Hey, good morning, everybody. Welcome to the session for Shake Shack. I'm David Tarantino, the restaurant's analyst at Baird. As many of you know, Shake Shack is a leader in the fast-casual, premium, burger segment. The concept has been very popular and generated really good returns on capital, and has a lot of room to grow in our opinion. Please welcome two members of the management team here today: CEO Rob Lynch and CFO Katie Fogerty. I think we'll kick it off by having Katie give us a few remarks. Katie, take it away. Great. Thank you. I just wanna start off our presentation today. We are reiterating our guidance that we gave on earnings last quarter for the second quarter, for the full year 2025, and our three-year targets. That all can be found on our investor relations website. With that, back to you. Thank you. [audio distortion] I think a good place to start. You've been at the company a little more than a year. I thought I'd ask you to maybe share some of your observations about Shake Shack, you know, what's maybe surprised you to the upside, maybe what's been more challenging than you envisioned. [audio distortion] Yeah. Thank you, David. I, you know, what I would say, and one of the reasons why I came here is, the positive surprises are the challenges, right? I mean, that's where the value creation happens, when we can find opportunities to take a company and a concept and a brand like Shake Shack and identify where there's opportunities. And you know, I'm very fortunate to have a Chairman like Danny Meyer, and he always says, like, "Hey, you know, we had the perfect model to get us from 1 to 300, but we're definitely gonna need to advance and evolve and change that model to get us to 1,500," right? He and the board have been very supportive. You know, we have now turned over a fair amount of the management team, and we have the right people in the right places doing the right jobs. We found opportunity literally across every facet of our business. So Whether you're talking about, you know, we started with operations, and we have significantly improved our operations across every operating KPI. We are looking at productivity in the supply chain, very, there's huge amounts of opportunity in the supply chain that we're exploring right now. On the brand culinary marketing side, you know, the reality is, is that Shake Shack has never really done marketing. I mean, it's amazing because it's the only concept, I believe, pretty much the only concept in fast food or fast-casual that when you tell somebody you work at Shake Shack, they say the same, I get the same response every time, "Oh my gosh, I love Shake Shack." Like, you just don't get that about every other brand in the space. Yet we've never really had a true brand positioning distilled down and communicated across all of our channels. That's work that we're doing right now that should reinforce even more how differentiated we are in the space. All of those things we've kind of uncovered and tapped into over the last 12 months, and all of those things are active work streams that are the reason why we have so much confidence in reiterating both our short-term and long-term guides. [audio distortion] can you, you stated a really ambitious long-term growth target, to get to over 1,500 locations. So, you know, can you maybe share how you arrived at that number and whether you think it's, you know, going to require different formats or how do you think about, you [audio distortion] [audio distortion] can you, you stated a really ambitious long-term growth target, to get to over 1,500 locations. So, you know, can you maybe share how you arrived at that number and whether you think it's, you know, going to require different formats or how do you think about, you [audio distortion] I mean, the first requirement to get to 1,500 is confidence in the cash-on-cash returns generated by the boxes that we build. And you know, despite all the noise on tariffs and inflation, we are committed. Last year, we decreased our cost to build by 10%. We committed to doing it again this year. In the face of tariffs, we're gonna decrease our cost by 10%. At the same time, we're maintaining our AUVs, and we're growing our margins. Our cash-on-cash returns are not just holding, they're actually improving. Our 2024 class and our 2025 so far this year are the best-performing classes we've had in recent memory. Really excited about the financial returns. That's first and foremost. Then it becomes, okay, well, how do we get to the, you know, is there enough real estate? You know, when Shake Shack started and then for the first, call it, 100 shacks, it was all about these big shacks in urban, tourist, foot traffic-driven areas. Over the last, call it, since the pandemic, where we've had to move into different formats like drive-through and we started penetrating other markets like Cincinnati, Ohio, and Pittsburgh, Pennsylvania, the model shifts. And I think, you know, when the company went public in 2014, there was this, you know, this ambitious goal to get to 450 shacks. That was with an idea that, you know, I think Danny Meyer said, "We'll never have a drive-through." So That was the mindset. They were all gonna look like they do in New York, and there was room for 450 of them. Today we have four different core concepts. We have a small format, we have our core, we have drive-through, and we