Shake Shack Inc (SHAK) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Shake Shack first-quarter 2015 earnings conference call.

(Operator Instructions)

Please note that this conference is being recorded today, May 13, 2015. On the call today, we have Randy Garutti, Chief Executive Officer of Shake Shack; and Jeff Uttz, Chief Financial Officer. And now, I would like to turn the conference over to Mr. Uttz. Please go ahead, sir.

Thank you, sir, and good afternoon, everyone. By now, you should all have access to our first-quarter 2015 earnings release. If not, it can be found at ShakeShack.com in the Investor Relations section.

Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. Actual results may differ materially from those indicated by these forward-looking statements due to a number of risks and uncertainties, including those discussed in the risk factor section of our annual report on Form 10-K, which was filed on March 27, 2015. Additionally, any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change.

Lastly, during today's call, we will discuss non-GAAP financial measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation, or as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available in the earnings release.

With that, I would now like to turn the call over to Randy.

Thank you, Jeff, and good afternoon, everyone.

In the first quarter, our team executed on our plan, and carried forward the strong momentum from the fourth quarter, and following our January 30 IPO. I want to share a few of the highlights for the 13 weeks ended April 1, 2015.

Total revenue grew 56.3% to $37.8 million. That includes an 11.7% increase in same-Shack sales on a calendar basis. Shack-level Op profit, a non-GAAP measure, increased 78.3% to $9.3 million, a 25.7% Shack-level operating profit margin. Adjusted EBITDA, a non-GAAP measure increased 94% to $7 million. On an adjusted pro forma basis, we earned $0.04 per share for the quarter, driven in large part by our much stronger than expected same-Shack sales growth.

As discussed on our last call, we saw many of the dynamics that benefited us in the fourth quarter of 2014 continue through this first quarter, including the two price raises taken in September 2014 and January 2015, to partially offset commodity cost pressures; the temporary closure of our Madison Square Park Shack, providing a lift to other Manhattan Shacks, which make up a significant portion of our small and limited comp base; the continued lift in sales due to the return of crinkle-cut fries; and the extraordinary amount of press surrounding our initial public offering, cultivating new Shack fans and an even greater brand awareness.

In addition, we've seen a positive mix shift from our limited time offering of the ShackMeister Burger, which we intend to continue to run through Q2. We are very pleased with our results, and in the light of our Q1 performance we expect full-year same-Shack sales growth to be in the low to mid single-digits. However, we remain consistent in our long-term expectation and guidance to deliver low single-digit same-Shack sales growth in 2016 and beyond, given that most of our Shacks typically already operate at high steady volumes.

This quarter we saw a broad-based geographic strength across our Shacks, with particularly strong results at our new Shacks located in key markets outside of Manhattan, including Las Vegas and Chicago, as well as the early results of our new Shacks opened this quarter in Baltimore and Boston. The early indicators of success in markets outside our New York home base bolsters the confidence we have in our long-term expansion plans. During the quarter, we opened three new Shacks in community gathering locations, including our first Shack in Baltimore, Maryland, in the heart of the Inner Harbor. We also deepened our roots in Boston, with two new Shacks, one on Newbury Street in the historic Back Bay neighborhood, and one in Dedham, at Legacy Place just outside of Boston. Subsequent to the quarter, we opened our third Shack in New Jersey at the Bridgewater Commons, as well as our first Shack in Texas, located in Austin on South Lamar Street, neighboring the original Alamo Drafthouse.

We look forward to opening an additional Shack in Austin later this year, as well as new Shacks in Long Island, Orlando, and two additional Shacks in the Chicago area, one on Michigan Avenue at the new Chicago Athletic Association Hotel and one at the Old Orchard Mall in Skokie, Illinois. Additionally, we are looking forward to the reopening of our flagship original Shack in Madison Square Park, New York City, towards the end of the second quarter. As a reminder, our Madison Square Park Shack has been closed since October 2014, and has undergone a complete renovation as part of our lease renewal with the City of New York.

2015 is right on pace to hit our growth targets for at least 10 domestic Company-operated Shacks. We are also well on our way towards building a strong pipeline for 2016 and beyond. To that point, we're thrilled about our recent announcements that we will be entering California in 2016, in the heart of West Hollywood, at the corner of Santa Monica Boulevard and West Mall Drive, just one block west of La Cienega. At long last, Shake Shack LA is on its way.

