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SCHEDULE I: CONDENSED FINANCIAL INFORMATION OF REGISTRANT | 12 Months Ended
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Dec. 27, 2023
Condensed Financial Information Disclosure [Abstract] |
SCHEDULE I: CONDENSED FINANCIAL INFORMATION OF REGISTRANT | SHAKE SHACK INC. CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY) (in thousands, except share and per share amounts)
|  |  |  |  | (As Restated)
|  |  | December 27 2023 |  | December 28 2022
ASSETS |  |  |
Current assets: |  |  |
| Cash | $ | 6,672 |  |  | $ | 7,152 |
| Prepaid expenses | 63 |  |  | 62 |
| Total current assets | 6,735 |  |  | 7,214 |
Deferred income taxes, net | 328,870 |  |  | 324,113 |
Investment in SSE Holdings | 362,296 |  |  | 337,939 |
Note receivable from SSE Holdings | 216,946 |  |  | 209,013 |
Note receivable - conversion option | 12,900 |  |  | 6,300 |
Due from SSE Holdings | 8,213 |  |  | 2,963 |
TOTAL ASSETS | $ | 935,960 |  |  | $ | 887,542 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
Current liabilities: |  |  |
| Accounts payable | 146 |  |  | 39 |
| Accrued expenses | 621 |  |  | 113 |
| Due to SSE Holdings | 22,027 |  |  | 16,975 |
| Total current liabilities | 22,794 |  |  | 17,127 |
Long-term debt | 245,636 |  |  | 244,589 |
Liabilities under tax receivable agreement, net of current portion | 235,613 |  |  | 234,893 |
Total liabilities | 504,043 |  |  | 496,609 |
Commitments and contingencies |  |  |
Stockholders' equity: |  |  |
| Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of December 27, 2023 and December 28, 2022. | — |  |  | — |
| Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,474,315 and 39,284,998 shares issued and outstanding as of December 27, 2023 and December 28, 2022, respectively. | 39 |  |  | 39 |
| Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,834,513 and 2,869,513 shares issued and outstanding as of December 27, 2023 and December 28, 2022, respectively. | 3 |  |  | 3 |
| Additional paid-in capital | 426,601 |  |  | 415,649 |
| Retained earnings (accumulated deficit) | 5,277 |  |  | (24,758) |
| Accumulated other comprehensive loss | (3) |  |  | — |
Total stockholders' equity | 431,917 |  |  | 390,933 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 935,960 |  |  | $ | 887,542 |
See accompanying Notes to Condensed Financial Statements. SHAKE SHACK INC. CONDENSED STATEMENTS OF INCOME (LOSS) (PARENT COMPANY ONLY) (in thousands)
|  |  | Fiscal Year Ended
|  |  |  |  | (As Restated) |  | (As Restated)
|  |  | December 27 2023 |  | December 28 2022 |  | December 29 2021
Intercompany revenue | $ | 7,971 |  |  | $ | 2,293 |  |  | $ | 2,878 |
TOTAL REVENUE | 7,971 |  |  | 2,293 |  |  | 2,878 |
General and administrative expenses | 6,663 |  |  | 3,132 |  |  | 2,491 |
Intercompany expenses | 54 |  |  | 67 |  |  | — |
TOTAL EXPENSES | 6,717 |  |  | 3,199 |  |  | 2,491 |
INCOME (LOSS) FROM OPERATIONS | 1,254 |  |  | (906) |  |  | 387 |
Equity in net income (loss) from SSE Holdings | 10,091 |  |  | (25,335) |  |  | (19,393) |
Other income (expense), net | 14,533 |  |  | (1,767) |  |  | (25,593) |
Interest expense | (1,047) |  |  | (1,047) |  |  | (867) |
INCOME (LOSS) BEFORE INCOME TAXES | 24,831 |  |  | (29,055) |  |  | (45,466) |
Income tax benefit | (5,203) |  |  | (5,783) |  |  | (21,677) |
NET INCOME (LOSS) | $ | 30,034 |  |  | $ | (23,272) |  |  | $ | (23,789) |
See accompanying Notes to Condensed Financial Statements. SHAKE SHACK INC. CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (PARENT COMPANY ONLY) (in thousands)
|  |  | Fiscal Year Ended
|  |  |  |  | (As Restated) |  | (As Restated)
|  |  | December 27 2023 |  | December 28 2022 |  | December 29 2021
Net income (loss) | $ | 30,034 |  |  | $ | (23,272) |  |  | $ | (23,789) |
Other comprehensive loss, net of tax(1): |  |  |  |  |
| Change in foreign currency translation adjustment | (3) |  |  | (1) |  |  | (2) |
OTHER COMPREHENSIVE LOSS | (3) |  |  | (1) |  |  | (2) |
COMPREHENSIVE INCOME (LOSS) | $ | 30,031 |  |  | $ | (23,273) |  |  | $ | (23,791) |
(1)Net of tax benefit of $0 for fiscal years ended December 27, 2023, December 28, 2022 and December 29, 2021. See accompanying Notes to Condensed Financial Statements. SHAKE SHACK INC. CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in thousands)
