Shake Shack, Inc.

Greetings and welcome to Shake Shack's second quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Rick Powell, Senior Vice President of Finance and Investor Relations.

Thank you, Laura, and good evening, everybody. Joining me for Shake Shack's conference call is our CEO, Randy Garuti, and President and CFO, Tara Comont. During today's call, we will discuss non-GAAP financial measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release and the appendix to our supplemental materials. Some of today's statements may be forward-looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our annual report on Form 10-K, filed on February 24, 2020, Form 10-Q, filed on May 4, 2020, as well as our Form 8-K business updates throughout the quarter and into July. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our second quarter 2020 earnings release, which can be found at investor.shackshack.com in the news section. Additionally, we have posted our second quarter 2020 supplemental earnings materials, which can be found in the events and presentation section on our site or as an exhibit to our 8K for the quarter. With that, I'll turn the call over to Randy.

Thanks, Rick, and good evening, everyone. We hope you, your families, and our entire Shake Shack community are all staying healthy and safe. Through this difficult time, I've been incredibly proud of our team. They have continued to show up, support each other, our guests, our communities, and our suppliers. They've had an unwavering commitment to excellence and hospitality in the face of an incredibly challenging operating environment. We owe them a debt of gratitude and remain committed to their safety, well-being, and ongoing development and growth. In the second quarter, we committed to pay an incremental $2.4 million across premium pay, guaranteed bonuses, and scheduling-related premiums to our teams in order to recognize the incredibly challenging conditions they're dealing with every day. We're happy to share that we'll be continuing to support our teams in this way into the third quarter. Looking at the second quarter, shack sales were down 39% compared to last year, while same-shack sales declined 49%. However, sales showed continuous improvement through the quarter. Sales in June did see a significant impact from temporary shack closures and reduced operating hours related to nationwide protest activity. Carl will go into this in further detail, but given the high growth nature of our business and relative small size of the comp base, yet again, same-track sales should not be the sole metric on which to understand current business performance. Total sales and average weekly sales continue to grow. And in fiscal July, we saw an 8% increase in average weekly sales compared to the prior period. As of today, approximately 95% of our domestic company-operated shacks are open, an improvement from the roughly 90% open at the time of our last earnings call. Less than half of our shacks are currently operating with interior dining, however, a reduction from a few weeks ago, as some previously reopened interior dining rooms have once again needed to close, as we prioritize safety, particularly in high-risk states. Of those that are open, they're operating at limited capacity and utilizing outdoor patio seating where available. Since the beginning of our company, we've built some of the world's favorite community gathering places. People's desire to gather with other people, share great food, hospitality, and the Shack experience is the very thing right now most challenged by COVID-19. While so much of our real estate footprint has been centered thus far in urban office travel and dynamic traffic driving sales environments. As these are the most impacted restaurants around the globe, that's what you see in our numbers. Our suburban shacks tell a slightly different story, with a less acute impact than our urban shacks, achieving a faster recovery and with consistently improving performance across all regions over the last four months. We continue to believe in the strength of the strategy that has led us to industry-leading AUVs and those deep connections we make with our communities. In the meantime, we're going to improve those shacks most challenged by the current environment while doubling down on the places around the country where we're learning, growing, and in some cases, doing even better than last year. We remain fully committed to our long-term growth opportunity, which we believe is as strong as ever. With a robust real estate pipeline that was paused earlier in the year, we're back in a place where we've restarted new shack development. We've opened four company-operated shacks in the first quarter and have successfully opened five shacks since the pandemic started, with a total of nine openings year-to-date. And we're pleased that this class is open with encouraging levels of sales and are so thankful to our teams for getting them open during these challenging times. and working so hard to become an essential part of their new neighborhoods. In today's ever-changing environment, nothing is certain, especially the permitting, construction and opening of restaurants. But assuming current conditions persist and no major work stoppages get in our way, we believe we expect to open between six and 11 additional domestic company-operated shacks, back-weighted towards the end of this year for a total of 15 to 20 for the full year. COVID-19 effectively cuts our development plan in half for this year from our original guidance. Looking ahead to 2021, we have a strong pipeline of leases. We're being proactive and opportunistic when it comes to real estate. With a strong balance sheet and a robust multi-year development plan, we are aggressively in market, looking to benefit from additional opportunities that we expect in a forever changed retail landscape. In our licensed business, total sales have also shown gradual improvement. as approximately 80% of our licensed shacks have now reopened. We successfully returned the shack unit growth with the opening of four new licensed shacks since the onset of COVID-19. All shacks right now in Hong Kong, mainland China, Japan, and Korea, with the exception of our Incheon Airport shack in Korea, are now open, although in most cases with limited hours and smaller capacity dining rooms. This is an ever-changing situation. And even this week, we've seen Hong Kong close and then Partially reopened dining rooms again due to recent spike in cases. In the Middle East, the majority of shacks have now reopened, but primarily for takeout and delivery with a slow reopening of dining rooms. In the U.K., approximately half of our shacks have reopened, but we're excited to be testing four new cloud kitchens in various neighborhoods throughout London, which has helped offset some sales loss and taught us a lot about this model in the U.K., Our domestic licensing business, Shack, Inc. Airport, Stadiums and Roadside, remains the hardest hit in our portfolio. With just half of our airport locations now open and operating at severely reduced sales, while air travel remains at a fraction of its pre-COVID-19 level. And nearly all of our domestic stadium venues remain closed. As an example of the dynamic and quickly evolving environment, our Terminal 3 location at the LAX airport will not reopen. as the airport has chosen to take this time to tear down and replace the terminal entirely. As we look ahead, continue to build opportunities for growth, we're excited to have recently announced the expansion of our existing partnership with Maxine's