have our flagship. There is room for all of those formats across all the white space that we have in the United States. It is both in markets that we have already penetrated, but not to the degree that we can. There are also a lot of markets, great markets, that we are not even participating in today. The reality is, we kinda have baked-in brand recognition, even in markets that we do not currently compete in. I mean, people travel to New York, people travel to Chicago, people travel to LA, and they see Shake Shack, and it is a special thing for them. It's, you know, one thing I would say, a lot of our industry, and I'm as guilty as anybody 'cause I've been around for a while, is about utility. It's about, you know, I'm driving down the road, I have to eat, I'm hungry, what are my options? And I'm choosing a lot of times the best of the worst. It becomes like a commoditized experience and just something to get some food at the lowest cost. When people come to Shake Shack, they want to be there. It's not just another option. It's actually a destination. As we've talked about, people travel to these cities to go to Shake Shack, and when they're there, "I have to go to Shake Shack." I get that all the time. I'm in New York. I'm going to Madison Square Park. We're gonna bring that special, unique, differentiated experience to everybody across the United States. Like, that gets me super fired up. I mean, our company's mission is to bring our fine-casual experience to as many team members, communities, and people as possible. Like, the more Shake Shacks we can open, the more we can bring it to the world, the better we're making the world. [audio distortion] should the company grow? I know you've had some three-year targets, so maybe Katie can remind the audience what those are. You know, we can talk about, you know, sort of beyond that, over the next 5 to 10 years, what do you envision for growth given this, you know, very big opportunity we have? Sure. The three-year targets that we've laid out, and which we are, you know, our 2025 guidance has us coming in above that. We're, you know, aiming to grow total revenue by a low teens%, expand our restaurant margins by 50 basis points a year, and grow our adjusted EBITDA anywhere between low teens-high teens%. To get there, you know, we have talked about having kind of a low single-digit type comp and growing units as well. Yeah. I mean, we're gonna grow at the rate that can deliver continued improvement across all of our KPIs. We're not gonna, you know, start opening shacks for the sake of opening shacks that don't deliver on the cash-on-cash returns or AUVs that we have set as our internal criteria. The really exciting thing is that almost every shack that we're opening is beating our pro forma, and the metrics are getting better. Like, as we grow, we're getting better. It's not like, you know, this idea of, "Hey, we're gonna cannibalize business," or, "It's gonna be less efficient or less productive." It's actually improving, and it's gonna improve our core, our growth in our restaurants improves our core restaurant profitability as well because we get synergy and productivity in our supply chain and our above-restaurant operations and in our marketing investments. So It's not just about, "Hey, each individual shack has to return this." I mean, that's the baseline. It's about how can we build a pipeline, and we have the largest pipeline in the company's history right now in terms of projects, deals that we've signed. How can we build a pipeline that's going to optimize our distribution network, our supply chain, how we manage our above-restaurant operations? It's just continuing to add to the productivity of our base while we build these shacks. Thanks. I wanted to shift to a couple of near-term themes. You know, this conference, we've had a lot of consumer companies comment on the state of the consumer, and I wanted to get your [audio distortion] You know, this conference, we've had a lot of consumer companies comment on the state of the consumer, and I wanted to get your [audio distortion] Say the least. What is your thought on kinda the health [audio distortion] You know, we came into this year with a lot of momentum, or at least we thought we did. I will tell you, and I just kinda wanna address some of the narratives that are out in the space about our brand. I will fully recognize that last year we did 3%, 3.6% comps carrying 6% pricing. That has been a little bit of the model for the last few years for this brand, that pricing has kinda driven the comps. In a world of hyperinflation and the pandemic that we were living in, it worked. I recognize that, you know, people and investors have had concerns about, "Well, that's not a sustainable model in an environment where there isn't that type of inflation and there isn't the amount of disposable and discretionary spend, disposable income and discretionary spending." When we got into January and February and March, you know, we actually had a really great start to January. At the inauguration, something just clicked in this industry and, and for us, and we had a really tough February and a little bit of a better March, but then a soft April. We've already disclosed April is down 1%. And We took that opportunity to really dig into our business model and really look at, like, what is the model, the sustainable model moving