Geiger, restaurants analyst at UBS, and today we're pleased to have joined by Randy Garutti, Shake Shack's CEO, and Mike Mauriello, senior financial planning and investor relations. Shake Shack is a modern-day roadside burger stand with over 330 domestic locations and over 180 international locations. Shake Shack maintains one of the industry's largest and best growth opportunities behind robust global unit development, a focus on digital, and an increasing profitability opportunity. With that, Randy and Mike, welcome, and thanks so much for being here. Good morning, Dennis. It's good to be with you all. Quick legal disclaimer for me. As a research analyst, I'm required to provide certain disclosures relating to the nature of my own relationship, and that of UBS, with any company in which I express a view at this event today. You can get these disclosures at www.ubs.com/disclosures, or ask me for them after the event. And with that, let's get started. So, maybe Randy and Mike, you guys have had a really strong year-plus year, in particular, strength across the top line, the bottom line, with an attractive outlook recently provided as well. I want to touch on all of that. But first, maybe if we talk about the solid top-line momentum that you've exhibited, particularly in the U.S., and how you're thinking about that momentum going forward. Yeah, look, we're... These are the words we've continued to use. We wanna make sure everybody understands. We've got a huge opportunity. As you said, only 300-ish domestic company-operated restaurants. Everybody else you followed, Dennis, I'm sure, has got multiples of that for the most part, and the opportunity for us remains pretty huge. But within that, not only are we a growth company, but we're a profitable growth company, and that's the important distinction. I think people understand that now, and they're starting to see that. As you look at last year, we can hit roughly 20% sales growth, you know, mid-single-digit comp, growing 85 restaurants last year, the most we've ever done. We've guided this year to be about 80 restaurants, a nice mix of domestic company-operated and licensed, and hopefully, we can take some time. I think one of the things that doesn't get talked about enough is the power of the licensing opportunity that we have globally, in nearly 200 restaurants. That is a powerful addition to our brand, asset- light, really efficient cash flow, and a great, great part of our opportunity moving forward. I think as you look at it, and we all are still coming out of whatever the COVID fog was and adjusting to whatever the universe and however we're all gonna move. Luckily, we're all sitting here, and we got dressed up this morning, and we came into the city or we're out, whatever, that's a good thing for Shake Shack. We generally have seen continued improvement through the year. With the sales improvement, as I said, we've really focused on continuing to improve our margins. Last year, we improved margins over 240 basis points. We've guided this year to continue to increase our margin opportunity, and we've got a lot in play that will give us that opportunity. So I think it's a really nice, solid, foundational time for the company to solidify the things that we're doing and set ourselves up for really good growth in the future. Yeah, I'd say, Dennis, too, we're here today. Randy said very excited for 2024, and we're reiterating that guidance today. Great. Thanks, guys. And I want to touch on a bunch of those, those points, which are, which are good ones, Randy. Let's start with development, where, I mean, you guys have built a phenomenal brand. Development has been a strength of the, of the brand for, for years. You're planning another strong year of development in 2024, targeting 40 new company-owned Shacks, 40 licensed Shacks. Maybe we could talk about the growth potential in, in the US in particular. You bet. And, you know, just to name it, we will be, unfortunately, a little backweighted this year, as sometimes happens. Last year was a little more spread out. Most years, it's backweighted development. This year will definitely be backweighted, both domestic and international. So just something to note as you model the company and think about that contribution of new Shacks. It's gonna hit more towards the end of the year. We like that balance. Look, we did 41 Shacks last year. We do about 40 this year. What we've spent a lot of time doing, and I'm sure we'll get into this, is improving our model overall. We're looking to take cost out of our build and our prototype. We're looking to continue to learn about new formats like drive-thru that we've invested deeply in. I believe we'll keep getting it better. Within all the profitability measures that we've improving, all that can lead towards stronger returns in the future, which is why this year we said: You know what? Let's do 40. That's an awesome number. We don't need to do more, and let's set ourselves up a stronger foundation to accelerate from there in the future, not giving any guidance past this year. Internationally, the opportunity is huge, and we had our biggest year ever with 45 Shacks last year. We think it'll be about 40 this year. A lot of growth in Asia. Obviously, we've tempered that this year, as many brands have. You're seeing some softness in China, and we, we experienced that as well. You're seeing some softness in the Middle East, in certain places, not everywhere. But we've also seen tremendous opportunity in our domestic growth. Airports, we've done roadsides. I think we got 9 roadsides that you're gonna start to see when you drive down the New Jersey Turnpike or the New York Thruway. Plus, we'll hopefully continue to grow outside of the Northeast. That opportunity, we love. So, unit growth is part of this company's DNA. We should be in that, you know, kind of mid-teens unit growth, as we look ahead to the future, and that's a solid opportunity for a really profitable company at the same time. Great stuff. And I know you said, you know, beyond what you just mentioned on percentage growth, we're not talking