Management expert on Shack Shack stock, McDonald’s controversy
Drucker School of Management’s Ryan Patel speaks about Shake Shack’s youth as a company and how it’s affecting its stock. Patel also discusses the McDonald’s top HR executive’s departure.
Weak sales at Shake Shack store locations weighed on the fast-casual burger chain’s fourth-quarter earnings report on Monday.
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The New York-based company said same-store sales declined 3.6 percent in the fourth quarter. Same-store sales are a key metric in the fast-food industry because they are considered a measure of customer foot traffic.
Shake Shack reported a net loss of $2.1 million, or 6 cents per share, a steeper decline than the 1-cent-per-share loss expected on Wall Street, according to Refinitiv data. Total revenue rose about 22 percent to $151.4 million, short of an expected $153.14 million.
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Shake Shack CEO Randy Garutti attributed the same-store sales shortfall to the chain’s focus on rapid expansion in recent quarters. Shake Shack opened 49 new store locations in the U.S. in fiscal 2019 and plans to open several dozen stores globally in fiscal 2020.
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“We recognize this level of growth and investment, at times, can have a near-term impact on same-Shack sales and other aspects of our financial performance, but we believe the company will ultimately benefit from this strategy over time,” Garutti said in a statement. “We are excited about our future and the significant runway we have ahead, as we quickly approach a billion dollars in total system-wide sales and build a company not just for quarters, but for years to come.”