Shake Shack Inc. (SHAK) Earnings Call Transcript & Summary

Good morning, everyone. My name is Jeff Bernstein, I am the restaurant and foodservice distribution analyst here at Barclays. I'm thrilled to introduce our next presenting company, Shake Shack. With us this morning from New York City, we have Randy Garutti, CEO; and Tara Comonte, President and CFO. By way of background, for those not familiar, if that's possible, Shake Shack is a fast casual chain with approaching 200 company-operated restaurants in the U.S., or including 20 licensed stores and 100-plus outside of the U.S. And following a brief development hiatus during the peak pandemic months, Shake Shack appears to be on track to deliver still low double-digit percentage unit growth in '20 and accelerating significantly in 2021, with guidance for 20% growth, on the path to what had been the long-term guidance for 450 U.S. company-operated units. With that said, we've opted instead of prepared remarks to just jump right into a fireside Q&A. So I'll be throwing, ask some questions for the next 35 minutes or so. With that said, thank you guys for joining us.

Just as we think very high level, through COVID, I think most restaurants fell into 1 of 2 buckets. There were those more defensive, typically QSR drive-through names where sales benefited through COVID, took a bit shares did as well. And then you have the more discretionary names, totally more casual dining, gathering place type concepts, where sales were meaningfully pressured through COVID, shares typically underperformed. Now of course, more recently, COVID concerns maybe start to ease and there's more talk about a vaccine, so it seems like maybe the reverse is happening. Obviously, a lot of moving parts. But what do you see yourselves in this paradigm being that you're more in this fast casual world, but still kind of gathering place and everyone has been asking just over the past day whether the recent spike in infections is something you would have anticipated or presumably not. But any kind of thoughts on more recent trends or how you deal with the recent spike would be great.

Well, thanks, Jeff. It's good to be with you. Tara and I are here to answer any questions today. I think number one, we've given up trying to predict what's coming next. And I think that's a bad business to be in. Certainly, this year, we've had our defensive moments in the beginning. And I'd say for the last 6 months, we've been strongly back on offense. That began with a strong fundraise, giving us a balance sheet of roughly $100 million today, with the strongest position we've ever been in for cash and opportunity to grow moving forward. But it hasn't been without its challenges, right? I think the biggest way to understand where we're at and where we're headed would be kind of what we've talked about in the last quarter, is the difference between Shake Shack and some of the other companies. We're happy to be right in the middle of that equation that you just mentioned. Casual dining here, fast food here, Shake Shack has always built itself for a middle proposition for a trade-up from fast food that's just better, more premium and a greater experience and a trade down from casual dining, where you can get the same kind of premium ingredients for a lesser price and yet still really enjoy yourself in being a cool atmosphere. That is what has led to our global growth. And the way to understand that has been the way we've shared really the suburban and urban breakdown of our performance through this time. We -- the good news is we've shown a very clear tick up in our sales since March. We had the depths of March and April, and then we've just continued to grow back. And that has been really encouraging, even given shutdowns today, tomorrow and yesterday. And our suburban Shacks have gotten close to their pre-COVID numbers. And our urban Shacks are still greatly impacted. And you can -- that's obvious, right? It makes sense where those Shacks are most impacted. When you look at our heaviest in the past, some of our busiest, strongest AUVs are the most hurting today: Midtown Manhattan, Grand Central Terminal, places like the Theater District in New York or some of our urban places through Chicago or L.A. or around the country. And those are the most hurt. But it makes sense, why? And we firmly believe they'll come back. When we look ahead, we were very cautious in our third quarter remarks, looking at what is going to be an interesting winter, right? No one knows how -- with many municipalities shutting down indoor dining how that will impact Shake Shack. We're obviously heavily weighted towards those type of municipalities, California, the Northeast, New York City. And yet, I believe our strategy, the digital toolbox that we've built, which we can talk about today, has been the thing that has kept us strong throughout and will keep us through this time. We are very much looking ahead. We're very much looking towards brighter days. They will come. There will be a vaccine. There will be a change. None of us know exactly how and when those dates will be, and we're not guiding to that today. But we believe Shake Shack, as community gathering place, as premium food, and as now, the opportunity in a post-COVID environment to expand our addressable market with digital, with new formats for Shacks and with growth around the country and around the world, in a strange way has probably never been better. And we're looking ahead to those days. We're getting back at it. We believe we'll be at roughly 35 to 40 domestic shacks and 15 to 20 in our international license business. That's a significant year of growth ahead. And we're excited to execute that and look towards the future beyond that.

