Shake Shack 2015 Annual Report Download - page 13

Table of Contents
MANAGEMENT INFORMATION SYSTEMS
Our domestic company-operated Shacks use computerized point-of-sale and back-
office systems created by NCR Corporation, which we believe are scalable to support our growth
plans. These point-of-
sale systems are designed specifically for the restaurant industry and we use many customized features to increase operational effectiveness, internal
communication and data analysis. This system provides a touch screen interface, graphical order confirmation display, touch screen kitchen display and integrated, high-
speed credit
card and gift card processing. The point-of-
sale system is used to collect daily transaction data, which generates information about daily sales, product mix and average transaction size.
Our back-office computer systems are designed to assist in the management of our domestic company-operated Shacks and provide real-
time labor and food cost management tools.
These tools provide the home office and operations management quick access to detailed business data and reduces the amount time spent by our Shack-
level managers on
administrative needs. The systems provide our Shack-
level managers the ability to submit orders electronically with our distribution network. The system also supplies sales, bank
deposit and variance data to our accounting department on a daily basis. We use this data to generate daily sales information and weekly consolidated reports regarding sales and other
key measures, as well as preliminary weekly detailed profit and loss statements for each Shack with final reports following the end of each period.
INTELLECTUAL PROPERTY
Since our inception, we have undertaken to strategically and proactively develop our intellectual property portfolio by registering our trademarks and service marks worldwide. As of
December 31, 2014 , we had 16 registered marks domestically, including registrations in our core marks ("Shake Shack," "Shack Burger," " " and "
") and certain other
marks, such as Stand for Something Good. Internationally, we have registered our core marks in over 80 countries spanning six continents. These marks are registered in multiple
international trademark classes, including for restaurant services, food services, non-
alcoholic beverages and apparel. We also own the domain www.shakeshack.com as well as over 60
other domain names for use in other markets.
In addition, we have agreements with the suppliers of our proprietary products stating that the recipes and production processes associated with those products are our property,
confidential to us, and may not be provided to any other customer. Our proprietary products include the burger recipe for our whole muscle blend and the patty grinding procedure and
the product formulations for our ShackSauce, 'Shroom Burger, cheese sauce, unflavored custard base, chocolate custard base, and certain toppings and custard mix-
ins. We also have
exclusive arrangements with our suppliers of ShackMeister Ale, Shack Red wine, Shack White wine, all-natural hot dog and all-natural chicken sausage.
GOVERNMENT REGULATIONS AND ENVIRONMENTAL MATTERS
We are subject to extensive federal, state and local government regulation, including those relating to, among others, public health and safety, zoning and fire codes, and franchising.
Failure to obtain or retain food or other licenses and registrations or exemptions would adversely affect the operations of our Shacks. Although we have not experienced and do not
anticipate any significant problems in obtaining required licenses, permits or approvals, any difficulties, delays or failures in obtaining such licenses, permits, registrations, exemptions
or approvals could delay or prevent the opening of, or adversely impact the viability of, a Shack in a particular area. The development and construction of additional Shacks will be
subject to compliance with applicable zoning, land use and environmental regulations. We believe federal and state environmental regulations have not had a material effect on
operations, but more stringent and varied requirements of local government bodies with respect to zoning, land use and environmental factors could delay construction and increase
development costs for new Shacks.
We are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986 and various federal and state laws governing such matters as minimum wages,
overtime, unemployment tax rates, workers' compensation rates, citizenship requirements and other working conditions. We are also subject to the Americans With Disabilities Act ("
ADA
"), which prohibits discrimination on the basis of disability in public accommodations and employment, which may require us to design or modify our Shacks to make reasonable
accommodations for disabled persons.
Approximately 3% of revenues from our domestic company-
operated Shacks is attributable to the sale of alcoholic beverages, namely beer and wine. Alcoholic beverage control
regulations require each of our Shacks to apply to a state authority and, in certain locations, county or municipal authorities for a license that must be renewed annually and may be
revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of our Shacks, including the minimum age of patrons
and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control
and handling, storage and dispensing of alcoholic beverages. We are also subject in certain states to "dram shop" statutes, which generally provide a person injured by an intoxicated
person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor liability coverage as part of our
existing comprehensive general liability insurance. Two of our domestic company-
operated Shacks do not have liquor licenses because of the high cost of a liquor license in that
jurisdiction, which has a liquor license quota. We may decide not to obtain liquor licenses in certain jurisdictions due to the high costs associated with obtaining liquor licenses in such
jurisdictions.
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