%. Shake Shack reported an operating loss of $12.2 million during Q4.