On the international front, we're on track to hit our stated targets of five new licensed Shacks throughout the UK and Middle East, the majority of which are targeted towards the end of the year. We're excited about our recently announced second UK Shack in Westfield Stratford City, opening later this month. Additionally, as discussed on our last call, we've begun working towards building our brand in Japan, and are continuing to target 2016 for our first Shack to open in Tokyo, with 10 licensed Shacks planned to open over the next five years.

Throughout 2016, we'll continue to further strengthen our base of Shacks along the East Coast, with new Shacks in Manhattan and the New York metro area, while also expanding our presence west of the Mississippi. We invite you to follow us on Facebook, Instagram, and Twitter, where we look for to updating you regularly on our expansion plans through these social media outlets, as well as through our own ShakeShack.com website.

With that, let me turn the call over to Jeff, for a more detailed financial review of the quarter.

Thanks, Randy.

Now turning to the results of our 13-week first quarter, ended April 1, 2015. Total revenue, which includes Shack sales and licensing revenue, increased 56.3% to $37.8 million during the first quarter, from $24.2 million in the first quarter a year ago. Shack sales increased 59.2% to $36 million during the quarter, versus $22.6 million in the year-ago period. The increase was largely due to the addition of 13 domestic Company-operated Shacks over the past year, as well as our stronger than expected same-Shack sales growth.

Same-Shack sales increased 11.7% on a calendar basis during the first quarter, versus a 3.9% increase in the same quarter last year, and this consisted of a 2.1% increase in traffic combined with a 9.6% increase in price and mix. We attribute our stronger than anticipated performance to menu price increases that were taken in September 2014 and January 2015 to partially offset higher commodity costs; the temporary closure of our Madison Square Park Shack, which is providing a lift to the other Manhattan Shacks which make up a significant portion of our small comp base; the reintroduction of crinkle-cut fries; and lastly, the limited offering of our ShackMeister Burger. As a reminder, our comparable Shack base includes those Shacks that are open for 24 months or longer, which we feel is the best comparison, given the long honeymoon periods of the new Shacks.

The comparable restaurant base in the first quarter of 2015 only included 13 Shacks, versus 9 Shacks in the first quarter of 2014. Average weekly sales for domestic Company-operated Shacks increased 7.2% to $89,000 for the first quarter of 2015, from $83,000 in the same quarter last year, primarily driven by menu price increases, positive shifts in mix from menu innovation, and strong performance from several Shacks opened in the second half of 2014, including the Shacks in Las Vegas and Chicago.

Despite the performance in Q1, we continue to expect our average weekly sales over the long-term to decline, as we continue to open more target-volume Shacks. Licensing revenue increased 13.2% to $1.8 million during the first quarter from $1.6 million a year ago, driven by the opening of eight internationally licensed Shacks, and one domestic licensed Shack over the past year.

Let's turn now to the expenses for the quarter. Food and paper costs as a percentage of Shack sales remained constant at 30.5% compared to the prior year, beating our expectations. Higher commodity costs, particularly beef, were partially offset by the previously mentioned menu price increases. That, coupled with lower dairy costs, provided better than expected margins on food and paper during Q1. Looking ahead, we expect continued pressure on beef prices, and as a result anticipate overall commodity inflation to remain at elevated levels for the remainder of the year and into 2016. Therefore, we continue to project inflated food and paper costs over last year, throughout the remainder of 2015.

Labor and related expenses as a percentage of Shack sales were 25.2%, a reduction of 240 basis points compared to the prior year. This was as a result of higher Shack sales. However, over the next few years, we continue to expect deleverage on the labor line, as target-volume Shacks make up a larger percentage of the base, and as minimum wage increases continue to pressure the industry moving forward.

Occupancy and related expenses as a percentage of Shack sales increased 40 basis points to 8.8% versus the prior year, driven by higher contingent rent and real estate taxes. Shack-level operating profit, a non-GAAP measure, grew 78.3% to $9.3 million, from $5.2 million last year, mostly due to the flow-through captured on higher Shack sales. As a percentage of Shack sales, Shack-level operating margins increased roughly 270 basis points to 25.7%, as we leveraged labor and other operating expenses. That said, we remain focused on the long-term expectation that new target-volume Shacks will reduce overall Company-operated Shack AUVs, and also Shack-level operating profit margins.