Caterers Limited, which targets a development agreement of 15 additional shacks across South China by 2030, including locations in Shenzhen, Guangzhou, and more. This agreement increases development targets for mainland China to 55 shacks by 2030, of which just five are open at this time. We're really looking forward to continue our growth in this critical and sizable market. Moving ahead to our menu and product strategies, we've been taking this time to simplify our menu in order to allow our teams to focus on execution. We've temporarily removed some of the most labor-intensive items, paused LTOs, and have been more cautious about new item testing. That said, our innovation kitchen is still humming along, We're excited about a few upcoming product initiatives. This fall, we plan to bring back hot chicken, a perennial fan favorite, while upping the offering this year and adding hot chicken bites and spicy fries. Longer term, as we've talked about in the past, we believe we have many opportunities to expand our menu with additional vegetarian and vegan options. We've got a new veggie shack burger made with real vegetables, herbs, and grains and topped with avocado, roasted tomatoes on a wheat bun. being tested at two Shacks right now, and we hope to expand that test next year. It's a great product, something we've been actively tweaking as we solicit guest feedback. As always, we continue to offer rotating beverages and shakes, such as our current pink lemonade and s'more shake. And as we head into the fall, we're planning the return of our popular pumpkin and holiday shakes. There's no doubt that this moment has amplified the need and the speed with which we intend to execute our plan in order to return to growth and prepare for a strong future. We've been intentional throughout this crisis to double down on those things that have made Shake Shack great and improve those things we know we can do better. For us, that's always meant a focus on creating an uplifting guest experience, crafted one burger at a time. We've elevated every piece of the traditional burger experience, and now we're focused on adding much greater accessibility, convenience, and ease of use to that strategy. That begins with our real estate selection, our shack designs, our digital journey, and the expansion of the way our teams and guests will experience the shack. And indeed, while some of our strongest shacks in the country are the hardest hit right now, we believe this to be temporary. Great real estate stands the test of time. And we're excited about the evolution we have planned to aggressively target a multi-format diversified portfolio of locations that thrives under any circumstances. Our intent is to further the progress we've made during COVID-19 across digital channels and to facilitate more pre-orders with a seamless pickup experience. Here's what we're up to. We've just launched curbside pickup in our app. For the first time, guests can pre-order on the app, identify their car, and we'll bring their order out to them with contactless pay and handoff. This is live and test in around 10 shacks right now, and we expect it to be rolled out to approximately 50 shacks by the end of the third quarter. It's really early, but we're encouraged by the initial results and convenience this adds for our guests. Next, we're adding shack tracks to both existing and new shacks. The shack track experience is an enhanced digital order and pickup solution that includes the ability to order via app, web, pickup via curbside, walk-up window, drive-up window, or with an improved in-shack pickup area. Through the end of this year, we'll expect to add at least eight shack track pickup walk-up windows to existing shacks, as well as add our first drive-up shack track. as we reimagine our Vernon Hills, Illinois shack where guests will never have to leave their car. For 2021, we expect roughly half the class to have either a drive-up or walk-up window, with the remaining shacks having a combination of enhanced interior pickup, curbside, and or dedicated delivery courier pickup areas. We're also really excited today to announce that we'll be building our first-ever drive-through experience in 2021. and we hope to execute more of these in the future as we learn. And as you'll see in the initial renderings we've provided in the supplemental deck, this is not your average drive-thru. Our design will retain the experience of the great community gathering place that has led our brand for 16 years while adding the convenience of pre-order shack track pickup or in-person drive-thru ordering. We've not yet announced the initial drive-thru locations but intend to lead with traditional suburban high traffic corridors. So why are we doing all this? The answer is simple. As we look ahead, our goal is to increase the addressable market opportunity for Shake Shack while driving strong AUVs and returns on capital. We're still in the early days for Shack Track, Drive Thru, and our enhanced pickup models, and we have a lot to learn in terms of sales and throughput, but we're bullish about a potential white space opportunity these formats could create while meeting the evolving needs of our fans. Moving on to digital. As guests begin to return to ordering at the Shacks, the mix between InShack and digital sales will continue to shift. During the second quarter, total digital sales represented 75% of sales. It more than doubled compared to the first quarter of 2020. Our own native web and app channels more than tripled compared to the same period last year. And when they've been combined, continue to be the fastest growing and largest ordering channels for us. throughout Q2 and into July. For fiscal July, digital sales represented 62% of total sales, retaining over 90% of the digital sales that we achieved during fiscal May, even as InShack sales have gradually returned. In addition, we've welcomed over 800,000 first-time purchasers via our app and web channels since early March. This is nearly four times higher than the same period last year. We're delighted with these results, and we're planning for digital sales to remain a significant component of our business and ongoing growth. As a result, we're doubling down on our digital investments that will continue to fuel the guest experience. We've launched a number of new features and functionality in response to COVID-19, and we're now extending much of that learning into broader initiatives. I just spoke about the opportunity we believe curbside pickup can create now and long-term, and I'm proud of the quick work the team did to launch this product. We're also fully rebuilding our broader web and app functionality over the next year with new and enhanced options that will allow additional personalization and feedback as well as functionality to give guests real-time order status among many other features. But the most important new feature will be the ability to offer delivery directly through our own channels for the first time, targeted at keeping guests within our native infrastructure and deepening our ability to connect directly with them over time. In addition, throughout the next year, we'll be leveraging are improving data and insight capabilities along with further guest-facing features such as expanded payment options, gift cards, and much more. Our teams and leaders have used this moment to accelerate the pace of learning and innovation in our company. We're committed to getting after those areas of greatest opportunity as we see them and take this time to set ourselves up for a strong future. With that, I'll turn it over to Tara.

