DON'T WORRY, YOUR SHAKE SHACK BURGER SHOULDN'T GET ANY MORE EXPENSIVE THIS YEAR

• Shake Shack doesn't currently plan to increase prices again this year, CFO Katie Fogertey said.
• Overall, menu prices went up in the mid-single digits in the quarter, she said.
• Californian prices rose by 7%, driven by the state's new $20-an-hour wage for fast-food workers.

Shake Shack says it could freeze prices for the remainder of the year.

Some diners have said that rising prices at fast-food and fast-casual chains are putting them off. At earnings calls this week, executives from chains including McDonald's and Starbucks said that customers were increasingly focused on value.

Shake Shack raised menu prices by about 3% in mid-March, CFO Katie Fogertey told investors on Thursday.

The burger and frozen custard chain had already also raised menu prices for delivery through its app and website by 5% in January, she said. This had pushed up prices on third-party delivery orders, where Shake Shack charges a 15% premium compared to ordering through the company directly, she said.

Overall, menu prices went up in the mid-single digits in the quarter, Fogertey said.

"We have no current plans to further increase price this year," she said.

Shake Shack CEO Randy Garutti said that some of its lower-income customers were "probably trading down from time-to-time," though he didn't say whether they were switching to cheaper chains or cooking at home instead.

The price increases this year were introduced to address food and wage inflation, Fogertey said. She said that the March rises came from a roughly 7% price increase in California, with prices elsewhere going up by between 2% and 2.5%, which she said was "very consistent with historical pricing practices" at the chain.

California boosted the minimum wage for fast-food workers to $20 an hour on April 1, up from the state's general minimum wage of $16. The new legislation applies to limited-service chains with at least 60 locations across the US.

Many restaurants have pushed some of their higher payrolls onto diners by raising menu prices, like at Shake Shack. Some have also tried to cut their costs by stopping hiring, turning to automation and technology like digital order kiosks, or delaying renovations.

Shack Shack's same-restaurant sales were up 1.6% year-over-year in the quarter, a huge slump compared to the 10.3% jump in same-restaurant sales from 2022 to 2023. It attributed the drop in the rate of growth of comparable sales to a 2.1% fall in traffic, believed to have been mainly caused by poor weather.

The company estimated that it missed out on about $3 million in sales due to weather as customers dined out less and its restaurants cut their hours or even temporarily closed.

Is fast food too expensive? Email this reporter at [email protected].

If you enjoyed this story, be sure to follow Business Insider on Microsoft Start.

2024-05-03T12:55:49Z dg43tfdfdgfd