Shack Shack at Fulton Center in Lower Manhattan | | Ed Rooney/Alamy Stock Photo
As I write this, I’m counting down the hours until I go to Shake Shack for dinner.
But there weren’t as many diners as the Hudson Square-based public company hoped for the quarter ending June 29, according to second-quarter financial results released Thursday.
Still, Shake Shack’s average weekly sales are the highest since the Covid outbreak, a reminder that Americans are returning to relatively normal patterns in their daily lives.
CEO Randy Garutti and I agree that Shake Shack makes more than just burgers. This quarter’s results summarize the many challenges in the economy, both unique to New York and those that challenge businesses and consumers across the country and around the world.
inflation. Materials, equipment, gas and wages are all expensive. Even beef prices, which the company says have stopped rising, are leveling off at high prices. Garutti said Shake Shack was showing solid profit margins and cost pressures seemed manageable. But the impact of inflation on consumers saw sales flatten out in mid-May and in June, he said on an earnings call on Aug. 4, adding: “Low-income consumers need to be careful.” said.
Modified routine. In the big Northeastern cities, Shake Shack didn’t have as many customers as it had expected. The New York City store posted its biggest sales since Covid began, while Manhattan same-store sales were up 37% year-over-year, but total sales were still his biggest in 2019. It is “well below” the level. for company presentations. Midtown in particular, where sales volumes are more than 40% below his 2019 levels. The square shows traffic patterns that show subway ridership remains at about 60% of pre-pandemic levels, potentially disastrous for the financial health of the Metropolitan Transportation Authority. .
wage. Compensation costs in the New York metropolitan area are up 5.2% for the fiscal year ending June 2022, compared with a national increase of 5.5%, according to the U.S., despite New York City’s minimum wage being twice the national level. is slightly behind. Bureau of Labor Statistics. For the hospitality industry, rising compensation eats into profits. According to Shake Shack, payroll and related expenses increased by 50 basis points from the same period last year as he increased starting salaries for employees.
As one of the few publicly traded restaurant companies based in New York City, Shake Shack can pre-set prices for ingredients such as potatoes. But advance planning and purchasing power couldn’t keep the company from the unfortunate pressure of Supply He chain, which the city’s smaller restaurants were already feeling, of a potato shortage for fries.