Welcome to Shake Shack's Second Quarter 2019 Earnings Call. At this time all participants have been placed on listen-only mode and the floor will be opened to questions following management's prepared remarks. It's now my pleasure to turn the floor over to Melissa Calandruccio, Investor Relations. You may begin.

Thank you, James, and good evening everyone. Joining me for Shake Shack's conference call is our CEO, Randy Garutti and our CFO, Tara Comonte. During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release, and in the appendix to our supplemental materials. Some of today's statements maybe forward-looking and actual results may differ materially due to a number of risks and uncertainties, including those discussed in the Risk Factors section of our annual report on Form 10-K filed February 25, 2019. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our second quarter 2019 earnings release, which can be found at investor.shakeshack.com in the News section. Additionally, we have posted our second quarter 2019 supplemental earnings materials, which can be found in the Events and Presentation section on our site, or as an exhibit to our 8-K for the quarter. I will now turn the call over to Randy.

Thanks, Melissa, and good evening, everyone. Now more than halfway through 2019, I'm pleased to report that Shake Shack enjoyed continued strong momentum into the second quarter across all areas of the business. System wide sales increased 33% to $225.9 million, and total revenue grew by 31% to $152.7 million, driven by the addition of 58 Shack system live since the end of the second quarter 2018. Our comp base delivered positive same Shack sales growth of 3.6%. Specifically our digital channels, including delivery, were a key contributor to these results in conjunction with the benefit from the shift in Easter timing within the second quarter. We earned adjusted EBITDA of $25.9 million, growing our rate of 18.5% and again delivered positive traffic in the quarter with growth of 1.3%. I'm so proud of the leading our Shacks every day to achieve this level of growth, while also opening a record number of Shacks. And extending the power of the Shack brand around the globe is truly a testament to their talent and hard work. During the quarter, we opened 11 domestic company operated Shacks, continuing our strategy to deepen our roots in existing markets with openings in San Diego, Los Angeles and Dallas, while also expanding into the new markets of Sarasota, Columbus and Virginia Beach. Subsequent to the quarter, we opened in New Orleans and Salt Lake City. We're thrilled to see that Shake Shack brand continuing to resonate so well across the country. As of today, we've opened 21 company operates Shacks so far this year, and this development pace represents a much more balanced opening schedule than the compression we experienced late in the year in 2018. Given where we are today in terms of openings, we're taking the opportunities to tighten our new Shack guidance…

Thanks, Randy. As you've just heard, we're very pleased with our continued strong sales performance across the business during the second quarter. Total revenue increased 31% to $152.7 million with Shack sales of $147.9 million, also representing growth of 31%, and license revenue of $4.8 million, growth of 43% on the same quarter last year. We delivered positive same Shack sales of 3.6%, which consisted of a 2.3% increase in price and mix, a traffic increase of 1.3%. And this performance was on top of 1.1% same-Shack sales growth in the second quarter last year. This was driven by continued strength and momentum across all our digital channels, combined with a favorable impact from the timing of Easter, which fell later in the second quarter this year. Our average unit volume remains strong at $4.3 million on a trailing 12-month basis with average weekly sales of $85,000 during the quarter. As a reminder, these particular average unit metrics will continue to gradually come down before leveling-off as we broaden our sales volumes, open new Shacks across the country and further expand an existing market, all while continuing to deliver significant top and bottom line growth. At this point in the year, given our performance to date, we are expecting company operated AUV to be at the higher end of our previous guidance range of $4 million and $4.1 million for the full year. As Randy mentioned, we will be transitioning our company operated Shacks to our integrated delivery partnership with Grubhub over the next two to three quarter. And as we work through that period, we expect the degree of volatility across the system in our delivery level failed, which is reflected in our updated guidance for the year. Additionally, our year-on-year sales comparisons get tougher in the fourth quarter…

I'll close the call today with a celebratory note. This summer, we reached a milestone, our 15th birthday at Shake Shack in Madison Square Park, the little hot dog cart that began it all. And today, we are as focused on the opportunity ahead as we have ever been and on building a truly great company to last. Once again, a sincere thank to our hardworking and dedicated leaders and team members who make it all possible day-in and day-out. With that, we'll go ahead and open the call for questions. Thank you.

Thank you [Operator instructions]. Our first question is coming from Katy Huberty with Goldman Sachs.