Sorry, Jeff, just one point of clarification on the balance sheet number. The number was about $190 million at the end of Q3, give or take. So...

I thought you parked a $190 million, Tara, so good job.

I mean we have been investing. But...

Yes. As we look ahead, if we flash forward 12 months, if we're sitting here, hopefully in person, looking back, what do you think investors and maybe restaurant operators, like yourselves, will believe has been the most significant structural change in the industry? And I presume some of the changes will revert back, but my guess is you could probably prioritize a few things that you think this is just accelerating what we were doing already, and this is never going back.

Yes. This time has accelerated and amplified everything we were doing before. And I think we'll look back and say, digital, digital, digital. And for us, it's not just about can you order online or thinking about it as e-commerce is, because we do believe people will return. People are going to return to cities, to high-traffic areas, to malls. I really believe that. However, how will they then experience it? And what we're so excited about and what we believe will be the fundamental structural advantage going forward is even when you come in person, you can preorder. We have a stronger pickup situation now. Our Shack Track designs for many of our restaurants will allow for separation of different groups, will allow for frictionless ordering and pickup. And whether you want to stay, go, take it in your car, we're even going to be building our first drive-through next year, these things will be the fundamental changes that keep the Shake Shack experience what it has always been and adds to it a convenient factor of relationship with that guest that we may never have had before and an opportunity to grow from there. And that is, to us, what's most exciting because it hits at our core of hospitality and it allows us new ways to provide hospitality in the future.

Obviously, the pandemic has been horrible for almost everyone. But if there was the silver lining that some investors talk about, and I think maybe we're off a little bit. But seems like food costs are maybe a little bit more benign, and you could tell me otherwise. Labor cost, I think everyone has this impression that unemployment is so high, therefore, labor is much easier to come by and inflation is fading. Real estate costs, if there's more availability, they should be coming down in theory. I was wondering whether you'd agree with this in theory and in actuality. And maybe any early signs of independent closures that you've noticed in terms of the potential opportunity for a brand like yourselves to take advantage of that?

Yes. I think there's pieces of that list. Certainly, we would expect the real estate market to have more opportunity, more sites available. But I think when you -- again, when you look at the brands and you look at everything Randy described, so for all, we're building out all these digital capabilities, we also want to continue to build very special Shacks in great locations. So those locations will still come at a price, and they'll still come at a premium price. So there may be some give and take in certain sites. But for the most part, great real estate I think will still cost accordingly. Commodity, food, inflation, you're absolutely right. After a significant peak and certainly be from the second quarter has absolutely sort of come back more in line. Labor is the interesting one. We absolutely continue to see and expect labor inflation in this country. For the most part, where it's always been hard to hire, it's still hard to hire. Where it's easy to hire, it's been easy to hire. But we still expect sort of low to mid-single-digit labor inflation, a combination of mandatory increases and discretionary increases on our part. We pride ourselves on being a great employer and being somewhere that can -- you can build a career, you can earn a fair wage, you can develop and move up the ladder. So as you know, the importance of investing in our teams has always been paramount, is a key part of our employment brand. So sort of a combination of those things. I mean I think for us that if there's a silver lining to the pandemic, it's much more about where we started this conversation. And it is the -- with the balance sheet that we do have, that ability to have double down, innovated fast with some new things, things like curbside, new capabilities like curbside, but also to have accelerated and really executed against some of those strategies that were very firmly in place pre-COVID. So the shift that you saw in our business in sort of March, April, going from a 20-80 digital in Shack to an 80-20 and obviously, coming down from that, and we expect it will still come down. Of course, as cities reopen and as dining rooms reopen, it will continue to come down. But we don't expect it to come down to where we were pre-COVID. So that bump of all our guests, new existing return, the huge acceleration of that sort of teach-in to a digital experience with a restaurant, no matter who you are, whether you were comfortable with it before or not, you now are because you care enough to learn how to engage in a safe, speedy, convenient, quick manner. And that's what all these digital tools offer in the moment. And I think the opportunity, going forward, as we sort of briefly just touched on is now really bringing them together as integrating that digital experience that we spent a couple of years building, the last 9 months accelerating, integrating that now into the physical design of these Shacks and some of these additional formats that we're talking about, some of the retrofits and some of the additional capabilities.