forward? We effectively put a hold on a price increase that was in the plan for March or April. March, yeah. March. You know, our model moving forward, like, and this, you know, the data, the already data we have this year substantiates, like, that we have confidence in this model. In Q1, we delivered 0.2% comp, which was $8 million below kind of like the revenue targets that we had. Our revenue was down from what we thought, 0.2% comp, and we delivered margin accretion. That is because we have done so much unbelievable work in our operations. Even in Q1, we carried about 6% pricing too. Q2, we have dropped a 2% year-over-year price benefit, and we just guided to low single digits after delivering minus one in April. When you do that math, it shows that we are growing our comps. We are accelerating our comps with 400 basis point less pricing baked in. The only way that you do that is to improve your traffic and improve your mix. And That is where all of our focus is in. And Now that we have an operating engine that we have 100% confidence in, we are doubling down on our culinary innovation, on our marketing, and in our, you know, loyalty and guest relationship platforms. So When I got here 12 months ago, we, you know, despite the culinary history and legacy of Shake Shack, there really was not a pipeline. That is why we ran truffle for six months, and that is why we ran out of gas in the last couple months of Q1. That will never happen again. You know, I brought in somebody that has worked with me for a long time about six months ago, and she has built an innovation stage gate development process. We have an unbelievable pipeline for the next 18 months built out. We've got redundancy in that. We've got alternatives. We will never have a scenario we don't have amazing culinary innovation that we believe in and that we've tested. This brand never did any consumer testing. It was a chef-driven, culinary-driven, founder-driven decision on, "Here's what we're gonna go out with." We've built a whole model around giving the guests what they want, but still pushing the envelope on culinary. We are different than QSR. Like, we are not QSR. We compete with them, but we are not. We have the ability to push the envelope on culinary unlike anyone else. When you have solid operations, it opens up the aperture of what you can do. When your core operations are tough, you can't throw wrenches into the operation because it just explodes. Our operations are better than they've ever been. Now we can push the envelope. We are looking at everything on innovation that doesn't negatively impact our supply chain or our operations, right? The beautiful thing I think about, one of the beautiful things about our brand is we're not, you know, Habit Burger. We're not In-N-Out Burger. We're not burger. We're Shake Shack. We don't have to be tied to burgers. We're gonna innovate on burgers. We're gonna always have the best burgers in the world. That's my, that's why I came here. I fundamentally believe that we do. In fact, we're actually working to make our burgers even better right now, our core burgers. We can innovate on sandwiches, on side items, on beverages. I mean, it's Shake Shack. Like, we should be a beverage destination. We can do all of that, and we have the culinary chops and capability to do it. We just didn't used to have the funnel. We didn't have the process, and it was dependent upon a few key people. If those few key people weren't hitting on all cylinders or somebody left the company, things broke down. It's not the model anymore. We are going to deliver traffic improvement. We are gonna deliver mix improvement. We are gonna bring innovation that trades customers up to premium innovation so we don't have to charge them more for the same stuff like we had to in the past. Like, we'll, our building blocks, we're gonna take between 1-2% pricing a year. That's the historical run rate that got a little crazy during the pandemic. We're gonna do that because costs continue to go up, but we're not gonna take the 5-6% unless some inflationary situation arises. At 1-2% pricing, we shouldn't see any transactional impact. Then you bake in 1-2% improvement in mix through our innovation and our, you know, the work that we're doing on all of our sides. We just launched Fried Pickles. I mean, Fried Pickles, like, that's not like crazy. It's not like, you know, we invented a new AI something or whatever. It's Fried Pickles. It's a pretty big deal. They're killing it. They're driving traffic, like a Fried Pickle side that we're not even really advertising. It's like, that shows us that if we invest in innovation, we can drive 1-2% mix improvement, and then we're gonna, you know, our focus is driving positive traffic. You do the math, 2% pricing, 1-2% mix, call it 0-1% traffic, although we aspire to do better than that. Like, that. That's your low single-digit comp. That's your low single-digit guy, comp. If we keep doing the work we're doing on the margins, which I hope we're building credibility because every quarter gets better and better and better, like, that's an amazing glide path. When you're building 13-15% new units that are company-owned every year and you're fixing the supply chain where we derive all the benefit from the supply chain benefit improvements, right? A franchise concept, if you go and do work on a franchise concept supply chain, the