too much about the future. I'm just curious, as we think about that longer-term potential for company-owned stores in the US and how you think about that goal of 450, maybe what's the process like there? How do you begin to think about updating that- Yes ... at some point? Anything to share on that. Yeah. Look, we haven't updated that since the IPO. We know that we need to update that. We're knocking on the door of those numbers pretty, pretty soon. We're pretty excited about that. But look, we wanna make sure people know, every time we've learned about a new format, new type, new geographic area, we get more and more confidence to what we can do to grow that in the future. Look, I think we don't need to make this about this, but as I announced, I'll be stepping down from the company at some point this year. Last December, I announced that, it's not the right time for me to put that on the next CEO, and I think the next CEO will certainly have a smart view on that as to what they see. That said, what's the work our company is doing today to increase that opportunity? Well, as you take down cost to build and you improve margins, the economies of scale get so much better. As we look at growing in lots of new areas across this country, we've got almost 30 restaurants in Texas now. We opened 8 restaurants, at least, in Texas last year alone, most of them drive-thru. So we're learning at a super fast rate as to what works where and how do we densify. So our development plan, for the most part, we'll do a couple of new cities next year, but for the most part, it's densifying current Shack areas and going deeper, and we're, we're super excited about that. And look, we got to keep building that muscle. You know, the team, team's grown quickly. We have grown basically 100% since COVID. When you really look at it, which is kind of amazing. There's not a whole lot of companies that could say that. And within that, we're doubling down on our processes, our opportunities, and our prototyping, so that we can better capture the economies of scale we haven't really captured yet. You've been working on a new prototype to reduce costs, you know, basically against the backdrop of particularly elevated build costs across the industry. What's the latest on progress there? Yeah, for development, I think you'll see new prototypes starting more in 2025 and beyond. So I think the opportunity to continue to take down costs, both in drive-thru and core Shack designs, exists quite a bit as we get into more of the outer years. Most of what will open this year and last year was designed years before. That prototyping continues. So what's it going to look like? Well, it's going to look like Shake Shack. Still going to feel like the premium experience where you say, "Hey, when I eat a burger, I don't want to really want traditional fast food. I want to go to that place. It's got a great experience, and it's beautiful. It meets my needs, the product is the best, and the price is right." When we do that, we think in the future, we can take down the size of dining rooms a little bit. We can use better materials. We can do little things, just as we scale, and hopefully, we start to exit. Some of the last couple of years have been really tough when it comes to development and getting things open, hitting development schedules, and the cost of materials. Hopefully, as all that continues to improve, we can capture some of that opportunity. So I think more you'll see, you know, the more noticeable, capturing of that stuff in the coming years. This year, we've got a solid class that's improving, and we think will be about 10% less on average as a class than last year. We're making significant improvements in the year as it is, but more along the lines of kind of smaller tweaks here and there through 2024. Great. I want to touch on the exciting drive-thru opportunity and maybe some of the learnings that you've discovered so far from those drive-thru restaurants that have opened thus far. How are employees managing the operational aspect there, while also maintaining that Shake Shack experience, and how would you describe the customer feedback to date? Yeah, well, we didn't invent the drive-thru. We certainly won't be the last ones to make a good one. It took us till, you know, we had many hundreds of restaurants to open one, and we're super excited about it, and I believe it's going to be a huge part of our future, and that's what we're going towards. At the same time, we've got about 30 open now, and it's a great opportunity to digest, excuse me, what we've done and say: How are we going to do it better? So for the most part, we're very happy with drive-thru. There's some that have underperformed, there's lots that have overperformed, there are a lot that are kind of right there in the middle, and we're targeting a really strong unit economic model over time as we build these. We know we can—we've built this, we've designed this prototype now where we can take significant cost out of the whole thing, now that we've learned. Team members really like it. It's busy when it's busy. We like that still about, roughly, depending on Shack, about half the people still continue to come inside, sometimes more. So that tells us people continue to want the Shake Shack experience, but when I want the quicker ease of use experience, or I got my kids screaming in the back seat, I can do that too. What we've also learned is we got to educate people. Even people that know Shake Shack don't ever think of us as a drive-thru. So we've got, like, I think, a lot of opportunity to help people understand, like, "Oh, my God, I can do a drive-thru there? That's like a whole different occasion in my mind as how I think about pulling over." And I see that as a big opportunity to grow, hopefully, comp in those restaurants as people figure out that that's an option. There's a lot going on in the drive-thru operationally. We've learned how we've put out a few different kitchen models within it and a few different ordering models. I think we've learned now the one that we like, the one linear kitchen