Greetings. Welcome to Shake Shack's First Quarter 2024 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Michael Oriolo, Vice President of FP&A and Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. Joining me for Shake Shack's conference call is our CEO, Randy Garutti; and CFO, Katie Fogertey. 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 the financial details section of our shareholder letter. Some of today's statements may 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 29, 2024. 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 first quarter 2024 shareholder letter which can be found at investor.shakeshack.com in the Quarterly Results section or as an exhibit to our 8-K for the quarter. I will now turn the call over to Randy.

Thanks, Mike, and good morning, everyone. As I wind down my time as CEO of Shake Shack, I want to begin by thanking our team for another solid quarter, sustained execution of our strategic plan and for building the strong foundation of momentum for what's ahead. This was the 13th consecutive quarter of positive Same-Shack sales, the seventh straight quarter of year-over-year restaurant level margin expansion and our highest first quarter restaurant margin since 2019. We achieved a record level of Q1 adjusted EBITDA overall at $35.9 million, grew total revenue by 14.7% to $290.5 million with 1.6% growth in Same-Shack sales and average weekly sales of $73,000, the trailing 12-month AUV across our Shacks at $3.9 million. We grew system-wide sales by 12.3% year-over-year to $443 million as we build Shacks across new and existing markets. And while we faced weather headwinds in January and throughout the quarter, our trends steadily improved with each month and into the second quarter, ending fiscal April at 4.9% Same-Shack sales with approximately flat traffic and further showing strong ongoing momentum into fiscal May to date as our sales and profitability initiatives take hold. In the quarter, we continued to improve profitability, increasing restaurant level profit margins to 19.5%, with expansion of 120 basis points year-over-year. We grew first quarter adjusted EBITDA by more than 30% year-over-year and improved our adjusted EBITDA margin by 150 basis points, growing from 10.9% last year to now 12.4%. We also continue to grow our footprint around the globe, opening 8 new Shacks in the first quarter for company-operated and for license, and we continue to expect approximately 80 Shack openings this year system-wide, roughly 15% unit growth, and we are building a robust pipeline of growth for the coming years. Our license business grew sales by…

Great. Thank you, and good morning. We're off to a solid start to 2024 with another quarter of continued profitable growth. Relative to the first quarter of last year, we grew total revenue by 14.7%, expanded restaurant margins by 120 basis points and grew adjusted EBITDA by 30.2% to 12.4% of total revenue, that's up 150 basis points versus last year. Our 2024 strategic priorities are build on the tremendous success we showed last year and are designed to bring us continued improvements in our profitability and cash flow even against macro pressures and we're showing solid signs of strength so far this year. And each month, we have improved sales. April got even better as we grew Same-Shack sales by 4.9% with approximately flat traffic, and we carried our momentum into fiscal May. Now on to first quarter results. Total revenue was $290.5 million, up 14.7% versus last year, driven by strong performance in new Shack openings system-wide and positive Same-Shack sales despite weather impacts in the quarter. We grew system-wide sales by 12.3% to a record high of $443.3 million with a line of sight to approximately $2 billion of system-wide sales in 2024. In license, we are pleased with our strong domestic performance and continue to face macroeconomic headwinds in the Middle East and China. We grew licensing sales by 8.1% year-over-year to $162.7 million and had a low single-digit sales headwind from foreign exchange in the quarter. We opened 4 licensed Shacks, growing the global licensed Shack count to 226. We grew company-operated Shack sales by 14.9% year-over-year to $280.6 million, with 4 Shack openings and 1.6% year-over-year growth in Same-Shack sales. Weather pressured our sales and comp in the quarter and our trends improved as weather pressures eased. We estimate that weather alone contributed to…