Thanks, Randy, and good evening, everyone. Firstly, I'd like to reiterate Randy's thanks and appreciation to all our teams right now. particularly those in the Shacks, but also our home office working remotely. Everyone has stepped up to such incredible new highs over recent months in support of each other and our company as a whole. We're looking forward to being in person together again soon, and in the meantime, thank you for all you continue to do. Moving on to the results. As previously shared, total revenue for the second quarter was $91.8 million, including Shack sales of 89.5 million, and licensed revenue of $2.3 million. We estimate that shack sales were negatively impacted by approximately $3.2 million due to nationwide protests and resulting curfews causing temporary shack closures and reduced operating hours during the two-week period from May 28 to June 10. Same shack sales declined approximately 49% in the second quarter compared to the prior year. driven by a decline in traffic of 60.1% and an increase in price mix of 11.1%. The increase in price mix was driven by a 28% increase in our average check as a result of the significant shift in the digital channels we've seen over the last few months, which have historically carried a higher average check than in Shack. In terms of sequential progression of same Shack sales throughout the quarter, we were encouraged with the continued improvement with year-on-year declines of 64% and 42% for fiscal April and May, respectively, and 39% in fiscal June when adjusting for the impact of the protests. Including the impact of the protests, same-shack sales reflected a decline of 42% in fiscal June. Same-shack sales in fiscal July were down 39% while delivering a further sequential increase in average weekly sales in the period. all of which can be seen on page seven of our supplemental materials. I'll talk about some of the underlying dynamics of our sales performance and our comp base in a moment. At the end of the second quarter, our trailing 12-month average unit volume was $3.4 million. The more relevant data point, however, as we gradually rebuild sales within this COVID-19 environment is average weekly sales, which for the second quarter were $45,000 with a clearly improving trend throughout the quarter. Average weekly sales in fiscal July were $56,000, representing an increase of almost two and a half times average weekly sales at the low point of the COVID-19 outbreak. The speed at which our business is recovering differs, generally depending on the location, whether that be in relation to the broader state's reopening progress or the extent to which our shacks are located in a typically dense urban or high traffic neighborhood, which many are. Our urban shacks, which make up half the units in our comp base, accounted for approximately 60% of our comp base sales pre-COVID-19. These shacks were and continue to be highly impacted by COVID-19 and were down 57% in the second quarter, improving to down approximately 50% for fiscal July. From a regional perspective, it's also worth noting that New York City, a fully urban footprint, saw same shack sales in fiscal July decline by 56%, with Manhattan shacks specifically down 65%. This quarter, we've included a regional breakdown of comp-based performance in our supplemental materials, and you can see the disparity between regions and the outlier that is New York on pages 10 and 11. The other half of our comp-based shacks are our suburban shacks. were the freestanding or in suburban malls or shopping centers, which represented approximately 40% of our same shack sales pre-COVID-19. These shacks were down 38% in the second quarter, improving to down approximately 24% for fiscal July. This stark difference in sales performance is something we expect to continue to some degree for as long as COVID-19 continues to impact our cities, our offices, and our travel, recreation, and entertainment habits. and is likely to be particularly true in some of our larger footprints like New York City, Chicago, Los Angeles or Washington, D.C., where some of our previously highest volume shacks are located. We've been encouraged by the initial performance of our 2020 class. Average weekly sales in fiscal July for our five most recent shack openings were nearly 40% above the company average in that period. Even in a COVID-19 world, new shacks are opening with strong levels of sales, and we believe the return on capital of this 2020 class remains healthy. We have a huge sales opportunity ahead of us and we're committed to capitalizing on that, albeit short-term sales predictability remains unclear. With states opening up and then regressing as cases spike, we're focused on remaining flexible in our operations and decision-making. With week-to-week volatility still a reality, we will not be providing specific sales guidance at this time. Moving on to shack-level operating profit margin, which in the second quarter was 2.2%, severely impacted by reduced sales levels and a number of exceptional and incremental costs across the business. In particular, for a large part of the second quarter, we experienced significant inflation in beef, with costs nearly double last year for most of June. Beef prices have since returned to more normalized levels, but we estimate the spike in beef costs negatively impacted our shack-level operating profit by approximately $2.5 million, or 280 basis points during the quarter. We'll also continue to have significantly higher paper and packaging costs as a percentage of sales, with all orders packaged as to-go in sealed bags with additional internal packaging for security. We estimate this increased level of packaging impacted shack-level margins by approximately $1.4 million, or 160 basis points in the quarter and will continue for such time as we remain in a heightened COVID-19 risk environment. In terms of labor, our priority remains safety for our teams and for our guests. As we adhere to social distancing and other safety protocols, as well as limited capacity dining, our labor costs will continue to show some inefficiency compared to prior levels. In addition, as recognition and Gratitude to our teams in the field, we chose to pay 10% premium to hourly team members on top of their existing hourly rates and also guaranteed bonuses for Shack managers in the second quarter. Currently in the third quarter, we've extended this premium pay and guaranteed manager bonuses and will be continually evaluating this during this time. Also incurred in the second quarter were heightened levels of payments, primarily due to the Fair Work Week in relation to scheduling changes for hourly team members. In taking all these incremental payroll items together, they represented additional costs of $2.4 million in the quarter, with an impact of 270 basis points on shack-level margin. In addition, we also continued to pay 100% of all health benefit premiums for furloughed employees. We greatly appreciate the sacrifice that our teams are making throughout this whole pandemic and are committed to continuing to support them in any way possible. Finally, our other operating expenses in the second quarter were 16% of shack sales, driven by higher delivery commissions due to mix, but also due to a step up in blended commission rates in our expanded multi-partner arrangements. We continue to operate with consistent menu pricing on our own channels and third-party marketplaces, and may revisit that at some point going forward in order to improve the profitability of this delivery channel. We also plan to offer delivery through our own channels in the future and while this will still come with a cost, it will provide us with greater flexibility in our overall pricing and marketing strategies for delivery. Outside of the delivery impact in the quarter, other operating expenses deleveraged compared to the same period last year due to lower levels of sales. Despite these increased costs, We were pleased with underlying improvements in shack-level operating profit margin as the quarter progressed. The low point in shack-level operating margin was in fiscal April at negative 11%. This improved to positive 7% and positive 5% in fiscal May and June, respectively. However, June was the period in which we saw the most acute impact from beef inflation, additional labor costs, and the impact of protest activity on sales. Taking these into consideration, we would have seen further sequential improvement in shack-level operating profit exiting the quarter. Moving on to G&A. Total G&A for the second quarter was $14 million and included $1.6 million related to non-cash items. In addition, we incurred higher professional fees of approximately $250,000 related to the April equity offering and the implementation of the CARES Act, which we expect to continue in the third quarter. At the beginning of the quarter, given the significant impact of COVID-19, we quickly cut back spend in many areas, including furloughing home office employees, cutting discretionary spend, and pausing investment in the majority of our strategic growth initiatives. As sales performance has continued to improve and with a strong balance sheet, we recommenced investment spend during the second quarter across a number of key areas. These predominantly center around our digital innovation initiatives but also includes critical growth areas in design and development, among others. While we maintain high levels of cost diligence across the business, we do expect our G&A to sequentially increase in the second half of the year and reach more normalized levels by the end of the year in support of our continued recovery. On an adjusted pro forma basis, we had a net loss of $18.3 million or 45 cents for fully exchanged and diluted shares. We estimate an approximate $0.11 impact on EPS in the quarter due to the exceptional costs related to beef packaging and labor mentioned earlier. In addition, there was an additional $0.02 unfavorable tax impact from a stock compensation-related adjustment. Our underlying effective tax rate was 27.8%. A reconciliation of our tax rates is included in the appendix of our supplemental materials. And finally, we're continuing to evaluate tax and other regulatory changes that were recently enacted related to the CARES Act. These retroactively change the recovery period for qualified investment property, which enables the cost of our leasehold improvements to be 100% eligible for bonus depreciation, as opposed to the 39-year period enacted with tax reform. Moving on to cash, our cash and marketable securities balance at the end of the quarter was $190.8 million. We repaid the $50 million we had previously drawn down from our revolving credit facility, and this facility remains fully available to us if needed. In terms of cash burn, at current sales levels, cash flow is positive at the Shack level and continues to improve as sales grow and our business recovers. At the enterprise level, weekly cash burn has also improved to approximately $100,000 per week, excluding the temporary pay increase and Guaranteed Bonuses for Shack Team and New Shack Capital Expenditure. This cash firm includes G&A at current levels. As we look at our financial results, the sequential sales and profitability improvements, our strong digital performance, our investment priorities and accompanying robust balance sheets, we're confident in our future and what lies ahead. We believe that as we fully exit COVID-19, whenever that may ultimately be, that the return metrics of our Shacks remain robust and compelling. and in the meantime, we will continue to proactively invest in both safety protocols and support and recognition of our team as we navigate the journey through and out the other side of COVID-19. Randy, back to you.