that we like, that we can really produce, have good throughput, great, excellent. And we know at the same time, we also know we're too slow and we got to improve that. A lot of our work in this year is taking time, and we've targeted a goal of at least 30 seconds this year to take out of that overall, but also the drive-thru experience, which I think will greatly help the perception of people as we go through that model. Yeah, I'd just add, Dennis, too. Like, for the 30 that we've opened and have open now, right? Most of them are not in our heritage markets, right? So that's really going to be a key change for what we see in 2024, and that's where we'll also learn, really, like, what this opportunity can be going forward. Thank you, Mike, for adding that. I think the other thing you learn if you're us is we kind of know what this Shake Shack thing is, over 500 restaurants, but we don't really know what a Shake Shack drive-thru location should be. And we've gotten some right, and we've gotten some wrong. And the ones that we've gotten right, we started to say, like, "Okay, cool. Like, we know Shake Shack is..." Now there's a certain level of access. There's a certain way you get around it. There's a certain amount of, you know, stack in the queue that you need, and that's learning for us, and that's the stuff that we'll be applying towards the future Shacks. ... Terrific. Maybe let's shift over to margins and profitability. The improving Shack margins and profitability has been a strategic priority for the company and a significant focus for investors as well. Maybe you could talk about some of the key initiatives that have supported the sizable profitability improvement that you've seen to date. Yeah, sure. I mean, I think when we look at really the improvement that we saw in 2023, you can really think about it across really initiatives. Really, a lot of the stuff that we talked about for 2024 as well. Really, efficiencies on supply chain, also taking initiatives to lower, you know, food and paper costs for third-party delivery. And then it's really this work of, you know, multiple teams within both FP&A and business intelligence, working hand in hand with operations to really right size labor for changing revenue levels. So you see a lot of that work in 2023 and what's going behind. And I'd say, along with that, on the profitability side, is really driving profitable sales. And so that's a lot of what this opportunity is going forward, and we talked a lot about for 2024. That's great, and Mike, you touched on it some there. But as we think about, you know, the sizable improvement in 2023, you know, margins of 20%-21% guided for 2024, how about some of those key considerations for this year, above and beyond what you just flagged? Yeah, I think let's start, like, going down the P&L, right? For food and paper, we've talked about the inflation that we've guided, right? Flat to low single digits. Part of that does assume some of these improvements for supply chain, but we do think there's additional opportunities that are not there. When we think about labor and 2024, and that continued improvement for that 20%-21%, it's really a continuation of what we're doing. But beyond that is these labor modules that we're testing now, which is a reflection of basically the new reality of Shake Shack, different format mix, different levels of kiosk, different mix of sales or different types of you know, throughput at different times of day. And it's really reflecting that, and that's kind of the next step beyond 2024. Then lastly, it's kind of coming all together, with, you know, these third-party consultants that are really augmenting a lot of these initiatives that we already have in play. Yeah, there's a lot of the work stream on the teams just for basic operating expenses. Things that, as we reach this better scale that we're at right now, you can just, you can just buy better, you can do better, and you can take the time to call time out on something we've done a certain way for a long time and do it better. Not just that, but we, a lot of when you can cluster in a denser way in a market, just get opportunity to negotiate that cleaning contract better. So all of those things, I mean, that's how I've always looked at the opportunity for Shake Shack over the long term, is the opportunities of scale as we, we really get to a scalable, number where things start to move. Yeah. How about as we just think about a couple of the industry pressures out there from a cost perspective this year? You know, beef, and California minimum wage in particular, how you think about that, how you think about managing each of those and kind of what you're looking for this year there? Yeah, I think on beef, listen, we don't like it. So we do know that's one of the larger risks to, you know, that margin improvement story. Whereas to your question on California and labor, we look at this as inflation, just like everywhere else with labor, right? We'll first look for efficiencies to offset that inflation, but then there's also strategic pricing, and we've been pretty clear that we will take outsize pricing in California versus, you know, the core rest of most of our markets. Terrific. Just a quick reminder, Randy loves curveballs, so anybody that wants to send questions through on the iPad, please. I love a curveball. Please go ahead. Sure. And, and, and- I didn't know we had that option. Cool. Yeah, absolutely. So, you guys touched on a few of the components, but I just wanna touch once more on the longer term profitability potential, because I think- Yeah ... it's, it's significant. There's a lot of focus out there on that as based on the work that you've done already to date. So just on that longer term margin potential, anything else, you know, to kind of frame up as we think about some of those buckets, Mike, that I think you were touching on, the COGS, labor, you know, the other OpEx, thinking about those margins and anything additional longer term - to, to be thinking about? Well, we're not gonna guide past this year. We've guided towards 20%-21%. That's one