XML 32 R18.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

INCOME TAXES | 6 Months Ended
--- | ---
Jun. 26, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Shake Shack is the sole managing member of SSE Holdings and, as a result, consolidates the financial results of SSE Holdings. SSE Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, SSE Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc. The Company is also subject to withholding taxes in foreign jurisdictions. Effective Income Tax Rates The following table presents the Company’s effective income tax rates:
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended
|  | June 26 2024 |  | June 28 2023 |  | June 26 2024 |  | June 28 2023
Effective income tax rates |  | 23.4 | % |  | 4.6 | % |  | 22.7 | % |  | 17.8 | %
The increases in the effective income tax rates for the thirteen and twenty-six weeks ended June 26, 2024 were primarily driven by increases in pre-tax income. Additionally, increases in the Company's ownership interest in SSE Holdings for the thirteen and twenty-six weeks ended June 26, 2024 increase its share of the taxable income of SSE Holdings. The Company's weighted average ownership interest in SSE Holdings was as follows:
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended
| June 26 2024 |  | June 28 2023 |  | June 26 2024 |  | June 28 2023
Shake Shack's weighted average ownership percentages | 93.7 | % |  | 93.3 | % |  | 93.5 | % |  | 93.3 | %
Deferred Tax Assets and Liabilities The Company acquires LLC Interests in connection with the redemption of LLC Interests and activity relating to its stock compensation plan and recognizes deferred tax assets associated with the basis difference in its investment in SSE Holdings upon acquisition of these LLC Interests. The following table summarizes the LLC Interests acquired by the Company:
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended
| June 26 2024 |  | June 28 2023 |  | June 26 2024 |  | June 28 2023
LLC Interests activity under the Company's stock compensation plan | 18,514 |  |  | 44,341 |  |  | 146,081 |  |  | 139,248 |
LLC Interests activity from redemptions of LLC Interests | 313,077 |  |  | — |  |  | 346,577 |  |  | 25,000 |
Total LLC Interests acquired by the Company | 331,591 |  |  | 44,341 |  |  | 492,658 |  |  | 164,248 |
Deferred tax assets related to the basis difference in the Company's investment in SSE Holdings were as follows:
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended
|  | June 26 2024 |  | June 28 2023 |  | June 26 2024 |  | June 28 2023
Deferred tax assets recognized upon acquisition of LLC Interests |  | $ | 7,263 |  |  | $ | (251) |  |  | $ | 10,577 |  |  | $ | 573 |
| June 26 2024 |  | December 27 2023
Total deferred tax assets related to the acquisition of LLC Interests | $ | 101,746 |  |  | $ | 90,419 |
The Company also recognizes deferred tax assets related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement and related deductions for imputed interest on such payments. Refer to "Tax Receivable Agreement," herein for additional information.
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended
|  | June 26 2024 |  | June 28 2023 |  | June 26 2024 |  | June 28 2023
Deferred tax assets recognized under the Tax Receivable Agreement |  | $ | 2,760 |  |  | $ | — |  |  | $ | 3,063 |  |  | $ | 129 |
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of June 26, 2024, the Company concluded, based on the weight of all available positive and negative evidence, that all of its deferred tax assets (except for those deferred tax assets relating to certain state tax credits and net operating losses) are more likely than not to be realized. As such, no additional valuation allowance was recognized. Tax Receivable Agreement On February 4, 2015, the Company entered into a tax receivable agreement with certain of the then-existing members of SSE Holdings (the "Tax Receivable Agreement") that provides for the payment by the Company of 85% of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of (i) increases in the Company's share of the tax basis in the net assets of SSE Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the "TRA Payments"). The Company expects to benefit from the remaining 15% of any tax benefits that may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or the Company. The rights of each member of SSE Holdings that is a party to the Tax Receivable Agreement, are assignable to transferees of their respective LLC Interests. Pursuant to the Company's election under Section 754 of the Internal Revenue Code (the "Code"), the Company expects to obtain an increase in its share of the tax basis in the net assets of SSE Holdings when LLC Interests are redeemed or exchanged by the other members of SSE Holdings. The Company plans to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interest occurs. The Company intends to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that would otherwise be paid in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. There were no transactions subject to the Tax Receivable Agreement for which the Company did not recognize the related liability, as the Company concluded that it would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred during the twenty-six weeks ended June 26, 2024 and June 28, 2023. A summary of obligations under the Tax Receivable Agreement were as follows:
|  | Thirteen Weeks Ended |  | Twenty-Six Weeks Ended
|  | June 26 2024 |  | June 28 2023 |  | June 26 2024 |  | June 28 2023
Additional liabilities recognized under the Tax Receivable Agreement |  | $ | 10,150 |  |  | $ | (4) |  |  | $ | 11,265 |  |  | $ | 468 |
| June 26 2024 |  | December 27 2023
Total obligations under the Tax Receivable Agreement | $ | 246,878 |  |  | $ | 235,613 |
During the twenty-six weeks ended June 26, 2024 and June 28, 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration