Greetings. Welcome to Shake Shack third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Allison Sternberg, Head of Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Joining me for Shake Shack's conference call is our CEO, Rob Lynch, and CFO, Katie Fogarty. 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. Reconciliations to comparable GAAP measures are available in our earnings release and the financial details section of our shareholder letter. Some of today's statements may be forward-looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our annual report on Form 10-K filed on February 21, 2025, and our other SEC filings. 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. By now, you should have access to our third quarter 2025 shareholder letter, which can be found at investor.shakeshack.com in the quarterly results section or as an exhibit to our 8K for the quarter. I will now turn the call over to Rob.

Thanks, Allison. Good morning, everyone. We are extremely proud of our third quarter results, which showcase the important foundational work we've been doing to position ourselves for growth in the achievement of our long-term goals. Despite the strength of the outstanding quarter, we will not be complacent. Our focus remains to build a resilient, long-term business, one that's not defined by any single We are making the necessary strategic investments today that set us up for long-term success. This means continuing to prioritize initiatives that strengthen our foundation and support sustainable growth. We have been executing with purpose against the deliberate strategy inspired by our mission to deliver enlightened hospitality to our team members and guests. Collectively, our efforts have resulted in stronger team retention, better guest service, operational improvements and productivity, a steady cadence of culinary innovation, and the foundation of a brand marketing model. The engine behind our success in the heart of our brand is our team. We have assembled an incredible group of talent who bring a wealth of experience from both inside and outside the company. Our external hires come from well-established multi-unit organizations where they have learned how to implement best practices that can help us as we continue to scale. And we are equipping our managers with tools to develop high-performing teams from within that are building a culture of hospitality, productivity, and excellence. It's no surprise to us that we are seeing a reduction in turnover, leading to more tenured, higher-skilled hourly team members, which in turn is having a direct impact on the productivity of our labor and our shacks. We're also building a brand marketing model. We recently announced that we appointed Michael Faneuil as chief brand officer. In this role, he will oversee advertising, paid media, and insights and analytics, working in close collaboration with the broader team to advance our marketing strategy and steward our brand in the marketplace. Michael has been supporting our team as a consultant since earlier this year, where he played a pivotal role in helping to build our strategic brand positioning and in making the selection of our new creative agency partner. We're extremely excited to take this next step in evolving our marketing model, which we believe is a critical component for us to build an enduring and powerful comp engine for growth. Michael's creativity, experience, and leadership will help us continue to build demand for our culinary innovation, optimize our media investments, and strengthen the Shake Shack brand. Over the past year, we have made important strides in improving operations, and I want to spend some time walking everyone through what we are seeing. I'm incredibly thankful to our operations team and our support center for all the work that they have done to advance our business. This year has been an important year across our operations as we establish new practices that will help us scale our business with hospitality, efficiency, and excellence. While we do not report this way, we recognize that many in the industry analyze our cost trends on a per operating week basis. We are aware of the fact that we are currently operating with fewer labor hours than we used to, and that our labor costs on an absolute dollar basis per operating week are down, however, still high relative to the fast casual industry. Our historical labor model and the execution of that model was not well positioned to achieve the operating excellence that we need to deliver on our aspirations. In fact, the reduction in hours necessary to operate our shacks with excellence has improved our ability to serve our guests because we are using those hours in a more productive way. We will continue to optimize our operations and get even more efficient in areas where we're simply overstaffed, while at the same time focusing on and delivering on better hospitality. As we have discussed over the course of 2025, we implemented a new labor model that is an activity-based labor model moving off of a sales-based labor model. We also took a hard look at how we were deploying the hours that our shacks were allocated and streamlined a lot in the service of the guest experience. We have built a disciplined approach and our SHAC leaders are showing real accountability and using the tools and processes provided to attain our labor goals. I am pleased to share with you that nearly all of our SHACs met or beat labor targets in the third quarter. This is a meaningful improvement versus last year where approximately half of our SHACs met their labor targets. We're doing a better job of supporting our managers with strong above-store leadership, data and analytics, and recruiting and training tools as they work to optimize the operations of their restaurants and deliver on their goals. But our work is not done. Team members are at the heart of everything we do and the lifeblood of our company. One of the things that I am most proud of is how much longer we are seeing our team members stay with us. We believe this improvement reflects our ongoing focus on creating an environment where team members can grow and succeed. We've included retention as a key metric on our operator scorecard, and our leaders are focused on training and development to help build a more tenured team. We're seeing improved throughput across all day parts, including peak, from our team members that have more experience in tenure. This is not surprising as we make many items fresh from scratch and there's a natural and longer learning curve to our process versus traditional fast food. Simply put, the more experience our team has, the better they can execute against our operational model. Our top priority is guest satisfaction. We will continue to seek out ways to help our team members become more productive, but it won't come at the expense of guest and team member satisfaction. The evidence of that commitment can be found in our improvements and operating metrics, which we measure as a way to hold ourselves accountable to our North Star, our guests. At Shake Shack, we cook our food to order. That is a big part of why it tastes so good. I am proud that our speed of service has improved from approximately 7 minutes in 2023 to now approximately 5 minutes and 50 seconds. We're going to continue to get even better here. Our guest satisfaction scores across meal taste, cleanliness of our shacks, and likelihood to return have all improved. And finally, with our optimized deployment, we're seeing higher throughput in all-day parts versus last year. In addition to our work and operations, we're also driving improvements across our supply chain, and we are just starting to see the benefits from this. We have identified a long runway of opportunities ahead, including, firstly, we are diversifying our supplier base, making sure that we have the right partners and enough partners to mitigate business risk and optimize costs. Second, we are diversifying our supplier footprint and optimizing logistics. Our supplier geography needs to grow as we grow. We're doing a lot of work to reduce time and miles from our suppliers to our distributors and to our shacks. Lastly, we continue to invest in technologies that support our supply chain department in the critical functions as we scale. As we continue to improve our supply chain, we will also continue to prioritize product quality and innovation. As we have onboarded additional suppliers across several key categories, we're making sure that we can continue to procure high-quality