of the best in the industry, as you know, and we believe there's room to grow from there over the long term. We've said that. We know that. We've been there, right? We had pre-COVID stronger operating profits in our restaurant margins, and we believe we can continue to grow back. The opportunities, as Mike just walked, are through the P&L. I think over time, supply chain is a tough word because it makes you go all kinds of different directions, but there's part of supply chain that can just be about how we buy. There's part of it that's just how we distribute as we scale. There's huge opportunities. And then part of it is just smart, really thinking about our menu. How do we increase the quality, and retain the great product that Shake Shack is always known for, while just being able to get better products for a lesser price? And you do that through sometimes adding another supplier, sometimes adding a secondary location for a similar supplier. All that stuff, we think on the food side, has big opportunity for us. And by the way, we didn't even talk about paper and packaging. These are things... This is another work stream we've been doing. Like, that's stuff that over time, obviously, those costs fluctuate with market conditions, but over time, with scale, when you're buying 1 million cups, it's better than buying 500,000, and those opportunities are there for us. On the labor side, look, the cost of labor will continue to increase. We, with all the initiatives that we have-... are working to solidify the right optimized labor, the best scheduling we can, and the right flow in our design of our food that leads to the design of our kitchens, that can optimize that labor and keep that at a really healthy level and hopefully improve it over time. Then when you get down to OpEx, it's things that we've talked about already today. So, by the way, occupancy is another one. You know, we generally tend to get really good deals, but as you look across the country, you know, occupancy cost is an opportunity to lever over time. And then that's just the Shack P&L, right? You look at the opportunities at scale, we talked about things like pre-opening costs, which we intend to take down at least 10% this year. You look at being able to scale big costs like equity-based compensation and things that hit G&A. We leveraged G&A last year. Our goal is to continue to keep a focus on levering that over time, while opportunities exist for more marketing and doing all the things we want to do to drive sales. We want to make sure that, you know, you look at the opportunities long term for continued net income, Adjusted EBITDA, they're there, and we've shown in this last period that we're going to continue to capture more of those and head up that curve even more. Great. Good stuff. I want to shift over to some of the exciting sales drivers that the company has. You know, as we think about new product innovation, a lot of success there for many years now. How do you think about innovation and sort of maybe at a high level, the pipeline for 2024 and beyond, as we think about new products? Yeah, we're not short on innovative ideas. We had a big tasting this week. I probably ate eight burgers in that tasting. Innovation is our core. It's part of who we are as a New York brand, as a fine dining-based brand. What we've got to continue to do is create innovative items that drive frequency, drive sales, and help all the other things that we're talking about here in costs of goods, labor, and all the things. So that balance is really the key construct of what we're working on. So right now, for instance, we brought back a favorite that we had done years ago in our Korean-style fried chicken. We added a Korean burger and fries. It's working really well. Even as we... Look, we've said that, that we have a tough lap this, I think we had a mid-teens comp last year. That's a tough lap, and part of that lap was our White Truffle Burger, which was really successful. There's burgers like that, that'll come back. So that is really easy when we do. So let's, I, I don't know when, but let's say the next time we're going to drive the next truffle burger, we know how to do that. We got everything ready to go, and we know how to operate it. Those things can come back from time to time. As we look around the menu, and we think about how do we add, we think there's big opportunity in beverage innovation. We continue to drive our lemonade. They drive our average check. We continue to look at ways to increase our frozen custard program. As we drive shake sales, we have been testing mini shakes, which are roughly half the size. We have a lot of calls from our guests for that. We got to figure that out. We're looking at... In the old days, if you recall, Shake Shack, we used to have what we called concretes, and that was our frozen custard mashed up. During COVID, that was one of the first things to go because there was too much going on. We're bringing back a version, but they're going to be more traditional sundaes. So that's not at scale yet. It's only at a couple handfuls of Shacks. But this summer, we're going to increase the number of Shacks testing that. We want to be able to play more in that afternoon category, more in the shoulder. And all of those things I just described do not mess up the kitchen. They don't add complexity in a year where our focus, our number one strategic goal that we've shared, is consistency of the operational experience, taking time out. So what we want to do is make sure we're innovating and improving the core menu around the goals of consistency. And it's great because we'll—this is why you share a strategic plan. You know, we'll sit in a meeting this week and come up with some really awesome item, and the ops guys will say: "Sorry, you said the number one goal is consistency this year. How does this contribute to that?" And you're like: "You're right. We really got to figure out. We can only do this if it achieves, if it achieves that goal right now." That's a really good constraint to work within. It doesn't mean we're not going to keep creating