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

Good morning, everyone. Thank you for joining us. My name is Jeff Bernstein. I'm 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 their New York City headquarters, we have Randy Garutti, CEO; Katie Fogertey, CFO; and a strong team behind them sitting in the audience. By way of background, for those not familiar, if that's possible. Shake Shack is a fast-casual chain with 230 or so company-operated restaurants in the U.S. while licensing an additional 30-plus inside and 140-plus outside the U.S. Management remains super confident in the long-term outsized annual unit growth. With that said, some of it appears with the pressures across the industry from a sales margin and returns perspective, management prudently tempered near-term unit growth, still a 15% plus growth rate, which is topped in the industry. And again, still confident in their long-term algorithm for at least 450 U.S. company-operated units. And we're anticipating that number to go up over time as they open up a variety of new formats, seeing very early success. I want to thank Shake Shack for joining us this morning, and we will kick off the Q&A. Thank you, guys.

Thanks, Jeff. Good morning.

[indiscernible] here.

[indiscernible] New York based company. Yes.

Well, thank you, guys, for joining us this morning. We have a number of restaurants over the next couple of days. There's a handful of questions that I think are topical for every one of them, and I'm sure you hear them a lot.

But as we think very high level about the consumer, clearly, you are a very strong consumer brand. I think if you looked at macro data or read the paper this morning, it would seem like the U.S. is heading into a little bit of a recession next year to varying degrees is up for debate. But how do you think your brand is positioned and potential levers to pull to sustain sales if you were to run into a slowing consumer environment?

Yes. I'll actually just take a little bit of a step back and kind of frame the macro drivers that we have been discussing. So a couple of quarters ago, we talked to investors on our call about we were starting to see a little bit of weakness at the low end. As a brand, we definitely over-indexed to high-income consumers. We -- both from a real estate perspective and in general -- from who, in our urban centers and in our suburban centers, tend to come to us we're just more high end than traditional fast food. But we did see a little bit of that weakness from the low-end consumer. We've seen really good trends from our higher income guests. We've seen great things from trading up into LTO. We've seen a lot of success from our Hot Ones LTO. We're seeing good strong attach rates for cold beverage. All of these things that you would want to see are holding in. It's just that lower end consumer was a point of weakness and didn't really change a lot last quarter. So what are we doing here? Well, we're leaning into where we think we have the most strength, whether it's from our menu innovation, continuing with cold beverage premium items and making sure that we're providing a great guest experience. But we've also been kind of testing the waters with some value-added solutions as well. So we started daypart promotions. So a Shake BOGO during the -- we started first kind of with the slump that we have between 2 and 5. We also have a late night Shake BOGO as well, and we've done some other kind of testing about different value-add promotions on that side. But overall, we're going to continue to provide that great guest experience and lean into where our guest values us the most.

And I think we've heard it in recent weeks coming out of earnings that we've kind of defined this Goldilocks scenario, which I'm not sure if it's really going to hold. But the fact that over the past month, pretty much all restaurants said sales are holding up surprisingly well for the most part, menu pricing is outsized, and seems to be being accepted thus far. And then on the flip side, commodities and maybe labor, tremendous pressures we've seen maybe are easing a little bit, clearly, not going on deflation. But in that scenario, if all those things were to hold, we're finding investors are intrigued by this potential near-term margin recapture. If your sales hold up, your pricing is there, and the costs come down. Is that something that is just not necessarily something that's likely to come to fruition? Is it something that you guys see in your business? Or are we missing something in terms of other inflationary pressures that might mitigate that and prevent us from seeing some near-term margin improvement off of those levers?

Yes. So we haven't given guidance beyond what we've talked about for the fourth quarter. But if we just kind of talk about the different ebbs and flows in our P&L, certainly, sales recovery is upfront and center. And the flow-through that we can get through that is really important, where it's something that we're going after pretty aggressively here. But then if you look down the P&L, yes, there's going to be ebbs and flows on the commodity side. There are some commodities that have taken very big steps up in the midway through this year. So we talked about fries, we've talked about dairy. These 2 big step-ups in the middle of this year. We'll have to see kind of how that market plays out throughout the rest of the year and into next year. But then the one thing that does not look like it's going to be coming down is wage inflation. And we know we have to step up there and support our team members to be fully staffed and open.