Thank you, Katie. Chewing off script there. But Katie, you've been -- you're an incredible CFO. She's been an amazing partner to me and everybody in this company. So thank you to everybody on our team. I believe this call represents my 38th earnings call as CEO since we went public more than 9 years ago. And what this group of people has achieved is a rare and special accomplishment and it's exceeded all of our wildest ambitions. Through it all, it's always been about our team. My greatest joy and I hope our most significant impact has been to create a place where our people could get a start, could develop, could grow and give them a chance to do their life's best work while taking care of each other and our communities. As I transition to an advisory role in the coming weeks, it's been a pleasure to get to know and welcome our new CEO, Rob Lynch. Rob has been spending a lot of time working with me to understand our history and how we've operated. He's been meeting with team members at every level, leaders across the company and learning so much of what makes us tick. This company is built upon a strong foundation, and we're ready to benefit from the next generation of leadership, and I have no doubt Rob will work with this extraordinary team to build the next set of strategies to take us to even higher heights and continue to drive Shake Shack forward. Make no mistake, Shake Shack is something special, and this company's future is bright. I want to thank our guests, our communities, our suppliers and all of our shareholders through the years for having the confidence in me and our team along every step of this journey. And lastly and most important, thank you to every single member of this team, who's ever worked here, whose hard work, creativity and love for this company has made all the difference. It has been the honor of my career to lead you and to be led by you. Our people are the secret in the Shack sauce and I trust that they always will be. With that, operator, we can go ahead and open the call for questions.

[Operator Instructions] Our first question is from Sharon Zackfia with William Blair.

Randy, I got a little teary eyed while that was being said. So we're all going to miss you. I guess I just wanted to clarify something about the kiosk lift. Did I hear correctly that you're seeing a high single-digit now versus I think it was high -- I'm sorry, high teens now versus what had been high single digit in the fourth quarter? And if so, kind of what's helping drive that improvement? And I know you've got a lot of other initiatives underway at the kiosk. So what are you seeing as you pilot some of the other initiatives? I guess I'm wondering how much more people are going to add on to their ticket with these kiosks.

Sharon, thanks for the question. So broadly with the kiosk strategy we have in place, we had talked about kind of at least a high single-digit lift and now we're seeing something kind of in the high teens. And really, it's been some exciting new interfaces that our digital marketing team has developed here to help guide the guests through that order experience and kind of focus more on the opportunity to trade up to a double, add bacon, some of the really great ways that our guests can customize their menu items that maybe are more intuitive at the cashier and we brought that over to the kiosk channel. I mean, it's now really kind of on par with where we are on our web offering as well. So then if I look at where the opportunities are going forward, we want to continue to push the envelope and learn and see what we can do from a digital merchandising standpoint to help our guests better understand our LTOs and more premium items continue to drive addition to the cart. But then at the same time, the work that the team is doing in development and in marketing is around making sure that we have exactly optimized wayfinding for how guests come into our Shacks, make sure that they very clearly see in every instance where that kiosk is as we want to continue to drive adoption. But just to bring it back, though, we are incredibly pleased with how the retrofit strategy on kiosk has helped not just us deliver a great guest experience, that's helped our team members manage their order journey within the Shacks, and I think it's helping our guests just to understand more about what our menu is and all of the great exciting offerings we have.

Our next question is from Lauren Silberman with Deutsche Bank.

And Randy, my congrats as well. It's been great to see what you've built. I wanted to ask about the comp, great momentum in April into May. The rest of the industry is slowing with negative traffic. What do you see as the most meaningful drivers of relative outperformance? And are you guys seeing any differences across regions?

Yes. Thanks, Lauren. I appreciate that. I'd say broadly a few things. Look, we know the industry has traffic pressure. We're not immune to that, and there are certain places where we see that as well. I think what we've done, though, and we've talked a lot about this is, we continue to employ more and more marketing, LTO, menu and guest experience strategies that have really picked up. So January was the low point, as we talked about, kind of flat. But with each successive month, we got better, comp got better, April, even better and sustaining so far into May, we feel really good about that. And we've just done a lot of fun brand campaigns. If you look at our Chicken Sundays campaign is particularly impactful in the month of April. We've done some cool promos. We've done a lot more dayparting opportunities to drive people and I think there's just kind of a -- those strategies are the ones that are offsetting what is no question, a little bit more of a pressure in the industry right now. So feel really proud of the entire team for how we've been reacting and driving, and it feels good for the momentum. We also have a little bit of an easier compare in second quarter and moving on in third quarter as well. The first quarter, we had a tough compare. We were over 10% comp last year. So that was some of the pressure on a 2-year basis. But we feel good about how that's been going. So momentum feels really solid in the company right now. So lots of good work.