|  |  |  |  |  | Fiscal Year Ended
|  |  |  |  |  |  |  | (As Restated) |  | (As Restated)
|  |  |  |  |  | December 27 2023 |  | December 28 2022 |  | December 29 2021
OPERATING ACTIVITIES |  |  |  |  |
Net income (loss) | $ | 30,034 |  |  | $ | (23,272) |  |  | $ | (23,789) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |
| Equity in net (income) loss from SSE Holdings | (10,091) |  |  | 25,335 |  |  | 19,393 |
| Amortization of debt issuance costs | 1,047 |  |  | 1,047 |  |  | 867 |
| Equity-based compensation | 894 |  |  | 614 |  |  | 526 |
| Deferred income taxes | (5,249) |  |  | (5,783) |  |  | (21,677) |
| (Gain) loss on note receivable - conversion option | (6,600) |  |  | 9,700 |  |  | 32,200 |
| Other non-cash income | (7,933) |  |  | (7,934) |  |  | (6,609) |
| Changes in operating assets and liabilities: |  |  |  |  |
|  | Prepaid expenses and other current assets | (1) |  |  | 2 |  |  | (19) |
|  | Due to SSE Holdings | (3,944) |  |  | (728) |  |  | (8,229) |
|  | Accounts payable | 107 |  |  | 30 |  |  | 6 |
|  | Accrued expenses | 512 |  |  | (104) |  |  | 118 |
NET CASH USED IN OPERATING ACTIVITIES | (1,224) |  |  | (1,093) |  |  | (7,213) |
INVESTING ACTIVITIES |  |  |  |  |
Purchases of LLC Interests from SSE Holdings | (11,731) |  |  | (7,619) |  |  | (41,875) |
Loan to SSE Holdings | — |  |  | — |  |  | (243,750) |
NET CASH USED IN INVESTING ACTIVITIES | (11,731) |  |  | (7,619) |  |  | (285,625) |
FINANCING ACTIVITIES |  |  |  |  |
Proceeds from issuance of convertible notes, net of discount | — |  |  | — |  |  | 243,750 |
Debt issuance costs | — |  |  | — |  |  | (1,075) |
Proceeds from issuance of Class A common stock to SSE Holdings upon settlement of equity awards | 11,731 |  |  | 7,619 |  |  | 41,875 |
Proceeds from stock option exercises | 744 |  |  | 424 |  |  | 6,640 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 12,475 |  |  | 8,043 |  |  | 291,190 |
DECREASE IN CASH | (480) |  |  | (669) |  |  | (1,648) |
CASH AT BEGINNING OF PERIOD | 7,152 |  |  | 7,821 |  |  | 9,469 |
CASH AT END OF PERIOD | $ | 6,672 |  |  | $ | 7,152 |  |  | $ | 7,821 |
See accompanying Notes to Condensed Financial Statements. NOTE 1: ORGANIZATION Shake Shack Inc. (the "Parent Company") was formed on September 23, 2014 as a Delaware corporation and is a holding company with no direct operations. The Parent Company's assets consist primarily of its equity interest in SSE Holdings, LLC ("SSE Holdings"), certain deferred tax assets and its note receivable from SSE Holdings. The Parent Company's cash inflows are primarily from cash dividends or distributions and other transfers from SSE Holdings. The amounts available to the Parent Company to fulfill cash commitments and pay cash dividends on its common stock are subject to certain restrictions in SSE Holdings' Revolving Credit Facility. Refer to Note 9, Debt, in the accompanying Consolidated Financial Statements, for additional information. NOTE 2: BASIS OF PRESENTATION These Condensed Parent Company financial statements should be read in conjunction with the Consolidated Financial Statements of Shake Shack Inc. and the accompanying notes thereto, included in Part II, Item 8. For purposes of these condensed financial statements, the Parent Company's interest in SSE Holdings is recorded based upon its proportionate share of SSE Holdings' net assets (similar to presenting them on the equity method). The Parent Company is the sole managing member of SSE Holdings, and pursuant to the Third Amended and Restated LLC Agreement of SSE Holdings (the “SSE Holdings LLC Agreement”), receives compensation in the form of reimbursements for all costs associated with being a public company and maintaining its existence. Intercompany revenue consists of these reimbursement payments and is recognized when the corresponding expense to which it relates is recognized. Certain intercompany balances presented in these Condensed Parent Company financial statements are eliminated in the Company's Consolidated Financial Statements. The following table presents amounts in the Parent Company's Condensed Balance Sheets that were eliminated in consolidation:
|  |  | (As Restated)
| December 27 2023 |  | December 28 2022
Assets |  |  |
Due from SSE Holdings | $ | 8,213 |  |  | $ | 2,963 |
