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Call participants
- Chief Executive Officer — Rob Lynch
- Interim Chief Financial Officer — Carrie Britton
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Takeaways
- Total revenue — $1.45 billion, representing more than 15% year-over-year growth.
- System-wide Shack openings — 85 new Shacks opened, including 45 company-operated and 40 licensed locations.
- Same-Shack sales growth — 2.3% increase in company-operated Shacks for the year; fiscal Q4 ended Dec. 31, 2025, posted 2.1% growth with 0.5% positive traffic and 1.6% price/mix contribution.
- Restaurant-level profit margin — Expanded by 120 basis points to 22.6% for the year; fiscal Q4 margin stood at 120 basis points above the prior year.
- Adjusted EBITDA — Approximately $210 million, up 20% year over year; adjusted EBITDA increased by over $80 million in the past two years.
- Net income — Adjusted pro forma net income of $16.6 million ($0.37 per diluted share); net income attributable to Shake Shack was $11.8 million ($0.28 per diluted share).
- Fiscal Q4 revenue — $400.5 million, up 21.9% year over year; company-operated sales were $385.3 million, up 21.7% with $77,000 in average weekly sales.
- Licensing revenue — Fiscal Q4 licensing revenue was $15.2 million, and licensing sales totaled $232.7 million, up 26.4% year over year.
- Labor and efficiency metrics — Labor and related expenses were $97.9 million or 25.4% of Shack sales, improving by 150 basis points year over year.
- Supply chain and build costs — Average build cost for new Shacks fell below $2 million, a 20% reduction compared to the prior year; lifetime preopening costs per Shack declined 14% for the 2025 class versus 2024.
- Inflation impact — Beef inflation reached the mid-teens in the second half of the year; blended food and paper inflation was in the low-single digits, and supply chain initiatives mitigated pressure.
- Wait time and retention — Average guest wait time dropped from seven minutes in 2023 to under six minutes in 2025; team member tenure increased nearly 40% since 2023.
- Cash and cash flow — Ended the year with $360.1 million in cash and equivalents, and generated $56.5 million in free cash flow.
- Strategic initiatives — Rob Lynch said, “our app downloads are up 50% as a result of that program. And we are seeing huge amounts of traffic growth each of these last three months. It gives us a huge amount of confidence for our loyalty program that we intend on launching by the end of this year. And the confidence in that loyalty program grows every day as we continue to see the engagement with our app that does not yet feature some of the added components and value that we will offer in the loyalty platform. So we are extremely excited about launching that and the ability for that to impact our business. Now I will tell you, our intention in launching loyalty is to launch it in an enlightened hospitality-driven way. So we are not going to rush in. We are going to launch it this year, but we are going to continue to optimize it as we scale it.”
- 2026 guidance — Projecting total revenue of $366 million to $370 million for fiscal Q1 ended March 31, 2026, with same-Shack sales growth of 3%-5%, licensing revenue of $12.8 million to $13.2 million, restaurant-level profit margin of 21.5%-22%, and four licensed openings in fiscal Q1.
Summary
Shake Shack (SHAK +10.17%) reported record annual total revenue and double-digit growth in adjusted EBITDA, attributed to operational improvements, disciplined cost management, and strategic menu innovation. Management highlighted supply chain optimizations that produced a 20% reduction in build costs for new Shacks and underscored gains in staff efficiency, with above 90% of Shacks meeting labor targets during the year. The company executed its largest ever global expansion, with 85 openings system-wide and strong performance from newly entered international markets, including a successful partnership presence at the Australian Open. Cash reserves strengthened as free cash flow improved, supporting a robust development pipeline and planned acceleration of openings outside the Northeast region.
- Rob Lynch said, “app downloads are up 50% as a result of that program,” reflecting the effectiveness of digital engagement initiatives in driving incremental guest activity.
- In January 2026, same-Shack sales increased 4.3%, overcoming approximately a 400 basis point negative impact from severe weather, though average weekly sales fell 7% due to holiday calendar shifts.
- Kitchen equipment upgrades reduced cold/fries complaints from over 30% to less than 10% of total guest complaints, as revealed by Lynch.
- Supply chain initiatives included qualifying additional suppliers and running major RFPs, increasing resilience and cost savings while securing premium ingredient supply.
- Marketing investments will remain at 2%-3% of revenue in 2026, with spending now more evenly distributed across quarters than prior years.
- Strategic expansion continues with approximately 34 Shacks under construction and a focus on entering high-potential U.S. markets beyond the Northeast.
Industry glossary
- LTO: Limited Time Offer — a menu item available for a short promotional period, often to drive traffic or test new products.
- AUV: Average Unit Volume — the annualized or periodic sales generated by a single restaurant unit (Shack).
- Crackable Shake: Shake Shack’s premium shake platform featuring mix-ins that are manually ‘crackable’ or breakable into the base shake at serving.
- Restaurant-level profit margin: The percentage of sales remaining after deducting direct operating costs, excluding corporate overhead or G&A expenses.
- G&A: General & Administrative expenses — non-operational corporate overhead, including management, marketing, and administrative payroll.
- AWS: Average Weekly Sales — the average total receipts per Shack per week.
Full Conference Call Transcript
Rob Lynch: Thank you, Alison, and good morning, everyone. Before I begin discussing our 2025 results and our 2026 plans, firstly, I am thankful for the team that we have in place. We have so many talented people on our team, some who have been here from the beginning. I’m also grateful and excited for the executive team that we have built. We’ve also added some remarkable new members to the team who bring a lot of external experience and best practice to bear on the foundation that we are building to support our lofty future aspirations.
My gratitude starts with all of the amazing people in our restaurants who welcome our guests every day, with warm hospitality and amazing cooking that makes Shake Shack Inc. so special. Another reason I am so excited and thankful to be here is because at Shake Shack Inc., we truly believe that we have the best food in the industry. And we endeavor to give access to that food to an ever-growing number of communities throughout the world. In order to do that, we will need to continue to use the best ingredients in our freshly prepared food and conveniently deliver it with value to our guests in every community that we serve.
Our company started as a hot dog stand in a park, a park that had fallen into disrepair and needed its community to bring it back to life. So what did our founders do? They raised money for that park by selling premium hot dogs made in one of the world’s most acclaimed fine dining restaurants, to everyone who was willing to stand in line to order. They served everyone with the same principles of enlightened hospitality that they were known for delivering in their fine dining restaurants. We aspire to bring that founder story to life every day and through each new Shack that we build.
We want to provide the entire world access to the quality of food and hospitality that historically has only been found in higher-priced fine dining establishments. In doing so, we will prove that the world’s best food does not have to be exclusive. But in order to accomplish that goal, we have to continue to use the highest-quality ingredients, turn those ingredients into our culinary-forward recipes, prepare our sandwiches, shakes, and sides fresh when ordered, and then deliver our food in a convenient and timely manner, all at a great value. Certainly not a small task.
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