So you guys last provided us with some more granular color on store margins by region at ICR, and I think that was mark-to-market for 3Q '18. And there's been some volatility in emerging line since then delivering and kick-in. It was very nice to see gross margins rebound this quarter. But it'd be really helpful for us if you could either quantify, or give us a way to contextualize how this improvement is playing out by region? In particular, we're really focused on non-New York stores rolling into the comp base. So it'd be helpful to see or understand what the incremental traffic you're seeing from delivery looks like by region? How operating margin trends have been by region? Any color there would be helpful. Thank you.

Thanks Katy, and congrats on launching your recent coverage for the industry. Those are numbers we're not going to break out today, appreciate the ask. I think we'll look at that possibly in the third quarter. We've done that the last two years and we'll take a look at that information to the extent it's helpful to you and our shareholders, we'll certainly consider that. Look, I think it's important that everyone know we continue to grow across the country. I noted that in the development remarks. If you really look at it, we've seen broad-based success in so many markets and that continues today. If you really look at it, we have 22 shacks in New York City. So I think now with 140 Shacks company operated in this country, only 22 of those in New York City. I think the question of how this restaurant companies does outside of New York has been answered, and will continue to be answered as we go. So bear with us when we can give you data, especially as it pertains to the digital ecosystem that you asked a lot about that will be an evolving thing in the next two -- we've just been piloting for a couple years here, delivery with Grub, we expect to be everywhere nationally. And we will keep a close eye on that and share those trends when we think it's helpful too.

Next we'll hear from Lauren Silberman with Credit Suisse.

How are you thinking about modifying the layouts of both new and existing Shacks as digital becomes a bigger part of the business? I think you've mentioned in the past the testing of pick up shelves. Are there any changes being implemented are necessarily in the back of the house? Thanks.

Thanks Lauren. We've been doing a lot with the constant iteration if you look at Shack designs over this last few years. Let's start in the back of house. I think in the back at house, we build what we call split kitchens, which continue to evolve, really giving us the horsepower to compete anywhere at maximum throughput. We still have a lot technology that we need to evolve on that. Part of our decision to go with Grub is the way that we're going to integrate that technology, and make sure that we can really start to have a more dynamic ordering capability for the percentage of our sales that is delivery. So we believe for the most part, we've made some better designs than others. But for the most part, the back house kitchen can handle a lot. However, it gets more complicated now as the delivery, digital app, web ordering, large orders come in. So couple things we're doing the front of house to help that, which is challenging by the way. We've noted this on a few calls. It remains challenging. If you go to a Shack in the busy times, that pickup area is busy. It is really busy there. There are couriers. There are app pick up. There are folks who just want to stay and get the Shack ready. There's family. There's everybody. There's competing for a limited space. So we're working to make sure we have some really good pickup areas for some good shelving that will help make the career shop a little easier, and make our app pick-ups a little bit easier. We're designing some restaurants that will really truly separate those areas. So next year, you'll see some Shack designs that will really have a completely separate section for the digital pick up from the in-house pickup, because we really want to honor our guests who continue to come to Shake Shack. Obviously, the overwhelming majority of our guests remain people who are looking for that great Shack community gathering experience. And we want them to have a great experience. So stay tuned, lots of different iterations, we're going to be testing a number of different ways to do it. All towards really making sure that a digitally native restaurant can be successful, while providing great guest experience across any channel issues.

Next we'll hear from Sharon Zackfia with William Blair.

It's Matt on for Sharon. Could you talk a little bit more about the integrated marketing plans for Grubhub? I mean how much customer data is Shake Shack going to get? And then secondarily, can loyalty be used in conjunction with the part -- with the Grubhub partnership?

So starting off, we will not have any Shake Shack loyalty program, and we won't be either connected to anything that Grub does, other than people who have -- they've just launched their new loyalty plan, so we've got a lot to learn about how that will work from their marketplace. But in terms of data and the tech integrations, there's a few important things. We've been able to work with Grub in a significant design that'll have optionality for us for just in time delivery, as well as really try to pair up that real delivery courier with real time how busy we are at Shake Shack in the moment. That tech integration is going to be crucial for us, right. We have really busy restaurants. We need to be able to have the ability to throttle that in real time, and make sure that that works across their drivers and our team. When it comes to data, we're really excited about the data that we intend to retain and access throughout their marketplace for our guests. That was one of the most important considerations to this decision was for us to be able to have that data and be able to connect with our guests regardless if they choose to order on a third-party platform. And that's one of the things we're really excited about. So over time, we expect to do some really great marketing both Shake Shack direct and together with our partnership with Grub.

Our next question comes from Jake Bartlett with SunTrust.

