Shake Shack dealing with a beef price spike
The largest increase in meat costs were seen in the most recent week
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Shake Shack saw its sales plunge in recent weeks as the coronavirus forced restaurant closures.
One factor that is also working against the chain is the cost of products in the marketplace.
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In the restaurant business, some have been able to do without their dining rooms, but the one thing they can't avoid are the higher costs associated with meat shortages.
Shake Shack's sales have come at a higher cost, especially among suppliers without non-exclusive agreements.
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"We're also closely monitoring the ongoing volatility in the beef market, as we're starting to see a material increase driven by industry constraints due to plant closures," said Tara Comonte, President and CFO during Monday's earnings call. "Over the last month, we've seen significant increases in beef, with the largest increase being realized over the most recent week."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SHAK | SHAKE SHACK | 122.35 | +3.00 | +2.51% |
Shake Shack is keeping an eye on the situation. The company has been able to have a clearer view of chicken and pork costs due to locked in pricing agreements.
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Same-store sales fell 12.8 percent in the first quarter compared to the same period one year ago. The most precipitous decline occurred in March, when same-store sales fell 29 percent year-over-year as Shake Shack moved to a “to-go only” model in order to comply with social distancing protocols.
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Revenue did rise 8 percent from a year ago.