I think, Jeff, the biggest question on all of that will be, to your first question, what happens in the consumer environment. And I think that's what everybody is waiting to see. One thing we didn't really talk about in the last few minutes is just so much of our gains have come this last couple of quarters in the return to the restaurant. While digital is holding very strong actually, the in-Shack guest is coming back. That's traditionally been our business. We're sitting here in Midtown today. We were talking earlier about our Shack, and 53rd in Lexington, and we've shared this in the last couple of quarters, and you just continue to see the urban centers strengthening, and strengthening in Shack. Now that brings lots of different dynamics, right? It's generally a smaller average check, not as big groups as you had. A lot of companies who are talking about the same dynamic. We're seeing that same dynamic. But I think the question on where we'll go with profitability here, we're doing a ton of work in our restaurants to regain the profitability that we had before COVID, and it's got to start with the continued return and strength of the consumer. So I'm hopeful, but we are preparing for all scenarios. I think we got to as a company to prepare for potential light recession, for a harder recession or maybe people just keep on spending. I mean we're going to find out in this holiday period here how it really goes. How many you did your shopping out this weekend, it's pretty busy out there. So -- and the data is kind of showing, I think, a lot of strength, but a little bit of mix, and nobody really knows where it's going to go yet. So I don't know. I think what we got to do as a company is just continue to recapture our in-Shack restaurant experience that Shake Shack was built on, continue to give solid digital tools and just work down the P&L to improve the things that have frustrated and hit us over this last few years as we recover our margin [indiscernible].

For those that are interested, if you leave our building and go up 7th Avenue, you don't even have to cross town because you go to 53rd and 7th on the Northwest Corner, good outdoor Patty, it's not too cold.

Great Shack. Great Shack.

And the fact that you guys are so heavy or people think of you as urban-driven. I mean do you see just vast differences? I mean an urban store in the middle of Midtown versus downtown on a Monday, Friday versus Tuesday, Wednesday, Thursday. I mean you're just seeing huge variability.

Yes. I mean we are seeing -- we've talked about our kind of most impacted more office-driven shack. Those are still -- we're talking about lunch and dinner. They were still kind of down more than 40% in pre-COVID levels. I think we were talking about this earlier, when offices aren't in on Monday and people aren't coming out on Friday, like that's just as an impact and that's an opportunity to recover. We'll have to see if more companies -- people are coming back to office, maybe it's on Monday through Thursday instead of Tuesday through Thursday or how this ends up evolving. But those shacks have had different dynamics than kind of the more, I would call it, the residential urban shacks, and then those that are kind of tied more to different occasions to -- also to commuting. So...

The head of the research department is in the room today, and he's trying to encourage us to be back more of so that will be in your favor.

Good. I love being back at work.

I'm not going to point to [indiscernible].

Yes. And I mean, the other thing with that too is you've seen this kind of in front of the articles that are starting to show the data of Thursday is a new Friday, right? Nobody works on Friday or at least they claim to. But I'll probably get in trouble for that, but people are going out and going out, be hard on Thursday night. And also when we used to get those kind of 50, 100 burger orders at our urban restaurants on Friday. That doesn't really happen as much if at all.

The trading [indiscernible].

Yes. The trading [indiscernible] orders on Thursday now. So if you were to go into that 53rd and Lex or the one right here on 7th. You would see Thursdays pumping out big orders that are kind of the corporate things. So it's a weird shift. We got to figure out how to recapture. It's different to -- I'm spending a lot of time in the restaurants right now, really witnessing and trying to take in some of these new dynamics. So it's in some of our Midtown and urban Shacks a couple of Fridays ago. And it was interesting that it wasn't that corporate, but there was a whole ton of tourists. So can we recapture Fridays as a different thing in places like New York or downtown Chicago or downtown in other urban environments? And that's -- as the world shifts as offices move and change, we're going to have to see how we can recapture that. But as Katie said, those heavy hitters, unfortunately are still down. And that's -- even as good as they've been getting, they're still down from their highs. And we got to keep recapturing that.