Randy, I want to start with just understanding better the transition period as you shift over to Grubhub, and from the handful of stores now to the system over the next couple quarters. Were you saying that -- you mentioned that could cause volatility, does that mean -- I mean, what are the -- what kind of delivery we're going to be doing with the other partners that you've been testing with? Trying to understand how big maybe a headwind this could be in the near term?

Jake, it's a great question. So thank you for asking it. It's built into our guidance on revenue, comp and everything. So here is the reality. We've spent two years building up relationships on other marketplaces, one of which was Grubhub. But we have great relationships on Caviar, and Postmates and DoorDash. Those relationships continue in the near term exactly as they've been and where they've been. However, as we roll this out and we reach mass scale with Grubhub, we will eventually on integrate and not market -- and we haven't done a lot of marketing with those in the past anyway. But really it's about on integrating the tech. So there could be some volatility there. If you are on another third-party marketplace and you are used to looking at that, and deciding, hey, maybe I will get Shake Shack tonight, which has been a part of our sales, it's something we're going to have a big marketing job to move those guests over to our partnership with Grub, which we're excited to do. But it's going to take some time, right? You've got two years of behavior in various marketplaces. And you know, they all have slightly different regional strengths, right? There are players, and by the way, this is one of the biggest decisions we had to make in this. Each one of them are great companies, every one of them are great companies. And each one of them has a certain region. Sometimes a certain Shack within that region that has strength or weakness, and they have varying success rates when it comes to the guest experience. For us, we put all that together and we believe over the next series of time that we will be able to do the best job at guest experience possible by working with Grub and all that way. But we very well may be that some of those marketplaces continue to Shake Shack on an on-integrated basis, I'd expect they've been with us…

And then when I think about your same store sales guidance, it implies a pretty sharp deceleration in the first and second quarter. And as I look at just from the surface, it doesn't look -- looks like your compares actually get easier just on a half year basis. So would you point to this potential volatility around delivery as the main reason why you'd little more conservative in the back half of the year?

We talked this out in the prepared remarks, and you may remember this from Q1 too. But we did have -- we benefited within that comp base from some warmer weather, particularly in the northeast at the beginning of the year, which went into that Q1 comp. We benefited, and Randy mentioned in his prepared remarks, just not from that shift in Easter with more of those Easter holiday weeks, really flowing into the quarter this year than last. So those are -- whilst we're really happy with the couple of those up, those two things were contributors. We're coming into some pretty active delivery and some digital activation in the back half of last year, particularly Q4. So we're comping over that. And then as Randy just explained, the majority of our Shacks have had delivery turned on for many quarter now across many markets lately. So as those gets rolled out and all these marketplaces look slightly different in many different ways, whether its regional footprint or various other factors, there is just potentially will be some noise as we go through that transition, particularly as we sell on integrating, those other two we've been in pilot with. So I think we'll see how it shakes out over the next couple of quarters. This isn't an overnight rollout, so we'll have to benefit as being able to keep you guys up to date as we get further into it.

Chris O'Cull with Stifel has our next question.

Randy, could you tell us what kind of information you're looking, or you're needing to determine whether the Chick'n Bites could be a permanent menu item? And then maybe just how much should we expect the product costs for that item to improve if you guys were able to commit to a supplier that could become a permanent menu item?

And what are we looking for? This has gone for basically half the year. With any LTO, we're looking for a few things. How does it perform sales wise, of course? It's very hard always to understand incrementality, true incrementality, which is one of the things that just takes time, especially in a totally new category like this. And impacts for trades up, trade down and in this case, maybe an add-on. We're also looking to continue to improve the way that we operate it. The way we do these every single Chick'n Bites is done by hand to order, right? This takes time. It's operationally challenging. It takes labor. And these are things that we want to continue to improve upon, and the way we do it. And we really just want to listen and learn. We have been really encouraged by what we've seen, which is why it's continue to sound and why we're going to continue to give it more time. When it comes to the supply chain and the costs, we've done a lot of work in the first half of the year, still impacted us in Q2. It's still, as Tara mentioned a high cost menu item. Chicken that is, you know all antibiotic free and all natural and fresh in the way that we do it is not cheap. It's not a commodity product. And it's something that we spend a lot of money on. So it's still got higher food costs. There's some work we want to do. And exactly how you just said, we're connecting with our chicken suppliers and saying, hey, can we do a little bit better here if we're going to continue to run this. Chicken, as a category, go back just a few short years you never had chicken before, now with the chicken shack, with Chick'n Bites. Chicken is a category at Shake Shack, that's a real thing. We're going to compete in the Chicken business. And we feel really good about that. But again, super early it's something we've got to see people continue to come back for and again, encouraged by the early signs.