ingredients. The work we're doing today in our operations and supply chain is also critical to helping us address a volatile beef market as we expect to face mid-teens beef inflation in the second half of 2025. Going forward, planned savings in our supply chain and continued improvements in operations afford us the opportunity to offset a meaningful part of beef inflation without having to take outsized price and still expanding our restaurant margins. This hasn't been the case historically for Shake Shack. Another exciting part of our evolution is on the equipment side, where we are actively testing multiple solutions designed to make our shacks easier to operate, with an emphasis on improving product quality, consistency, and speed. We plan to roll out the first of these solutions towards the end of the year, starting with new fry-holding equipment that will allow us to serve crispier, hotter fries every day. There is a lot more to come over the course of 2026 and beyond. We're also investing heavily in our technology infrastructure, particularly our kiosks and digital channels, which will continue to be critical parts of our comp sales growth. In our kiosks and our digital platforms, we are driving positive check growth from improved merchandising of our core menu. As I've stated in the past, we are focused on delivering enlightened hospitality to our A big part of that long-term commitment will be a strong loyalty platform. which we are working to deliver in 2026. As we build this best-in-class loyalty platform, we are currently leveraging our app with value and frequency offers. We have seen success from these initiatives and are tracking at approximately 50% more app downloads this year than last. This is important to our long-term growth as our app guests have higher frequency and lifetime value than our non-digital guests. At the end of the day, we know what really excites our guests is our culinary innovation. Our made-to-order model affords us the ability to deliver food that other QSRs and even fast casual concepts cannot easily replicate. Culinary innovation has always been a part of our fine dining heritage and DNA, but the cadence of innovation in place now is unprecedented for us. Our Dubai chocolate shake was a powerful illustration. Dubai was highly incremental and drove a positive impact on all key brand measures, with the largest brand perception gains on ingredient quality and innovation. Beverage is obviously an important and growing segment within our industry. We have always offered high-quality, innovative teas and lemonades alongside of our world-famous custard shakes. Our goal is to significantly grow our beverage business across soft drinks, teas, and lemonades, and to simply own the Shake Innovation space, with inspiration drawn from global recipes, seasonal occasions, unique textural elements, and flavor trends. Following on the success of our Dubai Shake, we've established a Shake Innovation Pipeline with exciting, crackable Shake offerings as a plus-up to our typical Shake LTO lineup. We're also continuing to fuel our pipeline of new sides with fried pickles and onion rings, and we are seeing strong attachment rate. But our crinkle-cut fries continue to be the crown jewel of our side's platform, and alongside our new hot-holding equipment, we're about to launch new procedures that will make them crispier, hotter, and more consistently seasoned, making them the best we've ever served. We're also going to continue to innovate across burgers and sandwiches. This includes our summer barbecue menu, which we launched in mid-Q2, and our limited-time French onion soup burger that launched in September. We're pushing the envelope and currently have a French dip Angus steak sandwich and a baby back rib sandwich in test markets. These innovations are part of our ongoing strategy to balance premium sandwich offerings with value platforms so that we can continue to drive traffic growth. Once again, our made-to-order model affords us the culinary flexibility to make things that no one else can deliver with the type of premium quality that our guests have come to expect from Shake Shack. While we're focused on developing traffic-driving LTO innovation, we're also continuing to invest in our core menu. These include fry improvements mentioned earlier, new chicken bites, which deliver a more consistent guest experience, and rolling out an improved cheese sauce for our fries that increases cheese coverage and has performed much better in tests than our current offering. Our culinary innovation, as well as improvements to our core menu and operations, are enabling us to serve our guests better and has prepared us to amplify our brand through new advertising and paid media. In the third quarter, we invested in paid media at scale for the first time. We shared with you last quarter that we were starting to make some investments in that capability, and I'm happy to report that we are delivering results while learning a lot. We invested media behind Dubai Chocolate Shake as well as our dollar soda and app-only promotion, and these investments are a reason why we are delivering the sales growth that we shared with you today. Our brand positioning work is now complete, and we will launch new advertising starting later this quarter. We are working with one of the most awarded creative agencies in the world to bring our brand story to life through advertising throughout 2026. Turning to development, we have significant white space to open new shacks in the U.S. and around the world, and we are doing so at lower cost in spite of inflation. As part of our development work, we are also focused on new kitchen prototypes and equipment that could have a significant impact on improving our throughput and quality. This year, we are on track to open our largest class of company-operated shacks. And next year, we expect to open at least 55 to 60 shacks as we accelerate our rate of new shack growth and continue to build our strong pipeline of shacks to come. Turning to our licensing business, with 23 new store openings as of Q3, we are well on our way to 35 to 40 openings this year, and we plan on opening 40 to 45 more in 2026. This business is healthy and growing. Our existing markets are performing better than expected, despite global macro headwinds with strength coming from new openings in the U.S., Canada, Israel, and Turkey. This year, we have announced four new licensed partnerships, most recently with Union Mac in Hawaii to bring the Shake Shack experience to the Aloha State. We're building great momentum in the licensed business, and there is much more to come. As we reflect on the most recent quarter and what is to come, Q3 was an example of our sales model at work. Multiple great LTOs in Dubai Chocolate Shake and Summer Barbecue, and an in-app value message with support from advertising and media complemented by a healthy digital business that collectively drove strong traffic in a tough environment. Now going to October, our sales trends, although positive, were not consistent with what we saw in the third quarter. Macro headwinds to the industry did intensify, and we are lapping one of the most iconic LTOs in our history, Black Truffle. We continued to invest in advertising and media to support the business. However, our French Onion Burger LTO, while loved by the media, has not been as accretive to traffic or check as was the case for our LTOs in Q3. After three weeks of analyzing the data, we pivoted and shifted support to our in-app value platforms. Over the last week, our in-app traffic is up 85%, and our overall traffic has seen over a 400 basis point change. looking ahead we will need to deliver newsworthy LTOs complemented by a strong value platform and a healthy app and loyalty platform as well as a strong delivery business that is exactly what we expect from the balance of Q4 and our plan for 2026 we will also need to mitigate the continued traffic declines in the DC and New York metro which we believe to be macro in nature with outpaced growth in other regions. I am really proud of the progress the team has made on the plan that we laid out at the beginning of 2025, and the quarterly results show that we are focused on the right strategic priorities moving forward despite the macro challenges. We have a long way to go to realize our full potential, but the progress is certainly heartening and will allow us the opportunity to continue to gain share against the challenging industry background. And with that, I'll turn it to Katie for more details on the quarter.

Thank you, Rob, and good morning, everyone. We are pleased with the results of our third quarter that marked the 19th consecutive quarter of positive same-check sales growth, along with strong restaurant-level and adjusted EBITDA margins and double-digit adjusted EBITDA growth. Considering the macro environment, we feel especially proud of our results that reflect solid momentum and execution across both our company-operated and licensed businesses. We grew total revenue by 15.9% year-over-year to $367.4 million, led by strong new shack openings and growth in our comp shack base. We grew licensing revenue by 21.1% year-over-year to approximately $14.6 million and licensed sales by 15% to $218.7 million, as we opened seven licensed shacks in the quarter and saw broad-based strength across most of our region. In our company-operated business, we grew shack sales by 15.7% year-over-year to $352.8 million. We opened 13 new shacks in the quarter, bringing the total as of the end of the third quarter to 30 openings, well on our way to opening our largest class on record, and we have plans to open 55 to 60 new Shacks in 2026. We grew average weekly sales by 2.6% year-over-year to 78,000. We delivered 4.9% positive Same Shack sales growth. That represents a 390 basis point improvement from our first half 2025 run rate. This acceleration was led by improved traffic from initiatives that Rob described earlier in his remarks. We grew traffic by positive 1.3% in the quarter, and all months saw positive traffic growth. We had positive comps and traffic in nearly all of our regions. However, we continue to see macro pressures in New York Metro and Washington, D.C. that are weighing on our overall results. New York Metro and D.C. represent over a quarter of our sales, and we have been experiencing a higher degree of macro pressures in these regions than many industry peers given our footprint today. So a challenging macro backdrop here continues to have an outsized impact on our overall performance. But in spite of those pressures in a few of our markets, we still delivered nearly 5% in same track sales growth with positive traffic. And that's really a testament to our strong success in other markets where we're actively growing our footprint and scaling. In fact, we drove 7% to 8% comps in the South, the West, and the Midwest with double-digit comps in San Francisco, Orlando, Dallas, and Denver, among a lot of other major metros. As our development pipeline has significant tilt away from growing in New York City and D.C., I am optimistic that over time, we can lessen the impact that one or two markets with specific pressures can have on our overall trends. In-check menu price was up approximately 2% and blended across all channels up approximately 4%. We took approximately 2% in menu price in the quarter to help offset the cost pressures from the mid-teens percent price increase in the beef market and rolled off last year's nearly 2% price increase in October. With this, we will exit the year with approximately 3% menu price. We drove 1.4% of positive mix, led by kiosk merchandising efforts. Items per check declined 1.6%, consistent with our trends last quarter. Turning to restaurant-level profitability, we generated $80.6 million of restaurant-level profit, reaching 22.8% of Shack's sales, a 180 basis point improvement over last year. Overall, the strong performance by our operators and the advancement of our strategic initiatives underscores the momentum we've built and our commitment to sustainable margin expansion over time, all while delivering on better gas metrics that Rob outlined earlier. Food and paper costs were $103.5 million, or 29.3% of Shack sales, up 110 basis points versus last year. The increase was primarily driven by mid-teens inflation in premium beef, which remains the largest part of our commodity basket. Historic low supply and sustained demand are contributing to a volatility in this category, and we expect elevated beef costs to persist through the year end and into next year. In the third quarter, our blended food and paper inflation after factoring in our cost savings within the mid-single digits range. As we shared in our shareholder letter, while we are planning for beef costs to still be up mid-teens percent year over year in the fourth quarter, We anticipate only a low single-digit net impact on food and paper costs. This is an improvement for the levels we showed in the third quarter, and this is due to the positive impact from our ongoing supply chain strategies. We expect cost savings from our supply chain to grow and be even more impactful in 2026. Labor and related expenses were $88 million, or 24.9% of SHAC sales, down 310 basis points year-over-year, reflecting continued operational efficiencies, improved retention, and gains in our throughput. Other operating expenses came in at $53.8 million, or 15.2% of SHAC sales, up 30 basis points year-over-year. This increase was primarily driven by higher digital sales. Occupancy and related expenses were $27 million, or 7.7% of SHAC sales, flat year-over-year. year. G&A was $44.4 million, or 12.1% of total revenue, and up 24.3% year-over-year as we made incremental marketing and people investments to support our growth. Equity-based compensation was $4.4 million, up 6.4% year-over-year, with $3.9 million in G&A. Pre-opening costs were $4.6 million, up 26.3% year-over-year, as we open 13 new shacks and prepare for a strong opening schedule in the fourth quarter and into next year. We have approximately 30 shacks under construction today. We grew adjusted EBITDA by 18.2% year-over-year to 54.1 million, or 14.7% of total revenue, a 30 basis point improvement compared to last year. Depreciation and amortization expense was $27.1 million. Net income attributable to Shake Shack Inc. was $12.5 million, or $0.30 per diluted share. Adjusted pro forma net income was $15.9 million, or $0.36 per fully exchanged and diluted share. Our gap tax rate was 35.2%, and our adjusted pro forma tax rate, excluding the tax impact of equity-based compensation, was 25.1%. Our balance sheet remains strong, with $357.8 million in cash and cash equivalents at the end of the quarter. This is up approximately $47 million year-over-year and $21 million sequentially. We grew operating cash flow by 50% year-over-year to $63 million. We invested $39 million in CapEx to support the strong opening calendar and are on track to deliver another approximate 10% reduction in our bill costs this year. I'm going to now provide our guidance for the fourth quarter and the implications for our fiscal 2025 guidance. Our outlook assumes no major changes to the macro or geopolitical environment. Additionally, our fiscal 2025 includes a 53rd week. Due to the calendar impacts from the 53rd week, the Christmas holiday closure falls outside of our comp measurement period this year, resulting in extra sales day in our fourth quarter and full year comp. Our fourth quarter 2025 guidance, we expect system-wide unit openings of 27 to 37 with 15 to 20 company-operated and 12 to 17 licensed. Total revenue of $406 to $412 million with same-check sales up low single digits year over year and licensed revenue of $15.4 to $15.7 million. Restaurant-level profit margin of 23.3 to 23.8%. For the full year 2025, we expect total revenue of approximately $1.45 billion, up approximately 16% year-over-year, with same-shack sales up low single digits year-over-year and license revenue of $54.1 to $54.5 million. Restaurant-level profit margin of approximately 22.7 to 23 percent, G&A to be approximately 12.3 to 12.5 percent of total revenue, equity-based compensation expense of $20 million, pre-opening cost of $19 million, net income of $50 to $60 million, and adjusted EBITDA of $210 to $215 million, reflecting the impacts from the macro headwinds and increased marketing investments. Please see our shareholder letter for the full details on our fiscal 2025 guidance. Additionally, as a housekeeping note, next year we are moving to a guidance framework that better conforms with general industry practice, and we look forward to sharing this with you when we provide our fiscal 2026 outlook. Thank you for your time, and with that, I'll turn it back to Rob.

Thank you, Katie. I want to thank our teams again for their hard work and passion for Shake Shack, which is the engine behind our strong third performance and our ability to achieve our long-term goals. Thank you to everyone on the call today and for your interest in our company. And with that, operator, please open up the call for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please limit to one question and one follow-up question. One moment while we pull for questions. Our first question is from Christine Cho with Goldman Sachs. Please proceed.

Thank you so much. And congrats on the strong quarter and appreciate all the color. I'd like to better understand your supply chain initiatives as a key driver of the margin expansion going forward. So first, how do you find the opportunity in the midterm? And two, how do you really plan to track and respond to consumer feedback regarding some of these product modifications that may arise due to your supplier changes and to ensure kind of consistent quality across regions and stores? Thank you.

Katie, maybe I'll answer the second question. first, then you can come back to the expectations. Sure. Hi, Christine. So there will not be any spec or product modifications. We are committed to delivering the same quality that we have delivered, you know, and it has made Shake Shack's reputation for culinary excellence what it is. So when we're looking at bringing on new suppliers, we go through a very thorough testing and validation process to make sure that they can deliver the specs that meet our standards and that the quality is consistent or better than what we have used in the past. And that's across every component of the supply chain, whether it's the beef that we're using, the buns that we're using, our custard that goes into our shakes, our fries, everything has to meet our standards or else we will not add that supply to our system.

