10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2017

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission file number: 001-36823

SHAKE SHACK INC.

(Exact name of registrant as specified in its charter)

Delaware	47-1941186
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
24 Union Square East, 5th Floor New York, New York	10003
(Address of principal executive offices)	(Zip Code)

(646) 747-7200

(Registrant's telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule-405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o		Accelerated filer	þ
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
			Emerging growth company	þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þ No

As of July 26, 2017, there were 25,981,176 shares of Class A common stock outstanding and 10,729,992 shares of Class B common stock outstanding.

SHAKE SHACK INC.

TABLE OF CONTENTS

Cautionary Note Regarding Forward-Looking Information			1
Part I			2
	Item 1.	Financial Statements (Unaudited)	2
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
	Item 4.	Controls and Procedures	38
Part II			39
	Item 1.	Legal Proceedings	39
	Item 1A.	Risk Factors	39
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
	Item 3.	Defaults Upon Senior Securities	39
	Item 4.	Mine Safety Disclosures	39
	Item 5.	Other Information	39
	Item 6.	Exhibits	40
SIGNATURES			41

Cautionary Note Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q ("Form 10-Q") contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different. All statements other than statements of historical fact are forward-looking statements. Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar expressions.

While we believe that our assumptions are reasonable, it is very difficult to predict the impact of known factors, and it is impossible to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements, except that the safe harbor provisions of the PSLRA do not apply to any forward-looking statements relating to the operations of any of our partnerships or limited liability companies. You should evaluate all forward-looking statements made in this Form 10-Q in the context of the risks and uncertainties disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended, and subsequent Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the "SEC") under the heading "Risk Factors."

The forward-looking statements included in this Form 10-Q are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Shake Shack Inc. Form 10-Q | 1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

	Page
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Income	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statement of Stockholders' Equity	6
Condensed Consolidated Statements of Cash Flows	7
Notes to Condensed Consolidated Financial Statements	8

2 | Shake Shack Inc. Form 10-Q

SHAKE SHACK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

		June 28 2017			December 28 2016
ASSETS
Current assets:
	Cash and cash equivalents	$	22,436		$	11,607
	Marketable securities	63,106			62,040
	Accounts receivable	5,078			6,006
	Inventories	968			806
	Prepaid expenses and other current assets	1,591			3,485
	Total current assets	93,179			83,944
Property and equipment, net		160,383			136,264
Deferred income taxes, net		320,015			313,207
Other assets		4,679			4,779
TOTAL ASSETS		$	578,256		$	538,194
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable	$	9,482		$	6,921
	Accrued expenses	8,615			8,538
	Accrued wages and related liabilities	4,758			6,084
	Other current liabilities	10,252			10,173
	Total current liabilities	33,107			31,716
Deemed landlord financing		11,166			2,007
Deferred rent		33,524			31,107
Liabilities under tax receivable agreement, net of current portion		277,316			267,902
Other long-term liabilities		2,145			4,109
Total liabilities		357,258			336,841
Commitments and contingencies
Stockholders' equity:
	Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of June 28, 2017 and December 28, 2016.	—			—
	Class A common stock, $0.001 par value—200,000,000 shares authorized; 25,939,866 and 25,151,384 shares issued and outstanding as of June 28, 2017 and December 28, 2016, respectively.	26			25
	Class B common stock, $0.001 par value—35,000,000 shares authorized; 10,770,992 and 11,253,592 shares issued and outstanding as of June 28, 2017 and December 28, 2016, respectively.	11			11
	Additional paid-in capital	145,102			135,448
	Retained earnings	23,865			16,719
	Accumulated other comprehensive loss	(17		)	(15		)
	Total stockholders' equity attributable to Shake Shack Inc.	168,987			152,188
Non-controlling interests		52,011			49,165
Total equity		220,998			201,353
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	578,256		$	538,194

See accompanying Notes to Condensed Consolidated Financial Statements.