And hopefully, we don't have to talk about COVID too much more in future conferences. But what would you say has been the greatest structural change to your brand or to the industry that has come out of COVID, whether or not those things are going to hold or revert back to where they were before? Kind of what's been the greatest positive and negative, maybe structurally.

There are a couple of things. I would start with -- on the digital side, obviously, the shift that we all had to make the digital. We made big investments there. Those investments now are paying off here a solid part of our business and we've got consumer behavior working in that way. I'm a believer that, that holds, but I'm also a believer that people want to go to restaurants, and I believe Shake Shack benefit in that scenario. I think on the challenging side, I think the labor environment is a structural shift as it will not be solved anytime soon. There just are not enough American workers working in our industry and other industries like them to fill the jobs that are available. And that means we've got to figure out to be more efficient. We've got to hire differently, better and retain. Turnover and retention are at the most challenging I've ever seen them in my career at every company I talk to will tell me the same thing that they're dealing with those guys dynamic. So I think that -- that's just hard. We have -- even today, Jeff, I think one of our biggest opportunities, and it isn't going to be easy to reclaim, but it is a huge opportunity. It's just retaining staff staying open, getting full hours. The amount of times that -- I can tell you, asking any restaurateur will all have a beer over this is I [indiscernible] in restaurants when I was 13 years old. I don't care no matter what happened in a restaurant. You would never close the door early, and you would never not open that didn't happen, ask a restaurateur of my generation. There was no scenario. Today, so many companies, including ours, often are understaffed, after a delay in opening have to close early. These things are real. It happens, and it's taking away a significant opportunity of our sales. Within that, I think that's a big thing. The bigger thing, and we talked about this a little bit on the last earnings, is just throughput and optimization. When you go in there and you don't have the reps, and you don't have key team members who have been there for a year or 2 or 3. It's harder when you're in a high-pace environment like a Shake Shack that is doing everything by hand to recapture throughput and opportunity. And that is where so much of our focus has to be right now. So we acknowledge that that's been a challenge. It has certainly impacted our sales and our profits. And that is -- if you look at our strategic plan for next year. Basically, the only thing that matters, but the thing at the top is hiring and retaining full teams. That is our complete focus right now because there's so much opportunity in just doing that.

What are the metrics you look at, first and foremost? I mean I don't know whether you shared this publicly, but just your turnover level or your retention or how long [indiscernible].

I mean retention, both matter. Retention is really the one that matters most. We don't break those out for us. We are at high -- some of the highest we've ever been in the history of the company on those metrics. When we look at how soon people leave, do we lose people in the first week, 30 days, 90 days? What are the dynamics that keep people? How do you also -- I mean there's just so many little things that really matter. How quickly can you apply for a job? In this room, that doesn't sound like a big deal. But when you're an hourly team member, if you've got to spend 15 minutes on an application, you're going somewhere else. So we've got to figure out how to review application processes so you can apply for a job in 90 seconds, right? These are -- meeting people where they are today, and that's a lot of where our G&A focus will be; our spend, our recruiting and our training. In the midst of a massive opening fourth quarter, we've already opened 10 shacks domestic company operated this quarter. We've opened 9 -- is that right? 9 licensed -- 8 licensed shacks. So it's a big fourth quarter, and we still have a lot to go in the last month that we have. That takes so many of these tactics I'm talking about is getting people in the door excited, staying. And this is the work. This is the work, this is probably the great challenge of our time and for Shake Shack to really optimize those opportunities. But it's part of when we look out and we say, okay, that we don't like something that we're challenged with now, how it's going to get better, it gets to that investment or people retaining and bring people in.

Not to ask one short [ cycle ] question, but there's a lot of questions on it specific to the fourth quarter [indiscernible] same-store sales. We guided in single digit of the floor you were running 100% an effort to be cautious on risk of [indiscernible] the indications of comparison better how seeing like, how do you think about the fourth quarter [indiscernible] talking about any today procuring [indiscernible].

