Shake Shack Plunges To Record Low As Store Growth Unexpectedly Reverses

Tyler Durden's picture

In May of 2015, we watched in stunned amazement as the price of Shake Shack stock exploded from its January IPO to soar to just shy of $100/share. Just around the time SHAK hit all time highs for the first and only time, we showed just how amazing the value of any one Shake Shack restaurant was in the context of its peers. As of May 2, 2015, it looked as follows:

Back then we cautioned that this valuation was unsustainabe. And, since May 2015, the stock price of SHAK has - well - dropped with the final indignity coming moments ago when SHAK reported first quarter earnings which on the surface were not bad: Q1 EPS of 10 cents beat estimates of 8 cents, with revenue coming in higher than expected also, at $76.7 million, an increase of 41.7%, and above the $74.7 million.  Operating income rose 19.4% while Adjusted EBITDA rose 28.9% to $12.2.

That was the good news. The bad news, and the reason why the stock just plunged to all time lows, is that the "growth story" is now in tatters, because in addition to everything else, SHAK also reported that same store sales declined 2.5%, far below the +0.2% estimate, and the first negative print since the company went public.

And worse, in its outlook, the company stated that "Same-Shack sales growth to be flat to prior year (vs. 2% to 3%), which includes approximately 1.5% to 2% of menu price increases taken at the end of December."

In other words, that inflation which the Fed can't find anywhere, just killed another growth story, and the result is a plunge in the stock price to new all time lows.

As to what the updated "value per restaurant" chart looks like now, here is the answer.

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Cognitive Dissonance's picture

It's the Tesla of burgers and shakes.

froze25's picture

I got to say, I have had their product and its pretty damn good. Unlike Tesla that makes crap and tries to pass it off as something good.

Cognitive Dissonance's picture

Imagine how good their burgers would be if they were government subsidized.

<Or at least their stock.>

spastic_colon's picture

i'm putting all my money into that company that flattens their meat patties before they cook them; now that's true innovation!

Ghost of Porky's picture

Why don't they use pink slime filler like the professionals do?

StackShinyStuff's picture

I guess people don't want to pay 10 bucks for a fucking burger

chunga's picture

I've never been there but it's good to flatten out burgers on top of a bunch of super thin sliced pickles amd onions. Woa

Blazing in BC's picture

For a truly unique experience, they should have a coral where you pick the cow you want and then you watch them make it into your fresh burger that you then cook yourself on the built in bbq at your table.

Glassport's picture

You mean Smash Burger, or, oh wait, the guys who did it first - Steak and Shake?  Make mine a Buttery Wisconsin with a Blackberry Shake please.

Raffie's picture

Nothing Burgers and Air Shakes

ParkAveFlasher's picture

That is a tasty burger, true. 

A double-shack for me, a chicken shack for the missus, and a shack and a hot dog for the squirts and a couple of fries to share.  That'll be $53M.

Giant Meteor's picture

Obviously you've taken the familiy to a movie recently, perhaps a sporting venue ..

ParkAveFlasher's picture

Actually, there's one that we frequent by church.

My call is that chick-fil-a sweeps in and snaps their asses up ... location, supply chain, branding, and all.

IntTheLight's picture

Great comment. Food way overpriced. Servings so small. Go to portillos. Now that's a damned good burger. Great dogs! Fries. And chocolate cake.

Jein's picture

You retards obviously haven't driven a tesla

Giant Meteor's picture

I will gladly pay you Tuesday for a burger today !

Temporalist's picture

I remember The Gap bubble burst being one of the singals during the 2000 crash as an analogy

Cognitive Dissonance's picture

The oldest bubbles are the bestest bubbles. :-)

scoutshonor's picture

This is unpossible.  Cramer said it was the bestest--he even hit the big red button and everything.

Able Ape's picture

Shakes and Burgers, my what a novel idea!  BUY! BUY! BUY!...

