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Shares of Shake Shack jump 11 percent after earnings beat

Customers pick up their orders from Shake Shack in Madison Square Park in New York.
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Customers pick up their orders from Shake Shack in Madison Square Park in New York.

Shake Shack shares jumped as much as 11 percent after the closing bell on Wednesday after the company posted third-quarter earnings that beat expectations.

Propelling the stock up was the company's higher-than-expected same-store-sales growth of 2.9 percent in the third quarter. Wall Street had expected same-store-sales growth of 1.7 percent, according to StreetAccount.

Rival restaurants like McDonald's and Starbucks have posted weaker-than-expected same-store-sales growth in recent quarters, blaming election jitters, grocery prices and meal kit delivery services for why consumers were eating at home more often.

Shake Shack reiterated its outlook for same-store-sales growth for the year of between 4 percent and 5 percent. The company is slated to sell its holiday shakes once again in the fourth quarter, which it believes will help drive sales.

The company noted that Chicken Shacks continue to drive sales and consumers can expect to see more innovations with chicken next year.

As for 2017, the company projects same-store sales will rise between 2 percent and 3 percent and indicated that it will increase menu prices in early January. The company will continue to sell its limited-time only Bacon Cheddar Shack through the first quarter and will begin selling a BBQ Burger and BBQ Chicken Shack near the end of that quarter.

"Shake Shack's Q3 performance demonstrates the continued strength and opportunity of our brand," Randy Garutti, CEO of Shake Shack, said in a statement Wednesday. "We delivered another quarter of solid results, with 40 percent growth in total revenue and a 28.8 percent Shack-level operating profit margin. We also hit some important milestones this quarter, including our 100th worldwide Shack opening and our first $1 million sales day in our domestic company-operated Shacks."

In addition, the company is slated to open between 21 to 22 new domestic company-operated restaurants next year, up from the 19 expected in 2016.

Globally, Shake Shack noted that it has experienced softness in the Middle East due to volatility of the oil market and foreign currency effects in the U.K. due to Brexit.

Shake Shack reported earnings of 15 cents per share ex-items on revenues of $75 million. Analysts had expected earnings of of 14 cents on revenues of $69 million, according to Thomson Reuters estimates.