Right. So what we also talked about is we took about 5% to 7% in price. So across all of our Shacks in mid-October, we were very targeted about it. We took anywhere between 2% to 10% for a blended potential 5% to 10% [indiscernible]. We are -- we didn't talk about how much we expected to realize on that, but that is actually a big [indiscernible] factor there on that guidance. And then just -- as everybody probably remembers [indiscernible] last year, November and December were very strong. We had a lot of international tourists here. Things were finally reopening. There was a big surge, and so we're going to be lapping that. That being said, we're optimistic. And we are -- the price that we've taken before the October price increase, we've talked about seeing very strong reception to that. So we'll see how all of that ends up playing out, but those are kind of the puts and takes on that side.

And clearly, there's a lot of focus on comps. But as we've spoken about many times before, the focus should be more about the unit growth, which is the stronger, more stable growth that Shake Shack delivered. So I'm just wondering if you could talk about maybe your pipeline and the real estate availability that you're seeing. We're hearing analysts talk of we want to open more, but we literally can't. So how do you balance quality versus quantity when you know that you're meant to be a super strong high-growth unit opener?

You bet. I mean, this is such a -- has always been a focus for us. Outside of the COVID model, we've accelerated development every year since we've been a company. Let's just reiterate the numbers. We've guided to 35 to 40 for this total year. We know that's gotten pushed back and pushed back and pushed back, and we expect to be at the low end of that guidance at the end of the year, and that's going to be a push for these last few weeks. You're going to see a lot of restaurants opening and a lot of restaurants may or may not make it right at the end of the year. Hopefully, that gives us a solid shot at a stronger first half than we had this year. We've got it to about 40 company-operated Shacks for next year. We think that's a good number. And about 25 to 30 each year, this year and next for our license business. That's 65, 70 Shacks -- 60 to 70 Shacks, total. It's a pretty good growth rate for a company of our size. We don't have any issue in availability of real estate. There's fantastic real estate of all types, especially as we have gotten out there with new formats, we can talk about drive-through, drive-ups, all kinds of different formats that have been a part of our addressing the increased long term of our total addressable market opportunity. But our challenge this year, and we expect, at least for next year is just getting them open. And we've never had that issue in the history of the company, where -- and anybody who's trying to get a painter or a plumber or anything to do anything in any business or home or whatever knows, you cannot find reliable on-time construction right now. That starts with our landlords, we have to do things. It even precedes that with our permitting. You have DOBs who cannot sign off on things. You get permits, take forever. We have restaurants that are fully built sitting ready to go, waiting on one piece of equipment for HVAC or a fryer or hood, both kitchen and electrical equipment. These things are just kind of taking them longer than they should. So that's been frustrating. It's been the cause of our year. So this is not a pipeline issue for us. It's really extension of the build-out process that -- it's a stuff took 12 to 18 months before kind of from identifying and getting the lease going to opening, it easily takes 18 to 24 months now easily, or 6-month add, and nothing better happened. So that's just the challenge that we're up against. Look, as we scale and we get better at this, we build our teams, we make more G&A investments. We will get better at this. We're starting -- for the very first time, you're starting to see hints that contractor bids might be starting to level or come down a little bit. We haven't seen them come down as you're seeing, like at least it isn't like here's my bid let me know if you want to talk. It's now -- there's -- you're starting to see some of the -- so we hope there's enough of an economic slowdown in that part of the world that, that benefits our ability to get restaurants open, and at lower cost. But we've said we're going to spend more money building restaurants this year. We're going to spend more than that next year. We will be building a number of drive-throughs. We've got 10 to 15 for next year. We've got 10 open now, which is super exciting. We're learning like by the second here on the drive-through. And I think a year from now, when we have 20-plus open, we'll really start to be understanding who we are going to be as a drive-through and where we should focus that growth. But those cost more money. And they're certainly going to cost more money in this first 20 to 30 of them that we need to try different things, build the full expression so that we can scale it down over time and go. And that it's not -- and we just opened 4 drive-throughs in the last 3 weeks.

Very busy.

In Minnesota, Michigan -- let's -- where the other ones? Come back to me [indiscernible].

