Shake Shack 2016 Annual Report Download - page 55

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Table of Contents
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 $183.2 million for fiscal 2015 compared to $112.0 million for fiscal 2014 , an increase of $71.2 million or 63.5% . The growth in Shack sales was
primarily driven by the opening of 13 new domestic company-operated Shacks during fiscal 2015 , robust sales at our mature Shacks, and same-Shack sales
growth. Shacks in the comparable Shack base contributed $10.1 million of this increase while new domestic company-operated Shacks contributed $63.9 million,
offset by the impact of 53rd week in fiscal 2014, which contributed $2.8 million in Shack sales in the prior year. Same-Shack sales increased 13.3% during fiscal
2015 , on a calendar year basis, primarily driven by increased menu prices and traffic. For purposes of calculating same-Shack sales growth, Shack sales for 21
Shacks were included in the comparable Shack base, which includes Madison Square Park. For fiscal 2015, same-Shack sales growth is calculated on a calendar
year basis, as it more accurately reflects the performance of our Shacks since it eliminates the impact of the extra operating week in fiscal 2014 and compares
consistent calendar weeks. For fiscal 2015 , AUVs for domestic company-operated Shacks increase d to $5.0 million from $4.6 million in fiscal 2014 , a 7.9%
increase, and is primarily the result of menu price increases, higher traffic and positive shifts in menu mix.
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 growth 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 (which includes Madison Square Park) 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.
Licensing Revenue
Licensing revenue is comprised of license fees, opening fees for certain licensed Shacks 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.
Licensing revenue was $7.4 million for fiscal 2015 compared to $6.5 million for fiscal 2014 , an increase of $0.9 million or 13.6% . This increase was primarily
driven by the opening of eight international licensed Shacks during fiscal 2015 , partially offset by lower revenue from Shacks in the Middle East and the negative
impact of foreign exchange rate fluctuations.
Licensing revenue was $6.5 million for fiscal 2014 compared to $3.9 million for fiscal 2013 , an increase of $2.6 million or 67.7% . This increase was primarily
driven by the opening of 12 international licensed Shacks and one domestic licensed Shack during fiscal 2014 . AUVs at international licensed Shacks declined
over the same period due to the opening of lower-volume Shacks during fiscal 2014 .
Food and Paper Costs
Food and paper costs include the direct costs associated with food, beverage and packaging of our menu items. The components of food and paper costs are
variable by nature, change with sales volume, are impacted by menu mix and are subject to increases or decreases in commodity costs.
Food and paper costs were $54.1 million for fiscal 2015 compared to $34.9 million for fiscal 2014 , an increase of $19.2 million or 54.8% , primarily due to the
opening of 13 new domestic company-operated Shacks during fiscal 2015 . As a percentage of Shack sales, food and paper costs decrease d to 29.5% for fiscal
2015 compared to 31.2% for fiscal 2014 . This decrease was primarily the result of menu price increases implemented in September 2014 and January 2015 and
lower costs in certain ingredients such as dairy and fries, which were partially offset by slightly higher beef costs.
Food and paper costs were $34.9 million for fiscal 2014 compared to $23.9 million for fiscal 2013 , an increase of $11.0 million or 46.3% , primarily due to the
opening of 10 new domestic company-operated Shacks during fiscal 2014 . As a percentage of Shack
53 | Shake Shack Inc. Form 10-K