Greetings, and welcome to Shake Shack's Second Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Mr. Rik Powell, Senior Vice President of Finance and Investor Relations.

Thank you, Laura, and good evening, everybody. Joining me the Shake Shack's conference call is our CEO, Randy Garutti; and President and 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 a substitute. The results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release in the appendix to our supplemental materials. Some of today's statements be forward-looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our annual report on Form 10-K filed on February 24, 2020, and Form 10-Q filed on May 4, 2020, as well as our Form 8-K business updates throughout the quarter and into July. 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 2020 earnings release, which can be found at investor.shakeshack.com in the News section. Additionally, we have posted our second quarter 2020 supplemental earnings materials, which can be found in the Events and Presentations section on our site or as an exhibit to our 8-K for the quarter. With that, I'll turn the call over to Randy.

Thanks, Rik, and good evening, everyone. We hope you, your families and our entire Shake Shack community are all staying healthy and safe. Through this difficult time, I've been incredibly proud of our team. They have continued to show up, support each other, our guests, our communities and our suppliers. They had an unwavering commitment to excellence in hospitality in the face of an incredibly challenging operating environment. We owe them a debt of gratitude and remain committed to their safety, well-being and ongoing development and growth. In the second quarter, we committed to pay an incremental $2.4 million across premium pay, guaranteed bonuses and scheduling-related premiums to our teams in order to recognize the incredibly challenging conditions they are doing every day. We're happy to share that we'll be continuing to support our teams in this way into the third quarter. Looking at the second quarter. Shack sales were down 39% compared to last year, while same-Shack sales declined 49%. However, sales showed continuous improvement through the quarter. Sales in June did see a significant impact from the temporary Shack closures and reduced operating hours related to nationwide protest activity. Tara will go into this in further detail. But given the high-growth nature of our business and relative small size of the comp base, yet again, same-Shack sales should not be the sole metric on which to understand current business performance. Total sales and average weekly sales continue to grow. And in fiscal July, we saw an 8% increase in average weekly sales compared to the prior period. As of today, approximately 95% of our domestic company-operated Shacks are open, an improvement from the roughly 90% open at the time of our last earnings call. Less than half of our Shacks are currently operating with interior dining, however, a…

Thanks, Randy, and good evening, everyone. Firstly, I'd like to reiterate Randy's thanks and appreciation to all our teams right now, particularly those in the Shacks, but also our home office working remotely. Everyone has stepped up to such incredible new highs over recent months. In support of each other and our company as a whole. We're looking forward to being in person together again soon. And in the meantime, thank you for all you continue to do. Moving on to the results, as previously shared, total revenue for the second quarter was $91.8 million, including Shack sales of $89.5 million and license revenue of $2.3 million. We estimate that Shack sales were negatively impacted by approximately $3.2 million due to nationwide protests and resulting curfews causing temporary Shack closures and reduced operating hours during the two-week period from May 28 to June 10. Same-Shack sales declined approximately 49% in the second quarter compared to the prior year driven by a decline in traffic of 60.1% and an increase in price/mix of 11.1%. The increase in price/mix was driven by a 28% increase in our average Shack as a result of the significant shift into digital channels we've seen over the last few months, which have historically carried a higher average check than in Shack. In terms of sequential progression of same-shack sales throughout the quarter, we were encouraged with the continued improvement with year-on-year declines of 64% and 42% for fiscal April and May, respectively, and 39% in fiscal June when adjusting for the impact of the protest. Including the impact of the protest, same-Shack sales reflect a decline of 42% in fiscal June. Same-Shack sales in fiscal July were down 39%, while delivering a further sequential increase in average weekly sales in the period, all of which can…

Thanks, Tara. Despite this being one of the most challenging environments, any of us could have ever imagined, we're moving forward with confidence. The team is looking at for each other. Our business is gradually working through its recovery, along with the rest of our country. And we're excited about the progress being made across the key strategic there of our company. We entered this crisis with tremendous momentum in a position of strength. Our balance sheet today is now stronger than it's ever been. And we will come out of this moment with an unmatched resolve and determination to grow again and improve the lives of our team along the way. As cities recover and people ultimately gather again, we're well positioned to capitalize on the many opportunities that lie ahead. And in the meantime, we'll continue to use the moment as one for learning. We're testing and innovation, ensuring that we come out of this crisis even stronger than how we entered it. Until then, hope you all stay safe and stay healthy. With that, operator, please open up the call for questions. Thanks.