Shake Shack Inc. Form 10-Q | 3

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except per share amounts)

		Thirteen Weeks Ended						Twenty-Six Weeks Ended
		June 28 2017			June 29 2016			June 28 2017			June 29 2016
Shack sales		$	88,003		$	64,406		$	162,158		$	116,559
Licensing revenue		3,313			2,066			5,907			4,078
TOTAL REVENUE		91,316			66,472			168,065			120,637
Shack-level operating expenses:
	Food and paper costs	24,712			18,104			45,886			33,136
	Labor and related expenses	22,426			15,262			42,886			28,424
	Other operating expenses	8,486			5,979			16,151			10,898
	Occupancy and related expenses	7,043			5,209			13,219			9,532
General and administrative expenses		9,678			7,496			18,148			14,380
Depreciation expense		5,258			3,404			10,006			6,510
Pre-opening costs		1,876			2,085			4,291			4,110
Loss on disposal of property and equipment		100			—			113			—
TOTAL EXPENSES		79,579			57,539			150,700			106,990
OPERATING INCOME		11,737			8,933			17,365			13,647
Other income, net		198			23			393			46
Interest expense		(366		)	(91		)	(669		)	(178		)
INCOME BEFORE INCOME TAXES		11,569			8,865			17,089			13,515
Income tax expense		3,385			2,316			5,043			3,615
NET INCOME		8,184			6,549			12,046			9,900
Less: net income attributable to non-controlling interests		3,305			3,251			4,900			5,140
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.		$	4,879		$	3,298		$	7,146		$	4,760
Earnings per share of Class A common stock:
	Basic	$	0.19		$	0.15		$	0.28		$	0.22
	Diluted	$	0.19		$	0.14		$	0.27		$	0.22
Weighted-average shares of Class A common stock outstanding:
	Basic	25,798			22,553			25,587			21,453
	Diluted	26,312			23,050			26,133			21,931

See accompanying Notes to Condensed Consolidated Financial Statements.

4 | Shake Shack Inc. Form 10-Q

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

			Thirteen Weeks Ended						Twenty-Six Weeks Ended
			June 28 2017			June 29 2016			June 28 2017			June 29 2016
Net income			$	8,184		$	6,549		$	12,046		$	9,900
Other comprehensive income (loss), net of tax:
	Available-for-sale securities(1):
		Change in net unrealized holding losses	(8		)	(6		)	(17		)	(8		)
		Less: reclassification adjustments for net realized losses included in net income	11			—			14			—
		Net change	3			(6		)	(3		)	(8		)
OTHER COMPREHENSIVE INCOME (LOSS)			3			(6		)	(3		)	(8		)
COMPREHENSIVE INCOME			8,187			6,543			12,043			9,892
Less: comprehensive income attributable to non-controlling interest			3,306			3,249			4,899			5,137
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAKE SHACK INC.			$	4,881		$	3,294		$	7,144		$	4,755

(1) Net of tax benefit of $0 for the thirteen and twenty-six weeks endedJune 28, 2017and June 29, 2016.

See accompanying Notes to Condensed Consolidated Financial Statements.

Shake Shack Inc. Form 10-Q | 5

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(in thousands, except share amounts)

		Class A Common Stock			Class B Common Stock				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Non- Controlling Interest			Total Equity
		Shares	Amount		Shares		Amount
BALANCE, DECEMBER 28, 2016		25,151,384	$	25	11,253,592		$	11	$	135,448	$	16,719	$	(15	)	$	49,165		$	201,353
	Net income										7,146					4,900			12,046
	Other comprehensive loss:
	Net unrealized losses related to available-for-sale securities												(2		)	(1		)	(3		)
	Equity-based compensation								2,612										2,612
	Activity under stock compensation plans	305,882	1						3,502							2,368			5,871
	Redemption of LLC Interests	482,600	—		(482,600	)	—		2,042							(2,042		)	—
	Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis								1,498										1,498
	Distributions paid to non-controlling interest holders															(2,379		)	(2,379		)
BALANCE, JUNE 28, 2017		25,939,866	$	26	10,770,992		$	11	$	145,102	$	23,865	$	(17	)	$	52,011		$	220,998

See accompanying Notes to Condensed Consolidated Financial Statements.