Thanks, Tara. Despite this being one of the most challenging environments any of us could have ever imagined, we're moving forward with confidence. The team is looking after each other. Our business is gradually working through its recovery along with the rest of our country. and we're excited about the progress being made across the key strategic growth areas of our company. We entered this crisis with tremendous momentum in a position of strength. Our balance sheet today is now stronger than it's ever been. And we will come out of this moment with an unmatched resolve and determination to grow again and improve the lives of our team along the way. As cities recover and people ultimately gather again, we're well positioned to capitalize on the many opportunities that lie ahead. And in the meantime, we'll continue to use the moment as one for learning, for testing and innovation, ensuring that we come out of this crisis even stronger than how we entered it. Until then, hope you all stay safe and stay healthy. With that, operator, please open up the call for questions. Thanks.

At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star zero on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star key. Please limit yourself to one question per person. One moment while we poll for questions. Our first question comes from the line of Sharon Safiki with William Blair. You may proceed with your question.

Hi, good afternoon. Good try on the name. Thanks for all the detail and congratulations on pivoting a lot in the current environment. I guess I'm sure a lot of the other questions are going to be asked. I'm going to ask about cloud kitchens. I was actually pretty curious about what led to that decision in the UK. I know they have a very different delivery architecture there. But are there applicable elements there that might make sense as well as you think about the U.S.?

Yeah, maybe, Sharon. I mean, it's not something we're focused on. We haven't really been. We're really much more focused on ShackTrack and taking our current Shacks and obviously the ones with capacity right now more than ever and making sure we can ease the access for all channels at our current Shacks. In the U.K., it was interesting. The U.K. completely shut down, okay? And, you know, we support our partners and the tests and things that they want to try as long as we think it's great for the business overall. What's been cool about our tests in London, and sorry, one other fact, you know, the way that the UK laws have worked with landlords and paying rent and those sort of things, you got to be sure you can kind of recover in order to make it worthwhile opening. There's a little bit different structure there. So it got the team aggressive. It got the team thinking about what else they could do to recapture some of that lost sales. And what it did with the four that we have is sent us to different neighborhoods. So it was at one time a sales-saving atmosphere and at another time a test of new neighborhoods. That's the kind of learning we want to get to, especially in urban centers as we think about our ability to drive deeper over time. And let's remember, we only have 172 Shake Shacks that we own in this country, in the US. We got a long way to go. We got a long way to go in London. So again, not our top focus today, but we love working with our partners to get the learning we can. And we'll see where it goes from here, but thanks.

Thank you.

Our next question comes from the line of Joshua Long with Piper Sandler. You may proceed with your question.

Great. Thanks for taking the question.

I wanted to see if you could dive into some of the items you alluded to in terms of helping out those shacks that have been most impacted. I'm curious on kind of how that's evolved from, you know, first quarter going to second quarter and then now as some of the markets have started to close back down again. Just what you've been able to do and what you found most impactful.

Well, you know, this goes to what we started at the beginning and talk about our teams. I mean, it's been incredible the pivots that we made You go back to March, it seems both like yesterday and 100 years ago, right, where we were immediately flipping towards stay-at-home orders, taking orders outside, changing to these pop-up drive-thrus. We've been able to shift a lot of that now to more of a better understanding, more contactless. Our shacks before, at the beginning of this, we didn't have that immediately ready. Now we've got it. Really making sure our outdoor patios, we have over 80% of our shacks have the opportunity for some type of outdoor patio seating. We're lucky, you know, as part of our real estate strategy, even in the hardest hit areas, we're next to parks, we're next to places where people can gather. So it's been really about making sure we can improve the access, convenience, and Then we started to do some really fun, you know, brand marketing, right? We've done Shack Camp for our families at home this summer. We've continued to engage with our guests. It's been really fun for us. And as we've, you know, I hope you caught some of those notes where, you know, we had 800,000 new users on our app channels. That is a huge number for a small company like us on top of only 172 restaurants. That's huge. We're going to capitalize on that. So the digital initiatives, the opportunity to drive digital engagement is huge. And as we look ahead, we look at kind of the first product where we've kind of gone, you know, purposely slimmer on product. Now we're going to start to expand that as we head into the fall with hot chicken. I think that'll be a good opportunity to hopefully draw some sales. But Josh, look, the neighborhoods are impacted as they're impacted, you know. There's not a lot we can do on 44th Street and 8th Avenue with Broadway shut down, with tourism shut down in New York City. One of our best restaurants in the world, our theater district location, is today one of our lowest performing. I mean, to think that that could have ever happened, it's crazy, right? There's not a lot you can do, but make it great every time with every guest you have in that restaurant. And as things recover, we fully expect it to recover. But the impact, and you've seen this, the lag in our numbers, that you're seeing is really due to that urban-suburban breakdown and the kind of shacks that we've built over the years that have been our sweet spot as our brand and will be again, certainly. But in the meantime, they're tougher to come back, but we'll get there. We're going to keep learning and trying new things.