Thank you. We'll here from John Glass with Morgan Stanley.

Thanks very much, a couple first on the Grub announcement. Did you actually see higher sales volumes from delivery on Grub versus other platforms, or was this decision made on the other factors, primarily the two you mentioned? Secondly, are you going to launch in-app delivery with us? Is that part of this integrated approach or does that come later? And do you have information about the customers? Do you know who they are, who are using other platforms that you can communicate with them directly and say, you know come and get us on Grub now or is that not, was that not possible?

That really was in part of the deal. I mean, in fairness to the marketplaces that didn't work with us the last couple years, it's really their customer. John, it was a combination of factors and Grub had tremendous performance in our pilot. They had a shorter pilot timeframe than the others. But in that, we were really encouraged by what we saw. And we looked at it by a few things; big picture nationwide, who's got the best long term revenue opportunity, that was number one; preceding even that, I guess, is who's got the opportunity to do the best job at the guest experience. Delivery is a hard business. Shake Shack's food is hard to deliver and we need to do it really, really well. So we even had just a limited amount of markets during the Grub test. So it gave us a lot of encouragement for what they can possibly do. The guest data and insights is a huge thing moving forward. So that's going to be new opportunity for us. And then really the overall economics of the deal will lead to better economics for us over the long-term, which as everyone is battling right now in this part of the business, you need to have something that works for everybody. And we believe we've got that, it's something we're going to do well. As far as delivery through our app, we absolutely want to do that over the long-term. It's not our first focus right now. We're doing some other great things with our app that continues to drive engagement, and our new web platform. So we're doing a lot on our own channels. But over time, we do expect, over the long-term, to be able to deliver through our apps with growth, that's going to take some time.

And then, Tara, you mentioned that you might spend some of the overage in G&A and particularly in projects that might assist store level margins if that's correct or make sure that is correct. And then what do you have in mind specifically? Are there technology investments that you think you can make near-term over the next six months that improve things? Or are you saying that, hypothetically, you don't want to leverage G&A, because there are so many opportunities longer term? Or was there something specific in mind?

I think it's a bit of a [indiscernible]. I mean, I think that -- the third of the ways through of 450, we continue to be very committed to reinvesting back in the business as a philosophy just being as young as we are with the growth that we have ahead. So I think there is a general appetite to do that and we continue to gain conviction and confidence in that with some of the returns that we're seeing in the projects that we have invested in to-date. And I think there are always a multitude of areas that you can invest in. So we're also looking at all sorts of things, I would say, it's hard. So as you find an investment, say that isn't underpinned with technology so you should assume that the majority of them will have some for the technological component. And pretty much everything we've done so far this year does, whether it's the back at Concrete type work, or its more guests facing in our digital channels. So I wouldn’t call out anything specific right now, but expect to see us continue to try to take administrative burden out of the Shack, so that we can in a high cost labor environment, have that labor really focused on guest experience, and Concrete is a piece of that. But there are various other labor initiatives that we're beginning to look at. Scheduling we've mentioned in the past, looking at optimizing our scheduling process, putting better tools in pipe to help operator schedule in a more precise basis. So I think there is a lot in the pipeline. And we're pleased to have the opportunities continue to just redeploy resources that gets the business where it make sense. Right now, that's obviously not really contemplated in the guidance that we gave you. So as we have further plans to do so, we'll obviously update that guidance and keep you guys updated.

Our next question will comes from Jeffrey Bernstein with Barclays.

Great, thank you very much. Two questions, one just on the restaurant margin. Tara, I think you mentioned ex-unusuals, the headwind was maybe 200 basis points. But at the same time, in the qualitative commentary, it does sound like maybe there is some signs of easing pressure, whether it's on food or elsewhere. And obviously, your comps have been stronger than you might have expected. So I'm just wondering, still seeing the significant deleverage despite that outside comp. I'm wondering maybe how you think about potential for where that would stabilize over the next number of quarters, whether there's any option for incremental pricing to help on that front? And if you could at least quantify what the cause and labor basket is for the year or for the back half, however you think about it? And then I had one follow up.