[Operator Instructions] Our first question comes from the line of Sharon Zackfia with William Blair. You may proceed with your question.

Thanks for all the detail and congratulations on pivoting a lot in the current environment. I guess I'm sure a lot of the other questions are going to be asked. I'm going to ask about cloud kitchens. I was actually pretty curious about what led to that decision in the UK. I know they have a very different delivery architecture there, but are there applicable elements there that might make sense as well as you think about the U.S.?

Yes. Maybe, Sharon, I mean it's not something we're focused on. We haven't really been – we're really much more focused on Shack Track than taking our current Shacks. And obviously, the ones with capacity right now, more than ever and making sure we can easily access for all channels at our current Shacks. In the U.K., it was interesting. For the U.K., completely shutdown, okay? And we support our partners and the tests and things that they want to try as long as we think it's great for the business overall. What's been cool about our test in London – and sorry, one other fact. The way that the U.K. laws have worked with landlords and paying rents and those sort of things. You got to be sure you can kind of recover in order to make it worthwhile opening. There's a little bit different structure there. So it got the team aggressive. They got the team thinking about what else they could do to recapture some of that lost sales. And what it did, with the four that we have, they sent us to different neighborhoods. So it was at one time a sales saving atmosphere, and at another time, a test of new neighborhoods. That's the kind of learning we want to get to, especially in urban centers, as we think about our ability to drive deeper over time. And let's remember, we only have 172 Shake Shacks that we owned in this country, in the U.S. We got a long way to go. We got a long way to go in London. So, again, not our top focus today. But we love working with our partners to get the learning we can. And we'll see where it goes from here. But thanks.

Thank you.

Our next question comes from the line of Joshua Long with Piper Sandler. You may proceed with your question.

Great. Thanks for taking the question. I wanted to see if you could dive into some of the items you alluded to in terms of helping out those Shacks that have been most impacted. Curious on kind of how that's evolved from first quarter going to the second quarter and then now as some of the markets have started to close back down again, just what you've been able to do and what you found most impactful?

Well, this goes to what we started at the beginning and talk about our teams. I mean, it's been incredible, the pivot that we made. You go back to March, it seems both like yesterday and 100 years ago, right, where we were immediately flipping towards state home orders, taking orders outside, changing to these pop up drive-throughs. We've been able to shift a lot of that now to more of a better understanding, more contactless. Our Shacks before – at the beginning of this, we didn't have that immediately ready. Now we've got it, really making sure our outdoor patios. We have over 80% of our Shacks have the opportunity for some type of outdoor patio seating. We're lucky, as part of our real estate strategy, even in the hardest hit areas. We're next to parks. We're next to places where people can gather. So it's been really about making sure we can improve the access, convenience. Then we started to do some really fun brand marketing, right? We've done shock camp for our families at home this summer. We've continued to engage with our guests. It's been really fun for us. And as we've – I hope you caught some of those notes, where we had 800,000 new users on our app channels. That is a huge number for a small company like us on top of only 172 restaurants. That's huge. We're going to capitalize on that. So the digital initiatives, the opportunity to drive digital engagement is huge. And as we look ahead, we look at the kind of the first product where we've kind of gone purposely slimmer on product. Now we're going to start to expand that, as we head into the fall with Hot Chick'n. I think that will be a good opportunity to hopefully drive some sales. But Josh, look, the neighborhoods are impacted as they're impacted. There's not a lot we can do on 44th Street and 8th Avenue with Broadway shutdown, we’ve totally been shutdown in New York City. One of our best restaurants in the world, our Theater District location, is today one of our lowest performing. I mean, to think that, that could have ever happened, it's crazy, right? There's not a lot you can do, but make it great every time with every guest you have in that restaurant. And as things recover, we fully expect it to recover. But the impact – you use your seamless. The lag in our numbers that you're seeing is really due to that urban-suburban breakdown. And the kind of Shacks that we've built over the years that have been our sweet spot as our brand and will be, again, certainly. But in the meantime, they're tougher to come back, but we'll get there. We're going to keep learning and try and do things.

Our next question comes from the line of Jared Garber with Goldman Sachs. You may proceed with your question.