benefit goes to the franchisees. Company-owned, we get all that. Yeah, there's downside to being company-owned. That's one of the biggest benefits. When we get more productive in our supply chain, we benefit from it. I don't know. I just laid out everything. We got 10 minutes left. We can call it a day. You've preempted a lot of my questions. I have a question, you know, one related to the promotional environment and your strategy to respond to that. I think you've been running, you know, some offers, pretty consistently. Can you just describe, you know, your thoughts on, you know, why that's important, what some of the implications are to the brand? Is this kind of a, you know, an approach you think you'll use long-term, or is this just reflective of the current environment? How do you, how do you think about that? I hope that this message goes out to, like, every investor in the world right now. I mean, can you make that happen, David? Okay. We do not run like $5 meal deal, right? I mean, $5 meal deal is a traffic driver. It is gonna be margin-dilutive. We run promotions that bring guests in. Typically, our promotions have some type of purchase threshold. When people come to Shake Shack, our frequency is lower than the industry, but our items per check and our checks are higher than the industry. When people come to Shake Shack, they buy everything. They buy a burger, they buy a drink, they buy fries, they buy a shake. That is just how it works. When we ran our Dubai Chocolate Shake last quarter, and we only put it in 30 shacks because we could not build a supply chain to support more, and we only gave each shack of those 30, 25 shakes per shack. We sold out in almost, in most of our Shacks, we sold out by noon. People were showing up wanting a Dubai Chocolate Shake at Shacks that were not offering it or the Shacks that were offering it that had already run out, and we did not have it. What did they do? They came in and bought burgers, fries, and a shake. Like, nobody comes to Shake Shack and just gets like a soda and then leaves. It is not a utility experience. It is a destination, which is so rare in our business right now. We have that. You know, we are working to make sure that our promotions bring people in, and when they do, they are buying a bunch of stuff. I cannot say this enough. Our promotions are margin accretive. I know that is hard to, like, wrap your head around, but we build them that way. We build them that way. We give the discounts on, you know, our high food cost items. They come in, and our attachment rate on our low food cost items goes up. It is actually margin accretive. The other thing is QSR, I mean, 40-50% sold on deal or promotion. If you actually throw combos in there, it is like 90% of QSR is on promotion. We sell less than 10% of our food on promotion. This idea of, well, they are gonna have to do these promotions to drive value because their prices are too high, so that is gonna be margin-dilutive. Just keep watching our margins and recognize that while our margins continue to grow, we continue to run promotions, and it is not margin-dilutive. Like, if everyone could take that away, like, every time I read about this concern about us having to invest more in marketing or drive, do promotions that are gonna be dilutive, like, that's just not the model. That's not the model that we've leveraged over the last 12 months. That's not the model that we've built in moving forward. Like, we have committed to improving our store-level margins for the next. Three years. Three years. And we're well on our way. [audio distortion] Yeah. On marketing and loyalty, you know, maybe you can tie those two together, but, you know, you're making investments there. You know, and your background is as a, you know, really great marketer. I guess, you know, talk to us a little bit about kind of your vision on how [audio distortion] you know, maybe you can tie those two together, but, you know, you're making investments there. You know, and your background is as a, you know, really great marketer. I guess, you know, talk to us a little bit about kind of your vision on how [audio distortion] you know, maybe you can tie those two together, but, you know, you're making investments there. You know, and your background is as a, you know, really great marketer. I guess, you know, talk to us a little bit about kind of your vision on how [audio distortion] So You know, I'm like a dinosaur of marketing, right? I mean, you and I both came from Procter & Gamble, right? I started before the millennium, you know, 1999, I started at Procter & Gamble. One of the things that you learn there as a brand marketer is that execution without strategy delivers terrible returns. I know it sounds obvious, but that is like the whole world of marketing right now. Everyone talks about the execution. They teach us about a marketing framework. It's three questions: who, what, and how. All anyone talks about is how. Oh, AI is gonna transform this. You know, when I started in this industry, oh, it's all about social media. Like, those are all hows. I get it because that's where the money gets spent, right? You're going and buying eyeballs, and all the tech is around the how. That's all anyone wants to talk about. You shouldn't even talk about the how until you understand truly who your target customer is and what you need to say to them to