General and administrative expenses increased $15 million to $18.4 million during the first quarter of 2015, from $3.4 million for the same quarter in 2014. As a percentage of total revenue, G&A increased to 48.6% from 13.9% in the prior year. This increase was primarily due to $12.8 million of nonrecurring compensation expenses related to the IPO, and also $600,000 of incremental IPO-related expenses. Excluding these expenses, G&A would have been 13% of total revenue for the quarter.

Adjusted EBITDA, a non-GAAP measure, grew 94% to $7 million in the first quarter, compared to $3.6 million in the prior-year period. As a percent of total revenue, adjusted EBITDA margins increased roughly 360 basis points to 18.5% for the first quarter. We reported a net loss of $12.7 million or $1.06 per diluted share for the first quarter of 2015, compared to net income of $1.1 million or $0.04 per diluted unit for the same period last year. The net loss for the first quarter of 2015 includes approximately $13.2 million of one-time after-tax expenses that were incurred in connection with our IPO.

On an adjusted pro forma basis, which excludes nonrecurring items, and assumes that all of the outstanding LLC interests were exchanged for Class A common stock whereby we would no longer present a non-controlling interest, we earned $1.3 million or $0.04 per fully exchanged and diluted share, compared to $600,000 or $0.02 per fully exchanged and diluted share in the first quarter last year.

Now, following on these first-quarter results, we would like to provide the following key metrics, with respect to our full-year FY15 outlook. We expect total revenue to be between $161 million and $165 million. Also, taking into account the performance in Q1, same-Shack sales are expected to increase low to mid single-digits for the full year. We remain cautious in our full-year guidance, in light of a number of factors contributing to the recent strength that are not expected to continue, including the price raises taken in Q4 of 2014 and Q1 of 2015, the return of crinkle-cut fries, and the lift in sales following our IPO.

We also expect that the reopening of our flagship Madison Square Park Shack could potentially cannibalize our other Manhattan Shacks, which have benefited since its closure in 2014. And as a reminder, we currently only have 13 Shacks making up our comp base. Our development plan for 2015 remains on track for 10 new domestic Company-operated Shacks opening throughout the year, and 5 internationally licensed Shacks.

With that, I would like to turn the call back over to Randy for some final points.

Thank you, Jeff, and before we close today, I do want to bring your attention to our most important charitable moment of the year. Throughout the month of May, Shake Shack has teamed up with Share our Strength and No Kid Hungry to launch our fourth annual Great American Shake sale throughout all domestic Company-operated Shacks. This whole month, when a guest chooses to donate just $2 to No Kid Hungry, Shake Shack will give them a free shake coupon to be used on their next visit. Our goal this year is to raise at least $350,000, and provide 3.5 million free meals to kids in need. This is a great month for our Company, and we hope you will come out have a shake with us.

Before we move to the Q&A portion of today's call, I would like to once again thank all of our truly dedicated and passionate team members. We know this past quarter has been an exceptional one for our team, and we know that Shake Shack's success has only been made possible because of the hard work and dedication put forth by our team each and every day.

With that, Operator, please go ahead and open the lines for questions.

(Operator Instructions)

John Glass, Morgan Stanley.

Thanks, good morning. Good afternoon, sorry. Randy, when you talk about Boston and Baltimore stores being better than expected or very encouraged, can you give any color around, are they well above your targeted pro forma openings? And any sort of color around how these new and maybe some of these suburban stores are performing relative to expectations?

A little early to say, John, and we did just open those in the quarter. So the two in Boston are really new, and Baltimore a little bit longer. I think what I would say is, Vegas and Chicago are obviously performing ahead of the $2.8 million to $3.2 million long-term targets that we've given you for our AUVs.

We always have a quick honeymoon in new Shacks, and that would be the case in Baltimore and the two Boston Shacks. However, we still believe over the long term on average, we're going to be in the $2.8 million to $3.2 million Shack AUV. And I think those three will probably play right into that over time, so very early to say.

And Jeff, how do you assume -- what do you assume for restaurant margins in your guidance, the balance of the year? I understand you don't expect comps necessarily to stay at these levels. But since a lot of it's been driven by price and mix, it's probably won't -- it's probably easier to predict, let's say, than traffic, right?

So given this level of pricing, and maybe the mix you experienced in the first quarter, how does the restaurant-level profit really look, even if assuming the traffic is flat for the balance of the year?

