Shake Shack (SHAK) risk factors, FY2025 10-K

Shake Shack's FY2025 10-K, filed Feb 26, 2026, lists 64 risk factors in 14 groups. Against the prior year's 77: 3 new, 16 dropped, 43 substantially reworded.

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Risk factors listed
6414 groups
New this year
3vs 77 last year
Dropped
16since the prior 10-K
Substantially reworded
43of those kept
Section length
20k wordsItem 1A

What the changes say

  • Shake Shack added risks around its organizational structure, long-term property leases, and stock price volatility.

What changed since the prior 10-K

New

  • NewRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    We are subject to risks associated with leasing property subject to long-term leases

    We operate all of our Shacks on leased premises with long-term, non-cancelable initial terms of ten to fifteen years.

  • NewGENERAL BUSINESS AND ECONOMIC RISKS

    Our stock price could be extremely volatile, and, as a result, stockholders may not be able to resell shares at or above their purchase price

    Our Class A common stock price could be extremely volatile, causing investors to experience substantial decreases in the value of their investment.

  • NewRISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

    We will continue to incur relatively outsized costs as a result of our complex organizational structure

    We incur outsized legal, tax, and accounting compliance costs due to our complex organizational structure and Tax Receivable Agreement.

Dropped

  • DroppedRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Our investments to enhance the guest experience through expanding the availability of our drive-thru options has required and will continue to require significant capital expenditures and may not generate the expected returns

  • DroppedRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    If we are unable to maintain and grow Shack sales at our existing Shacks, our financial performance could be adversely affected

  • DroppedRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    We rely heavily on social media for many of our marketing efforts. If consumer sentiment towards social media changes or a new medium of communication becomes more mainstream, we may be required to fundamentally change our current marketing strategies which could require us to incur significantly more costs

  • DroppedRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Shack brand could suffer. Failure of these Shacks to operate effectively could adversely affect the results of operations from our licensed business or have a negative impact on our reputation

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    may also have a more difficult time recovering from a food-borne illness incident and may be required to incur significant costs to repair our reputation

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    We are also subject to risk if there is a shortage of delivery drivers, which could result in a failure to meet our guests' expectations

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Shortages or interruptions in the supply or delivery of food products could adversely affect our operating results

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Inflationary environment poses a risk to broader demand for restaurants, including ours

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    ability to offer all sales channels at all Shacks. These restrictions and changing travel patterns may adversely affect our guest traffic and the ability to adequately staff our Shacks

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    We do not own any real property and all of our Company-operated Shacks are located on leased premises. The leases for our Shacks generally have initial terms ranging from 10 to 15 years and typically include two five-year renewal options

    Drive-thru expansion capital expenditures and execution risks.

  • DroppedRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    sustainability and social matters affecting our industry and meeting evolving stakeholder expectations, our brand image may suffer, which could lead to a loss of sales. Certain investors may choose not to invest in our securities if we do not meet their relevant ESG expectations, which may continue to evolve over time

    Same-Shack sales growth fluctuations.

  • DroppedREGULATORY AND LEGAL RISKS

    If we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial information or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could be impaired, which could have a material adverse effect on our business and stock price

  • DroppedRISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

    The non-controlling interest holders have the right to have their LLC Interests redeemed or exchanged into shares of Class A common stock, which may cause volatility in our stock price

  • DroppedRISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

    and coverage or incur substantially higher costs to obtain the same or similar coverage. Furthermore, if we are unable to continue to satisfy our obligations as a public company, we would be subject to delisting our common stock, fines, sanctions and other regulatory action and potentially civil litigation

  • DroppedRISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

    Shake Shack Inc. Form 10-K | 42

  • DroppedRISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

    Shake Shack Inc. Form 10-K | 43

    Reliance on social media for marketing and competition.

Reworded

  • 100% rewrittenRisks Related to Our Convertible Notes

    Shake Shack Inc. Form 10-K | 14

    Swapped construction cost and site competition risks for risks regarding Note conversions diluting stock and anti-takeover provisions.

    Was: Shake Shack Inc. Form 10-K | 20

  • 100% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Shake Shack Inc. Form 10-K | 15

    Replaced dram shop liquor liability risks with details on landlord delays, site cannibalization, and underperforming Shack closures.

    Was: Shake Shack Inc. Form 10-K | 31

  • 100% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Shake Shack Inc. Form 10-K | 17

    Replaced international regulatory risks with discussion of higher food and labor costs associated with quality ingredients and competitive wages.