Right. And if we think about future profitability, I'm sure, across many industries, but definitely in our silo, it seems like peers are talking about doing more with less. And when sales ultimately recover, and we do expect they will, that there's upside, whether you're looking at the restaurant margin or whatever margin you want to look at below that. Just wondering whether you think that's likely for your business. I don't think of you guys specifically in cost-cutting mode because you're in such high-growth mode, but how you think about the ultimate profitability on the other side, whether or not it's improved through this crisis or whether because of the way your business model operates? Hard to imagine meaningful upside to those margins post crisis.

Yes. I mean when you look at our business pre-COVID, we're a pretty high-margin business. And to your point, we are a young, high-growth business focused on investing against the opportunity that's ahead of us. So when you look outside of Shack margin, you should expect us to continue to invest in G&A, in a lot of the things that we've just touched on and that we'll continue to talk about today because we see the opportunity to deliver really compelling returns. So over the long term, we'll deliver some leverage in that line, absolutely. But in the immediate term, there's just -- there's a ton of opportunity for the business. When it comes to the Shacks, we're not at a point today where we're updating the sort of target average class metrics that we've given in the past of about a $3 million AUV and about a 20% Shack-level operating margin, on average. Right now, we're focused on getting back to those. However, when you look at our business, and this is through pre-COVID, our margin profile typically of our Shacks -- we need to get a little Shack by Shack basis. Our margin profile follows our sales profile, which is why those metrics have come down as -- with our growth as we've expanded out of New York. So to the extent that we can be successful in expanding that addressable market that Randy touched on, to the extent that we can grow sales and grab sales that we didn't have before and didn't have access before, then you would expect there to be margin opportunity there. But right now, we are focused on executing against those, understanding those, building a relationship and a marketing strategy around the kind of integrated data that those now offer us and focusing on really going after that top line. Because the Shacks are -- we're pretty tight when it comes to cost discipline, whether it be corporate costs or Shack cost. And I think you can see that through our Q3 numbers, with the fact that we were back at just shy a 15% Shack-level operating margin with comp down 30% plus. So we're not really focused on, to your point, cost-cutting our way back to recovery. We want to grow our way back to recovery. We want to grow our way to future top and bottom line enhancements.

And then just because you both mentioned labor in this chat and earlier today, just as we think about the impact of structural minimum wage increases. And I know you guys pay above minimum wage in most markets, but it seems like that's coming, and obviously, you have experienced maybe in Florida already. But how do you think about how much of that needs to be absorbed by the consumer versus yourselves? And on top of that, I mean, I know you mentioned that this year has been a unique year, so you paid extra for your workers to be there. You're paying bonuses in 2020. Is that something that you can then pull back in '21? Or is that now a new level where employees would be disappointed if they ever saw a pullback from there?

Well, I think there's a number of things. We have got to continue to pay our team the right wage through this tough time and moving forward. And you will see the majority of our restaurants and our entry-level teams will get raises next year. And in most markets, you'll see that, and we're excited about that. We want to continue to move our team up the ladder, give them a wage that works and be competitive. While also, and most importantly, giving them opportunity to grow beyond that entry-level role and really into leadership roles throughout the company. How that impacts us? We'll see wage inflation. We will. And we're going to see it next year. We're going to see it in the year after, we're going to see the year after that. I do think we've always had strong pricing power at Shake Shack, we'll remain conservative in the way we've done that. We will be looking similarly to how we have for the last 16 years in taking probably roughly around 2% price. And that will be our strategy going forward, and we'll make our business work with that. And we're excited about that. We think it's the right approach for our team, for our guests and for the overall long term, which we always think long term nature of how we build this business.