Yes, John, in terms of specific guidance on the Shack-level operating profit, we're not going to head there right now. But I can tell you that we are going to continue to see some pressure on beef. We don't expect to see any relief on that until probably 2017. We do expect, as I mentioned earlier in the call, some deleverage on the labor line. But again, I would steer you back towards looking at that 18% to 22% average Shack-level profit that we expect to see on the units that we're opening during the year, and build it in that way.

And can you just give us the precise, but I know you gave us the total check, but the exact breakdown in price and mix, and [line] mix I think got much stronger this quarter. What was it, was it just the ShackMeister, or were there other components that drove mix?

Yes, John, it was 9.6% on price and mix, most of that was the 6%, two price raises that we've talked about. It was 2.1% on traffic. The ShackMeister Burger, I think some new trial following the IPO had people trying a lot more things. We also made a change that has been pretty good for us, where we have introduced a new custard calendar, where we change our flavor every week, and that has started in Q1.

We now have a shake of the week flavor. We've never had that before. So I think the combination of the shift in custard, shake of the week, increasing a little bit of sales because we charge a bit more for that, and some of our seasonal beverages has been what has led to the 9.6% total price and mix shift. So it's been positive for us.

Great. Thank you.

John Ivankoe, JPMorgan.

Good afternoon. Thanks, it's Amod Gautam filling in. Congrats on a strong quarter. The first question was just around, what you were just talking about. I mean, the ShackMeister was running -- I think you guys said, it will run through the second quarter and it's been a driver of mix. So can you just talk about maybe the plans for the second half of the year? Would you plan to replace that with another maybe LTO type of burger, or make that a permanent thing on the menu?

That is our intention right now. Being the fine casual guys that we are, with our fine dining background, we're constantly tinkering in the test kitchen, and having a lot of fun. So we've got a lot of fun ideas, and we're going to continue to run the ShackMeister for a while. It's been a huge hit, and continues to be.

But as we look towards the second half of the year, we like the program that we've gone with, with an LTO burger happening. So we will stay tuned on that. Nothing new to announce just yet, but that strategy will continue.

And then, the California 2016 market entry, can you talk a little bit about how you chose the location there? I think it's in West Hollywood. And then, how fast you think you are planning internally to scale up the business there? Can you maybe put in context of some of the non-New York markets, such as the pace of openings in Boston or DC, relative to what you think you can do in California?

Yes. So how do we choose? We've been looking at California, obviously for a very long time, we've gotten to know the neighborhoods real well. This was a really special opportunity. We found a pad site that we were able to build something. As you know, we spend a lot of time and focus on design. So we're going to build a real roadside Shack, just like we always do, but for the LA car culture.

It's going to be something really special, and we found that lot where we could do that. It has parking, it has proximity to every great neighborhood in LA, on Santa Monica and La Cienega. It is really in a strong spot, and we felt that was the best way to introduce LA to everything that Shake Shack is. That's how we chose it.

As we look at the future of California, I think we are going to go about it in the same cautious and conservative fashion, that you've seen us take on every other market, whether it's DC or Boston. We want to get that one landed, do it right. Of course, we have our eyes the next opportunities out there. Nothing to announce yet, and no new leases signed beyond that site.

So we're going to do it cautiously and creatively, to make sure that the brand resonates the way we believe it will with our fans in LA. And what's been cool is, with the Vegas opening last quarter in December, we have seen more than ever people from Southern California coming to the Shake Shack, understanding what it is, and asking us to bring one to LA. So that's why ultimately, we went ahead and did that.

Very good. Thank you.

Jeffrey Bernstein, Barclays. Mr. Bernstein, your line is open. Please check your mute button on your phone.

Can you hear me now?

Yes, sir.

Hello? Perfect, thank you. A couple questions -- just first -- good afternoon. To follow up on the menu pricing discussion, with the -- I guess, you said in total it was roughly 6% at this point -- I'm just wondering what learnings you've had from that?

Whether or not you feel you have additional pricing power or whether you feel like there is any pushback? Obviously, the traffic was more low single-digit, so how you think those two dynamics play off of each other?

We have not seen pushback, Jeff, thanks for that. I think what we continue to learn about Shake Shack is, Shake Shack is for people who want to understand where their food is from, and have a higher expectation of when they go out to get a burger, where they want to get it, and they're willing to pay a little more for it.

We do continue to be really proud about where our pricing is relative to other burgers out there, and relative to other fine-casual operators. So we think even after taking that 6% over this last couple of quarters, we're still really well-positioned with future price opportunities.