Hi. Thanks for taking my question today. Really cool renderings of the new drive-thru locations, potentially working through. I just wanted to get a sense of how you think about that long term. Is this something that is going to be a major focus for the brand as we continue to see new units go up? And then I also wanted to get a little bit of an understanding of how you're thinking about the sort of the unit-level economics of these locations versus your typical sort of $3 million, $2 million, 20% margin figures?

Well, look, our goal – I'll start with the second part of your question. As I said in my notes, our goal, as always, is to increase the addressable market for Shake Shack as well as drive those long-term AUVs and profits that – and returns on capital that this company has been known for since day one. It's too early to comment on what those numbers are going to look like. We'll let you know as we perform. Our hope is that we create access in places where we may not have had access before, and we create opportunity in real estate that we may not have had before. And we're really excited about. If you look at that rendering – these are evolving things. We've got our sights on a few locations that we think we can execute, but we'll see. I think initially, it will be a smaller part of our portfolio where we'll be leaning more into Shack Track, both and pickup for preordering on the application, because we think that digital engagement we've created is going to be sticky. But we'll see. I think one of the things that we've learned over time, and you see it certainly now. Look, in the moment of safety, people want to stay in their cars. That's not going to last forever. But obviously, this country has proven that the drive-through in its old form works. We want to do in this new form. We want to do it better than ever with an experience that you stay you drive-through whichever you want. And it's everything Shake Shack has always been, that modern version of that old Road side community gathering place.

Our next question comes from the line of Lauren Silberman with Credit Suisse. You may proceed with your question.

Just a quick follow-up on the other – the prior question. Are you rethinking your unit development pipeline at all just over the next two to three years in terms of where you'll look to grow? And then my actual question is, you've talked a lot about your holistic approach to digital across the business. We've seen a large number of restaurant companies launch loyalty program recently to complement their digital strategies. So how are you thinking about loyalty? And has your thoughts evolved as you've attracted more customers into the digital ecosystem?

I'll take the first part and let Tara take the loyalty and digital part. Lauren, we've always had a multi-format approach. I think what this does is accelerates and amplifies our desire to get as many sites as we can that meet all those goals that also have accessibility. Look, we still have a number of fantastic sites even in urban Manhattan that we hope to do in the near future. So we're going to keep doing those. There are many great cities in this country that we've not even been to yet. And many that are – we can go a lot deeper in, in both urban and suburban. And look, we fundamentally believe that real estate – great real estate is great real estate. There's no question, that hurts us today and it hurts us more than others that are just drive-through in suburban atmospheres, and you're seeing that. But we – that will come back, right? That will come back. And it's important for us to continue to build a diverse portfolio that can sustain all of those. So as we look at next year, as I said, roughly a-quarter of the class should have a walkup Shack Track window. Roughly a quarter of that class should have a drive-up Shack Track window for preordering will throw a – we'll test our first drive-through in there. And the rest will be similar Shack experiences that you've known, which just continue to enhance curbside pickup and the pickup experience to add new conveniences to the way that the Shack has still continued to be. We're going to continue to be that. Tara?

Yeah. And then, hey, Lauren. So we have no plans today to launch any sort of formal loyalty program. But I would say, what underpins a loyalty program in terms of its objectives, whether that be around new guest acquisition or more typically around driving increased retention and frequency, sometimes average spend referral, all these different types of components that typically a loyalty program is trying to achieve are absolutely part of our broader digital strategy and marketing and tech development plan and we're just in it. We're in a position today where we're really in the ground scheme of things, although digital has been a priority for us for a couple of years now. We're still actually relatively early in that journey. And I think as you can see from some of the things that we're just launching. So behind the scenes, behind things like curbside or ultimately delivery through the app or as we expand our payment options, behind the scenes, we're also working really hard to further build out and in some cases, upgrade our digital infrastructure, so that we can build a more holistic view of that guest. And as we've talked about before, then ultimately go on the kind of data and insights from that holistic view and that single view of the guest, but also more importantly, we build a more engaging dynamic personal relationship with them. So I think no to the formal loyalty program. But absolutely yes, in terms of the types of functionality that we're putting into these products to drive the same type of outcomes that the loyalty program ultimately would.