Giant Meteor's picture

Good point. I wish someone would hurry up and invent a hotdog ..

Gilled cheese vendor carts maybe ..

Able Ape's picture

Yeah, what about sliced bread?  Won't that be great!...

Stormtrooper's picture

Is there an app for that?

TheSilentMajority's picture

it's made of people!

roisaber's picture

You don't get to decide that.

t./pol/

HooRAY4rSIDE's picture

You're NOT the one that I want (final ride)

 

https://www.youtube.com/watch?v=pYQltuvKCD4

spastic_colon's picture

it looks like only 9.8 more to go to find its true intrinsic value..........

CorporateCongress's picture

Why don't they just double the # of restaurants and they get the number below 5. And then do that again and again and again.....

Good luck with that SHAK

I am Jobe's picture

Americans need to stuff themselves and gain more weight. 

rejected's picture

Wife and I used to go to Red Lobster for anniversary dinner. Stopped last year as the food and service quality really has went down. Just not worth it. Had nothing to do with the economy...

ParkAveFlasher's picture

I don't know the decade that Red Lobster was quality, but you gotta get out more bro.

IndyPat's picture

That woulda been mid 80's.

Place could make your prom date spread like butter.

IntTheLight's picture

Never! Red Lobster! Ick. Fish from sewage treatment plants in Asia.

Stan Smith's picture

    Its burgers and fries.   How unique is that?   So it's Steak n' Shake for the hipster crowd.   They are good burgers, I've enjoyed them myself.    But it's not like they put other freshly made ground beef to shame.    The valuation that started originally was nearly as hilarious most of the other IPOs that have come out recently.   

    Look, they make a good product, so thats a plus.   But so do at least another half dozen chains nationally, and when competing with local or regional places it's hard to find the uniqueness other than catering to the crowd that will overpay for it.   There IS a market for that to be sure.   Hell, Apple has nearly fucking minted that track.  

    It does show how being perceived as being the "hot" thing carries weight.    But let's not pretend what these guys are doing is new and unique.

DFCtomm's picture

I have a theory. The quality of taste of any given animal is directly proportional to how "cute" a 16 year old girl would find it to be. Horse should taste great.

Cognitive Dissonance's picture

Based upon your theory, I'm throwing the cat in the crock pot tonight.

DFCtomm's picture

depends on how fat it is. If it's one of those lazy house cats then it's ready, but if it's lean and kind of scrawny then you'll need to fatten it up for a bit.

TeethVillage88s's picture

I hate inflated prices, but never been to shake shak.

Does this look right?

ShackBurger Single $5.29
ShackBurger Double $8.09
SmokeShack Single $6.84
SmokeShack Double $9.64
Shack Shack $9.59

Beer $6 Bucks
Wine $8 Bucks

IndyPat's picture

Five Guys is pretty spendy, but they ain't crying.

augustusgloop's picture

double shack (in high rent brooklyn) costs nearly 2.5x a double double. that's enough to prevent shake shack from ever making much ground on the west coast (I prefer a double shack, but on a regular basis, i would go to in n out).  Big mistake to take Shake Shack public c.f. In N Out. 

TeethVillage88s's picture

Panera turns out to be more expensive, but I haven't been there for years.

Premium Signature Sandwiches
Roasted Turkey & Avocado BLT Whole $8.99
Roasted Turkey & Avocado BLT Half $6.29
Roasted Turkey & Caramelized Kale Whole $9.29
Roasted Turkey & Caramelized Kale Half $6.59

moonmac's picture

Steak & Shake’s hand dipped milk shakes made with real ice cream blow Burger & Shake’s nasty yogurt smoothies away!

Peterman333's picture

Really good cheeseburgers that cost a fortune (Shake Shack Five guys)?

No thanks, I want really good cheeseburgers that don't cost a fortune (In n Out Burger).

jago's picture

runs counter the zeitgeist of health and wellness.

like Krispy Kreme.. went from 50 to 2.