Deferred income taxes, net | 4,289 |  |  | 8,004 |
Note receivable from SSE Holdings | 216,946 |  |  | 209,013 |
Note receivable - conversion option | 12,900 |  |  | 6,300 |
Liabilities |  |  |
Due to SSE Holdings | 22,027 |  |  | 16,975 |
Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $235,613 and $234,893, respectively as of December 27, 2023 and December 28, 2022. The following table presents amounts in the Parent Company's Condensed Statements of Income (Loss) that were eliminated in consolidation:
|  |  | (As Restated) |  | (As Restated)
| 2023 |  | 2022 |  | 2021
Intercompany revenue | $ | 7,971 |  |  | $ | 2,293 |  |  | $ | 2,878 |
Equity in net income (loss) from SSE Holdings | 10,091 |  |  | (25,335) |  |  | (19,393) |
Other income (expense), net | 14,533 |  |  | (1,767) |  |  | (25,593) |
Income tax expense (benefit) | 3,715 |  |  | (769) |  |  | (7,234) |
NOTE 3: RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED FINANCIAL STATEMENTS In connection with the preparation of the Company's Consolidated Financial Statements as of and for the fiscal year ended December 27, 2023, the Company discovered that in prior years it had not appropriately accounted for the deferred tax asset associated with its investment in SSE Holdings, primarily due to incorrect accounting for state tax depreciation. The error resulted in an overstatement of income tax expense of approximately $2,862 for the fiscal year ended December 28, 2022 and an understatement of income tax benefit of $4,094 for the fiscal year ended December 29, 2021 and deferred tax assets were understated for the impacted periods. The error also resulted in an understatement of retained earnings and deferred tax assets as of December 26, 2020 of approximately $10,094 related to prior periods. The error did not impact total revenue or loss before income taxes for the fiscal years ended December 28, 2022 and December 29, 2021. Refer to Note 3, Restatement of Previously Issued Consolidated Financial Statements, to the Company's Consolidated Financial Statements included in Part II, Item 8, for additional information. The impact of the correction of the misstatements is summarized below:
| December 28, 2022 |  | December 29, 2021
CORRECTED CONDENSED BALANCE SHEETS | As previously reported | Impact of Adjustment | As Restated |  | As previously reported | Impact of Adjustment | As Restated
Deferred income taxes, net | $ | 307,025 |  | $ | 17,088 |  | $ | 324,113 |  |  | $ | 304,442 |  | $ | 14,205 |  | $ | 318,647 |
Additional paid-in capital | 415,611 |  | 38 |  | 415,649 |  |  | 405,940 |  | 17 |  | 405,957 |
Retained earnings (accumulated deficit) | (41,808) |  | 17,050 |  | (24,758) |  |  | (15,674) |  | 14,188 |  | (1,486) |
| December 28, 2022 |  | December 29, 2021
CORRECTED CONDENSED STATEMENTS OF LOSS | As previously reported | Impact of Adjustment | As Restated |  | As previously reported | Impact of Adjustment | As Restated
Income tax benefit | $ | (2,921) |  | $ | (2,862) |  | $ | (5,783) |  |  | $ | (17,583) |  | $ | (4,094) |  | $ | (21,677) |
Net loss | (26,134) |  | 2,862 |  | (23,272) |  |  | (27,883) |  | 4,094 |  | (23,789) |
| December 28, 2022 |  | December 29, 2021
CORRECTED CONDENSED STATEMENTS OF CASH FLOWS | As previously reported | Impact of Adjustment | As Restated |  | As previously reported | Impact of Adjustment | As Restated
Net income (loss) | $ | (26,134) |  | $ | 2,862 |  | $ | (23,272) |  |  | $ | (27,883) |  | $ | 4,094 |  | $ | (23,789) |
Deferred income taxes | (4,126) |  | (1,657) |  | (5,783) |  |  | (17,583) |  | (4,094) |  | (21,677) |
Accrued expenses(1) | 1,101 |  | (1,205) |  | (104) |  |  | 118 |  | — |  | 118 |
Net cash used in Operating activities | (1,093) |  | — |  | (1,093) |  |  | (7,213) |  | — |  | (7,213) |