We'll find them.

Two in Michigan. Yes, it's been a super exciting drive-through push. We've got more coming.

Well, because you mentioned drive-through. I mean in the IPO process, 7 years ago, somebody asked me, would Shake Shack open a drive-through, I would have said no chance that it's...

Never say never...

[indiscernible] it's energy inside and who's going to wait online for a drive-through. Are you finding, obviously, the fact that you opened up 10, and you mentioned Detroit -- you mentioned Michigan. I mean I think Michigan would not be the place when it's freezing outside [indiscernible].

Wisconsin. That was the other one. Sorry. Wisconsin is just being told [indiscernible]. We opened [indiscernible] last week. We never say never. And we obviously learned for this time that, that is a big opportunity for this company. And the good news is it works. So if you go -- and I hope some of you get a chance to do it, it works, and we slow you down in the process enough that we can do what we need to do and cook the way we need to cook so that the integrity of the food is as good or better than if you were walking in the restaurant. And our system, our build out works. Now we got to figure out all the other things of how should the kitchen flow, how many stack what we call, how many cars could you do it? We're generally going for this 2-lane experience where you can take 2 orders at once. It's quite hard to do a person outside when it's snowing. But the goal for most weather situations is people outside taking your order. You converge into one, and you pick up. And it's a really cool experience. We're kind of targeting the 7- to 9-minute total experience time from the time you start to order to the time you pick up your food, and we are not trying to win the award for fastest drive-through. We will not win that award. We may, in fact, win a slowest [ shot ]. I don't know. But we just want to win the best experience. And if you go there today -- we've shared some of the data. But today, we continue to see about a 50-50 drive-through to in-Shack experience. That was our target. We're kind of thrilled that that's how it's playing out, and that tells us that there will be occasions where I want to drive-through and there'll be occasions where I'm still coming in because I'll have Shake Shack and I want to hang here, and we are building all of that. We're building it so that you really want to be at the Shack on those days. And hopefully, that will drive, over time, a greater frequency, greater visits and a higher AUV. That's what we're targeting with this. And we've got a lot to prove. And we'll keep talking about it over this coming year or 2 as we go, but we think it's a big unlock. And just stepping back, like when we sit in to your total addressable market, we sit in our real estate committee, we can take down a certain market plan, name your favorite city. We can really sort of look at different places that we might not have focused before and really target those in addition to that premium shopping experience mall or outdoor center, that urban location, that food core outlets, all those type of things and add now, hey, that one is just kind of a really busy street with a whole bunch of big box behind it. You might have a Home Depot or a Costco or everybody else behind you, we could take a pad site in front of that and add. And that's what gets us so excited about the opportunity. Now we've got to prove it.

So in certain of your more mature markets, mature, the drive-through beginning of the year or so. But it's now 50-50, where 50% of your sales is coming to drive through that's sort of 7 to 9. I would think that the person who's the third car in would say, there's no way I'd be sitting here for 16-plus minutes. But you're seeing people understand it, and are willing to wait.

Yes, absolutely. Now that will be the proof over time. So many of these are literally brand-new. I mean we literally just opened 4 of our 10 in the last 3 weeks. So we've got to prove that. But if you actually look at -- I won't name names, but if you look at the best drive-throughs out there, they don't tend to be the fastest. And that is by people's voting of their experience. It takes time to do things well, and to do it right. And that is what we're after. And that's been Shake Shack from day 1. Nobody ever accused us of being fast. That's just not what we have been built on doing excellent work with a premium product and charging for it. And that's kind of where we want to continue to be in this environment. And to the economic moment we're in, we don't know where this goes for us. We've never lived through a recession at Shake Shack in truth. But we -- our goal will be -- continue to be that premium trade-up from fast food, and we'll probably lose a lot of lower income consumers who need to trade down in this next environment. We'll probably lose a lot of that. Can we gain some of the upper-end consumer trading down from casual dining or bigger -- that's the goal. We'll see how it goes. And we see moments of that from time to time, and that's the stuff we're really trying to focus on our pricing and our product.