Our next question is from Brian Vaccaro with Raymond James.

Congrats on all your success and what you've done to the business to, Randy, over the years. So on labor, can I just have some question there? You saw some very strong leverage in that line. And I think you said you're rolling Phase 2 changes through the year. Could you just elaborate on the changes that you're making there? And maybe how the savings on Phase 2 compare to Phase 1 and did you embed? And I guess, how much did you embed on Phase 2 savings within your annual store margin guidance?

Great, Brian. Thanks for the question. So first of all, on labor, we did show some pretty good leverage on that line in the quarter. And a lot of that, though, just to remind everybody, in 4Q 2022, we had about 22 new Shack openings. And really, that carried into the first quarter of 2023. And as you know, when we open up a new Shack, it takes a while for that Shack to work its way to kind of full profitability levels. We just had a very heavy weighted opening schedule in the fourth quarter that kind of had a hangover in the first quarter. Also, last year, we talked about the rollout of kind of improved forecasting and working closely with our operators and some strategies there to help bring in labor and kind of optimize for the current model that we have in place. And that really took hold kind of at the very end of the first quarter into the second quarter and going forward last year. So I think that's a lot of what you're seeing on that side. Now as far as the new labor model that we're running here and we're testing, just as a reminder, what this does is it really helps us to optimize for the different menu mix, the different channel mix and the different daypart peaks across all of our restaurants in the system to kind of provide a more bespoke tailored recommendation for deployment. And we started testing that really at the end of last year into this year in a handful of Shacks. You're not really seeing it in the numbers. It hasn't been -- it didn't really like move the needle on first quarter just given the overall size of the base there. But we're really pleased with the results that we saw from the test. We're taking it a step further. And we've committed to rolling it out to all of the Shacks, company-operated Shacks by the end of the year. we haven't embedded any of that in guidance at this point, and we'll continue to update you as that rolls out through the rest of the year.

Our next question is from Brian Mullan with Piper Sandler.

I just want to echo, Randy, congrats on everything you've accomplished with the brand. It's an amazing story. I wish you the best. Just question on the advertising opportunity. The letter references an idea you need to learn and grow into a larger marketing budget over time. I thought that was interesting. My question is just on the organizational side, do you feel like you have the full team in place to take advantage of the size of this opportunity over the long term? Or maybe are there some hires or talent additions you want to make from here? And I know the incoming CEO has a marketing background that would be helpful. But I kind of mean once he gets there over the long term, any assessment?

Look, I think there is -- as we've said now for a little while, we've really been a brand that has done most of our work for 20 years on just being a great brand, and we've spent little to no advertising over those years, and it's new for us to be ramping up. We're super excited about the current marketing team at every level and how they're interacting with the entire company to drive some really cool new things and you're seeing that progress happen this last year. And we fully expect to continue to double down on that. Now listen, I think Rob Lynch who should be coming in has certainly got a strong background in marketing. I think the company is really excited to benefit from how he's thought about that, and I won't -- certainly won't speak for him, but I have no doubt he's going to have a keen eye for the best opportunities, and our team does these things with discipline, with a focus on strong returns and being accretive to our margins. So everything you've seen in this last 6 months is increasing our brand awareness, it's increasing kind of our brand health and it's stuff that -- it's also part of our strategy, gets in a little bit off topic here, but on real estate of going deeper into certain markets. We've increased -- so let's just take 1 market like Texas. We've increased our footprint in Texas by more than 30% in the last year. That helps with brand awareness. That helps when we do marketing, that helps whenever we want to execute anything in a single region. So super excited about the opportunities that we can employ from here.

Our next question is from Michael Tamas with Oppenheimer & Company.