Our next question comes from the line of Jared Garber with Goldman Sachs. You may proceed with your question.

Hi, thanks for taking my question today. Really cool renderings of the new drive-through locations potentially working through. I just wanted to get a sense of how you think about that long-term. Is this something that is going to be a major focus for the brand as we continue to see new units go up? And then I also wanted to get a little bit of an understanding about how you're thinking about sort of the unit bubble economics of these locations versus your typical sort of 3 million, 2 million, 20% margin figures.

Well, look, I'll start with the second part of your question. As I said in my notes, our goal, as always, is to increase the addressable market for Shake Shack, as well as drive those long-term AUVs and profits and returns on capital that this company has been known for since day one. It's too early to comment on what those numbers are going to look like. We'll let you know as we perform. Our hope is that we create access in places where we may not have had access before. and we create opportunity in real estate that we may not have had before. And, you know, we're really excited about it. If you look at that rendering, you know, these are evolving things. We've got our sights on our sights on a few locations that we think we can execute. But we'll see. I think initially it'll be a smaller part of our portfolio where we'll be leaning more into shack track, both drive up and pick up for preordering on the app. because we think that digital engagement we've created is going to be sticky. But we'll see. You know, I think one of the things that we've learned over time, and you see it certainly now, look, in the moment of safety, people want to stay in their cars. That's not going to last forever, but obviously this country has proven that the drive-through in its old form works. We want to do it in its new form. We want to do it better than ever with an experience that you stay, you drive through, whichever you want, and it's everything Shake Shack has always been, that modern version of that old roadside community gathering place.

Thank you.

Our next question comes from the line of Lauren Silberman with Credit Suisse. You may proceed with your question.

Just a quick follow up on the other, the prior question. Are you rethinking your unit development pipeline at all just over the next two to three years in terms of where you'll look to grow? And then my actual question is, you've talked a lot about your holistic approach to digital across the business. We've seen a large number of restaurant companies launch loyalty programs recently to complement their digital strategies. So how are you thinking about loyalty and has your thoughts evolved as you've attracted more customers into the digital ecosystem?

I'll take the first part and let Tara take the loyalty and digital part. Lauren, we've always had a multi-format approach. I think what this does is accelerates and amplifies our desire to get as many sites as we can that meet all those goals, that also have accessibility. Look, we still have a number of fantastic sites, even in urban Manhattan, that we hope to do in the near future. We're going to keep doing those. There are many great cities in this country that we've not even been to yet, and many that we can go a lot deeper in, in both urban and suburban. We fundamentally believe that great real estate is great real estate. There's no question that hurts us today, and it hurts us more than others that are just drive-through in suburban atmospheres, and you're seeing that. That'll come back. That will come back, and it's important for us to continue to build a diverse portfolio that can sustain all of those. So as we look at next year, as I said, roughly a quarter of the class should have a walk-up shack track window. Roughly a quarter of that class should have a drive-up shack track window for pre-ordering. We'll test our first drive-through in there, and the rest will be Similar shack experiences that you've known, which just continue to enhance curbside pickup and the pickup experience to add new conveniences to the way that the shack has still continued to be. We're going to continue to be that. Tara?

Yeah, and then here, Lauren. So we have no plans today to launch any sort of formal loyalty program, but I would say what underpins a loyalty program in terms of its objectives whether that be around new guest acquisition or more typically around driving increased retention and frequency, sometimes average spend, referral, all these different types of components that typically a loyalty program is trying to achieve are absolutely part of our broader digital strategy and marketing and tech development plan. We're in a position today where we're really In the grand scheme of things, although digital has been a priority for us for a couple of years now, we're still actually relatively early in that journey. I think as you can see from some of the things that we're just launching. And so behind the scenes, behind things like curbside or ultimately delivery through the app or as we expand our payment options, behind the scenes, we're also working really hard to further build out and in some cases upgrade our digital infrastructure so that we can build a more holistic view of that guest. And as we've talked about before, then ultimately go on the kind of data and insights from that holistic view and that single view of the guest, but also more importantly, build a more engaging, dynamic, personal relationship with them. So I think no to the formal loyalty program, but absolutely yes in terms of the types of functionality that we're putting into these products to drive the same type of outcomes that a loyalty program ultimately would.

Thanks so much.

Our next question comes from the line of Jake Barlett with SunTrust. You may proceed with your question. Our next question comes from the line of John Klass with Morgan Stanley. You may proceed with your question.

Thanks. Perhaps two unrelated questions. But one is, what is the percentage of your food that's actually consumed off-premise now? I mean, a lot of brands have now sort of realized in hindsight, well, we've got a dining room, but really actually very few people are using it relative to the size of it. So one is, what is that off-premise mix in total, people walking out as well as delivery and all the other things? Do you think that on average the shack sizes could come down over time as a result? I know there's a lot of different formats, but is that a goal or not really? And then just the unrelated part is you added some aggregators this quarter. I just wonder if that's gotten the result you hoped to. Did it expand delivery? Any comments on how delivery stood in your second quarter since that was such a heavy delivery quarter for the consumer?

Yeah, so as a percentage of sales, John, the most recent data that we shared, P7, was was 62% of orders happening digitally. That includes our channels, the biggest growing channel, as well as delivery channels. Now, of the people who order of the remaining 38%, a lot of them still take it to go. So we haven't shared that exact number, but the vast, vast majority are taking it to go, where I even noted in the notes, just about only half of our shacks even have some kind of dining room continue to be open. And we were well on that road to reopening dining rooms, as many others were. But as harder-hit states like California and Texas, Florida, we also pulled back. And we're going to take our time on that. We're not going to put our teams in danger unnecessarily. or our guests. And we want to make sure when we open it, we feel like it's it can be in a place that that makes sense. So vast majority of people happening off site right now. And we can't wait to get them back. And I know they can't wait to get back to your second question on shack size that, you know, I think it's going to be all the above. There's going to be some that are the current larger shack size. And we do continue to target, especially as we think about some of these urban areas. locations for the future that can be smaller, that can really lean into this new and improved digital architecture here where people are taking it to go. And so many of our urban shacks always had a higher percentage of to-go than the suburban shacks anyway. But if we can look at it that way and possibly benefit from there, that'll be balanced out by the full experience shacks that we will continue to build in the portfolio. On delivery, Yeah, I think the answer is yes to it certainly has had an impact. We have great relationships with all the major delivery carriers. Really excited with the growth most recently of Uber Eats. But we're excited with what that's going. I think as InShack has come up and our own channels continue to grow, delivery will likely settle in a very comfortable place, still much more elevated than it ever was. and we're excited about that. But I want to also note that we mentioned that we are working through delivery in our own app and we hope that we can continue to build that channel with great growth and keeping people in our infrastructure over time. So lots of that, lots of relationships to grow. It'll be interesting to see how the delivery world continues to go as this pandemic and beyond goes. Thanks, John.