(1)The prior impact of adjustments have been updated to conform with the current year presentation. These updates are not a part of the restatements above. All referenced amounts for prior periods in this Schedule I and the notes herein reflect the balances and amounts on a restated basis. NOTE 4: NOTE RECEIVABLE FROM SSE HOLDINGS In March 2021, contemporaneously with the issuance of the Convertible Notes described in Note 4, Debt, below, the Parent Company entered into a $250,000 intercompany note with SSE Holdings (the "Intercompany Note"). The Intercompany Note will mature in March 2028 unless the Parent Company exercises its right to convert the Intercompany Note to maintain at all times a one-to-one ratio between the number of common units, directly or indirectly, held by the Parent Company and the aggregate number of outstanding shares of Class A common stock. As of December 27, 2023 and December 28, 2022, the balance of the Note receivable from SSE Holdings was $216,946 and $209,013, respectively, net of accretion. The Parent Company's right to convert the Intercompany Note into common units of SSE Holdings (the "Conversion Option") is required to be bifurcated from the Intercompany Note and shown separately on the Parent Company's Condensed Balance Sheets. The Conversion Option is to be recorded at fair value and remeasured at each subsequent reporting date. As of December 27, 2023 and December 28, 2022, the fair value of the Conversion Option was $12,900 and $6,300, respectively. The following table presents amounts in the Parent Company's Condensed Statements of Income (Loss) related to the change in value and accretion on the Conversion Option:
| Classification | 2023 |  | 2022 |  | 2021
Unrealized gain (loss) | Other income (expense), net | $ | 6,600 |  |  | $ | (9,700) |  |  | $ | (32,200) |
Interest income | Other income (expense), net | $ | 7,933 |  |  | $ | 7,933 |  |  | $ | 6,605 |
NOTE 5: DEBT In March 2021, the Parent Company issued $250,000 aggregate principal amount of 0% Convertible Senior Notes (“Convertible Notes”) which will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances. Upon conversion, the Parent Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election. Refer to Note 9, Debt, in the Company's Consolidated Financial Statements, included in Part II, Item 8, for additional information relating to the Convertible Notes. NOTE 6: COMMITMENTS AND CONTINGENCIES On February 4, 2015, the Parent Company entered into a tax receivable agreement with the non-controlling interest holders that provides for payments to the non-controlling interest holders of 85% of the amount of any tax benefits that the Parent Company actually realizes, or in some cases is deemed to realize, as a result of certain transactions. Refer to Note 15, Income Taxes, to the Company's Consolidated Financial Statements included in Part II, Item 8, for additional information relating to the Parent Company's Tax Receivable Agreement. As described in Note 18, Commitments and Contingencies, to the Company's Consolidated Financial Statements, amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income of Shake Shack Inc. over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. As of December 27, 2023 and December 28, 2022, liabilities under the tax receivable agreement totaled $235,613 and $234,893, respectively. NOTE 7: SUPPLEMENTAL CASH FLOW INFORMATION The following table sets forth supplemental cash flow information:
|  |  |  |  |  |  |  | (As Restated) |  | (As Restated)
|  |  |  |  |  | 2023 |  | 2022 |  | 2021
Cash paid for: |  |  |  |  |
| Income taxes | $ | 9 |  |  | $ | — |  |  | $ | 19 |
Non-cash investing activities: |  |  |  |  |
| Accrued contribution related to stock option exercises | 744 |  |  | 424 |  |  | 6,731 |
| Class A common stock issued in connection with the acquisition of LLC Interests upon redemption by the non-controlling interest holders | 265 |  |  | 313 |  |  | 33 |
| Non-cash contribution made in connection with equity awards granted to employees of SSE Holdings | 10,305 |  |  | 6,988 |  |  | 11,468 |
Non-cash financing activities: |  |  |  |  |
| Establishment of liabilities under tax receivable agreement | 720 |  |  | 844 |  |  | 1,093 |

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- Definition The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 3 -Subparagraph (SX 210.12-04(a)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 205 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04(Schedule I)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480922/205-10-S99-6 Reference 3: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 810 -SubTopic 10 -Name Accounting Standards Codification -Section 45 -Paragraph 11 -Publisher FASB -URI https://asc.fasb.org//1943274/2147481231/810-10-45-11 + Details
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