Randy, congrats on your success with Shack, and I hope you get to enjoy some more free time going forward. One of the questions we've heard most often recently is about the margin path going forward. Obviously, I understand I'm asking to speak for Rob a little bit here, but his background is with much larger companies that have greater scale and bigger budgets than Shake Shack does. And obviously, that can be a benefit, as you just mentioned before. But how is the company, including the Board, thinking about the need for potential investments or different sales strategies beyond this year that might limit margins beyond '24? I know there's no formal guidance beyond this year, but just any qualitative commentary would be helpful.

Yes. Look, to be fair to Rob and the team moving forward, I don't think we want to give any guidance other than what we've done today. I think everybody here has seen -- look, we've -- this has been a strong company for decades. We have sustained -- and we talk about that today on purpose to say many, many quarters in a row of sustained improvement in our margins, along with our sales, along with our cash flow as a company. All of that is just in the right direction with strength. I fully expect Bob is going to get in and decide how he wants to take it. But I think we've got a great team that has a firm strategic plan for '24 and already eyes on the strong pipeline for '25. So everything you've heard us do is you've seen a strong guide and ticking that up and that the guidance we've given this year, we remain 1 of the best and most profitable restaurant companies in the space. So we're really proud of where we're at.

Our next question is from Peter Saleh with BTIG.

Great. Thanks, Randy. It's been a pleasure working with you, and best of luck to you in the future. I did want to ask about the kiosk commentary real quick. The high-teens increase it has, and yes, it was pretty substantial versus last quarter, do you think that, that is the endpoint? Or do you think there's more upside to the check growth going forward? I guess, is there more growth within the kiosk here? And then also, can you put that in the context of the negative low single digit, if I heard that correct, menu mix? Just trying to understand how you can have such a large increase in the kiosk check and still see some of that menu mix decline?

So first of all, on kiosk, we still believe we're in the early stages of what kiosk can do to our business. And certainly, the first step of retrofitting all of our Shack kiosk, making sure that they're available for our guest that was key foundational thing for last year. And now really, what we're doing is leveraging the talent on our digital merchandising team to optimize for how the guest goes through that order journey. A key thing here is what you're pointing out with mix trends, what we had in the quarter, yes, well, we're continuing to see some great benefits from the kiosk upsell opportunity. And I can see, it was flat overall company, we took some targeted opportunities in marketing, which did have a little bit of a mix headwind, however, had a positive traffic benefit on the back of it and really grew sales, and we did this in a way that grew our profitability. And so we talked about that last quarter kind of being embedded in the guide. And when we talk about our guidance for a low single-digit check this year, we anticipate to have more of that going forward. But overall, both things, we're really excited by what we are producing here for both our top line and our profitability.

Our next question is from Sara Senatore with Bank of America.

I have a clarification and a question. So hopefully, that counts as one. But first, obviously, also congratulations, Randy, on your next steps. I wanted to ask about the April. The clarification is -- so I'm trying to understand the sequential acceleration. I know you talked about easier compares, although April, I think, was a pretty tough compare as of 2Q. But you have, I think, more price than you did in the first quarter, is my understanding, and you have less negative mix. I'm trying to understand if the delta is -- because you said flattish traffic. So I'm trying to understand where the delta is. If you're seeing less of a negative mix or if it's just the improvement or the higher pricing that you have on the quarter. So that's a clarification. And then just on the margins, obviously, very good food and labor. I was wondering about the third line item and just sort of perhaps the opportunities you have there in other OpEx. It's not something that I think has been talked about too much. I know there's probably some of that drag from new stores, but anything you can say there?

Sure. So I'll take the other OpEx point first, and then we'll go back to your question on April. So on other OpEx, we are -- we've talked about this. We are investing more in marketing, both at our store level and also at the company G&A level and that is kind of where the sales driving strategies, a lot of those costs are borne in a restaurant P&L. And our guidance reflects our expectations for that strategy going forward. Again, I think it's important to emphasize that while we're investing more in marketing right now to learn and grow and we're excited about the sales that we're driving on the back of it, we're also doing this in a margin-accretive way. So you might see a little bit of a tick up on that other OpEx line. But overall, the sales are accretive to our profitability. And then on your question on April, overall, what I would say is we had some improvements in traffic. We were running at about kind of a 7% to 8% price. As you recall, we're going to be working off of about 2% price in May, so that will come down. And then we had a couple of really exciting marketing initiatives in April, in particular, the Chicken Sunday where we have offered a free chicken shack with a $10 minimum spend every Sunday. So that had a little bit of an impact on our mix, but nothing too out of the ordinary versus what we've been seeing.

