A Member of Pat McKeough’s Inner Circle recently asked for his advice on a global fast-casual restaurant chain that specializes in premium, made-to-order burgers, crinkle-cut fries, hand-spun milkshakes, and hot dogs.
Pat likes the company’s massive domestic and global runway for unit expansion. Plus, the brand retains strong pricing power and an expanding place within the fast-casual space. However, he notes the recent profit drop was fueled partly by cost inflation, while the shares trade at a high multiple of forecast earnings.
Shake Shack Inc. (Symbol SHAK on New York; www.shakeshack.com) operates quick-service restaurants offering the classic American menu.
The company is well known for its premium, made-to-order Angus beef burgers, crispy chicken, hand-spun milkshakes, house-made lemonades, beer, wine, and more.
Since the original Shake Shack opened in 2004 in New York City’s Madison Square Park, the company has expanded to 630 Shacks locations worldwide. Of that total, 359 are company-operated and 271 are franchisee held. In the U.S., the company has 405 restaurants in 34 states and the District of Columbia. Outside of the country, it has 225 international licensed Shacks in London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.
Shake Shack CEO Rob Lynch started with the company in May 2024 and is a former CEO at Papa John’s International. He replaced long-time Shake Shack CEO Randy Garutti, who retired.
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Shake Shack’s revenue rose but cost inflation rose faster
In the three months ended April 1, 2026, Shake Shack’s revenue rose 14.3%, to $366.7 million from $320.9 million a year earlier. Revenue rose due to a 4.6% increase in same-Shack sales and the opening of 22 new system-wide stores during the quarter.
Excluding one-time items, earnings fell sharply, to $88,000, or nil per share, from $6.4 million, or $0.14. Earnings fell due to increased investments in sales-driving initiatives, higher pre-opening costs from rapid unit expansion, and increased beef and labour costs.
The company’s balance sheet remains solid. It holds cash of $313.7 million, and its long-term debt is a manageable $248.0 million.
Shake Shack’s sales have continued to benefit from the installation of self-service kiosks in Shake Shack’s restaurants. These kiosks have been highly successful at coaxing customers into buying more food items or more expensive items. Kiosks now make up the company’s largest and most profitable ordering channel.
Shake Shack plans to continue opening new restaurants with a long-term goal of reaching 1,500 company-operated stores. This year alone, the company wants to open 45 new company-operated restaurants and 40 new licensed stores.
The outlook for Shake Shack is positive, but the company’s shares trade at a high 49.9 times the forecast 2026 earnings of $1.12 a share. That adds risk.
Recommendation in Pat’s Inner Circle: Shake Shack Inc. is okay to hold.