Our next question comes from the line of Jake Bartlett with SunTrust. You may proceed with your question. Our next question comes from the line of John Glass with Morgan Stanley. You may proceed with your question

Thanks. Perhaps two unrelated questions. But one is, what is the percentage of your food that's actually consumed off-premise now? I mean a lot of brands are now sort of realized in hindsight, well, we've got a dining room, but really actually very few people are using it relative to the size of it. And so one is what is that off-premise mix in total people walking out as well as delivering all the other things. Do you think that on average, the Shack sizes could come down over time as a result? I know there's a lot of different formats, but is that a goal or not really. And then just the unrelated part is you had some aggregators this quarter. I just wonder if that's gotten the result you hope to, did it expand delivery? Any comments on how delivery stood in your second quarter since that was such a heavy delivery quarter for the consumer?

Yes. So as a percentage of sales, John, the most recent data that we shared P7 was 62% of orders happening digitally, okay? That includes our channels, the biggest growing channel as well as delivery channels. Now of the people who order, of the remaining 38%, a lot of them still take it to go. So we haven't shared that exact number, but the vast, vast majority are taking it to go where I even noted in the notes, just about only half of our Shacks even have some kind of dining room continuing to be open. And we were well on that road to reopening dining rooms as many others were. But as harder hit states like California and Texas, Florida, we also pulled back. And we're going to take our time on that. We're not going to put our teams in danger unnecessarily or our guests. And we want to make sure when we open it, we feel like it's -- it can be in a place that, that makes sense. So vast majority of people happening off-site right now. And we can't wait to get them back. And I know they can't wait to get back, too. To your second question on Shack size. That I think it's going to be all the above, John. I think there's going to be some that are the current larger Shack size. And we do continue to target, especially as we think about some of these urban locations for the future. That can be smaller. That can really lean into this new and improved digital architecture here where people are taking it to go and so many of our urban Shacks always had a higher percentage to go than the suburban Shacks anyway. So I think we can look at it that way and possibly benefit from there. That will be balanced out by the full Experience Shacks that we will continue to build in the portfolio. On delivery, yes, I think the answer is yes. To -- it certainly has had an impact. We have great relationships with all the major delivery carriers, really excited with the growth of most recently of Uber Eats. We're -- but we're excited with what that's going. I think as in Shack has come up, and our own channels continue to grow, delivery will likely settle in a very comfortable place, still much more elevated than it ever was and we're excited about that. But I want to also note that we mentioned that we are working through delivery in our own app. And we hope that we can continue to build that channel with great growth and keeping people in our infrastructure over time. So lots of that. Lots of relationships go to be interesting to see how the delivery world continues to go as this pandemic and beyond goes. Thanks, John.

Our next question comes from the line of Jake Bartlett with SunTrust. You may proceed with your question.

All right. So I'll try to make it quick. My first question really is on dine-in being offered. You mentioned it was less than 50% of the system. Is the -- could you give us the percentage that it's open in suburban Shacks versus the urban Shacks? And then also in that context, maybe how are the sales at the stores that have dine-in open performing relative to your overall same-store sales? And then my second question -- sorry, I'll ask a second after your response.

Go ahead. Go ahead, Jake. Go ahead.

Okay. The second one is just on development going forward. And I'm wondering if it's fair to kind of assume that the stores that are slipping out of 2020, you've talked about being confident in the real estate pipeline. But should we assume that, that basically kind of layered what would have happened 2020 -- into 2021? Or are there any constraints like labor or any other constraints that should kind of caution us away from assuming you kind of not double up, but kind of make up for the loss development in 2021.

Okay. So on the dine-in, we haven't really broken out whether suburban or urban dine-in works better or worse. I think that really is a Shack-by-Shack conversation. Again, with us being still not having that many units. It's really regionally based more than suburban and urban. And look, if you go around New York City right now, you're not meeting inside any of our Shacks. They're only open outside. That impacts us, right? If it's a 95-degree July day in New York City, that impacts us. But some of our suburban Shacks that have opened do quite well. And to the second part of your question, yes, generally, as we reopen dining room, that benefits sales. That is a direct correlation for us. So as we've had to revert to some closures through P7, that's harder, right? You see that slowing the recovery. And we'll see. This is something that is unknown. We're going to take our time. As development -- as you look forward, look, we do not expect to do the lost 2020 plus, a full class of 2021, we're working on what we believe will be an appropriate class for 2021. And what gets in the way, and it's a pretty straight answer, the uncertainty of COVID and making sure that we can continue to execute. Look, the real estate is there. But we've also got to make sure we're rebuilding. We've got to make sure we're staffing. It's a time where you have a lot of people unemployed. You have a lot of people shifting how they want to work. And we really do need to get past this COVID time. That said, we are committed to openings. We're committed to continuing to hire and provide those development opportunities for our team that we always have. So no guidance at all on 2021 for yet, Jake. Still a class that needs to come together and it's still a world that needs to come together. So we'll keep you posted as all that goes. And as COVID recovery goes, I think we'll try to capitalize on that as soon as we can.

