Shake Shack Inc. (NYSE:SHAK) saw its stock decline 7% on Tuesday after management revised down key financial forecasts for the second quarter and for fiscal 2026.
The company narrowed its total revenue outlook for the second quarter to $415 million to $420 million, down from the prior range of $424 million to $428 million. At the same time, Shake Shack reduced its same-shack sales guidance to a range of 2.5% to 3.0%, compared with the earlier 3.0% to 5.0% outlook.
Restaurant-level profit margin expectations were also adjusted lower. For the second quarter, the company now expects restaurant-level margins of 22.0% to 23.0%, down from the previous 24.0% to 24.5% range. Full-year restaurant-level profit margin guidance for fiscal 2026 was trimmed to 22.0% to 23.0% from 23.0% to 23.5%.
On a full-year basis, Shake Shack reduced its adjusted EBITDA guidance for fiscal 2026 to $225 million to $235 million, from the prior range of $230 million to $245 million. Management also lowered net income guidance to $45 million to $55 million, down from $50 million to $60 million.
CEO Rob Lynch attributed the change in guidance to what he characterized as macroeconomic uncertainty and a competitive landscape, noting that the company is more than two-thirds through the quarter. Lynch said that fundamental business drivers remain strong and that Shake Shack remains confident in executing its strategic priorities.
The company left its licensing revenue forecast for the second quarter unchanged at $13.5 million to $13.7 million. It also reiterated expectations for roughly 16 company-operated openings and approximately 8 licensed openings in the quarter.
Shake Shack provided this business update ahead of presentations scheduled for investor conferences in June. The company said the guidance is based on preliminary and unaudited results and is subject to revision once the second quarter review is complete.
What the update means
- The lowered revenue and same-shack sales outlooks point to softer near-term demand than the company previously expected for the quarter.
- Reduced restaurant-level margins and trimmed adjusted EBITDA and net income forecasts indicate pressure on profitability metrics for the quarter and fiscal year.
- Licensing revenue and the pace of new openings were left unchanged, suggesting management sees continued expansion activity despite the softer operating results.
Context and caveats
Management emphasized that the guidance is preliminary and unaudited, leaving open the possibility of adjustments after the quarter is finalized. The company also highlighted that it is well into the quarter as it explained the reasons for revising its expectations.