Our next question comes from the line of Jake Corlett with SunTrust. You may proceed with your question.

Great, thanks. Can you hear me now? Good, good. All right, so I'll try to make it quick. My first question really is on dine-in being offered. You mentioned it was in less than 50% of the system. Could you give us the percentage that it's open in suburban shacks versus the urban shacks? And also in that context, maybe how are the sales at the stores that have dine-in and many more. Should we assume that they basically kind of layer what would have happened in 20 into 21? Or are there any constraints like labor or any other constraints that should kind of caution us away from assuming it kind of, you know, not double up, but kind of make up for the lost development in 2021?

Okay, so on the dine-in, you know, we haven't really broken out whether suburban or urban dine-in works better. or worse. I think that really is a shack by shack conversation. Again, with us being still not having that many units, it's really regionally based more than suburban and urban. Look, if you go around New York City right now, you're not eating inside any of our shacks. They're only open outside. That impacts us, right? If it's a 95 degree July day in New York City, that impacts us. But some of our suburban shacks that have opened do quite well. And to the second part of your question, yes, generally as we reopen dining rooms, that benefits sales. That is a direct correlation for us. So as we've had to revert to some closures through P7, that's harder, right? You see that slowing the recovery. And we'll see. This is something that is unknown. We're going to have to take our time. As development, as you look forward, we do not expect to do The Lost 2020 plus a full class of 2021. We're working on what we believe will be an appropriate class for 2021. And what gets in the way, it's a pretty straight answer, the uncertainty of COVID and making sure that we can continue to execute. Look, the real estate's there, but we've also got to make sure we're rebuilding. We've got to make sure we're staffing. It's a time where you have a lot of people unemployed. You have a lot of people shifting how they want to work. And we really do need to get past this COVID time. That said, we are committed to openings. We're committed to continue to hire and provide those development opportunities for our team that we always have. So no guidance at all on 2021 for you yet, Jake. It's still a class that needs to come together and it's still a world that needs to come together. We'll keep you posted as all that goes. As COVID recovery goes, I think we'll try to capitalize on that as soon as we can.

Our next question comes from the line of Don Ivanko with JP Morgan. You may proceed with your question.

Hi, thank you. Two related ones, if I may. Tara, in your prepared remarks, you kind of tucked in a comment around looking at pricing for delivery. I do wonder if potential pricing could be used to potentially fully offset the cost of delivery and making it more or less profit neutral to the in-store transaction. That's the first question. Secondly, you did mention expecting some data and analytics to be rolled out in 2021. What are the benefits that you could see in the near term in 2021 from this new program or this functionality change? in that year that you haven't gotten either this year or in the past that could potentially change your trajectory. Thank you.

Hey, John. Well, we're actually really pleased with our trajectory when it comes to digital. I mean, some of those stats that we gave you on the call with the fact that we've retained 90% of the high point or the quadrupling of new users, for example, on a year-on-year basis, we're really excited about the fact that digital momentum continues in such force. As it relates to delivery pricing, yeah, I mean, we mentioned it. There's no plans today to increase our prices or change our prices in the delivery channel. But it remains, you know, it remains something that we look at, remains something that is an option to us on a go-forward basis. And it's something that, you know, we may consider at some point in time. I believe we're in the minority in terms of restaurants who who do not have some sort of pricing differential. But we'll see. It's good to have that optionality. And I think really we will look at it in totality and with a broader lens as we bring delivery into our own channels, for example, and then think about it really within that context. So there's a lot of progress when it comes to all the digital initiatives really across the board outside of just delivery.

And I apologize if I misheard or I misspoke. Separating digital, which is very clear that you are doing a very good job with, but I thought I heard something around data and analytics in 21. Maybe I didn't hear that or heard that on a previous conference call. I'm not sure. But can you kind of talk about the data and analytics side of your business in terms of understanding some of that digital, understanding some of that customer, how to get your customers to consume more frequently or broaden that customer base or have that customer You've certainly heard me talk about data and insights many times before

and so I you know I'm not sure that we've got a a light switch that's about to be flipped at any point today on 2021 but as we look at the vast amount of development and innovation that's going on across the company right now in the digital kind of ecosystem behind the scenes of building the data analytics infrastructure is absolutely a part of that roadmap It's something that we started earlier in the year. It's something that is part of the investment that we have restarted. And you're absolutely right. It underpins all of these different digital channels because it will allow us to build that single view of our customer. And as I mentioned in my answer to Lauren's, and so on.

Our next question comes from the line of Elton Stumpf with Longbow Research. You may proceed with your question.

Elton Stumpf Yes, I can take my question. You know, I just wanted to press on, you know, what I think was asked earlier about I think over the next couple of years, kind of playing devil's advocate, if we don't see the consumer go back to sort of pre-COVID normal, could that have any impact on your decision to maybe build more suburban versus urban locations or is it just too early now to really know for sure if it's going to have that impact or not?

Well, Alton, it's a good question. None of us – I'll leave that to the economists and the future tellers. What we're going to do is make sure that our company is well positioned for value, which it always has been, for experience, even if the economy and we see a deeper and longer lasting recession. That certainly could happen. There's certainly some impact from that. And we will see. What we want to do is make sure our products, our pricing, and everything we do fits into a world that that can work for people. That is important. who we have been from the beginning, both in good economic times, entering the last great recession when we began the growth of our company in 2008 and 2009, and in today. So, you know, look, I think when we think about a portfolio, it is going to be balanced, as I've said a few times on this call. We absolutely think there will be a mix of suburban. We think there will be a return to cities. might look a little different for a while. But ultimately, we believe urban centers are going to continue their path that they began. But it may take some time. And we're going to balance out our portfolio in the meantime to make sure we've got strength everywhere.

