Shake Shack is opening more locations and investors are cheering.
The burger chain said it would be expanding the number of its restaurants in 2017 and 2018 and raised both its same-stores sales and revenue estimates for the end of this year. Shares of the burger chain rose as high as 9.9 percent on Wednesday in after-hours trading following the news.
Here's what Shake Shack reported compared with Wall Street's expectations:
- Adjusted EPS: 17 cents vs. expected 15 cents, according to Thomson Reuters
- Revenue: $94.6 million vs. expected $94.5 million, according to Thomson Reuters
- Same-store sales: down 1.6 percent vs. expected decline of 2.6 percent, according to StreetAccount
During an earnings conference call Wednesday, CEO Randy Garutti said that the company plans to open as many as 26 company-operated locations domestically before the end of the year, up from the 23 to 24 it had expected previously.
By the end of 2018, Shake Shack is slated to open between 32 and 35 new domestic company-operated locations, with about 20 percent of the new "shacks" expected to open in new markets.
Included in these store openings is a new location in Atlanta International Airport's Terminal A. Garutti said that the company is already "thrilled" with the early results of its location in Los Angeles International Airport.
Shake Shack said third-quarter net income rose to $5 million, or 19 cents a share, from $3.8 million, or 15 cents a share, a year ago. On an adjusted basis, the company earned 17 cents a share, outpacing Wall Street estimates of 15 cents a share.
Revenue rose to $94.6 million from $74.6 million a year ago. The revenue was slightly higher than analysts expectations of $94.5 million.
The company on Wednesday said it now expects revenue for 2017 to be at least $354 million, up from its previous forecast of at least $351 million.
In addition to bolstering its revenue outlook, the company updated its same-store sales estimate for 2017 to be down between 1.5 to 2 percent. Previously, Shake Shack anticipated same-store sales would fall between 2 to 3 percent.
The bump comes after the company reported that same-store sales in the third quarter were down 1.6 percent, a smaller decline than analysts had forecast. Wall Street anticipated that the burger chain would report a same-store sales drop of 2.6 percent.
The company said that its domestic chains averaged $91,000 in sales per week, a slight decline from last quarter which saw an average of $92,000 per week.
Garutti said during an earnings conference call that the company lost about $300,000 during the quarter due to restaurant closures associated with Hurricanes Harvey and Irma. Nine locations were closed for a total of 33 days, he said. During the closure, Shake Shack paid employees for the hours they would have worked.