There is a lot in there. So our COGS and labor assumptions for the back half included within our guidance that we gave you. So reinforcing that lower end of the 23%, 24% range that we gave you last quarter at about the 23%. I mean, big picture in COGS, and we touched on some of this. We will continue to see Chick'n Bitesimpact that COGS lines. But also as these digital channels continue to grow and we really like that growth and take paper and packaging, we'll continue to go up in that line. Beef and dairy, our commodities moved a little bit. As we said in the prepared remarks, we don't expect anything material in the back half but we'll likely see a little bit of inflation there continue. Labor, we just -- it is still really meaningful inflation across the country in the labor line. Double digits in New York city, really mid to high-single-digit inflation across the country in the labor line. And that's why I think we also committed to reinvesting back in the business. So we're not just the recipients of these things and we're constantly looking at ways in which we can tackle it, whilst not damaging the wonderful experience that is Shake Shack. So yes, there's pressure on the line, there'll continue to be pressure on the line just as we open lower volume Shacks. I think from the time of the idea we talked about you $3 million future stage, or current stage and certain Shacks AUV with more of 18% to 22%, around 20% flow. So as we continue to add more of those two systems, we're having a lot of those two systems that line will come down. Price is obviously an opportunity for us. We tend to be very conservative on price, and we're asked about this a lot. We took about a point in half in December and we took a similar, maybe slightly higher the year before but still sub-two. We'll probably do the same thing this year. We're working through all of that right now. And certainly it's something that as we continue to expand our digital channels, we will consider more seriously. I think we obviously have the opportunity to price differently across the channels. We don't currently do that today that maybe one way to help us mitigate the cost of delivery. So it's something we look at very seriously, but it's also something that I think you should expect to see us be cautious on. But it certainly is a lever that if we have to use it, we will do so extremely thoughtfully. We prefer to stay cautious on that line.

And then Randy, I think in your prepared remarks you talked about -- just digital channels broadly being a key contributor to the comps. I know you don't necessarily want to break out all the components of that. But can you maybe directionally prioritize between the app, kiosks, pickup and delivery, I guess, the big ones. Which you see as the prioritizing, the strongest to -- the biggest to the smallest?

Well, we haven't broken it out yet, Jeff and we don't intend to today. Just to separate a couple things. Kiosks, we kind of separate that and we talk about our digital sales. Of course it is digital but we treat that guests like an in-house guest. They just happen to order differently, not out of cash here. On the other ones, they're all growing, the app, web and delivery are significant. So we're not going to break it out just yet. There's a lot of movement in there. It's got to settle. And it's something that we're just going to take some time and continue to learn about. But we're excited about all those channels and investing in all of them.

[Operator Instructions] Our next question will come from Andrew Charles with Cowen and Company.

Great, thank you. And congrats on fortifying the Grubhub partnership. On two year basis, it looks likes the traffic accelerate 130 basis points in the quarter, while check deteriorated about 190 basis points. I guess, look like the success of digital during the quarter, but you previously called out that digital is a higher check and sales channels. Can you talk about the dynamics behind the check traffic changes from 1Q to 2Q?

I mean, we had posted traffic in the quarter of 1.3 and price mix of 2.3, schedule of 3.6 comp. So both positive and we were very pleased with the continued, both the traffic. Price mix is -- we don't split it out any further but you know the direction of what we've taken on price. That's not lapping on itself when it comes to -- depending on which periods you are comparing it to, so particularly looked at the impact of digital. And we do, we continue to see higher average check in those digital channels. So with the growth of digital, that will continue to impact that. But as I say, we're now lapping growth of digital and delivery on growth of digital delivery, which is positive of what you're looking at.

And Tara, just a longer term question, at the time of the IPO, you referenced that long-term restaurant margin guidance you said at 18% to 22%, which 4.5 years ago is obviously before third party delivery with the factor before targeted $15 minimum wages throughout much of the country. With the 2019 margin guidance for approximately 23% getting close to the high and long-term margin. Can you talk about the offsets help preserving grow margins overtime as long-term guidance for low single digit same store sales growth easing enough to help -- theoretically isn't enough to help lever the margins?

