Photographer: Michael Nagle/Bloomberg

Shake Shack Boosts Sales Forecast With Stepped-Up Expansion Plan

  • Burger chain’s shares rally after earnings beat estimates
  • Still, its existing restaurants have suffered slowing sales

Shake Shack Inc. is plowing ahead with its expansion plan, even as some of its existing restaurants show signs of flagging.

The company now expects to open as many as 26 company-operated locations in the U.S. this year, up from a previous target of 23 or 24. It also boosted the low end of its sales forecast, calling for revenue of at least $354 million.

Investors cheered the rosier outlook, sending the shares up as much as 9.9 percent in late trading. The New York-based company had been facing concerns that its older restaurants are losing momentum. Same-store sales, a benchmark that measures established locations, fell 1.6 percent last quarter.

Shake Shack seems confident that it can thrive in an increasingly crowded market for so-called better burgers -- the upscale alternatives to McDonald’s Corp. Next year, it plans to open 32 to 35 company-operated restaurants in the U.S., a record number for the chain.

Though Shake Shack still expects same-store sales to decrease this year, it now sees a decline of as little as 1.5 percent. The company had previously forecast a drop of 2 percent to 3 percent.

Third-quarter earnings also topped analysts’ estimates. They amounted to 17 cents in the period, excluding some items, compared with an average projection of 15 cents.

The stock rose as high as $40.82 in extended trading after the results were released. It had been up 3.8 percent through the close of trading Wednesday.

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