And great. And hi, Christine. So how do we think about the savings potential here? You know, we started to roll out some more material cost savings in the fourth quarter. We're expecting that to build into next year. We've talked about, you know, as you saw in the third quarter, we had a pretty big step up in our food and paper costs as a percentage of sales. That was largely led by the mid-teens inflation in the beef market. And what we're seeing now with being able to mitigate some of that cost pressure through negotiations with our current suppliers and some additional supply chain strategies is that next quarter, we're anticipating that food and paper as a percentage of our sales will moderate to more normalized levels with this low single-digit inflation. This is really powerful for us, And we expect that these benefits will grow into next year, especially considering, you know, historically when we've had big swings in the beef market, our main lever has been to pull price to help offset that and protect margins. Now we just have a much bigger aperture of tools that we can use to help navigate these waters. And, you know, part of it is for, you know, to help optimize our cost structure. But also, you know, as Rob talked about, you know, we need to add more suppliers. We need to have multiple sources of supply on our critical items, and we need to make sure that we're, you know, really pushing ourselves to make sure that we have the right suppliers. And so I believe all of that work is underway here. It's really exciting to see that also translate into an ability to help navigate, you know, what is likely to be a challenging market for the foreseeable future on beef and still have net overall, you know, pretty muted inflation in our business.

Thank you so much. And I think we've heard about kind of that broad deceleration in the macro inter-quarter and also softening trends into October. Could you kind of provide us with some thoughts on how you think about that set up in the fourth quarter? I know you pointed to D.C., New York travel pressures, but have you seen any pressures on the spending of the younger consumers under age 35, et cetera, that you would call out? Thank you.

Yeah, I mean, I would just say that I think it's pretty broadly understood that there's definitely some pressure on the lower-income consumers. And I think there's also been some commentary about the unemployment rates of younger populations as well, which obviously impacts our industry. But we have taken those challenges and incorporated them into our strategy. I called out in the commentary that we launched French Onion LTO at the beginning of October, and we weren't delivering the incremental growth that we had anticipated and what we were seeing in Q3. And so we did a lot of analytics to understand what was happening and what the challenges were. And everyone knows, and everyone's talking about it, there's obviously a push to value in this industry. And so we leveraged something that worked really well for us in Q3 over the last week, week and a half. we went back to our in-app value platform and shifted our media and shifted our awareness building to that platform. And we have seen dramatic change in the trajectory of our business over that time. We've seen over 80% growth in our app traffic sales. So it's been really transformational for us. And, you know, that's a big part of our plan moving forward. We need to have a balanced approach. You know, we are the premium player in the burger market, and we will continue to offer a great culinary innovation that plays in that premium space. But we need to have a balanced approach where we also have a value offering that can be very attractive to our guests, but also be accretive to us both on top and bottom line. And by leveraging our, which only, which, you know, represents a relatively small portion of our business, the traffic that we're driving and the check that we have to give up to drive that traffic is much less cannibalistic of our holistic business. So it's really driving the performance that we're seeing right now in Q4 and what we anticipate will help us deliver strong results again in Q4.

Our next question is from Michael Tomas with Oppenheimer & Company. Please proceed.

Hi, thanks. Actually, Rob, I wanted to follow up on that last point a little bit. You know, you talked about how French onion burger didn't perform up to what you thought it was going to. So maybe what surprised you relative to what you thought was going to happen, and how does that change the way that maybe you're testing or that innovation calendar? Because the message has been pretty clear that you're excited about the innovation calendar going forward. And so, you know, is there anything about what you're doing that might need to change to drive that innovation going?

Yeah, great question. You know, what I would say is that French Onion was another flavored burger. And, you know, it's not that there's not room for flavored burgers in our innovation calendar. But it's, you know, that is kind of our standard base form of innovation. Moving forward, including, you know, another big idea that we have coming this quarter, it's much more of innovation that we haven't done before. Ideas that bring a new story, not just a new flavor, to the ticket. And so, you know, we're focused on trying to bring, you know, things we've never done before, complemented by some of our, you know, historic LTOs that have been our biggest winners. So, you know, truffle was a huge success for us. You're going to see truffle again. For the Korean menu, huge success for us. You're going to see that again. And we'll continue to innovate on our burgers, but right now we're really focused on if we're going to be advertising and marketing a premium price point, it needs to be something that can generate earned media, be newsworthy outside of just the launch couple days, a couple articles written about it. We want our guests talking about our premium innovation, similar to Dubai Shake, things that really create virality around the ideas that we're bringing. So that's the premium part. The other innovation that we're delivering, I just mentioned, is in our digital platforms, particularly in our app. We have never seen the kind of growth that we're seeing right now in our app. we both in the form of downloads as well as actual sales. And it's driving traffic growth on our business. And so that is going to be a focal point for us. We're going to continue to double down there. We just launched our new platform, which is our one, three, five platform dollar drinks, $3 fries and $5 shakes. And I think that this is a transformational thing for Shake Shack. It shows, and we really built this and we talked about it, is how we show empathy to our guests during some challenging times. And I think that's resonated and that balance is going to be the holistic, innovative way we approach the marketplace. It's not just about the premium offerings. It's about having a balanced approach, particularly in this time where we need to make sure that we're delivering value to our guests.

