Shake Shack 2015 Annual Report Download - page 39

Table of Contents
RESULTS OF OPERATIONS
The following table summarizes our results of operations for 2014, 2013 and 2012:
Shack Sales
Shack sales represent the aggregate sales of food and beverages in domestic company-
operated Shacks. Shack sales in any period are directly influenced by the number of operating
weeks in such period, the number of open Shacks and same Shack sales.
Shack sales were $112.0 million for fiscal 2014 compared to $78.6 million
for fiscal 2013, an increase of $33.4 million or 42.6%. The growth in Shack sales was primarily driven by
the opening of 10 new domestic company-
operated Shacks during fiscal 2014. Shacks in the comparable Shack base contributed $2.3 million of this increase while new domestic
company-operated Shacks contributed $31.1 million. The results for fiscal 2014 include the impact of the 53rd week, which contributed $2.8 million in Shack sales. Same-
Shack sales
increased 4.1% during fiscal 2014, primarily driven by increased menu prices. For purposes of calculating same-
Shack sales growth, Shack sales for 13 Shacks were included in the
comparable Shack base and exclude the 53rd week. For fiscal 2014, AUVs for domestic company-operated Shacks decreased to $4.6 million as a result of opening more target-
volume
Shacks during the year.
Shack sales were $78.6 million for fiscal 2013 compared to $55.6 million for fiscal 2012, an increase of $23.0 million or 41.4%. The growth in Shack sales was primarily driven by the
opening of eight new domestic company-
operated Shacks during fiscal 2013. Shacks in the comparable Shack base contributed $2.3 million of this increase while new domestic
company-
operated Shacks contributed $20.7 million. Same Shack sales growth increased 5.9% during fiscal 2013. For purposes of calculating same Shack sales growth, Shack sales for
eight Shacks were included in the comparable Shack base. For fiscal 2013, AUVs for domestic company-operated Shacks decreased to $5.0 million as a result of opening more target-
volume Shacks during the year.
Licensing Revenue
Licensing revenue is comprised of license fees and territory fees. License fees are calculated as a percentage of sales and territory fees are payments for the exclusive right to develop
Shacks in a specific geographic area.
38
2014¹
2013 2012
Shack sales
$
112,042
94.5
%
$
78,587
95.3
%
$
55,591
97.5
%
Licensing revenue
6,488
5.5
%
3,869
4.7
%
1,447
2.5
%
TOTAL REVENUE
118,530
100.0
%
82,456
100.0
%
57,038
100.0
%
Shack-level operating expenses
2
:
Food and paper costs
34,925
31.2
%
23,865
30.4
%
16,774
30.2
%
Labor and related expenses
29,312
26.2
%
20,096
25.6
%
14,436
26.0
%
Other operating expenses
11,191
10.0
%
7,315
9.3
%
5,081
9.1
%
Occupancy and related expenses
9,753
8.7
%
6,892
8.8
%
5,053
9.1
%
General and administrative expenses
18,187
15.3
%
12,453
15.1
%
6,988
12.3
%
Depreciation expense
5,809
4.9
%
3,541
4.3
%
2,162
3.8
%
Pre-opening costs
6,105
5.2
%
2,334
2.8
%
1,858
3.3
%
Loss on disposal of property and equipment
105
0.1
%
25
—
%
—
—
%
TOTAL EXPENSES
115,387
97.3
%
76,521
92.8
%
52,352
91.8
%
OPERATING INCOME
3,143
2.7
%
5,935
7.2
%
4,686
8.2
%
Interest expense
363
0.3
%
52
0.1
%
156
0.3
%
INCOME BEFORE INCOME TAXES
2,780
2.3
%
5,883
7.1
%
4,530
7.9
%
Income tax expense
662
0.6
%
460
0.6
%
397
0.7
%
NET INCOME
$
2,118
1.8
%
$
5,423
6.6
%
$
4,133
7.2
%
(1) We operate on a 52/53 week fiscal year that ends on the last Wednesday of the calendar year. Fiscal year 2014 was a 53-week year with the extra operating week (the " 53rd week
") falling in our
fiscal fourth quarter. Fiscal 2013 and 2012 each contained 52 weeks.
(2)
As a percentage of Shack sales.