Shake Shack 2015 Annual Report Download - page 38

Table of Contents
Growth Strategies
We plan to continue to expand our business, drive Shack sales and enhance our competitive positioning by executing on the following strategies:
While we believe that there is still ample room to grow our Shack-base in Manhattan, the majority of our domestic company-
operated Shack growth is expected to occur outside of
Manhattan. Because our average unit volumes (" AUVs
") are higher in Manhattan, due in large part to population density and overall familiarity with the brand in Manhattan, historical
domestic company-
operated AUVs are not a good measure of expected sales at new Shacks. As we continue to expand outside of Manhattan, we expect new Shack revenue to be
between $2.8 million and $3.2 million per new Shack (" target-volume Shacks "), which will reduce overall company-operated Shack AUVs and Shack-l
evel operating profit margins.
Longer-term, given the increased penetration of target-volume Shacks, we are targeting AUVs in the $2.8 to $3.2 million range and Shack-
level operating profit margins in the 18 to
22% range. Taken together, we are targeting long-term revenue and Adjusted EBITDA growth of over 20% after 2015.
With only 63 Shacks around the world, as of December 31, 2014
, we have identified many attractive new markets for the Shake Shack experience. We have successfully launched
different layouts and sizes of Shacks in varied locations throughout urban high density areas, suburban in-
line and pad sites, regional malls, lifestyle centers, ballparks, airports and train
stations. Each design is critical to the Shake Shack experience and we blend our core brand identifiers with features specifically designed for each Shack to be of its place and connect
directly with its neighborhood. With a disciplined approach to new Shack development and a successful track record in site selection, we believe that we are positioned well for future
growth.
2015 Outlook
For the fiscal year ending December 30, 2015, we currently expect the following:
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▪ Open new domestic company-operated Shacks. Our domestic company-
operated Shack growth strategy is focused on both existing and new markets. Given that we are still
in a nascent stage of growth, a substantial portion of our growth will come from opening Shacks in markets where we currently have little to no presence. In fiscal 2014, we
opened 10 domestic company-operated Shacks. Given that our primary growth driver will be the opening of new domestic company-
operated Shacks, we are keenly focused
on maintaining a rigorous site selection process. In addition to evaluating key new Shack criteria, our management team personally visits each potential Shack to determine if
the prospective location is likely to meet certain Shack-level operating profit margin and cash-on-cash return targets.
▪ Capitalize on our outsized brand awareness.
The Shake Shack experience has cultivated significant brand awareness relative to the small number of Shacks. We have worked
tirelessly to establish a genuine connection with our guests and integrate into their communities through investment in innovative marketing and programming.
▪ Grow s ame-Shack sales.
We continually focus on improving our same Shack sales performance by providing an engaging and differentiated guest experience that includes
great food, unique and thoughtful integration with local communities and high standards of excellence and hospitality.
▪ Opportunistically increase our licensed Shacks abroad.
We will continue to grow our licensed portfolio by expanding further in the eight countries abroad in which we
currently have internationally licensed operations. This strategy historically has been a low-cost, high-
return method of growing our brand awareness and providing an
increasing source of cash flow. We believe there are additional international markets that will embrace the Shake Shack concept.
▪
Total revenue to be between $159 million and $163 million.
▪ Same-
Shack sales growth in the low single digits.
▪ At least 10 new domestic company-
operated Shacks to be opened throughout the year.
▪ At least five international licensed Shacks to be opened under the Company’
s current license agreements in the U.K. and Middle East, all of which are scheduled to open
towards the end of fiscal 2015.