Our next question is from Jake Bartlett with Truist Securities.

My congrats to you, Randy, as well. It's been great working with you. My question is on the margin guidance for '24. And it's nice to -- obviously, you've seen improvement and that's encouraging. My question is that it seems a little conservative. I mean my math is that pricing is going to be about mid-single digits. Since you said low single digits of labor inflation, flat to low single digits food costs, that alone should get us, I think, to the high end of your guidance. You also have the impact of kiosks. Other labor scheduling that you've done over the last year that's been an improvement. So am I missing anything? Or is there a level of conservatism kind of built into this guidance?

Yes. So I think you've outlined a lot of the key points there for the fiscal 2024 guide. On kind of the top and the bottom end range there, look, we were very clear about this kind of in our remarks and also in the shareholder letter. Beef remains a big uncertainty, and we are watching it through the rest of this year and that's an area of the basket that we do not contract and we're not locked in there. We're going to be kind of subject to what the macro does on that side. And then just depending on the degree of extend that we're having around our marketing strategies to offset what Randy had alluded to is clearly a softening of the overall backdrop. So those are the things that I would look at on that side. I will say that we're incredibly proud of the work that our teams have been doing to get after all of the improvements that we've been talking about across our total cost to serve, across our supply chain, all the things we've talked about in our restaurants with labor and other ways that we're still providing a great guest experience but doing it in a way that is translating to the strongest flow-through that we've had even pre-COVID. So we're excited about where we're headed and the guidance today is for 20.2% to 21%. That is a 30 to 110 basis point improvement versus last year.

Our next question is from Andrew Charles with Cowen and Company.

Randy, congrats on building the Shake Shack brand to what it is today and best wishes on your next chapter. It's no secret that we're going to see intensified burger value activity in the coming months. And I'm curious if you believe your digital value tactics that you've utilized so far in 2024 around Chicken Sundays, Free Fry Fridays, the bubble shakes during the shorter periods, et cetera, are enough? Or do you believe more is needed to protect traffic amongst lower income consumers?

Yes, it's a great question. There's no question we're living in, whether it's us or the largest online companies who are all seeing consumer who's seeking value, a consumer who's seeking discounts in a lot of cases, promotions, we've seen a lot in our industry. Shake Shack needs to continue to retain its premium brand position. This is what has set us apart from the beginning, our ingredients, our hospitality, our designs. Everything about the Shake Shack experience transcends the traditional fast food burger experience. We're going to continue to do that. And everything we've done has hit those lines. So when you see us doing things, they're almost entirely added value. We want to give you something extra, we want you to feel the value. We want you to understand the quality of what we're doing. So when we do things like our Chicken Sundays, that hits our channels. It hits our interior, you can come in and use those. So it's not just digital. It's omnichannel, truly in Shack, in our kiosks in Shack, app, web and delivery. And I think the strategy the team is just beginning to employ have been so our learning is just so fast, furious and fun. I mean we're really enjoying the process of opening up these budgets a little bit, trying some more things to see what hits in our guests, see what hits regionally. Sometimes something hits very different in New York than it does in California or Texas, and we're learning all that. And I think as you build an engine that's based in the data that we now have as we're growing over these years, we can take greater insights into our strategies. And that's really the foundation that the team has been working on to build. So we're super excited. We have a lot more arrows in our quiver as we move forward regardless against whatever the economic opportunities are going to be. And you've seen that. You've seen that in the trend of continuing sales growth every month getting better so far this year.

Our next question is from David Tarantino with Baird.