and doing cool things. We are a culinary-based company, but we got to do it with those constraints right now, and that's what we've clearly, on purpose, boxed ourselves into because we believe those are the right things for this company, for this next phase. Then just within that vein, as we think about or as you think about LTOs relative to permanent new items, is there a way to... that you think about that at a high level? Well, here's why LTOs we like today. I, I think LTOs drive frequency. They kind of wake up your lapsed guests, especially some of our best guests, who are omni-channel guests, who are working in our channels, and some of the third-party channels. So with that, there's always a reason to bring something back. What we want to do is, and I've said this before, we generally want to run less LTOs for more period of time. And that just helps with supply chain, it helps with changeover in ops and complications. It helps make those items better, but it, it does force that function of opportunity. And we know when we do these, they contribute to the mix. They contribute to our average check. Like, these, these things are important to that. You just got to find the right amount, and then improving around the core. We found a lot of success in the last year with fry LTOs, right? The number one item sold at Shake Shack is fries, right? You would think it's burgers, and that's close, but fries are actually the number one, right? So when you can hit a fry LTO, that might be $0.50 or $1 more than your average fry order, that makes a material impact. And so fry LTOs, things like that, that we think we can continue to do. So innovating with and around the core is, I think, the today's construct of how we're going to build. Terrific. How about as we think about operations, you know, you've seen some gains already. I think you talked about the 30-second target earlier. Maybe just framing up the biggest opportunities to improve operations within the four walls of the Shack. I think as you scale, you get big opportunities. You know, I think it starts with people, and I know it's hard to quantify that, and people doing their models can't quantify that. But if you really look at what's happened as part of our improvements over this last year and a half, it's been retention and turnover improving. When those things improve, you have a shot of improving the operations. That's number one. We have a very impressive retention for our manager level and our GMs, and I wanna continue to double down on the development of those people and the opportunities by which they can continue to operate, do better, and grow. So that, that's the core of all of it. Once you get that, well, then you can put all the things in place that we've talked about today and, and otherwise, which is improving the flow of how we move through to the kitchen, better scheduling, all the things Mike talked about on the labor side that impact the P&L. And I, and I think operations has to run. Like, it, it has to run the company's mindset. Like, the people have to come in and have a great experience. If they don't, it doesn't matter what you do on the back end. They have to come in and have a great experience. We're always gonna focus on, like, how do we make that experience work within all of the really smart, I think, business model constraints that we've added and will continue to add more this year with more initiatives that improve that profitability overall. That's great. I wanna shift over to digital. Been a big focus for the company. You've seen great success there in past years. Maybe how do you think about growing that digital contribution in 2024? What are some of the key initiatives to drive even greater digital engagement among guests? Yeah. So look, we've got into this kind of mid-thirties, roughly, digital overall, which includes third parties and our own channels. Really nice mix of all that. Nobody knows where this all settles out in the industry. It seems to be settling generally around there for a lot of us, and that feels good. So we can continue to drive each of those channels differently. We will continue to invest quite a bit in our digital infrastructure. I'll hand it off to Mike, and maybe you wanna talk about kiosks for this year, which has really been our biggest initiative. Yeah, I, I think, you know, the good thing, right, is kiosks. We said we would be fully rolled out by the end of 2023. We did that a quarter before that, essentially fully rolled out by the third quarter. And then the next question is, well, what's next, right? If you're fully rolled out, how do you keep generating that? And it's really enhancements to that product. When you think about that high single-digit lift that we've talked about, that we've seen, that's literally from someone just going in and spending time with the menu. The next step in these enhancements that we're talking about is really suggestive selling and giving that guest experience of saying, "Hey, do you wanna add bacon?" And so I think you'll see more of that investment next year, and it's good for us overall, financially, but also good for our guests. If you really look at it, too, and it's not a... I think many companies are doing kiosk or digital ordering really well right now. Everybody's got their own vibe and how they- how it works for them. But I would applaud our team on the feeling of our kiosk experience. We know we get good scores on it. We know it's our most profitable channel. And if you actually go in and experience it, it's just better than how fast food is doing it or some others. The full core guest experience of it is, is really good, and we're gonna keep investing there to allow upsell opportunities, where we can drive higher average check. Huge opportunities there. Guest recognition opportunities, like right now, the kiosk doesn't really know you, whereas your app does. So connecting those ecosystems over the next year or two is a huge body of work for the company. And then as we get into, like, performance marketing and opportunities to really, you know, provide reasons to come