Our next question comes from the line of Chris O'Cool with Steeple. You may proceed with your questions.

Great, thanks. Good afternoon, guys. This is Patrick on for Chris. I was curious when you start planning or when you're planning to start testing your own delivery channel and if that's something you see rolling out across the system or do you believe it's just certain markets or location types where that makes more sense? And then secondly, on the shack track additions that you mentioned in the deck, what do you think the total opportunity is to potentially add a shack track to or retrofit a shack track with existing units?

I mean, on the delivery, I think we don't have a specific launch date for you. I think we expect that to be a capability that we can offer within the next six to 12 months. Hopefully the earlier part of that, but there's a lot going on in the digital development team right now. And I suspect like most new functionality, we will test it. in different ways in different places. So all of that's still to be worked out, and we'll update you once we've got sort of a more formal launch plan. It's certainly not tomorrow, but it's very much on the roadmap. So we'll share more specifics as we get.

And when we look at ShackTracks... Sorry, Tara. No, it's good. Chris, as we look at ShackTracks, you know, it's hard to say. Not every shack will be able to be easily converted when we think about the exterior aspects ability to have either delivery drivers at a separate area and our pre-order channels. Really, the definition of shack track is going to be our pre-order channels and the ability to get that pickup in an exterior way that's separate and easy for you, whether you choose to stay or take it to go. There's a lot that can. There's a lot that's a little funkier than others. We showed a couple pictures of some of the ones we think we're going to work towards execution in the supplemental deck. and you'll get an idea for that. So at a minimum, the interior pickup experience will continue to improve. We know one of the greatest challenges of Shake Shack is we're a high-volume restaurant. There's a whole bunch of people. And we know that was a challenge pre-COVID and it's certainly going to be a challenge now so that we want to make sure we can improve that ease of use and convenience for our guests to get their great premium Shake Shack food in a little bit easier fashion.

Our next question comes from the line of Jeffrey Bernstein with Barclays. You may proceed with your question.

Great. Thank you very much. And again, thank you for the incremental color in the slide deck. The period and geography stuff is very helpful. Just as I think about the comp recovery as you progressed over the past three or four months, it seemed like you had a huge improvement in May north of 20 percentage points off of the April troughs. then in June I guess it slowed down to 300 basis points after you adjust it and July seems like it's totally flat with June at the same down 39 and that I guess is despite some reopenings. I know when you look by region it shows like the Northeast saw a huge improvement in July but yet it was only single-digit improvements in non-core markets so my question really why do you think the recovery may be slowed or stalled out a little bit in the most recent month or two and How do you gain confidence that the headwind is all COVID-related rather than perhaps the brand maybe not resonating in certain new markets? Just wondering how you decipher that as a new kind of growth company going into some of these markets, whether it's the brand or whether it's just the COVID headwinds. Thank you.

Well, I wouldn't put a whole lot on the brand and trying to establish that during COVID. I think the brand is stronger than ever and remains one of the great brands. in our industry. So we're really confident in that. Look, the pop to May was coming off of massive lows. June, we're deeply hit by protests, again, a result of our urban architecture that you see. And then if you look at July, we had reclosing of dining rooms. And that's another kind of bump back as some of those regions like California, Texas, Florida, and many others were hit. So if you really look at the regionality, you'll see and this is, let's go back to the beginning of what we've said since we've gone public. Comp is not the only way to look at this business. We have about half of our restaurants in here and they're wildly swamped. If you were to look at some of our top restaurants in this company and understand the impact that they have, Theater District in New York City, Penn Station, these shacks haven't gotten any better because the summer came. These are some of our best restaurants and some of the best restaurants. I'm not sure there are a whole lot of $5 burger joints in the world that look like these. And there's a lot of those in the Shake Shack system, not just in Manhattan. But those really drag it down. Those big impacts really drag it down. And that is part of the story we've told for the Shake Shack, same Shack sales, comp-based. from New Guinea. It's frustrating for us. And we've got some of our best restaurants still closed. Grand Central Terminal, one of our best restaurants in the country, it's closed, right? These are unfortunate truths in the COVID reality. So, look, I think our brand is strong. I think, you know, July was better than it was in the past. And we're hopeful that we'll continue to tick up. And as a world, we hope, continues on a positive trajectory. There's no guarantees. We're going to try to capitalize on that and get ourselves back to a gradual recovery.

Our next question comes from the line of Andrew Charles with Cowan. You may proceed with your question.

Randy, I appreciate the commentary for 15 to 20 planned openings for 2020, but can you talk about the position to resume development following the same shack sales that have hovered at a similar level in the last three months? Given the cash positioning, Is there an opportunity to secure the leases, get you good sites for the future, but pause the actual construction development in order to concentrate the efforts and increase the focus on the recovery rather than growth?

I think we can continue to focus on both, Andrew. This is not a cash issue. We have fortified our balance sheet to an incredible amount that gives us total flexibility as we look forward. I want to call out a note that Tara shared that our new shack, in period seven, July, performed at 40% higher average weekly sales than our current system. So if that gives you any indication of whether people are excited to find a new shack in their neighborhood, I think that answers it for you. Now, we'll see where that goes. It's very hard to measure what a new shack looks like during COVID, but we've opened in places like Sacramento, California for the first time to extraordinary start. We've deepened our footprint in L.A. We've deepened our footprint in St. Louis and North Carolina and many other places. So we're excited to keep growing. But we shouldn't do it at the same rate. It's why we're not going to hit our original guidance for good reason. But it certainly is not taking the focus off of recovery. Recovery for us, I believe our teams are working hard and doing so many of the right things. Recovery for us is a big part of COVID allowing people to return, return to travel. We exist in some of the best, most high traffic demand areas in the world. And, you know, we'll keep focusing on that with everything we can. And we also need some tailwinds of the world and COVID to start going our way a little bit to get back to full recovery. And it's going to take some time.

Our next question comes from the line of David Tarantino with Baird. Can we proceed with your question?

Hi. Good afternoon. My question is on the shape of the sales recovery you're seeing, and I fully appreciate the challenges you have in some of the urban markets, but I wanted to focus the question on the suburban shacks. How that's trended and how that is trending down 24% in July, it does seem like the absolute level of the comps or the recovery has been shallower than what we're seeing elsewhere among concepts that we've put in your peer group. So just wondering if you could comment on that and what you think might be the biggest impediment in the suburban shacks specifically in terms of recovering the sales.