Randy, congrats from me as well on a fantastic career at Shake Shack. So I wanted to kind of follow up on your commentary, Randy, since you've been sort of the inventor of this very premium brand and successful brand. And I wanted to ask, a lot of the advertising has been focused on promotional activity, and that's certainly understandable in this environment. But I wanted to get your perspective on how you're balancing the offers that you're making with the need to protect the premium nature the brand positioning. And specifically, how you're monitoring whether some of the things you're doing or having an influence on consumer perceptions and that related to the brand.

Yes. Those are great questions. It's something we think a lot about. I think the strength of the Shack brand and its ability that we just have always punched so far above our weight, that's been a strength for us. But as I've said in previous calls, what's also fascinating as we've grown pretty far, pretty fast globally and around this country is there's still a lot of people who don't really know Shake Shack. So we start everything with the education of who we are. Our brand pillars are really about helping people understand the quality of our ingredients that we're cooking to order, that we're spinning our shakes fresh by hand. These things are paramount. Then what we do as we think about whether it's a promo or afternoon shake opportunity or sometimes we'll do free Fridays, whatever these things are, they're all based in added value. They're all based in ensuring that we continue to keep that brand position. I don't expect you're going to see us do a dollar menu type of promo. That's just never been Shake Shack's thing. We certainly understand there's a great place for traditional fast food, and we may not get those consumers as often as traditional fast food does at that price point. But we feel like our value is strong and everything you're going to see and have seen from us is about continuing to help people understand, hey, when you choose to eat a burger, chicken sandwich or have a shake, you should choose Shake Shack and here's why. And that's what we've done and it's what I expect we'll continue to do.

Our next question is from Andy Barish with Jefferies.

Yes. Randy, it's always nice to see a Jersey boy do well. So congrats. Just, Katie, quick clarification, and sorry if I missed it. Just on the 2Q same-store sales guide of low single digits, and you're starting out mid-single digits. Can you give us kind of a little color about sort of why it doesn't continue in that range?

Sure. So in May, we're going to be rolling off about 2% price. We're expecting our trends to kind of to be solid, but rolling off price and just normal seasonality, that's what gets us to our guidance for a low single-digit comp in the second quarter.

Our next question is from Jeff Farmer with Gordon Haskett.

Great. Congratulations to Randy. Definitely looking forward to seeing what you pursue next. What I did want to touch on was the consumer backdrop. So my question for you guys is, do you see the consumer demand headwinds stabilizing or sort of further building, further intensifying in coming quarters? So that's the first part of it? And how is that demand backdrop impacted Shake Shack?

Yes. Look, it's hard to say where it's going to go from here. I think what we've said has been consistent what we've said for probably about a year. You definitely see some of that consumer pressure. We've said and shared and we see this today, some of our lower income consumer probably trading down. From time to time, we may lose a little bit of that. We may lose some of the middle-distance consumer in some of our urban centers. We've talked about that a little bit. But generally, those trends have remained similar for about a year right now, and we kind of expect those to be where they're at for now. So how that impacts us is, as we've driven traffic through other strategies and through building great restaurants in great places and continuing to build our brand. And that's what you've heard us consistently say, and that's what we've done against that backdrop, and it's been successful for us.

Our next question is from Jeffrey Bernstein with Barclays.

This is Pratik on for Jeff. And I'd echo the same, congrats, Randy, on all you've achieved. It's been great partnering with you, and I wish you the best of luck. My question is on store level margins. This year, you're going to get back to the low 20%, and that's relative to your long-term framework of 18% to 20%. Just do you see an opportunity to expand margins materially higher from here on out, especially with all the great work you're doing with operational efficiency and taking cost out of the model? Or is that really kind of offset by more muted AUV growth going forward and just a higher cost environment that makes return to former peak harder?

