Shake Shack wants to open over a dozen restaurants, but limited construction supplies might make it impossible until next year
- Shake Shack may not be able to open any more locations until next year because of the supply chain.
- Shortages in construction materials are delaying some locations from opening until 2022, according to its latest earnings call.
Shake Shack may not be able to open any more locations until later next year because of supply chain disruptions.
Shortages in construction materials are delaying some locations from opening until 2022, the burger restaurant said in its third quarter earnings call.
"Based on the widespread delays and material shortages that we are seeing across the construction industry, it's possible that we open some Shacks later than our guidance reflects," Katie Fogerty the company's chief financial officer told analysts and investors on Thursday. "It's also possible that some of these openings in which we expect to happen in 2021 will slip into 2022."
The company originally hoped to open 12 to 15 new Shake Shack locations in the fourth quarter. In-person dining in the company's busiest locations helped with its pandemic-related recovery as sales rose 24.8% year-over-year in the third quarter.
Shake Shack did not respond to Insider's request to comment on the disruptions.
This year, supply chain disruptions caused record shortages of every day products from electronics to cars, food, and raw materials. Last year, coronavirus-related shutdowns across the globe wreaked havoc on the global supply chain. Since then, closed ports and a shortage of workers to unload ships continues to limit efforts to return the supply chain to pre-pandemic levels.
To limit some of the construction setbacks, the company plans to prepare as much as it can ahead of time, Randy Garutti, the chief executive officer and director, said.
"From time to time, you're just having funky disruptions," Garutti explained. "And we expect that stuff is going to be choppy for a bit, and I don't think we're alone in that."
In 2019, Shake Shack started testing a four-day workweek to help recruit managers at the fast-growing burger chain, but had to halt the program in September because of the ongoing pandemic, Insider reported. In place of the four-day workweek, Shake Shack increased wages and bonuses to attract workers as the labor shortage continues to impact the restaurant industry.
Earlier this year, Shake Shack announced it will raise the cost of its food by 3% to 3.5% to offset the rising cost of ingredients, labor, and construction materials. While the company does not anticipate another price increase, they are not ruling out the possibility, executives disclosed on Thursday's call.