    Was: Shake Shack Inc. Form 10-K | 34

  • 100% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Shake Shack Inc. Form 10-K | 18

    Replaced ESG and legal proceedings risks with specific broadline distributor figures, noting 42% of purchases for chicken, fries, and custard.

  • 100% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Shake Shack Inc. Form 10-K | 21

    Replaced 2024 California, Ohio, and Texas Shack closures with risks regarding digital ordering platform upgrades and third-party outages.

  • 100% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Shake Shack Inc. Form 10-K | 22

    Replaced same-Shack sales growth targets with dietary trends and health perceptions, specifically mentioning semaglutides, sodium, and calories.

  • 100% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Shake Shack Inc. Form 10-K | 23

    Replaced broadline distributor inventory details with lease obligations, net lease costs, and risks of failing to negotiate renewals.

  • 100% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    Shake Shack Inc. Form 10-K | 25

    Replaced net operating loss (NOL) availability risks with the immediate and unverified impact of negative social media posts.

    Was: Shake Shack Inc. Form 10-K | 39

  • 100% rewrittenREGULATORY AND LEGAL RISKS

    Shake Shack Inc. Form 10-K | 30

    Was: Shake Shack Inc. Form 10-K | 40

  • 100% rewrittenRISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

    Shake Shack Inc. Form 10-K | 35

  • 100% rewrittenRISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

    Shake Shack Inc. Form 10-K | 36

  • 100% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    Shake Shack Inc. Form 10-K | 26

  • 100% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Shake Shack Inc. Form 10-K | 16

    Was: Shake Shack Inc. Form 10-K | 33

  • 99% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Shake Shack Inc. Form 10-K | 24

    Was: Shake Shack Inc. Form 10-K | 38

  • 99% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Shake Shack Inc. Form 10-K | 19

    Was: Shake Shack Inc. Form 10-K | 37

  • 94% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Increased food commodity and energy costs could decrease our Restaurant-level profit margins or cause us to limit or otherwise modify our menu, which could adversely affect our business

  • 90% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Our purpose to Stand For Something Good subjects us to risks

  • 88% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    Because a component of our strategy is to continue to grow our licensed business internationally, the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business

  • 83% rewrittenREGULATORY AND LEGAL RISKS

    As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), and the listing standards of the New York Stock Exchange

  • 82% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Our failure to manage our growth effectively could harm our business and operating results

  • 79% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    The digital and delivery strategy, related expenses, execution and expansion thereof, is uncertain and subject to risk

    Was: The digital and delivery business, related expenses, execution and expansion thereof, is uncertain and subject to risk

  • 76% rewrittenREGULATORY AND LEGAL RISKS

    We are subject to many federal, state, local and foreign laws and regulations, as well as other statutory and regulatory requirements, with which compliance is both costly and complex. Failure to comply with, or changes in these laws or requirements, could have an adverse impact on our business

  • 74% rewrittenRISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

    We will not be reimbursed for any payments made to the non-controlling interest holders under the Tax Receivable Agreement in the event that any tax benefits are disallowed

  • 71% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    If we fail to maintain our corporate culture, our relationships with our team members and guests could be negatively affected

  • 71% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Our marketing strategies and channels will evolve and our programs may not be successful

    Was: Our marketing strategies and channels will evolve and our programs may or may not be successful

  • 70% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    The increasing focus on environmental, sustainability, social and governance matters could increase our costs, harm our reputation and adversely impact our business and financial results

  • 69% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    We rely on a limited number of licensees for the operation of our licensed Shacks, and we have limited control with respect to the operations of our licensed Shacks, which could have a negative impact on our reputation and business

  • 62% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Incidents involving food safety and food-borne illnesses could adversely affect guests' perception of our brand, result in lower sales and increase operating costs

  • 60% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    In addition to the expected increased costs of labor, if we are unable to identify and recruit a sufficient number of individuals to meet our growing needs, we may need to decrease the operating hours of some of our Shacks, which would result in lost sales

  • 60% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brand and adversely affect our business

  • 60% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Pandemics or disease outbreaks, such as the COVID-19 pandemic, have disrupted, and may continue to disrupt our business, results of operations and our financial condition

  • 55% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Our business is subject to risks related to our sale of alcoholic beverages

  • 51% rewrittenREGULATORY AND LEGAL RISKS

    Our ability to use our net operating loss carryforwards may be subject to limitation