No plans at all to take price through the rest of this year, and that's really going to depend on how we fare with the commodities. And again, first quarter, we had a lot of things in our favor, beef mostly held from the fourth quarter. It was significantly up from the first quarter of 2014, but we've won quite a bit in dairy from last year, and from the fourth quarter.

And that's what helped us maintain our cost of goods at a level that was better than we expected. However, we still think there's some continued pressure through the end of the year on that, but hopefully not enough to cause us to take price just yet. But stay tuned, and again, we'll keep you posted if we think a price raise is coming.

Yes. And then, the second question was just on the pace of openings for, I guess the rest of this year? I know you mentioned some cities where you are coming to, but should we assume any more in the second quarter, and/or how do they breakout between the third and fourth, your best guess I guess?

Yes. So it's really well paced. We got 3 opened in the first quarter of the 10. We've gotten two open so far, and we expect probably one more in the quarter. So we probably be right on track for roughly half of our plan through Q2.

We'll probably have a little break in the early summer, and open the majority of those other four towards the end of Q3 and into Q4. And that's how it's going to play out, which is kind of right in line with the expectations that we have had through the year. The development team is doing a heck of a job, and they are really hitting their schedule. They are executing on the plan we had.

Got it. My last question was just, as you look out and try and drive incremental traffic into your stores, I know you all think of the question [of capacity and throughput], but do you see any -- whether it's technology or otherwise opportunities -- obviously you don't want to damage the customer experience -- but any way to see how to get more traffic through your stores, so that's not a constraint?

Well, we're constantly thinking about that, and this has been, I think, an extraordinary quarter to say, the Ops guys have run great restaurants this quarter. We had higher-than-expected sales, and they did a great job flowing through that higher-than-expected sales to the Op profit line, which is why our beat our Op profit projections. And I think as you look at it, we are constantly thinking about how to raise that.

We had our highest average weekly sales here at $89,000 a week, and that just shows when you look at our AUVs, they are really at a high level. We're going to continue to focus on that and making sure every guest has a great experience each and every time.

Got it. But nothing new on the technology front, at least at this point, in terms of the order and pay, or payment or anything along those lines?

That's right. Nothing new to announce at this time on that.

Great. Thank you.

Andy Barish, Jefferies.

Hey, guys. Just one or two more on the cost line. I mean, prime costs were much better. I guess, if we can break out on the -- first of all, on food and paper, I just wanted to make sure I understood, you do think that's going to get a little bit higher from here in the first quarter going forward?

And then, secondly, on the labor costs, I understand the long-term impact of opening the target Shacks, but what do you think near term in terms of comp, do you need to continue to get nice leverage on the labor line?

Hey, Andy, it's Jeff. So to cover the cost line, beef is obviously the biggest piece of our market basket, as you know, and which is -- it continues to be a little bit elevated. Sequentially over last quarter, it still up a little bit, not incredibly high, from over last quarter of Q4 of 2014. But it is still up significantly over Q1 of last year, and we don't expect, and we haven't modeled to see a lot of relief on that line for the remainder of the year.

Dairy is down. We did see dairy come down. The purchasing team has done good job at renegotiating contracts, doing what they can with that line. But I think with beef being the biggest piece of that market basket, and just the volatility there, we're not expecting to see any significant leverage on that line going forward this year.

And for labor, and we continue to feel additional pressure there. We will have, as you know, we've always paid above minimum wage at Shake Shack, and this year, we'll have uptick in one of our markets in DC for three of our Shacks. So that will happen in July, so there will be a little bit of labor pressure there.

And as you said, as the target model Shacks enter the base, which there will be a lot more of those than others, there will be continued pressure on the labor line as we go. So we're going to continue to be conservative there. The story, here in Q1, really is the flow-through and the work that the team did in capitalizing on that. So as you look at it, we still are going to staff our restaurants with great people who get paid well, and that costs money, and we're going to continue to commit to that.

And Andy, it's Jeff. There's no doubt that the 11.7% same-Shack sales for the quarter helped leverage that line. And as we've said, we don't expect that to be sustainable throughout the remainder of the year, and because of that, don't expect to see, as Randy said, significant leverage on the line any time soon.

Thanks, guys.

Sharon Zackfia, William Blair.