As you think about the recovery you've seen through COVID, I mean to imagine, your comps were down 70% their trough in March. Now you're down 20% in October. And I know, and to be fair, we try not to focus too much on comps because with Shake Shack, very unique that there's such a small number of stores in the comp base and they're so distorted based on geography and whatnot. But I think you guys have been telling a pretty good story, and I was hoping you could share a little bit more color in terms of the divergence you've seen to try and equate your suburban stores to what many other of your peers have been reporting for their entire system, because that's where they're located mainly versus your urban stores. Can you give just a little bit more color and context around how you think about effectively 2 businesses, and how one's performing versus the other?

Yes, absolutely. I mean we gave October data with our quarter 3 earnings release. And you could see in that, if anyone hasn't seen it, there should be a supplemental deck up on our site. And within there, you can see that our suburban Shacks were fast approaching flat with last year at down 4% in October, while our urban Shacks were still down sort of 33%. So you're absolutely right, a pretty significant divergence within there. The way we look at it, it's really to do with how people are moving around the country. So when we talk about the Shacks that are hurting acutely, so places like Grand Central, which is still closed, and will not come back until people are commuting through Grand Central. Places like the Theater District, where one of our most successful highest volume Shacks, which will come back, but it won't come back until Broadway comes back. Midtown Manhattan needs offices to come back. And I'm sure we'll get on to how we feel about our real estate pipeline, but we're bullish on these urban and these incredible locations coming back. But in the meantime, while probably every one of the vast majority of the people on this call are working from home and offices aren't back, people aren't traveling, schools are in and then out, and then in and then out, and people are out of the cities, that movement of people generally around the country is the biggest influencing factor in terms of that divergence of our performance between suburban and urban. And we believe they'll all come back. I mean as I said, we're very bullish on urban. We believe that when we come out the other side of this, people are going to want to gather again. As you heard from Randy, when all we've doubled down on these digital capabilities through COVID, they are complementary and additive to how we feel about the Shake Shack experience. They are against an agenda of expanding access, expanding convenience and enhancing the overall Shake Shack experience, not shifting it, adding to it. So -- but in the meantime, heads down, we continue to focus on recovery. And yes, some of our most successful and heavily urban stores are still going to feel the pain.

When I think about a growth company going into new markets, I think it's so telling that you have to manage each market and make sure the market is performing well and the brand has been accepted. Then you go through a COVID crisis like this, which I would think would make it a lot more difficult to do that. I think personally, and I think, Randy, we discussed earlier, our offices in Midtown Manhattan, I haven't been to that location with the great outdoor patio in 8 months. But the location near me on Long Island, I visit all the time now. So when you look at a region, obviously, some stores, you'd expect to be doing poorly and other stores to be doing quite well and maybe comping positive. But do you then consolidate and look at the state of New York or just broader regions to say, "Hey, that shift is appropriate. This is a market that's surprising us because that can't be explained by just the shift in where the customer is coming." Like how do you think about that as you're growing into new markets and trying to assess, is this market successful for us? It seems much more difficult to do.

Yes. I mean I think, yes, we do. But one of the benefits of still being as small as we are, is we actually look at every Shack. And when we look at Shack by Shack, whether it be around a city or state, or just a larger part of the country, it makes sense to us when we see which Shacks are up and which Shacks are still hurting. And again, it primarily follows where people are comfortable, which states are out a little bit more than the ones that are sort of still hunkered down. And that pattern makes sense when we look at it.

Right. Randy, as a restaurant guy and spending a lot of time in the kitchen and thinking about the menu, I mean the burger category, and more recently, the chicken wars seem to be ranging as fiercely as ever. On your seat, I'm just wondering where you see the most competitive pressures. I know there seems to have been a shift more recently to a little bit more chicken. I know you talked about veggie. Just as you think about others in your space, like what are you most concerned about? Is it the QSRs who are upgrading? Is it your fast casuals? Is it the casual diners that are pushing all burgers to $10? How do you think about the category, and where you're going with the menu?