Our next question comes from the line of John Ivankoe with JPMorgan. You may proceed with your question.

Hi. Thank you. Two related ones, if I may. Tara, in your prepared remarks, you kind of talked in the comment around you're looking at pricing for delivery. And I do wonder if that potential pricing could be used to potentially fully offset the cost of delivery, making it more or less profit neutral to the in-store transaction. That's the first question. And then secondly, you did mention you expect some data and analytics to be rolled out in 2021. What are the benefits that you could see in the near term in 2021 from this new program or the functionality in that year that you haven't gotten either this year or in the past that could potentially change your trajectory? Thank you.

Hey, John. Well, we're actually really pleased with our trajectory when it comes to digital. I mean, some of those stats that we gave you on the call was the fact we've retained 90% of the high point or the quadrupling of new users, for example, on a year-on-year basis. We're really excited about the fact that digital momentum continues as such force. As it relates to delivery pricing, yes, I mean we mentioned it. There's no plans today to increase our prices or change our prices in the delivery channel. But it remains something that we look at, remains something that is an option to us on a go-forward basis. And it's something that we may consider at some point in time. I believe we're in the minority in terms of restaurants who do not have some sort of pricing differential, but we'll see. It's good to have that optionality. And I think really, we will look at it in totality and with a broader lens as we bring delivery into our own channels, for example. And then think about it really within that context. So there's a lot of progress when it comes to a little bit delivery, all the digital initiatives really across the board outside of just delivery.

And I apologize, if I misheard or I misspoke, separating digital, which is very clear that you are doing a very good job with. But I thought I heard something around data and analytics in 2021 maybe I didn't hear that or heard that on a previous conference call, I'm not sure. But can you kind of talk about the data and analytics side of your business in terms of understanding some of that digital, understanding some of that customer, how to get your customers you can see more frequently or broaden that customer base or have that customer, you spend more, what have you? I mean, did I hear correctly that, that is a new functionality of that may be coming in 2021? And if I did mishear that, just comment on that broadly speaking. Thank you.

Yes. No, I don't know – I don't think I mentioned it specifically in my prepared remarks, but you certainly heard me talk about data and insights many times before. And so I'm not sure that we've got a light switch that's about to be flipped at any point today or in 2021. But as we look at the vast amount of development and innovation that's going on across the company right now in the digital kind of ecosystem. Behind the scenes, building the data and analytics infrastructure is absolutely a part of that road map. It's something that we started earlier in the year. It's something that is part of the investment that we have restarted. And you're absolutely right. It underpins all of these different digital channels because it will allow us to build that single view of our customer. And as I mentioned to Lauren, also begin to engage with them in a much more personalized in a much more individual – a much more relevant manner to drive all those type of outcomes that we're talking about, which again, you've rightly mentioned. So you're absolutely right that it's critical. It's just not guest-facing.

And John, you were right. It was in my section where I noted it quickly as we were talking about some of the investments that we're making on digital. So you're both right.

Yes.

Our next question comes from the line of Alton Stump with Longbow Research. You may proceed with your question.

Yes, great. Thanks for taking my question. I just wanted to press on what I think I was asked earlier about I just kind of think about our next couple of years, kind of like devil's advocate, if we don't see the consumer go back sort of pre con normal. Could that have any impact on your decisions to maybe build more suburban versus urban locations? Or is it just too early now to really no sure if it's going to have that impact or not.

Well, Alton, it's a good question. None of us – I'll leave that to the economists and the future tellers to figure that out for us. What we're going to do is make sure that our company is well positioned for value, which it always has been. For experience, even if the economy – and we see a deeper and longer-lasting recession. That certainly could happen. There's going to be some impact from that. And we will see. What we want to do is make sure our product, our pricing and everything we do fits into a world that, that can work for people. That is who we have been. From the beginning, both in good economic times, entering the last great recession when we began the growth of our company in 2008, 2009 and today. So look, I think when we think about the portfolio, it is going to be balanced, as I've said a few times on this call. We absolutely think there will be a mix of suburban. We think there will be a return to cities. It might look a little different for a while. But ultimately, we believe urban centers are going to continue their path that they began. But it may take some time. And we're going to balance out our portfolio in the meantime to make sure we've got strength everywhere.