6 | Shake Shack Inc. Form 10-Q

SHAKE SHACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

			Twenty-Six Weeks Ended
			June 28 2017			June 29 2016
OPERATING ACTIVITIES
Net income (including amounts attributable to non-controlling interests)			$	12,046		$	9,900
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation expense		10,006			6,510
	Equity-based compensation		2,534			2,240
	Deferred income taxes		2,561			(21		)
	Non-cash interest expense		154			141
	Excess tax benefits on equity-based compensation		—			(35		)
	Loss on sale of marketable securities		15			—
	Loss on disposal of property and equipment		113			—
	Changes in operating assets and liabilities:
		Accounts receivable	3,964			1,740
		Inventories	(162		)	(92		)
		Prepaid expenses and other current assets	2,310			169
		Other assets	(633		)	(492		)
		Accounts payable	1,024			347
		Accrued expenses	1,324			2,497
		Accrued wages and related liabilities	(1,326		)	(1,403		)
		Other current liabilities	(1,390		)	409
		Deferred rent	603			2,768
		Other long-term liabilities	587			(242		)
NET CASH PROVIDED BY OPERATING ACTIVITIES			33,730			24,436
INVESTING ACTIVITIES
Purchases of property and equipment			(24,986		)	(26,548		)
Purchases of marketable securities			(5,993		)	(378		)
Sales of marketable securities			5,628			322
NET CASH USED IN INVESTING ACTIVITIES			(25,351		)	(26,604		)
FINANCING ACTIVITIES
Payments on promissory note			—			(313		)
Proceeds from deemed landlord financing			530			—
Payments on deemed landlord financing			(101		)	—
Distributions paid to non-controlling interest holders			(2,379		)	(1,602		)
Payments under tax receivable agreement			(1,471		)	—
Proceeds from stock option exercises			6,187			1,570
Employee withholding taxes related to net settled equity awards			(316		)	—
Excess tax benefits from equity-based compensation			—			35
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			2,450			(310		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			10,829			(2,478		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			11,607			70,849
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	22,436		$	68,371

See accompanying Notes to Condensed Consolidated Financial Statements.

Shake Shack Inc. Form 10-Q | 7

SHAKE SHACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

		Page
Note 1	Nature of Operations	9
Note 2	Summary of Significant Accounting Policies	9
Note 3	Fair Value Measurements	12
Note 4	Inventories	14
Note 5	Property and Equipment	15
Note 6	Supplemental Balance Sheet Information	15
Note 7	Debt	15
Note 8	Non-Controlling Interests	16
Note 9	Equity-Based Compensation	17
Note 10	Income Taxes	18
Note 11	Earnings Per Share	20
Note 12	Supplemental Cash Flow Information	21
Note 13	Commitments and Contingencies	22
Note 14	Related Party Transactions	23

8 | Shake Shack Inc. Form 10-Q

NOTE 1: NATURE OF OPERATIONS

Shake Shack Inc. ("we," "us," "our," "Shake Shack" and the "Company") was formed on September 23, 2014 as a Delaware corporation for the purpose of facilitating an initial public offering and other related transactions in order to carry on the business of SSE Holdings, LLC and its subsidiaries ("SSE Holdings"). On February 4, 2015, we completed an initial public offering ("IPO") of 5,750,000 shares of our Class A common stock at a public offering price of $21.00 per share. We used the net proceeds from the IPO to purchase newly-issued membership interests from SSE Holdings ("LLC Interests"). Following the organizational transactions completed in connection with the IPO, we became the sole managing member of SSE Holdings. As sole managing member, we operate and control all of the business and affairs of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. We report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. As of June 28, 2017 we owned 70.7% of SSE Holdings. Unless the context otherwise requires, "we," "us," "our," "Shake Shack," the "Company" and other similar references, refer to Shake Shack Inc. and, unless otherwise stated, all of its subsidiaries, including SSE Holdings.

We operate and license Shake Shack restaurants ("Shacks"), which serve hamburgers, chicken sandwiches, hot dogs, crinkle-cut fries, shakes, frozen custard, beer, wine and more. As of June 28, 2017, there were 134 Shacks in operation, system-wide, of which 75 were domestic company-operated Shacks, nine were domestic licensed Shacks and 50 were international licensed Shacks.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Shake Shack Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and on a basis consistent in all material respects with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended ("2016 Form 10-K"). In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.

The accompanying Condensed Consolidated Balance Sheet as of December 28, 2016 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our 2016 Form 10-K.

SSE Holdings is considered a VIE. Shake Shack Inc. is the primary beneficiary as we have the majority economic interest in SSE Holdings and, as the sole managing member, have decision making authority that significantly affects the economic performance of the entity, while the limited partners have no substantive kick-out or participating rights. As a result, we consolidate SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of our consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of June 28, 2017 and December 28, 2016, the net assets of SSE Holdings were $177,437 and $158,845, respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreements. See Note 7 for more information.