Thanks. And it's sort of like you knew my next question was going to be about value. You know, do you think that the 135 on the, you know, the drinks, the fries and the shakes, do you think that's powerful enough for the consumer to recognize the values or do you think you need to sort of to really give the consumer?

Well, I can tell you I have 10 days of data that would suggest it's extremely impactful. So I'm really excited about what we think this can do for us through the balance of the quarter and heading into 2026, and I can't wait to share those results with you next year when we're reporting on Q4.

Our next question is from Brian Vaccaro with Raymond James. Please proceed.

Hi, thanks, and good morning. I wanted to ask about operations and sort of the guest experience, and I really appreciate the color you provided on average ticket times now below six minutes. I was wondering if you could elaborate just on what you're seeing in terms of other guest satisfaction metrics. Obviously, speed is very important, but it does sound like you're seeing improvements in the experience, quality, maybe taste metrics, that sort of thing. Are there any other metrics worth highlighting?

You know, Brian, I had a call with Stephanie last night at like 9 o'clock after she'd wrapped up. She's in Atlanta with our entire senior operations leadership team. We built this Atlanta Center to bring our teams from all over the United States and be able to collaborate and plan and train and develop our teams. And it's amazing. Everybody's using this space right out of the gate, our operators, our development teams. But she had our operations team there over the last couple days, and they are doing their quarterly business planning. And they are building plans to close the year really strong, and they're also building plans to make sure that we have a pipeline of talent to be able to open up 60 shacks next year. So our operations have really never been at this level. And every time I think we can't get better, we get better. And it's as much about the mindset and the culture as it is about the specific components of the plan. Our team, our operators right now are not talking about the macros. They're not talking about the challenges. They're talking about how we can serve our guests better. They're talking about how we can get faster. They're talking about how we can get better at deploying our labor where it needs to be. They're talking about how now we can extend hours to better service our guests in the shacks where it makes sense. And they're doing that with excitement and pride. And, you know, winning begets winning. And these guys have knocked it out of the park for the last year and have gotten better every month. And, you know, we've we've had some turnover and brought in some some external leaders that have really brought great perspective to kind of the middle to higher end of our operations team. But it's also the folks who have been here for a long time and have been a part of Shake Shack for a long time. Sometimes when you bring in change and you try to transform something in 12 months, there's resistance. And my discussion with Stephanie last night is like, look, everybody is on board. Everybody is full go. They're not talking about, you know, how tough it is. They're talking about how great we're doing. And, you know, that gives me the confidence that we're going to be able to continue to improve on our speed. Accuracy, particularly in the delivery channels, is a big core focus for us. We want to make sure that we're getting those orders right because those guests aren't in our dining rooms. They're not able to bring up something if it's not right. So we're focused on accuracy. We're focused on speed. And something that Katie talked about and I talked a little bit about in the comments, we are significantly increasing the tenure and retention of our team members. You know, you would think as we hold our teams more accountable that that might create an environment where people don't want to be a part of it. It's just the opposite. They're seeing success. They're seeing opportunities for them to advance their careers, and they're staying longer. And that tenure builds experience, which makes them more productive and makes us a better operating unit. So all of those things are moving in the right direction. On the guest sat, yeah, I mean, guest satisfaction across restaurant cleanliness, friendliness, all of the things that you measure have all moved in the right direction despite less labor hours. So we're just getting better. We're not ripping out labor to just drive savings. We're building models that optimize our labor pool, and that's delivering better guest satisfaction.

All right. That's very helpful. And just to follow up, if I could, just, Katie, a question on the G&A guidance. I think if we did our math right, it implies maybe a $10 million increase in the quarterly spend versus what we saw on Q3. And I understand you've added a lot of new talent to the organization, but could you just elaborate on what's driving the uptick in the fourth quarter?

Yeah. So as Rob talked about, we are making some meaningful investments here in marketing and media to drive the business. We're really excited about the stuff that we have lined up. We started kind of marketing this 135 platform that he talked about on the value side and seeing extremely strong results on the back of it. And we also have some exciting stuff planned for later this year. These investments that we're making are all really geared at driving traffic, driving sales, which in turn we expect to drive profitability, you know, at the restaurant level and beyond. So we're really excited about that. You know, for those who haven't followed us as closely, last quarter we did talk about kind of embarking on this new strategy, new for us, kind of commonplace for the industry, but new for us of investing into paid media to better expand and grow the awareness and our message and our ability to drive traffic at our restaurants. The results that we showed in the third quarter with 130 basis points of positive traffic growth and some really strong comps, especially relative to a challenge industry, give us the confidence that this is indeed the model that we should be doing, and we're excited to make these investments here today.

Our next question is from Sharon Zuckia with William Blair. Please proceed.

Hi. I wanted to delve in a little bit more on that improvement you've seen in speed. And, you know, five minutes and 50 seconds is obviously a big improvement, but I'm curious what that bell curve looks like when you look across the shacks and what you would view as like an ideal speed over time for the company to get to.