Yes. We were born in New York from fine dining restaurant companies, fine dining restaurants that compete with each other. We have always believed that when we do things really well, at the right price, with premium grades, people will come enjoy it. And we don't allow others' decisions to lead ours. Of course, we're aware. And of course, we pay a lot of attention, but we don't compete on the cheapest price, so the cheapest ingredients or the cheapest experience. We compete by building great products and great experiences. And that's where we want to win. When we look at the current moment, we took this year and we slimmed back the menu a little bit. We took some of the more complicated items off. That allowed us to return to LTOs, like Hot Chick'n, which has been one of our most successful LTOs. We're running that now. We're going to shift that next year into continued other chicken LTOs. We're going to lead early next year with a Korean-style fried chicken, a new item that we've never done that we developed in Seoul, Korea on many trips with our partners over there. Really excited about that item. I can't wait because it's one of my favorite things that I've tasted for a while. We even launched yesterday in New York and California in just a few locations, a black truffle burger, where we use real black truffles with a company that provides those to Michelin star restaurants. I don't think there's anybody in the fast food category that's thinking that way. And we're always going to keep thinking that way. As we look towards menu expansion and other opportunities, we keep thinking about veggies. We know that's a need that we have not met. Outside of our 'Shroom Burger, which is kind of the veggie burger that meat lovers enjoy. And we want to make sure that anything we do fits that category, too. And what we're doing now is we're testing at about 30 Shacks a brand-new Veggie Shack, which is real vegetables. This is not all meat, this is real vegetables developed by us. And it's got 13 different vegetables, grains and herbs. It's got fresh avocado, fresh roasted tomatoes on a brand-new bun that we've created. And that will be tested and learned. And we'll see. We'll see if people like it. We'll see if people want that at Shake Shack or not. But we're excited about that and other things. And then we want to grow around the categories where we can see a little tick up in growth that we think we can provide to some average check, some extra add-ons. Things like our Chick'n Bites category, which we continue to grow when we do other chicken items. Our beverage category with more and more special lemonades and premium beverage ingredients, and our frozen custard category, with shakes, with looking at other ways that we can do frozen custard next year to remain that real dessert option for you throughout the day, in the afternoon, day part, later at night, and beer and wine. We just redid all of our Shack wines. We have our Shack red, white and roses in a can now, that's really cool, and that will be rolling out through this year. Really great product. So all of the ways that we can just take every bit of the business and say, whoever wrote the rule, it needs to work this way. We're just going to do a little bit better. That's what Shake Shack is and what we've always been. And I think that's what will continue to lead us, while keeping things as tight as possible for operations so that we can get through this tough time and have good throughput coming out.

We have to venture into New York City for the truffle burger? Or is that...

You do. You do. It's only at 2 Shacks in New York and 2 in the L.A. area. So we saw...

Worth the trip?

We saw a lot of them yesterday. It was a lot of fun on the first day of launch, and this is something that we'll do for a month for fun and just continue to remind people who we are as a brand. And we'll see. Maybe if people love it so much, we bring it back as an LTO at a wider audience at some point. But this is how we've always done things, through ingredients, through chef collabs and some other really cool opportunities that drive the brand.

Randall, I know a lot of your peers talk about through this crisis kind of trimming down the menu, especially with digital delivery or you would want to be as efficient as possible. And then coming out of this, some are talking about expanding the menu and others have said, "No way, we're never getting back to that expanded menu." So how do you think about that, especially as your digital mix grows? Just wondering where the bottleneck is that a Shake Shack where you might consider changing your strategy because you know what, it's just not worth it to try that. It's just going to slow down the kitchen.

We've done -- we've removed a couple of those items. We didn't start from the place that many of those companies that you mentioned started from, with a menu that already was crowded. We've always had a fairly efficient menu. So we've made a little room on that so that we can do the things -- the fewest amount of things that matter the most. And as we said, that's chicken, that's veggie, that's burgers. And it's easier things on the side that we can execute well. Look, our bottleneck will always be the fact that we cook things to order. And we do things with the best ingredients that are fresh. And we want to continue that. We don't just drop your Chick'n Bites in a fryer. Your Chick'n Bites are hand breaded, one by one by one, and cooked to order. These are the things that make a difference at Shake Shack. This is why with no antibiotics in that product, why we charge more, why we obtain a premium price for those things. And that will continue to be our strategy. Behind that, we are getting smarter on kitchen design. We are continuing to evolve. And mostly in the digital changes, the Shack Track and other things, we continue to add opportunity for a seamless and frictionless opportunity at order and pick up. And that's really the convenience factor that we think will continue through this time.