Our next question comes from the line of Chris O'Cull with Stifel. You may proceed with your question.

Great. Thanks. Good afternoon, guys. This is Patrick on for Chris. I was curious start planning – or when are you planning to start testing your own delivery channel? And if that's something you see rolling out across the system? Or do you believe it's just certain markets or location type for that makes more sense. Then secondly, on the Shack Track additions that you mentioned in the deck, what do you think the total opportunity is to potentially add a Shack Track to or retrofit Shack Track with existing units?

So I'll start with the Shack Track – go ahead, Tara.

Okay. I mean on the delivery, I think we don't have a specific launch date for you. I think we expect that to be a capability that we can offer within the next sort of six to 12 months. Hopefully, the earlier part of that, but there's a lot going on in the digital and the development team right now. And I suspect, like most new functionality, we will test it in different way and different places. So all of that still to be worked out, and we'll update you once we've got a more formal launch plan. It's certainly not tomorrow. But it's very much on the roadmap.

Yes. When you look at Shack Track – sorry Tara.

No, no, it’s good.

Good. As we look at Shack Track, it's hard to say -- not every Shack will be out to be easily converted when we think about the exterior ability to have either delivery drivers in a separate area, and our pre-order channels, really, the definition of Shack Track is going to be our preorder channels and the ability to get that pickup in an exterior way that's separate and easy for you. Whether you choose to stay or take it to go. There's a lot that can. There's a lot that a little funkier than others. We showed a couple of pictures of some of the ones we think we're going to work towards execution in the supplemental deck, and you'll get an idea for that. So at a minimum, the interior pickup experience will continue to improve. We know one of the greatest challenges is Shake Shack is we're high volume restaurants, there’s a whole bunch of people. And we know that was a challenge of pre-COVID, and it's certainly going to be a challenge now, so that we want to make sure we can improve that ease of use and convenience for our guests to get their great premium Shake Shack food and a little bit easier fashion.

Our next question comes from the line of Jeffrey Bernstein with Barclays. You may proceed with your question.

Great. Thank you very much. And again, thank you for the incremental color on the slide deck, the period and geography stuff is very helpful. Just as I think about the comp recovery as you progressed over the past three or months, it seemed like you had a huge improvement in May, north of 20 percentage points off of the April troughs. But then in June, I guess, it slowed down to 300 basis points after you adjusted. And July seems like it's totally flat with June at the same down 39%. And then, I guess, despite some reopenings, I know when you look by region, it shows like the Northeast saw a huge improvement in July. But yet, it was only single-digit improvements in noncore markets. So my question really, why do you think the recovery may be slowed or stalled out a little bit in the most recent month or two? And how do you gain confidence that the headwind is all COVID-related rather than perhaps the brand maybe not resonating in certain new markets. Just wondering how you decipher that as a new growth company going into some of these markets, whether it's the brand or whether it's just the COVID headwinds? Thank you.

Well, I wouldn't put a whole lot on the brand in trying to establish that during COVID. I think the brand is stronger than ever and remains one of the great brands in our industry. So we're really confident in that. Look, the pop to May was coming off of massive lows. June, we're deeply hit by protest, again, a result of our urban architecture that you see. And then as you look at July, we had reclosing of diners. And that's another kind of bump back as some of those regions like California, Texas, Florida, many others were hit. So if you really look at the regionality, you'll see – and this is – let's go back to the beginning of what we've said since we've gone public. Comp is not the only way to look at this business. We have about half of our restaurants in here and they are wildly swung. If you were to look at some of our top restaurants, okay, in this company and understand the impact that they have, [indiscernible] district in New York City, Penn Station. These Shacks haven't gotten any better because of the summer came. These are some of our best restaurants and some of the best restaurants. I'm not sure there are a whole lot of $5 burger joints in the world that look like these. And there's a lot of those in the Shake Shacks system, not just in Manhattan. But those really drag it down. Those big impacts really drag it down. And that is part of the story we've told for the Shake Shack same-Shack sales comp base from the organic, it's frustrating for us, and we've got some of our best restaurants still close Grand Central terminal, one of our best restaurants in the country. It's closed, right? These are unfortunate truths in the COVID reality. So look, I think our brand is strong. I think July was better than it was in the past. And we're hopeful that we'll continue to tick up. And as the world -- we hope continues on a positive trajectory. There's no guarantees, we're going to try to capitalize on that and get ourselves back to a gradual recovery.