That's a great question. And, you know, I think when you think about speed of service, averages can be very, even though that's what we shared, averages can be a little bit vague. I mean, you know, what we are focused on right now is mitigating the tickets over seven minutes. We want to make sure that we are not executing in a way that frustrates our guests. People don't get real upset about five minutes and 30 seconds versus five minutes and 50 seconds. They get upset when it's eight minutes to get their food. So our plan to continue to drive down the average ticket time is to minimize our exceedingly long tickets. And that usually happens in rush when we've got, you know, super busy shacks. obviously we do you know high volume hours and so some of the ways we're going to mitigate that is through some of the equipment technology that we talked about one of the things that holds us up is you know we're we're we're making fries to order and that takes a lot of time and it's not like um you know we can't hold fries it's what everybody does it'll make them hotter and it'll give us better access to those fries. And, and so like fry holding is a simple way for us to make sure that that doesn't become a bottleneck while still delivering the same or better quality. So there's equipment solutions that we can impart. There's also, you know, labor deployment. You know, we used to, part of our, part of what we're doing and how we're driving labor savings is we used to have like standard deployment schedules where when we opened, we always had in every Shack, five or six people show up. We don't need five or six people every minute of opening. We're staggering the approach. We're bringing people in when we need them. What that does is it frees up some labor for us to deploy during the peak hours. So as we move underutilized labor off the shoulders and into the peaks, we're going to be able to get faster and be better. So there's equipment solutions, there's labor deployment optimizations that are all going to drive improvement. But I think if we're in that five-minute zone, five to six minutes, we're making our customers happy. They know it takes longer. We're cooking the order, but we can't have the eight-minute to 10-minute orders. That's the danger zone.

I also wanted to ask a follow-up on the menu innovation. Clearly, I think a lot of it has been on the premium end, and it sounds like, you know, French dip and ribs might be there as well. Is the idea that you can keep kind of your base price at a very affordable kind of hurdle for the consumer and allow them to self-select into these kind of higher price points and drive check that way? I'm just curious how you're thinking about kind of balancing premium versus value.

Yeah, I mean, you absolutely nailed it. we have pricing power. I want to make it really clear that if there is some significant inflation, we could execute price increases to mitigate that inflation. We are approaching pricing in a very disciplined way and challenging ourselves to not take pricing, especially in this environment. So we will continue to utilize pricing in the most productive way. But we want to keep our core menu prices as low as we can possibly keep them. And the way to do that is to get more efficient in our supply chain, more efficient in our operations, and to bring this innovation that allows us to have people, like you said, self-select into more premium price points and drive check growth. But I will tell you, we're also being very judicious on how we price those premium innovations. You know, we have a big innovation coming here in the next couple weeks that we're really excited about. And we are being very aggressive on the price point for what we're offering. And we're doing that because right now in this environment is the time to take share. Right now, you know, when there's a challenging environment, that's the time when great companies get better. And we are focused on taking share. We are focused on making investments. We are not we're not, you know, excuses and results are negatively correlated. Like we are not blaming macros. They're out there. We'll acknowledge them. It'd be naive not to do so. But we we're building plans to address them. And we are focused on, you know, delivering value at every price point, whether it's our premium innovation, our core menu or the value offerings that we're putting into our app.

Our next question is from Jake Bartlett with True Securities. Please proceed.

Thanks for taking the question. You know, my first is on COGS and the impact of, obviously, beef inflation. You expected it to go into, continue into 26. My question is that you've had some nice offsets this year, even aside from the supply chain savings, but you've seen some lower costs on the other items. So, I guess if you could kind of give us a base case or, you know, roughly what we should, what you're thinking about for overall inflation, food cost inflation in 26, including, you know, the items outside of beef, that'd be helpful. And I have a follow-up.

Hey, Jake. So, how we're thinking about next year, you know, we have this long-term guidance that we're going to be able to continue to expand our restaurant margins that's, you know, consistent with our three-year outlook. We've reiterated that today, you know, calling for 50 basis points a year in restaurant margin expansion. How we get there and as we've talked about, we're expecting a lot of that next year to come from supply chain and through, you know, kind of your natural leverage from growing the business. We are embarking on kind of an accelerating path of supply chain savings. And also, as you've called out, there are some items that are moving more favorable as well in the commodity basket. We are planning for beef prices to still be a pressure, though, next year. And we are, you know, working with our suppliers to help navigate through that environment, still meeting our objectives and our guidance for continued margin expansion next year without having to lean on, you know, a significant amount of price to offset the beef market. And we'll share all of the details on how 2026 will – how we're expecting that to shape up when we give our annual guidance in January.

Great. And then, Ida, another question about the labor savings that you've been realizing. And you're going to be lapping on something right about now, the labor deployment, and then in January the new scorecard. So the question is how much more you have kind of in the tank for labor efficiency. I know the message is you're kind of switching much more to the supply chain to drive the margin expansion, but is there any opportunity still to drive efficiencies with labor into 26 and beyond?

So one of the big opportunity, untapped opportunities is on equipment. So we have built essentially an equipment innovation center in Atlanta. And our teams are doing work that we've never done before at Shake Shack to bring a standardized kitchen model that leverages equipment that is really all about making our teams more efficient. through increasing the ease to execute our model and delivering higher quality, hotter items faster. And, you know, we just had our global team come into Atlanta last week and we shared some of these ideas with them and they were blown away. And, you know, their remark was all the kitchen innovation used to come from our licensees internationally because they were going out and doing things that Shake Shack wasn't necessarily exploring. And now we are bringing the ideas to our restaurants, but also bringing them to our licensed partners so that they can operate their kitchens more efficiently, drive higher margins, and build more shacks at a more rapid rate globally. So equipment is a big untapped opportunity for us to be able to continue to drive operational efficiency and increase our speed.