to Shake Shack, connecting those and ability to, to greet you in all our digital channels is a really big opportunity for the company because it's, it's the most... Look, we know, this is obvious, but let's just say it, an omni-channel guest is our best guest. We know this. You come more often, you spend more money. When I know I got Dennis in the ecosystem, I got Dennis, and I'm gonna, I'm gonna hit you with a, uh, afternoon BOGO. I'm gonna hit you with a new- you can-- only you can order on the app for three days, the new LTO, before the regular public. How do we do those things more often? And over time, that will get more personalized, it will get, smarter regionally, and we'll be able to do things that we can really much, in an efficient way, market towards our best guests. Great. Tons of opportunities, clearly, from a digital tech standpoint. How about just on the, on the cost side of things? Maybe you touched on a little bit of this earlier, Mike, with some of the margin stuff. What's kind of, you know, bigger picture, longer term, what are some of the tech opportunities, maybe from a margin or a cost efficiency standpoint, that maybe you guys are thinking about? Maybe we're a little early there, but- Some of it's in labor with the kiosk, as we've talked about. It's not a direct one-to-one relationship, but it certainly helps our labor, right? It sort of helps optimize where our people are gonna be and put them in hospitality-led and food-led and throughput-led positions. So I think that's a huge part of it. Look, we don't expect, and Shake Shack does not have a current plan to start putting robots in our kitchens or any of the things that you might make a nice headline. I think in reality, how we cook food takes full hands, full hearts, real people. We don't expect that to change at scale anytime soon, but we got to keep getting better about how we use tech to do those things better. A perfect example is what Mike's talked about and just the scheduling thing. We keep talking about this, but the more intelligent our forecasting can get, which it gets better every day, the more we can predict what's gonna happen next week, next month, next year, and allow the teams then to build their labor models and all their operating models towards that expectation. It changes everything, and that is where we're just getting smarter, better, and using the tools that we have to do it better. There's other small things, like we now... This year, for the first time, we rolled out a new way to apply for a job. Now, that, I don't know the last time any of you applied for a job at a restaurant is, okay? But where you lose people is-... After about 90 seconds and they're like, "Ah, I fill this out. I I tell you, my whole life story. Like, I go down the block to whatever other brand." We now have our application process is so quick, so easy, which sets up an automatic interview with the manager. Instead of 6 emails back and forth, like, "Hey, can you do Tuesday at 2? Hey, can you do that?" No. Here's our availability, here's mine. Boom! Come in. It has been a game changer just in 3 months, to massively open up our application base and then take out. If you want to drive sales, you know where your manager is? In the kitchen, right? But what does the manager need to do in a high turnover business? They're constantly dealing with this crap like this. So, like, when you can take those things and add tools to help, that, to me, is a big way that tech can enable it. Then there's a whole bunch of other things we're doing behind the scenes, but we'll- Terrific. I wanna shift over to marketing, 'cause you've seen some really strong results as you've leaned into marketing more recently. So maybe you could talk about, you know, the potential for marketing, for partnerships, promotions, and sort of, you know, any insights into what marketing looks like this year and longer term. Yeah, I think everybody's got to remember that Shake Shack has always had this massively outsized brand, right? Thank goodness. However, this all happened, we were born in New York from Danny Meyer's fine dining company. We were a bunch of fine dining people, all these two decades. By the way, we're about to hit 20 years at Shake Shack in, in the next couple of months, and 2023, if you include the hot dog cart. That happened because of a whole bunch of few crazy things. And good news is, I think our brand has never been stronger when it comes to those kind of things. That said, one of the things that we've started talking about is our own recognition, that within that, our brand awareness is actually quite low in many parts of the country and the world. It just is. And that is a huge unlock opportunity. We've never really spent money at any scale to advertise. And I describe it to people whenever I get this chance to say: Listen, if kind of doing very little is who we are today, very small percentage of our total sales relative to our peers, and, you know, the apex is mass media, constantly on TV, you know the brands, you see them all the time. We can't be this yet. We're not big enough. We don't have enough doors to take in that, and it's not a good return. But we sure got to start inching our way up. So while we may not be able to do a bowl game, you know what we do do? We might be at the Vanderbilt basketball game doing a cool, you know, if you hit the foul shot, you get a free fries at the Nashville Shack. That might have a good return. There are out-of-home type things that we're testing and learning into. There are regional things that we're doing, but most of the increase this year that you'll see, and most of the learning we're getting, is from digital performance marketing. Channels that you will see pop up on your Google, Meta, YouTube feeds in various ways. We know who you are. We know that you like burgers. We're gonna send you something. And that is the way that you can inch into with a, I think, a disciplined amount of spend, with high Return on Ad Spend, that gets us into a, a solid learning category, where we can then, from time to time, take leaps. You will see us