Shake Shack’s Tough 2022 Start and Its Growth Push in China and Asia

This is an English adaptation of a FoodBud historical article originally published on January 13, 2022.

On January 11, 2022, Shake Shack released results for the fourth quarter and full year ended December 29, 2021. Fourth-quarter total revenue reached $200 million, up 29% year over year, including $7.4 million from licensing revenue.

System-wide sales in the quarter were $314 million, while same-Shack sales increased 20.8% year over year. Compared with 2019, same-Shack sales were up 2.2% in Q4, an improvement from a 7.3% decline in Q3.

Average weekly sales per Shack reached $74,000 in Q4, compared with $72,000 in Q3 2021.

Digital and Store Base

Digital orders accounted for 42% of revenue in the fourth quarter. Since March 2020, 3.5 million users had used the Shake Shack app.

During Q4 2021, Shake Shack added a net 19 new Shacks: 13 company-operated locations and 6 licensed locations.

For the full year, it added a net 58 new Shacks, including 35 company-operated locations and 23 licensed locations. The company also closed one company-operated Shack and three licensed Shacks.

By the end of the fourth quarter, Shake Shack operated 218 company-operated Shacks and 151 licensed Shacks. Its Greater China footprint included 12 locations in mainland China, 7 in Hong Kong, and 1 in Macau.

A “Tough Start” to 2022

CEO Randy Garutti said 2022 had begun with a “tough start,” citing the rapid spread of COVID-19 variants and worsening labor shortages.

Discussing growth for 2022, he pointed to drive-thru development, noting that the rules had changed after the pandemic. Shake Shack already had two drive-thru locations and expected to open another 10 during the year.

Garutti said growth in 2022 would still depend on unit expansion, with 45 to 50 new Shacks expected in the U.S. market.

China and Asia Expansion

Shake Shack’s 2022 target for licensed openings was 20 to 25 locations, with growth sought in China and other Asian markets. In 2021, the brand opened new locations in Shenzhen, Hangzhou, and Macau, and maintained strong sales growth despite the pandemic.

At the beginning of 2022, Shake Shack signed an agreement with South Korea’s SPC Group to enter Malaysia, with plans to open 10 locations there from 2023 to 2031.

Malaysia would be Shake Shack’s sixth market in Asia. By 2031, Shake Shack and SPC Group expected to operate more than 45 locations across South Korea, Singapore, and Malaysia.

SPC Group Vice President HeeSoo Hur said the group had opened 28 Shake Shack locations across South Korea and Singapore over the previous five years, including 20 in South Korea and 8 in Singapore.

Note: Store targets, market-entry plans, and forward-looking figures are historical as reported in January 2022.