Our next question comes from the line of Andrew Charles with Cowen. You may proceed with your question.

Randy, I appreciate the commentary for 15 to 20 planned openings for 2020. But can you talk about the decision to resume development following same-shack sales that have covered at a similar level in the last 3 months? Given the cash positioning, is there an opportunity to secure the lease to get you good sites for the future apathy actual construction development in order to concentrate the efforts and increase the focus on the recovery rather than growth.

I think we can continue to focus on both, Andrew. This is not a cash issue. We have fortified our balance sheet to an incredible amount that gives us total flexibility as we look forward. I want to call out a note that Tara shared that our new Shacks in period 7, July, performed at 40% higher average weekly sales than our current system. So if that gives you any indication of whether people are excited to find the new Shack in their neighborhood. I think that answers it for you. Now we'll see where that goes. It's very hard to measure what a new Shack looks like during COVID. But we tend in places like Sacramento, California for the first time to extraordinary start. We've deepened our footprint in LA; we've given our footprint in St. Louis and North Carolina and many other places. So we're excited to keep growing, but we shouldn't do it at the same rate. That's why we're not going to hit our original guidance for a good reason. But it certainly is not taking the focus off of recovery. Recovery for us -- I believe our teams are working hard in doing so many of the right things. Recovery for us is a big part of COVID allowing for return, return to travel. We exist in some of the best, most high-traffic demand areas in the world. And we'll keep focusing on that with everything we can. And we also need some tailwinds of the world COVID to start going our way a little bit to get back to full recovery as it takes some time.

Our next question comes from the line of David Tarantino with Baird. You may proceed with your question.

Hi. Good afternoon. My question's on the shape of the sales recovery you're seeing. And I fully appreciate the challenges you have in some of the urban markets. But I wanted to focus the question on the suburban Shacks. So if I look at how that's trended and how that is trending down 24% in July. It does seem like the absolute level of the comps or the recovery has been shallower than what we're seeing elsewhere among concepts that would put in your peer group. So just wondering if you could comment on that and what you think might be the biggest impediment in the suburban Shacks, specifically in terms of recovering the sales?

Well, let's start with anyone you would put in our peer group probably has thousands or multiples of that, more restaurants than we do. So let's just start there. We have less than 100 Shake Shacks in the comp base of which we're talking about right now. So it's wildly swung by just a few. So it's really hard to compare us to the industry in that regard. There are some Shacks that are up. There are some suburban Shacks that are up. But you have to remember, when you think about suburban, a lot of these are high-traffic destinations as well. Some malls, right? The malls are not the busiest places right now, other places where people would necessarily gather, even where traffic, travel, tourism and business, suburban business centers as well. So the greatness of our real estate is exactly the challenge we have today. I think when you compare us to companies with thousands of other restaurants that have a more regular real estate and much more diversified over time, it's much more -- let me not speak for them, but it's a little bit more spread out. Our real estate is a little more special and, therefore, impacted. And that's really the sort we're trying to tell with these extra numbers today.

Okay, thanks for the perspective.

Our next question comes from the line of Brett Levy with MCM. You may proceed with your question.

Okay, thank you. Thanks for taking the call, and thanks sharing all the details. Tara, if you could just recap again what you said on the cash burn rate. I think you had said -- well, I'll just let you speak on that. And also, you've given us great segmentation on sales. Would you care to share anything in terms of buckets of margins by either suburbans or the regions, just what the delta looks like in the best and worst quartiles? Thank you.

Hey, Brett, yes, I'm happy to just restate the cash flow piece. So what we said was that we're pleased that we are now positive cash at the Shack level. And we're improved at the enterprise level to achieve the 100,000. That 100,000 excludes the temporary premium pay and the guaranteed manager bonuses in the Shack and also excludes new Shack development CapEx. The number is also reflective of our current G&A spend, which I also mentioned in my prepared remarks, we're beginning to gradually increase as sales come back, and we've become more proactive on our strategic investment strategy. In terms of profitability, we obviously haven't reported and working down profitability in terms of any kind of segmentation. But the biggest correlation to profitability, it wouldn't surprise you to know is sales. So I think you can look directionally at sales performance and assume that profitability to some degree will mirror that. Sales will be as sales recover, so will profitability. And therefore, you can apply that rationale Shack-by-Shack or a region-by-region basis. And it's fair to say the open Shacks are hurting a bit more right now, generally speaking.