Shake Shack Inc. Form 10-Q | 9

Fiscal Year

We operate on a 52/53 week fiscal year ending on the last Wednesday in December. Fiscal 2017 contains 52 weeks and ends on December 27, 2017. Fiscal 2016 contained 52 weeks and ended on December 28, 2016. Unless otherwise stated, references to years in this report relate to fiscal years.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements     

We adopted the Accounting Standards Updates (“ASUs”) summarized below in fiscal 2017. The effects of adoption did not have a material impact on our consolidated financial statements.

Accounting Standards Update (“ASU”)	Description	Date Adopted
Improvements to Employee Share-Based Payment Accounting (ASU 2016-09)	This standard simplifies certain aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, certain classifications on the statement of cash flows, and an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur. Upon adoption, we made such policy election. The adoption methodology applied varied based on each applicable provision of the standard, and none of the provisions had a material impact on our consolidated financial statements.	December 29, 2016
Simplifying the Measurement of Inventory (ASU 2015-11)	This standard applies to inventory measured using methods other than last-in, first-out (LIFO) or the retail method, and requires entities to measure such inventory at the lower of cost or net realizable value. It was applied prospectively.	December 29, 2016

Recently Issued Accounting Pronouncements       

Accounting Standards Update (“ASU”)	Description	Expected Impact	Effective Date
Statement of Cash Flows: Classification of Certain Cash Receipts and Payments (ASU 2016-15)	This standard provides guidance on eight specific cash flow issues with the objective of reducing diversity in practice. It should be applied retrospectively to each period presented, subject to certain conditions.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 28, 2017

10 | Shake Shack Inc. Form 10-Q

Accounting Standards Update (“ASU”)	Description	Expected Impact	Effective Date
Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01)	For public business entities, this standard requires: (i) certain equity investments to be measured at fair value with changes in fair value recognized in net income; (ii) a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) elimination of the requirement to disclose the method(s) and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) separate presentation of financial assets and liabilities by measurement category and form of financial asset in the financial statements; and (vii) an entity to evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The standard should be applied by means of a cumulative-effect adjustment to the balance sheet at the beginning of the fiscal year of adoption. Early adoption is permitted, subject to certain conditions resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 28, 2017
Revenue from Contracts with Customers and related standards (ASU’s 2014-09, 2015-14, 2016-08, 2016-10, 2016-12, 2015-20)	This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. Early adoption is permitted.	We are currently in the process of evaluating the impact this standard is expected to have on our consolidated financial statements. It is still too early in our process to determine the magnitude of the potential impact. However, based on our preliminary assessment, we believe that further evaluation of the fixed fees associated with our licensing agreements (such as the initial territory fees) may reveal differences in the timing of revenue recognition from current policy, but that it is likely that recognition of sales-based royalties will not significantly change. In addition to further evaluating each of our licensing agreements, we are in the process of assessing whether any sales promotions or discounts we currently offer related to our Shack sales could be considered separate performance obligations. As we continue our evaluation, we will further clarify the expected impact of the adoption of the standard. We plan to adopt the standard on December 28, 2017, and we have not yet selected a transition method.	December 28, 2017
Leases (ASU 2016-02)	This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 27, 2018

Shake Shack Inc. Form 10-Q | 11

NOTE 3: FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis as of June 28, 2017 and December 28, 2016, and indicate the classification within the fair value hierarchy.

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of June 28, 2017 and December 28, 2016:

		June 28, 2017
		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash		$	17,417	$	—	$	—		$	17,417	$	17,417	$	—
Level 1:
	Money market funds	5,019		—		—			5,019		5,019		—
	Mutual funds	60,566		—		—			60,566		—		60,566
Level 2:
	Corporate debt securities(1)	2,570		2		(32		)	2,540		—		2,540
Total		$	85,572	$	2	$	(32	)	$	85,542	$	22,436	$	63,106

		December 28, 2016
		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash		$	6,322	$	—	$	—		$	6,322	$	6,322	$	—
Level 1:
	Money market funds	5,285		—		—			5,285		5,285		—
	Mutual funds	60,232		—		—			60,232		—		60,232
Level 2:
	Corporate debt securities(1)	2,473		3		(30		)	2,446		—		2,446
Total		$	74,312	$	3	$	(30	)	$	74,285	$	11,607	$	62,678

(1) Corporate debt securities were measured at fair value using a market approach utilizing observable prices for identical securities or securities with similar characteristics and inputs that are observable or can be corroborated by observable market data.