I'd be remiss if I didn't spend some time talking about the primary driver of your top line, which would be unit growth. Obviously, this year, you said kind of pulled it back from 40 to 20. Next year, getting back to your former level of growth. I know you've gotten questions on this for a long time, but it would seem like there are even more so coming out of a crisis like this. What is the right rate of growth? And what might be inhibiting you? It sounds like you have optimism now that there's a larger addressable market. So I'm just wondering how you think about an annual rate of growth, and then how you ultimately think about the ultimate population of Shake Shacks as it does seem like now you've got drive-through and pick up and all these other things that maybe you didn't have as optionality before.

Well, the right number this year was 20. That was not easy to do given that we got roughly half of our class in the 18 to 20. We'll finish the year with half the class open that we planned, even in this environment, is an extraordinary effort by our ops and development teams. Next year returning to that 35 to 40. That's the right number next year. When we look at all of these plans for digital, for new format growth, drive-through, Shack Track opportunity, curbside pickup within that, we believe our goal is to increase that addressable market. We've got a long way to prove that, and that's the goal. When we look out there, there are sites available. The inhibitors of growth are always going to be, number one, making sure we have the best leaders and developing people to lead these restaurants. That is what matters most, and it's something we'll always lean into first. Beyond that, we can get the real estate, and we're evolving those designs. We're evolving to create still that great experience, but give that as those convenient options. I think that's the most important and exciting probably learning a thing to come out of COVID for Shake Shack. Just to be able to say, look, this amplified and accelerated the things that we are working on that allow us to move quicker, bigger, faster over time. We are not out of the woods on COVID yet. We've got -- we're not going to ramp up things inappropriately in a time where the world is still struggling. But that will end. People will gather again. They will come to big cities again. They'll go to the great cities around the world where we have Shake Shacks, by the way, like Shanghai, like our newest opening in Beijing, like Singapore. These are markets that we have a great foothold in and we think we can grow. And the international opportunity is huge. It's huge. It's something we don't talk about enough. I'm not sure if people understand how important that is to our cash flow, to our opportunity, to our brand, most importantly. And that stuff is out there. That's something that's out there. And we've got just over 300 total Shake Shacks. There's a lot of opportunity moving forward. We're excited about it.

And I know there's obviously been a lot of talk about real estate availability through this crisis. Is it the real estate that, coming out of this crisis, you'd say that's where we want a Shack to be? Or because you're so high profile in the locations you're looking for, this didn't open up a vast array of newer stores to ramp up?

It's a mix. It's a mix, right? I mean we're not looking for a clothing retailer in a C mall that went out of business site, right? We're not looking for strip mall locations that might be available just because. That's not who Shake Shack is or ever will be. We're looking for a real estate across the country in great high-traffic areas. That's going to be competitive today. It's going to be competitive tomorrow, and it always has been. There's obviously pockets of opportunity. There's a huge opportunity being Shake Shack, who has been a strong partner to our landlords during this tough time, and they will remember that and reward us with that moving forward. And there will be lots of opportunity in urban centers and other places that have been harder hit. And we're going to capitalize on that opportunity. And we're going to hope that -- coming along with that, our friends who are independent restaurants and great small businesses continue to find a way through this and to get back to growth on the other side. I believe they will be, and that's the hope. We've got to all -- rising tides, got to lift all boats here. We want to be a part of that renewal in any neighborhood that we can.

Right. And the Shack Track that's been alluded to, I mean, it would seem like it would make your head spin just because it gives you so many more options versus maybe what you were looking at a couple of years ago. If you were to maybe prioritize the various initiatives or options being considered within Shack track, maybe different iterations you've seen, what do you think are the best, most exciting opportunities that will come out of that?

