Shake Shack Inc (SHAK)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 45.82% | 36.63% | 42.37% | 41.43% | 40.68% |
| Operating profit margin | 0.24% | 0.54% | -2.26% | -1.91% | -6.60% |
| Pretax margin | 1.14% | 1.56% | -2.70% | -2.34% | -8.70% |
| Net profit margin | 0.81% | 1.86% | -2.88% | -1.37% | -8.71% |
Based on the provided data for Shake Shack Inc, we can observe the following trends in profitability ratios:
1. Gross Profit Margin:
- The gross profit margin has shown a positive trend over the years, increasing from 40.68% in December 31, 2020, to 45.82% in December 31, 2024. This indicates that Shake Shack has been effectively managing its production and operating costs to improve profitability at the gross profit level.
2. Operating Profit Margin:
- The operating profit margin started off in negative territory at -6.60% in December 31, 2020, but improved gradually over the years to reach 0.24% in December 31, 2024. This suggests that the company has been able to control its operating expenses and enhance operational efficiency to achieve positive operating profitability.
3. Pretax Margin:
- The pretax margin also exhibited a similar pattern of improvement, moving from -8.70% in December 31, 2020, to 1.14% in December 31, 2024. This indicates that Shake Shack has been successful in managing its costs and generating higher pre-tax profits relative to its total revenue.
4. Net Profit Margin:
- The net profit margin, a key indicator of overall profitability, has shown variability over the years, with a significant improvement from -8.71% in December 31, 2020, to 0.81% in December 31, 2024. This suggests that the company has been enhancing its bottom-line performance by controlling costs and increasing net income relative to sales.
In summary, Shake Shack Inc has demonstrated an overall positive trend in its profitability ratios, with improvements in gross profit margin, operating profit margin, pretax margin, and net profit margin over the years. These trends indicate effective cost management and operational efficiency, leading to enhanced profitability for the company.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 0.18% | 0.37% | -1.36% | -0.97% | -3.01% |
| Return on assets (ROA) | 0.60% | 1.26% | -1.74% | -0.69% | -3.98% |
| Return on total capital | 3.47% | 4.22% | -5.76% | -3.62% | -10.96% |
| Return on equity (ROE) | 2.17% | 4.57% | -6.57% | -2.32% | -11.18% |
Shake Shack Inc's profitability ratios show varying trends over the years.
1. Operating return on assets (Operating ROA) has been negative in recent years, with a notable improvement from -3.01% in December 2020 to 0.18% in December 2024. This indicates that the company's operating income generated from its assets has improved, albeit modestly.
2. Return on assets (ROA) also displays a mixed performance, fluctuating between negative and positive figures. From -3.98% in December 2020 to 0.60% in December 2024, there is a positive trend in generating net income relative to total assets.
3. Return on total capital reflects the company's ability to generate returns for both debt and equity holders. The ratio has shown an upward trend from -10.96% in December 2020 to 3.47% in December 2024, reflecting improved efficiency in utilizing both debt and equity capital to generate profits.
4. Return on equity (ROE), which measures the returns generated for shareholders, has also displayed a mixed performance. There has been an improvement from -11.18% in December 2020 to 2.17% in December 2024. This indicates that Shake Shack Inc is gradually becoming more efficient in generating profits for its equity investors.
Overall, while the profitability ratios of Shake Shack Inc have shown improvements in recent years, there is still room for further enhancement to ensure sustainable and consistent profitability in the future.