Our next question is from Jeffrey Bernstein with Barclays. Please proceed.

I just wanted to build on the marketing discussion. I know you mentioned building a foundation of a brand marketing model. I'm just wondering what new do you think we'll see into 26? I mean, it sounds like a ramping on the paid media, which just began. I'm wondering how that will tie in with the new loyalty program being rolled out in 26. How do you think the interplay on those will drive incremental traffic? And then had one follow-up.

Yeah. I mean, our product innovation and our value platforms supported by media are what we are focused on delivering new guests, creating awareness and traffic, right? Our loyalty platform should increase frequency. And right now, what we are doing with 135 and the amount of adoption and downloads and all of that increased application user base is going to transfer directly into our loyalty platform. So we will launch our loyalty with a built-in user base, and we will be able to leverage that loyalty platform to drive frequency with our most valuable guests. So both of those work in a symbiotic way together. We're going to advertise and bring people in with exciting new innovation and value platforms. They come in over the next six to nine months as we build out our loyalty platform. They transition into the loyalty platform, and we leverage that to drive frequency. And that's the model that we're going to employ, you know, next year and moving forward.

Understood. It does seem like there's confidence around the comp trajectory and initiative there. And obviously, the Unicrowth is accelerating in terms of openings. And the restaurant margin, Katie, you just mentioned kind of margin expansion. I guess it's the G&A that's therefore getting a lot of the attention, And hopefully that gets a good return. But because of the significant uptick in the full year spend this year, and they said paid media starting in the fourth quarter, should we therefore assume that that uptick is sustained in 2026 as far as a good run rate to assume for that? How should we think about the, at least directionally, that G&A spend, which seems to be the only area that's maybe working counter to, you know, all the other things that have that positive trajectory?

Thank you. yeah no it's great question i mean we will obviously be providing guidance on 2026 in january so i'm not going to necessarily speak to what we're forecasting in sales but what i can tell you is the gna is the fuel that's going to drive the comps and obviously we are going to make investments that we believe we're going to get returns from and so you know this as i said earlier, this environment where we're seeing a lot of competitors be challenged and lose traffic, this is our opportunity. This is our opportunity to take share. This is our opportunity to gain customers at a disproportionate rate. So we are all in. We believe ourselves to be a hyper-growth company, right? And now we have the operations excellence to have 100% confidence that when we are sending new guests or infrequent guests who may have had a bad experience in the past back to our shacks, they are going to have a balanced options in terms of value and premium. They're going to have the highest quality that we've ever delivered, and it's all going to be served fast and accurately. So that creates lifetime value. So yeah, I mean, we're investing GNA because that's the fuel. And over time, we should be able to scale that investment. We should be able to grow our revenue faster than we grow the rate at which we invest marketing in GNA. And and that's going to create margin expansion. So, you know, this is the first time we've invested at scale on paid media. And so, yeah, right now it's, it isn't scaled. It isn't, it isn't, it isn't necessarily at the point where we're able to decrease our GNA as a, as a, as a function of revenue, but that's the plan. And so it's either that or, you know, we, we, we, we kind of batten down the hatches. And we're not prepared to, like, issue a dividend anytime soon. This is a growth company. We're going to invest in growth. We believe that we have the right model in place.

Our next question is from Andy Barish with Jeffries. Please proceed.

Hey, Rob.

Just a question kind of from your background in QSR and sort of taking a higher level approach to what's been sort of a, you know, an unrelenting, you know, discounting promotional environment both below you guys as well as above. How do you kind of see that playing out in 26? And is that informing any of your decisions on driving the Shake Shack business? Or, you know, do you guys think, you know, you can do what you can do if you execute on the, you know, the plans you've given us, you know, today?

Yeah, I mean, we're in the thick of it right now. I mean, everybody is pushing value. You've got $5 meals. You've got $11 casual dining meals where you sit down and get waited on. There's value aplenty. And we are executing our model in the thick of that and delivering, I think, outpaced results. We're not optimized yet. We are going to continue to learn. We are going to continue to get better. Some of our things we're doing have better results than other things we're doing, but we are very well prepared to deliver a balanced growth engine into 2026. And we, like I said, are continuing to identify what works, what doesn't, what price points make sense, how to execute things, which target audiences to go after. All of that is feeding our plan moving forward. And I'll just tell you, it never feels good to get on a call and say, hey, we ran something for three weeks and it didn't work as well as we wanted it to. But what I want everyone to take away from that is that we have an agile business model. We are going to evaluate everything in real time with data and analytics. And when we see an opportunity to improve our results, we can shift into something that we believe will give us higher returns and deliver better outcomes. So, we have our plan already in place for 2026. We know what we're launching. We know when we're launching it. We know how we're doing it. We'll continue to assess the environment, the competitive environment, as well as the results that we see and optimize on an ongoing basis. Thanks.

We have reached the end of our question and answer session. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.