in certain places doing some TV, but it's not normal TV. It's gonna be Connected TV, Hulu, YouTube, directed ads, things that we can really target and have a high return on. And that's where most of the money is gonna go this year and into the increase. But I believe we've got a really big unlock opportunity towards marketing spend throughout the next few years. Terrific. I want to spend a minute or two on delivery and sort of what you're seeing in the U.S. within that channel, how you think that channel evolves for Shake Shack, and maybe if we could touch on just sort of the pricing, what that's meant for that channel and, you know, to the customer utilizing that channel. I think everybody's starting to figure out where delivery is gonna shake out. There's a certain kind of level of percentage of sales. We have great relationships with all the third-party delivery partners, and we want to keep it that way. They're all super strong marketplaces. They all bring lots. We're testing various sponsorship, various... We might do a BOGO from time to time with an LTO, see how that drives things. And I just think there's a great opportunity to kind of put that where it belongs, which is there's a certain amount of people who want to order that way. You're never going to change them. Stop thinking like that person's coming into the restaurant, because they're not. And it's also not, you know, the whole famous, is it incremental from pre-COVID conversations? You know, it's just part of how we all operate today, and now we can get delivery. I expect delivery probably keeps getting more and more expensive, with various things that those companies got to go through. The cost for a human being to bring you something is expensive. So as we've looked at it, we've increased our own delivery cost this year for our app slightly. Ours is still the best price by far, which has allowed us to take that same increase on our third-party channels. So I think it's part of a multi-channel strategy that you got to lean into on all sides. So we'll do various fun promos and things on our channels where that you can only get it. Right now, we did an Oscars thing. Some of you may have seen it, depending on how long the Oscars was, so people were, were voting for that. We did a thing in the fourth quarter on the Chicken Dance. If any NFL player did a Chicken Dance in the end zone, you got a Chicken Shack for free. Excuse me. And those things drive specifically to our channels only. So they're our guests in our app and web channels that get a deal on that. So I think just, just sitting with understanding and figuring out how to drive each of those to the place you want is great. In the meantime, the best Shack guest is the one who comes into the restaurant.... Right? That is our most profitable guest. It's the one we want the most. It's the one we get the highest scores from, the one the food is the freshest, all of those things. Shake Shack continues to be built, and I think in that manner, where we have to keep giving that experience, because that is time and time again, what people tell us is their favorite way to do Shake Shack. Right. You touched on delivery pricing there, but maybe pricing broadly, how you're thinking about pricing, you know, this year, overall, this is out as well. Maybe, Mike, if we could touch on that a bit. Yeah, perfect. Yeah, so when we talk about 2.5% realized price in 2024, that is check. And so there's basically three components of added price as we think about 2024. One is the delivery pricing that Randy just talked about, right? We've disclosed that digital is 30%-35%. Delivery is a piece of that, so you guys can do the math on that. Second is gonna be the California pricing, where it's gonna be outsized versus the rest of the company. We already talked about that. And third is really the rest of the business, kind of outside California, which is very kind of historically low, like previously, which is only 2.5%. You're gonna have that, and then you're gonna have basically, let's call it one, like, low 1% pricing that follows through from 2023. You put those together, you're gonna get basically 4%-5% price. But then to get to the 2.5 realized price or check, that's where you're gonna have some sort of mixed impact that we're considering given, you know, we'll see what the industry takes with some of this pricing, et cetera. I think that's one of the bigger questions, right? Like, we're trying to return to that kind of low single digit pricing overall, right? That's kind of what Shake Shack has always been. A lot of the industry is trying to return to their pre-COVID, pre-inflation norms. Hopefully, we can get there, and then there's no new inflation surprises. But with all that, there's gonna be impact, right? You're gonna be looking at your items for check or mix change. We'll see, right? We've all, the whole industry is gonna see what happens in California as people take a lot of price to pay for a high minimum wage. So I think what we want to be is conservative to a point, while still making sure that we are protecting and improving our margins for this year. Great. I want to ask on just combo meals, and you touched on this, pretty recently. Yeah. I believe you're still in test there, but what's the strategy in early days, very early days, what's the potential opportunity? Well, once again, like, we didn't invent the combo meal, and pretty much everyone that's ever sold a burger thinks it's the best way to do it. We've never done it. We're doing it 20 years in, like, we haven't done it. And it's been a debate. Believe me, it's been a debate for 12-15 of those 20 years, and we've always held off and said: Well, you know, it's kind of Shake Shack different and whatever. But we want to learn now, especially in this moment where there's a lot of value-conscious, you know, shopping going on. So we have, I think, 7 or 8 Shacks, less than 10 Shacks, test, and it's only our drive-thrus. Okay, so it's 7 or 8 drive-thrus testing a combo meal. Why are we doing this? Well, we want to know if guests want it from Shake Shack. Second, can we