either increase or change their behavior. That's the strategy. We've spent 12 months working on marketing strategy. Yeah, we've done some how, because, you know, that was in place before I got here, and we're continuing to keep the lights on on the loyalty, guest recognition, promotion stuff to a smaller extent. In terms of what I call marketing, we've never done it. We've never done it, and we are going to. Before we do that, we are gonna develop a guest-centric strategy. We're gonna absolutely define who our target guests are, the highest value guests, and then we're gonna deliver communication that differentiates, differentiates our brand versus our competition in the most profound way with that target audience. Until you have that, you shouldn't be spending a bunch of money on buying media. We are working on that right now. I've brought in new people that are working on it that, you know, have done it with excellence. You know, I think maybe a lot of you know this, but, and this is, you know, to my grave, I'm gonna have to deal with this, but I'm like known as the "we have the meats" guy, and it's, you know, it's not necessarily what you want on your headstone, right? I'll take it. It is what it is. Like, I've brought in people who worked on that stuff. Like, that transformed our brand at Arby's. I turned around a brand that was dead. Like, we don't have to turn anything around here. People already love this brand. We just have to be smart enough to tap into why and then distill it and then send it out into the world. We're working on a strategy, you know, and, like, I'm, and the other thing is we're gonna have amazing culinary innovation to launch that brand positioning with, like, stuff that nobody's seen in the industry before. I mean, we're eating. Yeah. I mean. A lot. Yeah. Very fun. Yeah. So, yeah, couldn't, it's like, it's so exciting. So, and, you know, there's also a narrative out there that's like, okay, well, he's the marketing guy and he's gonna spend all this money on marketing and it's gonna dilute the margins. Just not the case. Like, we have committed to generate, to delivering the EBITDA, that we guided to. Yep. You know, my LTI, my annual bonus, everything is EBITDA driven. I spent six years in private equity before going to Papa John's. Like, I'm a steward of our P&L. Like, we're gonna deliver the profit. We're gonna continue to, but we're gonna fund all this with the productivity that I talked about that we're delivering in the operations and the supply chain. Part of Katie and I, our job is, is our teams are finding all this productivity. We need to figure out how much, how much of it drops to the bottom line because we're committing to improving our margins and how much of it fuels the top line growth because we have to get transactions going in a positive direction. I mean, that's what we do every day. That's great. Katie, maybe it might be helpful just to unpack some of the things you're doing on the margin side. You know, I kind of know you talked to future supply chain operations, labor management. So, you know, can you just maybe share with the audience what some of the key drivers are of that 50 basis points of improvement and how you, how you expect to get there? Sure. So, you know, for the past, I think it's 16, 17 quarters, we've been delivering, you know, margin expansion at the company. A lot of that has come in how we're operating our shacks and just getting better and better at that. Really, when we're looking at the go forward, we're gonna continue to do that, but where we have a lot of excitement and where we've uncovered a lot of opportunity is actually in the supply chain. If you kind of think about how our supply chain team has grown over time, you know, we're using a lot of the same suppliers and a lot of the same number of suppliers that we used when we had 30 shacks. Now we're, you know, over 350, and we know we're growing really fast and we have big, aspirations here. Rob actually moved supply chain underneath Stephanie Santeller, Chief Operating Officer, who both of them have a lot of experience running supply chains at scale. And, you know, they've already identified a lot of really exciting opportunities, which, you know, Rob alluded to it a little bit, but these things are, you know, items that, or projects that help us, you know, capitalize on our scale for sure, but also they're just part of what running an at-scale supply chain team looks like. It's about having redundancy in your supplier base. And they're also, you know, things that are improving our product. So those are the things that we're really excited about. Great. Thank you for that. Quick one, you're turning to free cash flow positive. We already there. Yeah, you're already there. Okay. How do [audio distortion] Yeah. Last year was the first year as a public company that we have generated positive free cash flow. It was a very exciting moment for me. And, you know, look, we're a business that has been generating, you know, and our forward path is generating even greater returns on our investments, especially around our new restaurant development. And so we're gonna continue to build more restaurants and grow that scale on that side. And that's the greatest potential investment that we have here. Great. With that, we're out of time. [audio distortion] Thank you. Thank you for being here. Thanks. Thanks, David.