  • 50% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected

  • 48% rewrittenRISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

    We will continue to incur relatively outsized costs as a result of being a public company and in the administration of our complex organizational structure

  • 42% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    Damage to our reputation could negatively impact our business, financial condition and results of operations

  • 41% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Restaurant companies have been the target of class action lawsuits and other proceedings that are costly, divert management attention and, if successful, could result in our payment of substantial damages or settlement costs

  • 40% rewrittenRISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

    Rising labor costs and difficulties recruiting and retaining the right team members could adversely affect our business

  • 37% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    Security breaches of either confidential guest information in connection with, among other things, our electronic processing of credit and debit card transactions; kiosk, app, or web ordering; or confidential team member information may adversely affect our business

  • 36% rewrittenGENERAL BUSINESS AND ECONOMIC RISKS

    Because many of our Company-operated Shacks are concentrated in local or regional areas, we are susceptible to economic and other trends and developments, including adverse weather conditions, in these areas

  • 24% rewrittenRISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

    Shake Shack has non-controlling interest holders, whose interests may differ from those of our public stockholders

  • 22% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Our long-term success is dependent on the selection, design and execution of appropriate business strategies

  • 22% rewrittenRISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

    Our primary growth strategy is highly dependent on the availability of suitable locations and our ability to develop and open new Shacks on a timely basis and on terms attractive to us

All 64 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Convertible Notes

  1. 01Shake Shack Inc. Form 10-K | 14100% rewritten

RISKS RELATED TO OUR GROWTH STRATEGIES AND OPERATIONS

  1. 02Our long-term success is dependent on the selection, design and execution of appropriate business strategies22% rewritten
  2. 03Our primary growth strategy is highly dependent on the availability of suitable locations and our ability to develop and open new Shacks on a timely basis and on terms attractive to us22% rewritten
  3. 04Shake Shack Inc. Form 10-K | 15100% rewritten
  4. 05Our plans to open new Shacks, the ongoing need for capital expenditures at our existing Shacks and our ongoing digital enhancements require us to spend capital
  5. 06Our expansion into new domestic markets may present increased risks, which could affect our profitability
  6. 07Our failure to manage our growth effectively could harm our business and operating results82% rewritten
  7. 08Shake Shack Inc. Form 10-K | 16100% rewritten
  8. 09New Shacks, once opened, may not be profitable, and may negatively affect Shack sales at our existing Shacks
  9. 10Our marketing strategies and channels will evolve and our programs may not be successful71% rewritten
  10. 11Our purpose to Stand For Something Good subjects us to risks90% rewritten
  11. 12Shake Shack Inc. Form 10-K | 17100% rewritten
  12. 13Shake Shack Inc. Form 10-K | 18100% rewritten
  13. 14We rely on a limited number of licensees for the operation of our licensed Shacks, and we have limited control with respect to the operations of our licensed Shacks, which could have a negative impact on our reputation and business69% rewritten
  14. 15If we fail to maintain our corporate culture, our relationships with our team members and guests could be negatively affected71% rewritten
  15. 16Shake Shack Inc. Form 10-K | 1999% rewritten

RISKS RELATED TO OPERATING IN THE RESTAURANT INDUSTRY

  1. 17Incidents involving food safety and food-borne illnesses could adversely affect guests' perception of our brand, result in lower sales and increase operating costs62% rewritten
  2. 18Rising labor costs and difficulties recruiting and retaining the right team members could adversely affect our business40% rewritten
  3. 19In addition to the expected increased costs of labor, if we are unable to identify and recruit a sufficient number of individuals to meet our growing needs, we may need to decrease the operating hours of some of our Shacks, which would result in lost sales60% rewritten
  4. 20Increased food commodity and energy costs could decrease our Restaurant-level profit margins or cause us to limit or otherwise modify our menu, which could adversely affect our business94% rewritten
  5. 21The digital and delivery strategy, related expenses, execution and expansion thereof, is uncertain and subject to risk79% rewritten
  6. 22Shake Shack Inc. Form 10-K | 21100% rewritten
  7. 23We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected50% rewritten
  8. 24Shake Shack Inc. Form 10-K | 22100% rewritten
  9. 25Pandemics or disease outbreaks, such as the COVID-19 pandemic, have disrupted, and may continue to disrupt our business, results of operations and our financial condition60% rewritten
  10. 26Our international licensed Shacks import many of our proprietary and other core ingredients from the United States and other countries. If this international supply chain is interrupted, our international licensed operations could encounter supply shortages and incur higher costs
  11. 27We are subject to risks associated with leasing property subject to long-term leasesNew
  12. 28Shake Shack Inc. Form 10-K | 23100% rewritten
  13. 29The increasing focus on environmental, sustainability, social and governance matters could increase our costs, harm our reputation and adversely impact our business and financial results70% rewritten
  14. 30Restaurant companies have been the target of class action lawsuits and other proceedings that are costly, divert management attention and, if successful, could result in our payment of substantial damages or settlement costs41% rewritten
  15. 31Shake Shack Inc. Form 10-K | 2499% rewritten
  16. 32Our business is subject to risks related to our sale of alcoholic beverages55% rewritten