move? Can it help us on our throughput goals? Third, at the drive-thru, anybody who's had screaming kids in the back and you're like: "What do you want? What do you want?" Well, it's a heck of a lot easier to say, "I'll take a number one," than it is to say, you, you, you, you. Whether that plays out to being a good strategy for Shake Shack is a big unknown. And then, by the way, at what level of pricing and or discount, or is it just put it all together as a, as a meal? Those are the various tests that we want to do. Lots of A/B testing going on right now. Lots of menu board design going on right now. So I don't want to, like, overdo its importance because it is at less than a couple handfuls of Shacks, but it's the kind of thing that Shake Shack needs to be looking at as we look at scaling and saying, like: Is that actually how people just want to order a Shake Shack? And, you know, our guests are going to let us know. So that—no, do not expect any scaled rollout of that anytime this year, but expect a lot of, a lot of learning for us this year. You touched on the consumer, I think, you know, sort of briefly there. From your customer specifically, what have you observed from a spending pattern, other- Yeah ... other behavioral changes, perspective over the last 12 months or more recently? Anything to call out there? Yeah, look, good news for Shake Shack, we absolutely have a higher income consumer as our core base. We have consumers across the income scale, but generally, we have some of the highest end consumers out there, certainly in our industry. They've generally continued to spend, been part of our success. That's been good. From time to time, we've seen trade down from our lower-income consumers to traditional fast food. We expect that. In times like this, that's just gonna happen. That has been part of some of the traffic challenges that we had last year. But generally, our consumer remains pretty strong. I think that there's questions around mobility right now. You know, we talked about it in January, and the whole industry talked about terrible weather in January. You know, when you have this last weekend, anyone in New York, it rained like the sky opened up. It was, like, ridiculous. So that's a Saturday. What happens? We don't have a good day of sales on that day. We don't. We've had more rain and, like, kind of crappy weather, certainly in January, as reported, and even in the whole quarter. That changes mobility patterns for people, and the mobility of things is really what we study quite a bit. And, we're seeing that generally, your middle to lower income mobility does change a little bit in these times. They travel a little bit, not as much to the, you know, kind of 10- to 50-mile trip that they did when things were less inflationary. So you got to watch that a little bit, and that's what we're watching. But generally, we feel like our consumer is a strong consumer who's generally employed, doing well, and continuing to feel good about spending at Shake Shack. ... Terrific. I want to shift over to the licensed opportunity. Maybe first, we do the US or domestic license. Just touching sort of on the latest update in that business in the US, how you think about the development opportunity there going forward, and bigger picture, just strategically, how you view that license business in the US. We love the license business overall. As I said, it's an asset light, ac cretive business. It's very rich in cash flow and allows our brand to grow in lots of places. The amount of people who text me, like, the Wednesday before Thanksgiving, like, "I'm going to the parents, and I'm down on the New Jersey, the Garden State Parkway. Thank God, there was a Shake Shack!" Like, I love to go domestically where people have low expectations: airports, roadsides, stadiums. We go to these places, and our expectations go here. And then you put a Shake Shack there, and it's like, ah! And you—like, you—people have these moments driving down the highway, like, "Yes, I don't have to eat that crappy fast food. I can get a burger, which is what I really want, the kids really want, and it's good." We think that opportunity is huge. We've done lots of airports. There's many more we can do. Roadsides, I think, is a huge unlock, and we're just unlocking a lot of the New York Thruway this year. Later this year, we'll do, hopefully, our first out-of-state, out-of-Northeast version. Internationally, we think the opportunity is huge. Obviously, Asia has been our biggest growth opportunity. We have a very mature business in the Middle East. But this year, as we've cautioned China, we definitely have cautioned in China with the economic situation there, but we're going to keep growing in China. We think it's a massive opportunity for Shake Shack. and then obviously, in the Middle East, lots of choppiness with everything going on in the Middle East, but we generally, you know, wanna hold on to that. But, you know, that's the caution. Otherwise, we're continuing to grow in Japan, in Korea, in Singapore, in Hong Kong. You know, all of these places, there's very few brands at our scale who have the opportunity to go as far afield as we have. And I just think this is one of the most undervalued and appreciated and understood parts of our business. And if you ever travel internationally, go to a Shake Shack. Like, I'll take you to a Shake Shack in Shanghai, and you'll be like, "Oh, my God!" It is, it's amazing what the opportunity really is. So we haven't guided towards a number, but I believe the international and domestic license opportunity is huge, and it's a great way to offset and provide lots of profitability over the near term, as we continue to grow our profitability in the main domestic business. Terrific. Well, we are out of time. Randy and Mike, thank you so much for your time. Randy, I have to thank you for your time and your insights over the years. Congratulations, it's a little early here, but the best of luck and looking forward to seeing what you do next. Thanks so much. We appreciate it very much. Appreciate everybody being here. Cheers.