It's funny, I hadn't thought of it in the head spinning way. And here is why. It actually has helped hone that in, right? Because now we're looking at sites, and you can say that one should be a drive-through. That's a great site for a drive-through. You can look at sites and say, "You know what, in the past, we might have gone here. But now, what if we went down the block and added that convenience factor that we might not have been able to add in the past? Wow, we can look at a whole new different kind of site here." And oh, by the way, most of our business will be the kind of great core Shacks that we've always built that will continue to thrive and drive strong AUVs profits and returns. So it basically just gives us more arrows in the quiver as we think about those opportunities. And I actually think it's the opposite of head spin. It is the -- it forced clarity on types of locations that before you might have said, "How might we do that?" Now we can say, "Hey, let's try this one." And by the way, a lot of this is learning, right? We're not guiding towards anything, but the optimism of growth and the opportunity to drive sales, drive location opportunity and the long-term sales growth for Shake Shack, that we're doing with a hefty strong balance sheet and an opportunity for -- reasons for lots of optimism. And we'll see. Drive-through is going to be exciting next year. We'll see how that goes. We'll learn a lot. We're going to commit to a number of those. Get that learning. I'm sure we'll get some things right, and we'll get some things wrong. We'll adjust, and we'll look ahead to the next group of Shacks that can grow this company.

The curb side, it would seem like that has the broadest appeal, if you were to say which one of these initiatives would be something you could roll out quickly to a lot of stores. Is that something you can retrofit existing and do all of your news that way?

We have -- and it won't work everywhere, right? It's hard to do curbside in the Upper East side of Manhattan, if you will. So -- but when we look at it in our suburban Shacks, we've rolled it out at nearly 70 Shacks today. Any Shack moving forward that has an opportunity for a park situation where we can bring you food, we will do that. And so I think that will continue to expand. But most of our Shacks in urban centers are not going to be able to do that. Some of the ones that are in deeper, whether mall or premier shopping center interior locations. But for instance, we just opened in a great site in university village in Seattle. It's one of the great kind of exterior shopping center, lifestyle centers. That can't have curbside, but it has an amazing Shack Track window, where you can preorder, grab your food out of that window and go sit down at the Shack and eliminate all that friction. Or you can take it to-go and go grab it and put it in your car more easily. All of those are just increasing the amount of ways people can engage with us during this tough time and the habits we hope will stick moving forward.

Just the few minutes we have left. In terms of the stickiness that perhaps you just mentioned, Tara earlier, you said something of 20% digital, 80% in-store and how that literally flipped to 80-20 and now presumably it find somewhere in the middle over time. And I know the answer is it varies meaningfully by market. But as you think about that, what has to change? I mean a lot of restaurants talk about, and Randy, we discussed earlier, maybe second make lines or different things like that. Like what has the change in your restaurant, something new and different in stores that are much more heavily digital versus traditional?

I think that's up for learning. Right now, we think that the digital experience that we're building, which is not newly conceived was all in the works pre-COVID, fits really well within the concept of these great community gathering places. So I wouldn't think about it like a new Shake Shack, right? To Randy's point, we still want to build these great community gathering places. And I think about the moment that we're in as actually the integration of the 2. So we've always got great, unique, wonderful Shacks that hopefully deliver a great experience. So you want to spend time out and return to. In the meantime, in the last couple of years, we've been building this digital infrastructure and this digital foundation that really allowed us to keep all these Shacks open through something as extreme as a pandemic, and continue to deliver meaningful and increasing sales since that low point. And we're in a moment now where the 2 are coming together. And I think they're going to work really well together. And we don't build cookie-cutter Shacks. Most of our Shacks are relatively unique, and that allows us the opportunity to -- in that design phase. And even to Randy's point, in the real estate selection phase, in some cases, to think about it holistically as opposed to taking something and trying to turn it into something else. This is an evolution of Shake Shack. It's an evolution of the experience. It's an evolution of the design. And it's the moment where that starts to come to life. So we're really excited about it.

Well, I have another 30 questions, but it looks like I only have another 30 seconds. So I guess we will cut off the Q&A there. But I believe you have other meetings to follow. And Randy, Tara, Shake Shack more broadly, I want to thank you very much for participating. Look forward to doing this next time in person. Stay safe. We'll talk to you soon.

You too. Thank you.

Bye, Jeff. Thanks, everybody.

Thank you.

Thanks, everybody.