Fast food Shack's growth can't shake off investor concerns

 
William Turvill
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Shake Shack Burger Chain Considers I.P.O.
Shake Shack's share price has fallen from more than $70 a year ago to less than $40 (Source: Getty)

Shake Shack’s shares plummeted in after-hours trading on Wednesday despite the fast food company reporting expectation-beating results.


The US company’s share price fell to just over $37 on Wednesday evening – down from more than $70 a year ago amid investor concerns over growth and valuation.

Read more: Flipping good: Shake Shack shares up after beating expectations

Shake Shack Shake Shack | mobile image

Total revenue during the second quarter of 2016 totalled $66.5m, up 37.2 per cent, while sales increased 38.3 per cent to $64.4m.


Analysts had expected revenue of $63m, according to a Thomson Reuters consensus.

Adjusted earnings before interest, taxation, depreciation and amortisation (Ebitda) during the period were up 39.3 per cent to $15.6m.

Shake Shack increased its revenue outlook for 2016 from $245-249m to $253-256m.

Read more: Fast-food company shakes up $51.1m fourth quarter revenue

Chief executive Randy Garutt said:

Domestically, given favourable development tailwinds in our 2016 pipeline, we have increased guidance to open 18 domestic company-operated Shacks this year.

Next week we will reach a milestone of our 100th Shack opening worldwide. We have never been more excited about the opportunities ahead of us and are committed to investing in our team as we envision and execute the next 100 great Shacks.

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