Our next question comes from the line of Peter Saleh with BTIG. You may proceed with your question.

Great. Thanks for taking my question. I appreciate all the color that you guys provided today. I wanted to come back to the conversation on the development side and all the formats. Can you just give us a sense on the real estate strategy going forward with the new formats? Do you think the sites that you're going to be targeting you think they'll be available for lease? Or do you think you'll have to spend more to acquire some land and maybe change your strategy up a little bit going forward?

Yes. We don't really intend to purchase. That's part of the question. We do continue to intend the lease as we have. We don't own any real estate today. And I did not say we would never, but that's not our -- the best return on capital for Shake Shack today. Look, we're finding that there is an ever-shifting moment here. Big landlords and small are waking up to see who is out there. Many restaurants and retail will struggle, both in dry retail and restaurants. And you're going to see a pretty radical shift. Look, I think drive-through locations will continue to be kind of what they were. They're pretty good locations. We'll see what the expectations are because I think people are going to continue to grow in those. But they're available. They're available. There's a lot of brands who -- I mean you follow it. You see the number of brands that are either bankrupt or struggling there's going to be a lot of sites available. We want to make sure we go after the best, as we always have. And when we do that, we'll do it in each category. So if we're going after some suburban real estate that can either be a drive-through or a Shack Track drive-up or pickup, we're going to make sure that's great real estate and has a great return on capital, we're going to go right after it. I think this is a great moment to be in market and being a buyer. It's a great moment to be one of the not so many brands that are out there, being opportunistic, being aggressive and getting after it. We've got a lot of phone calls coming our way about great real-estate opportunities. And we're going to do that appropriately. So the whole point of sharing with you these new formats today is to, again, continue to encourage the understanding of the growth of the addressable market and the amount of locations that we think we can get to. And that's taking the next step for us in that opportunity next year.

Our next question comes from the line of Brian Vaccaro with Raymond James. You may proceed with your question.

Thanks and good evening. I had a question, follow-up by just a quick clarification. The question is, based on the disclosures for many of your peers, it's been interesting to see how the consumers utilized takeout versus delivery in the COVID environment. And just curious what percentage of your digital sales were delivery in the second quarter. And I know it's still early, but could you share a little more on how the curbside pickup test performed in the test -- the 10 test units?

Yes. So we haven't broken out the delivery. It's within the 62% total, we have broken it out. What we have said and we reiterate our channels are the stronger ones and the higher growing channels. While, again, we're excited about the amount of delivery, we're doing and excited to continue that channel. We haven't broken it out. When we talk about curbside, it's literally just been a couple of weeks. So, it's really new. It's only about 10 Shacks. And the initial data is that each day, it's grown a little bit. Each day, people are figuring it out. We haven't marketed it. We haven't told anyone. It literally just pops up in the app. So, if you're savvy enough, you say, cool. This is a new option. I'm not sure this. I'm going to try this. And people are trying it. More and more every day. And we're really excited about it. So that, to us, we believe, has the opportunity -- everything is about guest experience, especially now. And everything now is about guest experience, including safety. Make sure I can come to your brand and feel good about it. I feel good about being safe. We're going to live that for a while. And curbside, we believe, can be a solid addition. So, we're hoping to get to 50 Shacks by the end of this quarter and we'll keep you posted. I'm excited about this. I think this is a fundamental big opportunity for Shake Shack, just to shift. To shift how people use us, make it easier on them. Reduce some of that stress. And in the meantime, use that, and we'll see. And you can even do it. If you intend to stay, we'll see. So preorder ahead, there's going to be a lot of opportunities to use the convenience.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Mr. Randy Garutti for closing remarks.

I want to thank everyone on the call today. Look, the second quarter for us for our country for so many companies has been a hard one. It's been a hard 1 for our team, and I'm incredibly thankful for their resilience. We're all hopeful that, that was a trough moment and that we will continue to see the gradual recovery coming out of it. And looking forward, we've got a lot of new ways and new exciting things we're going to be doing a Shake Shack to capture a great future. Thanks, everybody. We look forward to talking with you soon.

This concludes tonight's conference. You may disconnect your lines at this time. Thank you for your participation. Have a great day.