Although Shake Shack implemented a 3% price hike last year, wage and supply inflation are triggering another round of price increases, CEO Randy Garutti said Thursday on a call with investors.

"Given the continued outlook, we've decided to take another 3% to 3.5% in March, resulting in inflation-based price raise of 6% to 7% heading into Q2," he said while reporting the chain's Q4 financials, which resulted in a fourth-quarter loss that was greater than Wall Street expected. The chain lost $9.7 million, or 25 cents a share, in the fourth quarter, compared to last year's Q4 loss of $19.4 million (50 cents a share).

The chain will also raise prices on third-party delivery services, ensuring that those customers pay between 10 and 15% more than in-Shack guests.

"This gives us the opportunity for better profitability on those channels and even more reasons to drive people to our own digital channels for the best value," Garutti said.

Total Revenue for the quarter was $203.3 million but was $739.9 million for the full year. System-side sales in 4Q21 and FY21 were $314.3 million and $1.1 billion respectively, representing year-on-year growth of 42.5% and 47.6%. The chain also opened 19 locations for the quarter, including its first drive-thru locations in Minnesota and Missouri.

"We are pleased to report a strong sales comeback in the fourth quarter with record full year system-wide sales results and same-Shack sales up 2.2% versus 2019," Garutti said. "However, our sales were impacted by the sharp increase in Omicron cases in fiscal January, causing a decline in traffic, lost hours and Shack closures. While a return to pre-COVID movement patterns remains uncertain, we are pleased to see improvement through fiscal February, with same-Shack sales up approximately 13% month to date."

Growing strong
Unit growth is on the menu for Shake Shack as it hopes to add 45 to 50 company-operated locations, although most will open toward the end of the year.

"We expect to open a total of seven company-operated Shacks in Q1 and between five and seven in Q2," Garutti said. "As we're already feeling the impact of supply chain disruption, labor availability and construction and extended permitting timelines pushing this year's opening schedule heavily into the fourth quarter. There's risk to these numbers as uncertainty and availability of time line critical items have continued to grow even over the last quarter."

Despite those uncertainties — including build-out costs being 10-to-15% higher than usual — Garutti said the chain will have 10 drive-thrus operating by the end of 2022, proving its commitment to providing better customer experiences.

"Unlocking this potential can have a tremendous impact on our long-term addressable market, and we're focused on deepening our investments, resources and learning about this critical new addition to the Shack family of experiences," he said.

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