Wednesday, February 27, 2019

Shake Shack Declines as Expensive Expansion Erodes Profitability

NREI
Shake Shack is still failing to bring in more diners as it expands outside its home market of New York in the fiercely competitive restaurant space. That may be a concern as more expansion is coming -- the chain plans to open 36 to 40 company-owned U.S. locations in fiscal 2019. They’re also growing internationally. The U.S. chain is facing pressure from higher labor costs, and Shake Shack locations are concentrated in areas where the minimum wages have been on the rise. That cost, coupled with delivery commissions,caused the restaurant-level operating margin to contract to 22.5 percent -- well below the 25.2 percent of a year earlier. . . . more