Shake Shack lowered its financial outlook for the quarter ending July 1, projecting overall revenue of $415 million to $420 million — down from an earlier target of $424 million to $428 million — as Chief Executive Rob Lynch pointed to macroeconomic uncertainty, a competitive environment, and related pressures affecting the business. The company now expects same-store sales growth at its company-operated locations of 2.5% to 3%, a narrower range than the 3% to 5% it had previously forecast.
Shares fell 9.2% in premarket trading Tuesday to $56.49 following the announcement, extending a decline that had already wiped more than 30% from the stock’s value over the preceding three months.
“It’s important to emphasize that our fundamental business drivers remain strong,” Lynch said in a statement. The company still expects licensing revenue of $13.5 million to $13.7 million for the second quarter and plans to open about eight licensed premises during the period, unchanged from prior guidance.
The guidance cut follows a first quarter in which Shake Shack swung to a loss of $290,000, squeezed by investments meant to drive traffic during a period when consumers are spending less at restaurants. Revenue in the first quarter rose 14% to $366.7 million, and same-store sales grew 4.6%.
High beef prices have continued to pressure the company’s margins. Lynch said last month that he expects beef costs to stay elevated.
For the full fiscal year ending Dec. 30, Shake Shack now projects net income of $45 million to $55 million, down from an earlier range of $50 million to $60 million. Adjusted earnings before interest, taxes, depreciation and amortization are forecast at $225 million to $235 million, compared with prior guidance of $230 million to $245 million.
The company operates more than 690 locations, including over 445 in the United States.