Net unrealized losses on available-for-sale securities totaling $30 and $27 were included in accumulated other comprehensive loss on the Condensed Consolidated Balance Sheet as of June 28, 2017 and December 28, 2016, respectively.

12 | Shake Shack Inc. Form 10-Q

The following tables summarize the gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June 28, 2017 and December 28, 2016, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:

		June 28, 2017
		Less than 12 Months					12 Months or Greater					Total
		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	Money market funds	$	—	$	—		$	—	$	—		$	—	$	—
	Mutual funds	—		—			—		—			—		—
	Corporate debt securities	1,445		(8		)	455		(24		)	1,900		(32		)
Total		$	1,445	$	(8	)	$	455	$	(24	)	$	1,900	$	(32	)

		December 28, 2016
		Less than 12 Months					12 Months or Greater					Total
		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	Money market funds	$	—	$	—		$	—	$	—		$	—	$	—
	Mutual funds	—		—			—		—			—		—
	Corporate debt securities	1,244		(10		)	540		(20		)	1,784		(30		)
Total		$	1,244	$	(10	)	$	540	$	(20	)	$	1,784	$	(30	)

A summary of other income from available-for-sale securities recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

		Thirteen Weeks Ended					Twenty-Six Weeks Ended
		June 28 2017			June 29 2016		June 28 2017			June 29 2016
Available-for-sale securities:
	Dividend income	$	191		$	—	$	369		$	—
	Interest income	19			23		39			46
	Loss on investments	(12		)	—		(15		)	—
Total other income, net		$	198		$	23	$	393		$	46

A summary of available-for-sale securities sold and gross realized gains and losses recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

		Thirteen Weeks Ended						Twenty-Six Weeks Ended
		June 28 2017			June 29 2016			June 28 2017			June 29 2016
Available-for-sale securities:
	Gross proceeds from sales and redemptions	$	473		$	322		$	628		$	322
	Cost basis of sales and redemptions	484			322			642			322
	Gross realized gains included in net income	—			1			—			1
	Gross realized losses included in net income	(12		)	(1		)	(15		)	(1		)
	Amounts reclassified out of accumulated other comprehensive loss	11			—			14			—

Shake Shack Inc. Form 10-Q | 13

Realized gains and losses are determined on a specific identification method and are included in other income, net on the Condensed Consolidated Statements of Income.

The estimated fair value of our investments in corporate debt securities that are accounted for as available-for-sale securities are all due within one year and are included within marketable securities on the Condensed Consolidated Balance Sheets.

We periodically review our marketable securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and our intent to sell. For our debt securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. As of June 28, 2017 and December 28, 2016, the declines in the market value of our marketable securities investment portfolio were considered to be temporary in nature.

Other Financial Instruments

The carrying value of our other financial instruments, including accounts receivable, accounts payable, and accrued expenses as of June 28, 2017 and December 28, 2016 approximated their fair value due to the short-term nature of these financial instruments.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Assets and liabilities that are measured at fair value on a non-recurring basis include our long-lived assets and indefinite-lived intangible assets. There were no impairments recognized during thethirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

NOTE 4: INVENTORIES

Inventories as of June 28, 2017 and December 28, 2016 consisted of the following:

	June 28 2017		December 28 2016
Food	$	578	$	543
Wine	56		47
Beer	71		58
Beverages	93		79
Retail merchandise	170		79
Inventories	$	968	$	806

14 | Shake Shack Inc. Form 10-Q

NOTE 5: PROPERTY AND EQUIPMENT

Property and equipment as of June 28, 2017 and December 28, 2016 consisted of the following:

	June 28 2017		December 28 2016
Leasehold improvements	$	139,252	$	120,629
Landlord funded assets	4,644		—
Equipment	27,069		23,194
Furniture and fixtures	8,535		7,342
Computer equipment and software	10,057		8,710
Construction in progress (includes assets under construction from deemed landlord financing)	18,067		13,510
Property and equipment, gross	207,624		173,385
Less: accumulated depreciation	47,241		37,121
Property and equipment, net	$	160,383	$	136,264

NOTE 6: SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of other current liabilities as of June 28, 2017 and December 28, 2016 are as follows:

	June 28 2017		December 28 2016
Sales tax payable	$	1,601	$	1,324
Current portion of liabilities under tax receivable agreement	3,110		4,580
Gift card liability	1,105		1,153
Deferred compensation	2,455		—
Other	1,981		3,116
Other current liabilities	$	10,252	$	10,173