Andrew, its great point. In fact, Tara and I may both answer this. I will give the historical perspective. As I was here at the IPO and long before, that's definitely a number that we targeted at that time. It remains a number we believe we can hit over the course of new shacks as they come into the system. We absolutely believe that we've seen it many places, but there are new pressures. Labor continues to be a pressure and no sign of that lighting up. But we do believe obviously delivery and some of the digital world will be a pressure. But I think we've got some really good things in place for the long-term. We've got work to do to make sure that our labor over the long-term can settle, our cogs over the long-term can settle. And we do believe we also have strong price power over the very long-term, which will factor in both of those. There's couple of things you got to remember about Shake Shack, it's really important to say these things. We have 140 restaurants. We are in 28 states. When we opened one restaurant on Saturday, we opened in Utah. That Shake Shack is out there by itself, that's really hard to run that restaurant. Now, it's going to be crazy sales. And there was about a thousand people online on Saturday, and a whole heck of a lot of excitement. And that's great. But someday we have lots of restaurants in Salt Lake City. A lot of things get better. And that part of what we need to look at. There is distribution. That over the long-term will help food costs. We have more than 20 different distribution centers around this country. Next year, we intend open up no new ones. So what does that mean? It means that the trucks that we have in those distributors get fuller and fuller as we go deeper. And that's why we've talked about this strategy of going deeper in current markets. So we've got some of that, just scale in general. Learning -- we've got to learn how to run shacks in all these different parts of the country. We've gone pretty far pretty fast and now we're deepening that learning. So look, it's -- I think it's a tick on each part of the P&L over time near term pressure. But eventually, that levels off. That levels off in a pretty darn good company.

Thank you. We'll now hear from Alton Stump with Longbow Research.

I just wanted to ask, there's certainly has been a fair amount of conversation in the industry about whether a store guest or other third party guys that have the margin profile looks when it goes through versus you're on your own site and/or inside your store, nothing like in any specifics. But is there any color on -- if it's all dilutive from a margin perspective if a customer does go to DoorDash as opposed to for your side directly?

So, you came in and out there a bit on. So I just want to make sure I got the question right. Really, it's a question of is delivery is a more expensive channel than somebody walking into Shake Shack, or going onto our site? Is that the question?

Yes, that's it.

So the answer is, yes. Delivery is more expensive. We have a commission in those in those businesses that we do not have on our own sites. If you come into a Shack, we also have less paper. So there's significant cost to that. So yes, we've added a channel that is a more expensive channel over time. But eventually, hopefully we can deliver on our own -- on our own app, as I mentioned a little bit earlier. But in general, look, we just want to find a balance of all the things that will drive long term sales growth for this company, delivery is one of them, sometimes those come at a cost. Part of why we chose Grub and this new partnership will be to lessen that cost over the long term. And we thought we were in a good place on that to help out as we lift it in the future.

Our final question will come from John Ivankoe with JPMorgan.

I was looking for a little bit of maybe color on the composition of the comps and specifically traffic. And I asked this just because your comp base digital is still so small, and it's getting increasingly diverse. If there's any characteristics by store here, by geography, by time of the day and by time of the day, I mean, whether off-peak or peak where you're specifically seeing strengths and if you see any areas that you could see for particular improvement over time.

Honestly, John, there are -- there's 74 Shacks in the base today, there'll be 84 by the end of the year. A significant portion of that remains in the northeast as we've talked about, both in New York and the Northeast in general. So it's still a small base. It's still fairly volatile. It happens to be up right now. A lot of that has been digital. As we've said, a lot of it has been strength to some of the call outs that Tara made earlier. So we haven't broken it out or shared why. I think when you look at what's the upside I think it's just maturing in certain markets. There's -- we've talked to over time that what happens to a Shack when we open a number of Shacks around it. You have your ups and downs there. But over time, we really feel like those things settle out and continue to grow again. Part of lot of what we have is a very mixed. There are some Shacks that are up, some that are down when they enter the base. All told, it's making for a really great story right now and some strong traffic. So not ready to break any of that out just yet. But just to say, it all -- there's a lot of strong momentum in the company right now and the comp base, and our sophomore Shacks, and in our freshman first year Shacks too.

And we do have a question form Andy Barish with Jefferies.

This is Alex on for Andy. Just wanted to follow-up on Alton's question. Assuming that Grubhub to continue to grow the mix of delivery once it's sold out nationally. Can we expect the headwinds and some delivery commissions to alleviate our margins just given the structure that took place with them…

Given the long-term agreement we have with them, that's a structure we do believe that will be helpful to our OpEx line over the long-term. Now, it remains a question mark of how much that continues to grow, and that will play into the factor of how much of total sales becomes delivery. But in general, we expect to do better on that line once fully rolled out than we have over this last couple of years.

That will conclude today's question-and-answer session. I will now turn the conference over to Randy Garutti, CEO for any additional or closing remarks.

I just want to thank everybody for coming for the call tonight. It's been a busy day I'm sure for all of you view in the market, so we appreciate you taking some time to be with us at Shake Shack. Thanks again and we will talk to you soon. Take care.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.