Great. Thanks for the question. We're not providing any outlook here beyond our guidance for 2024. But what I will say is that the team has continuously delivered profitable growth here. We have been steadily improving our margin every quarter and certainly, our guidance for this year calls for another year of restaurant margin expansion. Look, we have a number of pressures that are not too unique to us. We have wage inflationary pressures. Supply chain remains broadly inflationary if you take out kind of the benefits that we're seeing here from the work that our team is doing on strategic cost savings. So that's kind of how I would view the opportunities here. And we're really proud and excited by the work that our team has been doing to address opportunities in total cost to serve. As we get denser in markets, as we kind of grow our footprint, we're able to leverage more suppliers, we're able to optimize freight. We're able to do things that guests really doesn't see the impact of, but it does help us be more efficient in running our restaurants. On the labor side, too, it's been a combination of several things, both things that we've done internally to help improve turnover trends and keep our team members for longer and just helps them be more efficient as well as all of the work that the finance team and operations have done to partner together and really be much tighter on how we're operating our restaurants. And then if I look forward to kind of the next level here with having even just a more bespoke and optimized scheduling tool for our operators, I think that, that continues to provide a great opportunity for us to navigate inflationary pressures in a way that allows us to also kind of maintain the value for our guests. So no long-term guidance, but that's the overall framework that we think about here at Shake Shack.

Our next question is from James Sanderson with Northcoast Research.

Randy, congratulations on all your accomplishments over the years at Shake Shack. I wanted to talk a little bit about unit growth and unit development. On the international front, I'm wondering how confident you are that the brand can sustain the 40 units that you've achieved this year, given the macroeconomic headwinds and the geopolitical issues we're seeing overseas. And then in the U.S., if you're leaning into any specific regions or states that you believe really are a much better fit for the Shake Shack brand than maybe in the past years.

Jim, thanks. Two great questions there. Internationally, we feel very strong about the 40 Shack guide. Look, it's a big world out there. Let's remember, too, we've had amazing success in so many places that we've gone. So yes, we acknowledge in a lot of conversations that there's pressures in certain parts of China right now. Generally, our Asia business has done quite well. But we're also focused on our domestic license business here in the U.S. Our airports, we're growing a lot of our road sides, which have been a really good new model for us, stadiums and other opportunities that we feel are nontraditional opportunities. We've done some museums, things like that, where we think there's really exciting opportunity. We haven't even hit Western Europe at all other than the U.K. We haven't even really hit anything. We have not hit anything south of Mexico. The opportunities for us are really strong, and that is such a critical and important part of our business. And I think undervalued, underappreciated. So it's something I definitely keep an eye on as we go. We really appreciate that part of the business. And then in terms of the domestic opportunities, we really want to balance it out. We want to go deeper in our current markets. You're going to continue to see us do things in the major markets that we're in, the Northeast, Texas, California, the Midwest. We're going to do a few new markets this year, but they're not too far afield, Pittsburgh is going to be our next big market opening. And by the way, just to jump back to international, we're opening in Canada later this year for our first one. That's a tremendous opportunity for us. So I think at 300 roughly domestic company operated and just over a couple of hundred internationally and licensed like, there's a big opportunity for this company in our growth.

Our next question is from Rahul Krotthapalli with JPMorgan.

Randy, wish you the best going forward, and I'll keep up with your social media updates here. Broader industry. Can you talk about the state and pace of competition growth out there? And how do you think the landscape is changing? There are a lot of new upcoming concepts with national aspiration and also competing locally as well. I appreciate your thoughts here, however you would like to describe on a regional basis or urban versus suburban basis?

Listen, I think there's always going to be great competition. We didn't invent the cheeseburger and we won't be the last people to create a great one. We've always fit ourselves into a very special place though that sits well above traditional fast food in our quality and our experience and below casual dining. And I think that's been a good home for us. I expect that's where we'll continue to go. But that does require us to continually reinvent. We got to get better, we got to have better products, have exciting LTOs, have exciting menu evolution over the years, and I think we've done that. So when you really think about our ability to compete, we're watching and we're learning. There's lots of great restaurants out there that we certainly compete with and we think at our best when Shake Shack does what Shake Shack is built to do, we can be a winner in a lot of places. That's what we've shown for 20 years now.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing comments.

I'll just close it out and if anyone's still listening. Just a lot of people said some very nice things to me, but I hope everybody goes into a Shake Shack and says those nice things to the employee who's working hard day after day to be a key member of this restaurant and make it what it is because it's certainly been them that has made this all happen. So thanks, everybody, and we look forward to seeing you for a Shack Burger soon.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.