NOTE 7: DEBT

In January 2015, we executed a Third Amended and Restated Credit Agreement, which became effective on February 4, 2015 (together with the prior agreements and amendments, and as further amended, the "Revolving Credit Facility"), which provides for a revolving total commitment amount of $50,000, of which $20,000 is available immediately. The Revolving Credit Facility will mature and all amounts outstanding will be due and payable five years from the effective date. The Revolving Credit Facility permits the issuance of letters of credit upon our request of up to $10,000. Borrowings under the Revolving Credit Facility bear interest at either: (i) LIBOR plus a percentage ranging from 2.3% to 3.3% or (ii) the prime rate plus a percentage ranging from 0.0% to 0.8%, depending on the type of borrowing made under the Revolving Credit Facility. As of June 28, 2017 and December 28, 2016, there were no amounts outstanding under the Revolving Credit Facility. As of June 28, 2017, we had $19,920 of availability under the Revolving Credit Facility, after giving effect to $80 in outstanding letters of credit.

The Revolving Credit Facility is secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors. The obligations under the Revolving Credit Facility are guaranteed by each of SSE Holdings' wholly-owned domestic subsidiaries (with certain exceptions).

Shake Shack Inc. Form 10-Q | 15

The Revolving Credit Facility contains a number of covenants that, among other things, limit our ability to, subject to specified exceptions, incur additional debt; incur additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve ourselves; pay dividends or make distributions; engage in businesses that are not in a related line of business; make loans, advances or guarantees; engage in transactions with affiliates; and make investments. In addition, the Revolving Credit Facility contains certain cross-default provisions. We are required to maintain a specified consolidated fixed-charge coverage ratio and a specified funded net debt to adjusted EBITDA ratio, both as defined under the Revolving Credit Facility. As of June 28, 2017, we were in compliance with all covenants.

As of June 28, 2017 and December 28, 2016 we had deemed landlord financing liabilities of $11,166 and $2,007, respectively, for certain leases where we are involved in the construction of leased assets and are considered the accounting owner of the construction project.

Total interest costs incurred were $409 and $733 for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, and $91 and $178 for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. Total amounts capitalized into property and equipment were $43 and $64 for the thirteen and twenty-six weeks endedJune 28, 2017, respectively. No amounts were capitalized for the thirteen and twenty-six weeks endedJune 29, 2016.

NOTE 8: NON-CONTROLLING INTERESTS

We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. We report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the "LLC Agreement") of SSE Holdings provides that holders of LLC Interests may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis. In connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in SSE Holdings. Changes in our ownership interest in SSE Holdings while we retain our controlling interest in SSE Holdings will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Interests in SSE Holdings by the other members of SSE Holdings will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital.

The following table summarizes the ownership interest in SSE Holdings as of June 28, 2017 and December 28, 2016.

	June 28, 2017			December 28, 2016
	LLC Interests	Ownership %		LLC Interests	Ownership %
Number of LLC Interests held by Shake Shack Inc.	25,939,866	70.7	%	25,151,384	69.1	%
Number of LLC Interests held by non-controlling interest holders	10,770,992	29.3	%	11,253,592	30.9	%
Total LLC Interests outstanding	36,710,858	100.0	%	36,404,976	100.0	%

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income and other comprehensive income (loss) to Shake Shack Inc. and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the thirteen and twenty-six weeks endedJune 28, 2017 was 29.6% and 30.0%, respectively. The non-controlling interest holders' weighted average ownership percentage for the thirteen and twenty-six weeks endedJune 29, 2016 was 37.9% and 40.9%, respectively.

16 | Shake Shack Inc. Form 10-Q

The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

		Thirteen Weeks Ended					Twenty-Six Weeks Ended
		June 28 2017		June 29 2016			June 28 2017			June 29 2016
Net income attributable to Shake Shack Inc.		$	4,879	$	3,298		$	7,146		$	4,760
Other comprehensive income (loss):
	Unrealized holding gains (losses) on available-for-sale securities	2		(4		)	(2		)	(5		)
Transfers (to) from non-controlling interests:
	Increase in additional paid-in capital as a result of the redemption of LLC Interests	720		5,736			2,042			10,378
	Increase in additional paid-in capital as a result of activity under stock compensation plans	632		161			3,502			404
Total effect of changes in ownership interest on equity attributable to Shake Shack Inc.		$	6,233	$	9,191		$	12,688		$	15,537

During the twenty-six weeks endedJune 28, 2017 and June 29, 2016, an aggregate of 482,600 and 3,477,145 LLC Interests, respectively, were redeemed by non-controlling interest holders for newly-issued shares of Class A common stock, and we received 482,600 and 3,477,145 LLC Interests in connection with these redemptions for the twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively, increasing our total ownership interest in SSE Holdings.