Well, let's start with anyone you would put in our peer group probably has thousands or multiples of that, more restaurants than we do. So let's just start there. We have less than 100 Shake Shacks in the comp base of which we're talking about right now. So it's wildly swung by just a few. So it's really hard to compare us to the industry in that regard. There are some Shacks that are up. There are some suburban Shacks that are up. But you have to remember when you think about A lot of these are high traffic destinations as well. The malls, right? The malls are not the busiest places right now. Other places where people would necessarily gather, even where traffic, travel, tourism, and business, suburban business centers as well. So, you know, the greatness of our real estate is exactly the challenge we have today. I think when you compare us to companies with thousands of other restaurants that have a more regular real estate and much more diversified over time, it's much more, let me not speak for them, but it's a little bit more spread out. Our real estate is a little more special and therefore impacted. And that's really the story we're trying to tell with these extra numbers today.

Great. Thanks for the perspective.

Our next question comes from the line of Brent Levy with MCM. You may proceed with your question.

Thank you. Thanks for taking the call and thanks for sharing all the details. Tara, if you could just recap again what you said on the cash burn rate. I think you had said, I'll just let you speak on that. And also, you've given us great segmentation on sales. Would you care to share anything in terms of Buckets of margins by either suburbans or the regions. Just what the delta looks like in the best and worst quartiles. Thank you.

Hey, Brett. Yeah, I'm happy to just restate the cash flow piece. So what we said was that we're pleased that we are now positive cash at the Shack level and we're improved at the enterprise level to the tune of 100,000. That 100,000 excludes the temporary premium pay and the guaranteed manager bonuses in the shack and also excludes new shack development capex. That number is also reflective of our current G&A spends, which I also mentioned in my preferred remarks were beginning to gradually increase as sales come back and we become more proactive on our strategic investment strategy. In terms of profitability, we obviously haven't reported and broken down profitability in terms of any kind of segmentation. But the biggest correlation to profitability, it won't surprise you to know, is sales. So I think you can look directionally at sales performance and assume that profitability to some degree will mirror that. Sales will be, as sales recover, so will profitability. And therefore, you can apply that rationale on a shack by shack or a region by region basis. And it's fair to say the urban shacks are hurting a bit more right now, generally speaking.

Our next question comes from the line of Peter Saleh with BTIG. You may proceed with your question.

Great. Thanks for taking the question. I appreciate all the color that you guys provided today. I want to come back to the conversation on the development side and all the formats. Can you guys just give us a sense on the real estate strategy going forward with the new formats? Do you think the sites that you're going to be targeting, do you think they'll be available for lease or do you think you'll have to spend more to acquire some land and maybe change your strategy up a little bit going forward?

Yeah, we don't really intend to purchase. That's part of the question. We do continue to intend to lease as we have. We don't own any real estate today. And it's not saying we would never, but that's not the best return on capital for Shake Shack today. Look, we're finding that there is an ever-shifting moment here. Big landlords and small are waking up to see who's out there. Many restaurants and retail will struggle. both in dry retail and restaurant. And you're going to see a pretty radical shift. Look, I think drive-through locations will continue to be kind of what they were. They're pretty good locations.

We'll see what the expectations are because I think people are going to continue to grow in those. But they're available.

They're available. There's a lot of brands who, I mean, you follow it. You see the number of brands that are either bankrupt or struggling. There's going to be a lot of sites available We want to make sure we go after the best as we always have. And when we do that, we'll do it in each category. So if we're going after some suburban real estate that can either be a drive-through or a shack track drive up or pick up, we're going to make sure that's great real estate and has a great return on capital. We're going to go right after it. I think this is a great moment to be in market and being a buyer. It's a great moment to be one of the not so many brands that are out there Being opportunistic, being aggressive, and getting after it. We've got a lot of phone calls coming our way about great real estate opportunities, and we're going to do that appropriately. So the whole point of sharing with you these new formats today is to, again, continue to encourage the understanding of the growth of the addressable market and the amount of locations that we think we can get to. And that's taking the next step for us in that opportunity next year.

Our next question comes from the line of Brian Vaccaro with Raymond James. You may proceed with your question.

Thanks, and good evening. I had a question followed by just a quick clarification. The question is, based on the disclosures from many of your peers, it's been interesting to see how the consumers utilize takeout versus delivery in the COVID environment, and just curious what percentage of your digital sales were delivery in the second quarter. I know it's still early, but could you share a little more on how that curbside pickup test performed in the 10 test units?

Yeah, so we haven't broken out the delivery. It's within the 62% total. We haven't broken it out. What we have said and reiterated is our channels are the stronger ones and the higher growing channels. While, again, we're excited about the amount of delivery we're doing and excited to continue that channel, we haven't broken it out. When we talk about curbside, it's literally just been a couple weeks, so it's really new. It's only about 10 shacks. And the initial data is that each day it's grown a little bit. Each day people are figuring it out. We haven't marketed it. We haven't told anyone. It literally just pops up in the app. So if you're savvy enough, you say, oh, cool, this is a new option. I'm going to choose this. I'm going to try this. and people are trying it more and more every day. And we're really excited about it. That to us, we believe has the opportunity. Everything's about guest experience, especially now. And everything now is about guest experience, including safety. Make sure I can come to your brand and feel good about it, feel good about being safe. We're going to live that for a while. And curbside, we believe, can be a solid addition. So we're hoping to get to 50 Shacks by the end of this quarter. We'll keep you posted. I'm excited about this. I think this is a fundamental big opportunity for Shake Shack just to shift how people use us, make it easier on them, reduce some of that stress. In the meantime, use that and we'll see. You can even do it if you intend to stay. We'll see. Pre-order ahead. There's going to be a lot of opportunities to ease the convenience.

Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Mr. Randy Garuti for closing remarks.

I want to thank everyone on the call today. Look, the second quarter for us, for our country, for so many companies has been a hard one. It's been a hard one for our team, and I'm incredibly thankful for their resilience. You know, we're all hopeful that that was a trough moment and that we will continue to see the gradual recovery coming out of it. and looking forward, we've got a lot of new ways and new exciting things we're going to be doing at Shake Shack to capture a great future. Thanks, everybody. We look forward to talking with you soon.

This concludes tonight's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.