GENERAL BUSINESS AND ECONOMIC RISKS

  1. 33Damage to our reputation could negatively impact our business, financial condition and results of operations42% rewritten
  2. 34Shake Shack Inc. Form 10-K | 25100% rewritten
  3. 35Changes in economic conditions, both domestically and internationally, could materially affect our business, financial condition and results of operations
  4. 36Because many of our Company-operated Shacks are concentrated in local or regional areas, we are susceptible to economic and other trends and developments, including adverse weather conditions, in these areas36% rewritten
  5. 37Security breaches of either confidential guest information in connection with, among other things, our electronic processing of credit and debit card transactions; kiosk, app, or web ordering; or confidential team member information may adversely affect our business37% rewritten
  6. 38Shake Shack Inc. Form 10-K | 26100% rewritten
  7. 39If we are unable to maintain and update our information technology systems to meet the needs of our business, our business could be adversely impacted
  8. 40If we experience a material failure or interruption in our systems, our business could be adversely impacted
  9. 41Because a component of our strategy is to continue to grow our licensed business internationally, the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business88% rewritten
  10. 42Our stock price could be extremely volatile, and, as a result, stockholders may not be able to resell shares at or above their purchase priceNew
  11. 43We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brand and adversely affect our business60% rewritten
  12. 44We depend on key members of our executive management team
  13. 45Our insurance coverage and self-insurance reserves may not provide adequate levels of coverage against claims

REGULATORY AND LEGAL RISKS

  1. 46We are subject to many federal, state, local and foreign laws and regulations, as well as other statutory and regulatory requirements, with which compliance is both costly and complex. Failure to comply with, or changes in these laws or requirements, could have an adverse impact on our business76% rewritten
  2. 47Shake Shack Inc. Form 10-K | 30100% rewritten
  3. 48As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), and the listing standards of the New York Stock Exchange83% rewritten
  4. 49Our ability to use our net operating loss carryforwards may be subject to limitation51% rewritten
  5. 50Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition

RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

  1. 51Shake Shack has non-controlling interest holders, whose interests may differ from those of our public stockholders24% rewritten
  2. 52Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the non-controlling interest holders that will not benefit Class A common stockholders to the same extent as it will benefit the non-controlling interest holders
  3. 53We will continue to incur relatively outsized costs as a result of being a public company and in the administration of our complex organizational structure48% rewritten
  4. 54Our anti-takeover provisions could prevent or delay a change in control of our Company, even if such change in control would be beneficial to our stockholders
  5. 55We do not currently expect to pay any cash dividends

RISKS RELATED TO OUR TAX RECEIVABLE AGREEMENT

  1. 56We will continue to incur relatively outsized costs as a result of our complex organizational structureNew
  2. 57Shake Shack Inc. Form 10-K | 35100% rewritten
  3. 58In certain cases, payments under the Tax Receivable Agreement to the non-controlling interest holders may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement
  4. 59We will not be reimbursed for any payments made to the non-controlling interest holders under the Tax Receivable Agreement in the event that any tax benefits are disallowed74% rewritten
  5. 60Shake Shack Inc. Form 10-K | 36100% rewritten

RISKS RELATED TO OUR CONVERTIBLE NOTES

  1. 61Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt
  2. 62The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results
  3. 63Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our Class A common stock
  4. 64Certain provisions in the indenture governing the Notes may delay or prevent an otherwise beneficial takeover attempt of us

Other Shake Shack 10-Ks

  • FY2024 10-K risk factors
    77 risks

    Shake Shack's risk profile centers on aggressive domestic and international unit expansion, heavy reliance on a single broadline distributor, and increasing labor and commodity cost pressures.

    Filed Feb 21, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.