Hi, this is actually [Matt Curtis] on for Sharon. I got a question on the Madison Square Park location. Could you explain how comps exactly are going to be impacted as we move through the year? You said it's providing a lift to other Manhattan Shacks while it's closed, and then would be cannibalizing sales potentially when it comes back. So maybe if you could just explain how this dynamic plays out as we move through the year?

Yes. So what happened in October of 2014, when we closed that Shack, it came out of the comp base. And so it's still out of the comp base right now until it reopens. We feel that, that's providing a lift to the other Shacks, which are still remaining in the comp base. How many people have shifted their allegiance from MSP to another Shack, we don't know? But we do feel that there is some impact there.

And then, when it reopens, it will come back in, during the time period up until October, when it won't have anything to comp against in 2014, and will come back out, until such time it hits the anniversary of the reopen, and then it will go back in. So when it does reopen, we're going to have a reverse effect, and people will come from those Shacks that were in -- wherever else in New York, and come back potentially to Madison Square Park. But we just can't quantify that, but we do believe there is some impact there.

And again, reiterating that there is only 13 Shacks in the comp base for this quarter, 15 today, and 5 of those in this past quarter are New York City, all right? So you have got to take that for the data set that it is, and that is one of the bigger reasons why we're going to continue to be conservative in our low to mid single-digit comp guidance for this year. Because, we will see how the Madison Square Park reopening impacts the sales of those other five Shacks in the comp base.

Okay. I appreciate the clarification. Thank you.

(Operator Instructions)

Paul Westra, Stifel.

Great. Good afternoon, everyone (multiple speakers). Just a follow up -- first on same store --?

Paul, how are you? (Multiple speakers).

Doing pretty well. I'm calling in from China. First question is, on the same-store sales, give us an idea how maybe the comps progressed during the quarter? Was there any funny weeks with weather, was there any funny [laps] or anything, and maybe the best and worst month of the quarter would be helpful?

You're asking about Q1, right? Not the current quarter, right, Paul?

Q1, yes.

Yes. So it was pretty balanced (multiple speakers). Well, that we're not going to share at this time, but Q1 was pretty balanced. As we've talked about, we did have a little more pressure in February. February was a cold month in the Northeast, obviously, and with the majority of our comp Shacks in the Northeast, that affected it. But generally, it was pretty straightforward.

And there is a lot of factors, right? We had the IPO on January 30. So the bad weather was balanced by a lot of excitement on the brand and a lot of press. So that really caused a pretty straightforward comp throughout each month in the quarter.

That's helpful. And a follow-up to Andy's questions on commodities. We sort of anchor ourselves off the first quarter's cost of goods sold percent, are you seeing any sequential sort of movement in the commodity cost basket going forward? I know you talked about potential pressure on a year-over-year basis, but just taking it from a sequential first-quarter basis on performance?

For the remainder of the year, Paul, we're building in sort of mid single-digit inflation rate for the remainder of the year. Beef is so volatile -- crossing our fingers it will stay where it is, or even go down, but we are projecting mid single-digit inflation rate for the remainder of the year for our cost of goods sold line

Okay. And then maybe some additional color on your Las Vegas and Chicago, clearly a source of upside in the revenue for the quarter. Anything to share, maybe where that upside is coming from, the shelter periods, are you sort of operating at better throughput during peak hours, and maybe some take-out mixes? Or anything that you can share with us about the performances?

Without getting individual unit economics, which we're not going to do, I would just say, we're really pleased with the response that people have given us in those markets. It's -- there's no question Shake Shack has gotten a lot of new markets in the last year, and so much positivity has happened there. So we have just found that in Chicago, and then in Las Vegas, people are coming out, and they are coming out often. So we're excited about the performance there, at all levels, especially with guest visits and sales.

Great. And last question, anything one-time expense issues with the reopening of Madison Square Park outside pre-opening?

Just regular. There will be regular pre-opening costs, like we have with every Shack, some start-up costs to go ahead and get the team retrained and reopened. So other than that, the majority of the spend is on a regular CapEx line to rebuild that restaurant, which we undertook a full renovation, both underground and above ground in a New York City park. So it was a CapEx expenditure. No major P&L hit, other than a standard opening start-up costs, which we've assumed all along.

Great. Thanks, and congrats on a great quarter.

Thank you.

Thanks, Paul.

And that does conclude our question-and-answer session for today. I would like to turn the call back over to management for any closing remarks.

I want to say thanks again, and thanks to our team for a great quarter. Thanks to all for listening. Take care.

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.