Fast-casual restaurant chains Shake Shack (NYSE:SHAK) and The Wendy's Company (NASDAQ:WEN) both reported year-over-year increases in sales and profits for the third quarter as inflationary pressures encourage consumers to seek out more affordable dining out options.
New York-headquartered Shack Shack, which offers hot dogs, hamburgers, fries and milkshakes, reported 3Q revenue of $276.2 million, up 21.2% from the year-ago quarter. This was ahead of Wall Street estimates of $276 million.
It reported $265 million in sales and $11.2 million in licensing revenue, with sales slightly below the forecast of $265.4 million while licensing revenue was ahead of estimates of $10.72 million.
Adjusted earnings per share (EPS) of $0.17 also topped forecasts of $0.09.
During the quarter, it opened 10 domestic company-operated Shake Shack (NYSE:SHAK) locations and 15 licenced locations, including in the Bahamas and China.
“We are proud to report Shack-level operating profit expansion of 400 basis points year-over-year to 20.4% in the third quarter – the second straight quarter with profitability above 20%,” Shake Shack (NYSE:SHAK) CEO Randy Garutti said in a letter to shareholders.
“Shack sales in the quarter started strong in July and August and softened through September as we returned to more normal seasonality patterns.”
Meanwhile, Ohio-based Wendy’s reported a 3.4% year-over-year increase in sales from $532.6 million to $550.6 million, missing estimates of about $555 million.
The chain, which is famous for its hamburgers, chicken sandwiches and beverages such as its signature Frosty ice-cream drink, reported adjusted EPS of $0.28.
This was up from EPS of $0.24 in the year-ago quarter and ahead of the Street consensus of $0.26.
A total of 71 Wendy’s locations were opened globally during the quarter resulting in a net store count gain of 51.
“Global same-restaurant sales accelerated on a two-year basis and digital sales grew 30% versus the prior year, driving another quarter of company-operated restaurant margin expansion,” Wendy’s CEO Todd Penegor commented.
Following their results, Shake Shack (NYSE:SHAK) shares fell 2.1% to about US$56, while Wendy’s shares were down 1.7% at US$18.67.
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