And I feel like most investors we talk to tend to want to focus on the U.S. company-operated business. But I'd be remiss if I didn't at least ask -- I know we were talking about China earlier, and I didn't fully appreciate the fact that you're now approaching 30 stores in the Greater China area. Obviously, there's a lot going on in China, the people here on the stage before you are heavily focused on Macau and whatnot. What's your take on the growth opportunity, international more broadly, but then specifically in China as an example?

We have a huge opportunity, and it is very profitable. And that's what people should understand about our license business at 140-plus restaurants, both domestically with airports, road sides, we're getting that business really humming now, and internationally in places like China. As Jeff said, we've got just about 30 restaurants now in Mainland China, Hong Kong, Macau. They've been massively impacted, by the way, in the news that you've seen in the last month or so, it's not easy to operate in those environments with constant lockdowns, changes all that. But we're very confident in the long-term Chinese business and expect it to be -- I mean it is today our biggest international country that we have opportunity. We also have great strength in Korea. That's been impacted by the tragedy that happened in Itaewon in Korea a few weeks ago as well. So we've got lots of kind of ups and downs. But when we look at that, we say there's so many new market opportunities all over the world that we have. This year, we'll open -- excuse me, next year, we'll open in Thailand, the following year even in Malaysia. We're going to continue to go expanding other opportunities that we can. Those come in the form of very rich cash development fees for the country as well as ongoing royalty fees. We love that business, and it's just so good for the brand. And I hope in all of your research on us, you get a chance to see some of those Shacks even if it's in an airport or as far away as Thailand. It's really exciting to see what's going on in international. So we're very bullish, very excited and putting a lot of resource to that potential growth.

So I've got a number of other questions, but with 5 to 10 minutes left, I thought I'd open it up to see if anybody in the audience had any questions if they'd like to pose. All good. So from the biggest drivers or seem like biggest opportunities for your delivery in digital are 2 areas that seemingly really grew exponentially through the pandemic is clearly a positive. Just wondering if you could talk maybe first about digital, which seems like the bigger opportunity whether it's your mix of sales that are currently coming from digital or maybe the disparity of what we always hear is that digital sales come with a much higher average check, greater customer satisfaction, less labor. I mean what -- those were all positive, like what is the downside to digital? Or are you only finding positives and it continues to grow?

I love to see how the digital business evolves, but I'll kind of talk about what we've built and where our focus is. So we have about 36% of our sales last quarter came through our digital channels. That includes our own app pickup, app delivery, web and also third-party delivery in that mix. And what we're seeing is we see higher frequency from our digital guests. We know that when they're in our channels, they spend more, they come more frequently. It's definitely the business that you want to continue to push into as you're looking at a source of long-term sustainable comp growth, for sure. And so we're continuing to push and give people more incentives to come into our digital channels to move from kind of the analog space into our digital channels. We're also seeing -- as Randy talked about this, where all of our gains are coming here is actually from in-Shack. So we're seeing those digital guests also move more into omnichannel. And we've talked about this before, but kiosk is actually a very interesting opportunity for us to kind of over time, kind of bridge the gap between the digital and the in-Shack world. So we've guided to having kiosk at all of our Shacks or nearly all of our Shacks by the end of next year. This is really a very exciting thing for us because where we would have 2 to 3 cash registers, we're able to have one cash register and maybe 4 to 5 kiosks. We see that when our guests come into the Shack, this is their opportunity to have a digital experience in the Shack. They can go through the menu. And if you haven't used, I highly encourage you to, it really takes you through and helps you to build up your cart, I mean, or your tray, I should say. And you see that in the numbers. We have more items per check. People will trade up to our premium items. They understand the menu more. We have higher attach rates of our LTOs, and it also helps us just to use labor a little bit better in the Shacks.

