Shake Shake’s shares tumbled 30% on Thursday after it blamed disappointing financial results on bad weather, high beef prices and tourism declines.
The Big Apple-based burger chain missed Wall Street’s estimates for sales and profits in the quarter ended April 1, losing $290,000 compared to last year when it posted a $4.25 million profit. Revenues rose by 14.3% to $367 million, but Wall Street had expected $371 million.
Bitter cold and rainy weather in January and March kept diners away, according to Shake Shack.
“We came into this quarter with a significantly higher sales rate than … what the outcome was. And that was primarily [due to] the weather,” chief executive Rob Lynch lamented on an earnings call with analysts.
The company also flagged beef inflation — rising by a “low-teens percentage”– and fewer tourists visiting its home city as impacting its financial performance.
“We continue to see declines in tourism in our largest urban markets, particularly New York City,” Lynch said. “Inbound tourism has slowed substantially, which has further pressured sales, particularly at high-traffic locations.
Other restaurant chains, including McDonald’s, have raised concerns about consumer spending amid rising inflation. Mickey D’s CEO Chris Kempczinski warned during a Thursday earnings call that consumer spending may get “a little bit worse” as high fuel prices slam wallets.
Shake Shack named Michelle Hook as its new chief financial officer on Thursday. The Domino’s Pizza veteran has a “track record of scaling growth companies and building high-performing teams,” the company said in a statement.
She succeeds Katherine Fogerty, a former Goldman Sachs vice president, who led finances for Shake Shake since 2020 and stepped down in March.
