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Shake Shack’s urban-suburban divide continues

The fast-casual chain continues to see improvement during the pandemic, but some locations are gaining back sales at a much faster pace than others.
Photo courtesy of Shake Shack

The gulf between the performance of Shake Shack’s urban and suburban locations continues to be vast as the pandemic drags on, according to preliminary Q4 results released by the chain Tuesday.

Overall, same-store sales at Shake Shack for the quarter ended Dec. 30 were down 17.4%, a significant improvement from Q3, in which the chain’s sales were negative 31.7%.

But same-store sales at Shake Shack’s suburban restaurants were flat during Q4, showing recovery from being at negative 16% during the previous quarter.

Shake Shack’s urban locations, though, tell a much different story. Urban restaurants reported same-store sales down 31% in Q4, with units in New York City's borough of Manhattan down 45%. Manhattan Shake Shacks had been negative 60% during Q3.

Total revenue in Q4 increased 4% to $157.5 million over the same period the previous year. An extra week during the quarter bumped up that revenue. Without that week, total revenue actually decreased 3.3%.

Curbside pickup and a limited test of delivery through the chain’s app, with plans for a broader rollout this year, will help the chain navigate the pandemic, CEO Randy Garutti said in a statement.

“We believe these digital investments to be a critical differentiator for our business, creating the opportunity to drive greater engagement and frequency with both new and existing guests,” Garutti said in a statement.

Early in the pandemic, it became clear that Shake Shack’s urban-focused real estate portfolio, long a great asset, was a hindrance. Its locations in some of the country’s areas of highest foot traffic, such as Grand Central Terminal and New York City’s theater district, are of little help now.

The New York City-based chain is scheduled to open its first drive-thru unit later this year.

The chain expects to open 35 to 40 new stores this year, with many of them slated for the second half of 2021. In 2022, Shake Shack intends to open 45 to 50 new restaurants.

“These openings are expected to incorporate a version of our new Shack Track digital pre-ordering and pick-up capability,” he said. “Our evolving designs focus on enhancement of the guest experience by implementing friction-reduced order and pickup areas across all formats.”

Shake Shack also plans to open 15 to 20 new licensed units this year and 20 to 25 licensed restaurants in 2022.

 

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