That's the key thing. We were just in Nashville last week as a team, checking out of that market. We have 4 Shacks there, 3 -- 1 downtown, 2 suburb and an airport, kind of a perfect -- kind of little microcosm of a new Shack market. And we were just getting kiosks for the first time there. That is a perpetually understaffed city. You cannot find staff in Nashville. It is really, really hard. And you think, well, all these people moving [indiscernible] Nashville. What's the problem? Well, all of these people moving [indiscernible] Nashville is no longer the cheap place than it was. And it's very hard to find staff. And you ask anybody any restaurant in Nashville, it's really hard. So we're not going to all of a sudden like have less people, but the person who is now the cashier can now help produce food because we have kiosks out front taking orders. And that's one of our big opportunities this year. I mean there's -- as Katie said, we're about 100 Shacks that between kind of now and the end of next year, we'll convert to add, these are mature Shacks, not new because everybody knew gets them. So we'll see. That we hope can be a help to the optimization of labor so that people can be working in the most important areas of food production and guest greeting without having to be stuck taking orders. So we'll see. I mean that's a big part of the digital experience.

Right. You mentioned delivery within that. I have 2 daughters, so I'm not sure if I want to thank you or not, but we see lots of Shake Shack packaging that obviously came...

Thank you.

Just show us that.

No, thank you. But the delivery mix, I would think that would be the -- maybe you could just share some metrics on that, but you would think that, that mix would be the mix that would decline in a slowing environment where the consumer decides, all right, I don't need to pay this luxury of an extra $5 or $10 all in. Maybe I'll come back and get to the stores. What are you seeing in terms of your relationship with your third parties [indiscernible].

I'm not predicting anything. I don't know where it goes our -- we don't break it out. But somehow it appears to me, at least for the higher-end consumer that we have, even though people are starting to finally realize how expensive delivery is. And every time you get your credit card for that order, you see how expensive it is. I don't expect it to go down. I just think people have a irrational ability to pay for the convenience of things to come and show up in their house. We do it -- when you all did it all weekend along with everything you ordered. And [indiscernible] in the price, whether you see your delivery or [indiscernible], it doesn't matter, somebody getting paid. And I don't expect that to go down. I think our guests will continue to order delivery at a pretty solid rate. And we've got to continue to make that business strong, better. We do it on our own channel, on our own app, but right now, we're -- this month, we're actually running kind of free delivery. Uber Eats is a delivery engine behind our app. And we also are on Uber Eats channel. So we're doing a little bit of a promo there right now. And we have great relationships with all them with Grubhub, DoorDash, the key players. And I expect that to continue, and I expect it to be a strong part of our business that who knows where levels. I don't know. But it's -- I think it's going to stay strong. It's one of those things -- I think it is going to be one of the last luxuries people take away from themselves. You would think it should be the first. But I don't think people are canceling their Netflix subscription, and I don't think they're going to stop getting delivery. Our ability to sit at home on a couch is very high.

I will though [indiscernible] on that one. So well delivery was to say how that kind of evolves. What we are seeing is the biggest games here are coming from in-Shack. That is our highest margin channel, kiosk also being -- in-Shack is a high-margin channel as well. So what we are seeing is a little resiliency on that side, but then also just outsized gains of people coming back to dine in our restaurants.

My last question. Just as you mature and get bigger and bigger, it seems like there's more attention is paid to infrastructure spend and G&A, and at a certain point, you get to a size and scale where some of these investments you can start to lever. Like we at a point where we can start discussing that? Or is there just so much still infrastructure investments to be had that in the short term, you'd be sorry if you didn't do it because 5 years from now, you'd say, well, we should have done it back in 2022. So should we expect over the next couple of years that there is still some heavy investments to be made on the G&A front.

I mean we are a growth company. There are a lot of very exciting things that lay ahead for us that we talk about a lot. We also -- I talked about having a disciplined approach to investing here and a scenario-based approach to investing. So just like you talked about earlier, a lot of unknown there for how the consumer plays out. This is all going through how we're thinking about planning our investments for the next couple of years. We want to be mindful of the fact that this is a company that hasn't gone through a major consumer cycle. And so it's important to us that we not get too out of our fees, but also still invest in for the long-term growth of the company.

Understood. Well, that wrapped our time, but we want to thank Shake Shack, Randy and Katie and team for joining us this morning. And hopefully, you have a productive meetings to follow. Thank you guys very much.

Okay. Bye Appreciate that.