Shake Shack's stock fell approximately 30% during afternoon trading on Thursday following the announcement of an operating loss of $2.6 million for the quarter. This disappointing performance was compounded by earnings and revenue figures that did not meet Wall Street's expectations, as reported by analysts from LSEG.
The company reported earnings per share that broke even, significantly lower than the anticipated 12 cents per share. Additionally, Shake Shack's quarterly revenue was $367 million, falling short of the expected $372 million.
During the earnings conference call, CEO Rob Lynch attributed the poor results to several factors, including adverse winter weather and an increase in the number of store openings projected for the year. The company has also faced rising beef costs, although these are not increasing as rapidly as they did a year ago.
For the full year, Shake Shack has adjusted its EBITDA outlook to a range of $230 million to $245 million while maintaining its revenue forecast between $1.6 billion and $1.7 billion. Lynch also noted that the ongoing conflict in the Middle East is expected to negatively impact the company's performance this year, particularly as it has several licensed locations in the region.
He explained that the conflict has caused business disruptions, including temporary closures and reduced operating hours, which have further affected sales, especially in high-traffic areas due to a slowdown in inbound tourism