Shake Shack’s (SHAK) stock have tumbled since its third-quarter earnings miss, which was $101.85 highs. Shake Shack has opened up 25 company-operated Shacks in 2021, with five alone this quarter.

The firm has already established 25 new authorized Shake Shacks worldwide and has yet to open 21 additional Shakes.

Shake Shack, a New York-based chain of burger restaurants, will add 45 to 50 new locations in 2022. Shack Tracks offers drive-up and walk-up windows at roughly a quarter of the restaurants. 2022 will be heavily backloaded owing to supply chain disruptions.

The Company is in the midst of its digital transformation, with significant investment in an omni-channel experience that includes new website, app upgrades, and unique in-app only menu items to improve digital guest engagement, acquisition, and sales.

Shake Shack, like many fast-casual restaurants, is recovering from the pandemic as a more digitally sophisticated business with improved digital infrastructure. With much more room for development, the company is still experiencing growth. Investors seeking exposure in the fast-casual restaurant industry may look for pullbacks in shares as opportunistic buying opportunities arise.

Q3 FY 2021 Earnings Report

Shake Shak released its third-quarter fiscal 2021 results for the period ending September 2021 on Nov. 4, 2021. The firm reported an EPS loss of (-$0.05) excluding non- recurring charges versus expectations of a loss of (-$0.06), which was better than analyst predictions by $0.01 per share.

Revenues increased 48.7% year over year (YoY) to $193.9 million, short of the anticipated $197.47 million according on consensus estimates. Same-store sales grew 24.8 percent YoY. In fiscal September, the firm retained roughly 80% of digital sales.

Shake Shack CEO Randy Garutti said, “We are pleased with the positive sales performance seen during the third quarter. This quarter marks our highest revenue quarter ever, with total revenues of $193.9 million and system-wide sales of $298.6 million. We saw benefits to our urban Shacks as more of our guests returned to offices, events, commuting and tourism-based locations. Our suburban Shacks continue to recover and, on average, perform above 2019 levels.”

He continued, “as of fiscal September, we had retained nearly 80% of our digital channel sales, compared to fiscal January 2021, even as in-Shack sales return. Sales strength aside, we are not immune to the margin pressures that are still being felt across our industry. Inflation in commodity prices and investments across team members are pressuring our margins.”

“We remain committed to investing in our team members to ensure we are retaining and developing the best talent in our industry, and these pressures are likely to persist for the foreseeable future. Our team is working harder than ever to take care of each other, bring hospitality to our neighborhoods, transform our Shack formats, invest in critical digital infrastructure, and uplift everyone in the Shack community along the way.”

Shake Shack released downside Q4 revenue guidance, ranging $193.5 million to $200 million versus $202.06 consensus estimates.

Conference Call

CEO Garutti commented, “This quarter represented the highest total revenue quarter in our company’s history. With all the noise, it’s easy to overlook that revenue is up 49% this quarter versus the same time last year. In October, we had our highest ever company operated Shack Sales Day hitting just under $3 million. And in the fourth quarter, we expect to surpass $1 billion in system-wide sales for the year, a first for us that is quite a comeback our team is making.”

“Our Same-Shack sales compares continue to improve and are nearly back to 2019 levels on average, most notably exiting fiscal October at down, just 1%. Our hometown of New York, our hardest-hit urban Shacks are leading the way building every day as the energy of offices, events, commuters, and eventually, tourists slowly return.”

“For Shake Shack long-term we believe the balance of urban renewal and the strength and focus of our suburban models will build a solid foundation for the future. None of us knows what’s ahead in this environment, but we’re hopeful this momentum continues. Yet as sales keep climbing back, we acknowledge profitability challenges remain, and there’s a fair amount of uncertainty for the world in the coming quarters. As many industries are shared, we too are experiencing a swift and broad acceleration in the cost of goods and labor pressures facing our business.”

He continued, “On the domestic license side, we remain committed to growing our presence across airports, event venues and roadside Shacks in the coming years. We also want to congratulate our friends at the Houston Astros, who once again brought Shack Burgers to fans all season and all the way to a great world series. We’re proud to partner with them and some of baseball’s best as we bring Shake Shack to sports fans in stadiums around the country. While our licensed business continues to benefit from the overall global recovery, conditions do remain volatile and ever-changing.”

“As a reminder, as of fiscal October end, six of our airport locations around the world, we’re still temporarily closed. Many of the pressures we feel here exist similarly across the globe. And we’re working hard with our licensed partners to keep sharing and building Shacks that sustain the test of time in some of the world’s greatest locations.”

“Finally, we’re working continuously to create an uplifting guest experience by elevating everything we do. We’re focused on gathering communities, enriching our neighborhoods, launching great products and driving our brand in new and innovative ways. On the menu front, we’re really excited about our latest LTOs, the Black Truffle Burger and Parmesan Black Truffle Fries, which began as an app-only option to drive digital engagement.”

“This burger feature sauce made with real black truffle oil and is layered with crispy shallots and Gruyère cheese. At $8.99 in most Shacks in our urban markets, this item also pushed the upper envelope to pricing tiers for us. And it’s going to teach us a lot about our opportunities to offer even more premium items down the road.”

Shake Shack Stock

The graphs on the weekly and daily time frames are useful for seeing the landscape in SHAK stock using the rifle charts. On last earnings gap, the weekly rifle chart peaked near the $101.01 Fibonacci (fib) mark.

The stock’s price has been correcting, causing the rising 5-period moving average (MA) support to overshoot at $81.05. The weekly stochastic fluctuated near the 40-band as it stalls around the 20-band.

On the monthly chart, we clearly see that the weekly has been attempting to rise, and it would continue attempting to do so as long as the stochastic is moving higher and the 5-period MA can crossover the 15-period MA at $81.38.

At the $72.95 fib, $68.30 fib, $65.86 fib, $62.12 fib, and $59.96 fib levels, traders can look for pullback levels to capitalize on a buying opportunity before the price rises again. Trajectories are expected to rise from the $91.56 fib to the $108.43 fib.

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