During the twenty-six weeks endedJune 28, 2017 and June 29, 2016, we received an aggregate of 305,882 and 77,935 LLC Interests, respectively, in connection with the activity under our stock compensation plan.

NOTE9: EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 28 2017		June 29 2016		June 28 2017		June 29 2016
Stock options	$	863	$	1,053	$	1,827	$	2,083
Performance stock units	399		157		684		157
Restricted stock units	23		—		23		—
Equity-based compensation expense	$	1,285	$	1,210	$	2,534	$	2,240
Total income tax benefit recognized related to equity-based compensation	$	44	$	33	$	95	$	64

Amounts are included in general and administrative expense and labor and related expenses on the Condensed Consolidated Statements of Income.

Shake Shack Inc. Form 10-Q | 17

NOTE10: INCOME TAXES

We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. SSE Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, SSE Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc. We are also subject to withholding taxes in foreign jurisdictions.

Income Tax Expense

A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax expense is as follows:

	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	June 28 2017					June 29 2016					June 28 2017					June 29 2016
Expected U.S. federal income taxes at statutory rate	$	4,050		35.0	%	$	3,014		34.0	%	$	5,982		35.0	%	$	4,595		34.0	%
State and local income taxes, net of federal benefit	659			5.7	%	472			5.3	%	1,008			5.9	%	744			5.5	%
Foreign withholding taxes	227			2.0	%	117			1.3	%	413			2.4	%	357			2.6	%
Tax credits	(248		)	(2.1	)%	(87		)	(1.0	)%	(378		)	(2.2	)%	(126		)	(0.9	)%
Non-controlling interest	(1,303		)	(11.3	)%	(1,200		)	(13.5	)%	(1,982		)	(11.6	)%	(1,955		)	(14.5	)%
Income tax expense	$	3,385		29.3	%	$	2,316		26.1	%	$	5,043		29.5	%	$	3,615		26.7	%

Our effective income tax rates for the thirteen weeks endedJune 28, 2017 and June 29, 2016 were 29.3% and 26.1%, respectively. The increase in our effective income tax rate for the period is primarily due to an increase in our ownership interest in SSE Holdings. As our ownership interest in SSE Holdings increases, our share of the taxable income of SSE Holdings also increases. Our weighted-average ownership interest in SSE Holdings was 70.4% and 62.1% for the thirteen weeks endedJune 28, 2017 and June 29, 2016, respectively. The impact to the effective income tax rate related to the increase in ownership was partially offset by higher tax credits.

Our effective income tax rates for the twenty-six weeks endedJune 28, 2017 and June 29, 2016 were 29.5% and 26.7%, respectively. The increase in our effective income tax rate for the period is primarily due to an increase in our ownership interest in SSE Holdings. As our ownership interest in SSE Holdings increases, our share of the taxable income of SSE Holdings also increases. Our weighted-average ownership interest in SSE Holdings was 70.0% and 59.1% for the twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively. The impact to the effective income tax rate related to the increase in ownership was partially offset by higher tax credits.

Deferred Tax Assets and Liabilities

During the twenty-six weeks endedJune 28, 2017, we acquired an aggregate of 788,482 LLC Interests in connection with the redemption of LLC Interests and activity relating to our stock compensation plan. We recognized a deferred tax asset in the amount of $7,876 associated with the basis difference in our investment in SSE Holdings upon acquisition of these LLC Interests. As of June 28, 2017, the total deferred tax asset related to the basis difference in our investment in SSE Holdings was $215,457. However, a portion of the total basis difference will only reverse upon the eventual sale of our interest in SSE Holdings, which we expect would result in a capital loss. As of June 28, 2017, the total valuation allowance established against the deferred tax asset to which this portion relates was $16,334.

During the twenty-six weeks endedJune 28, 2017, we also recognized $3,801 of deferred tax assets related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement and related deductions for imputed interest on such payments. See "—Tax Receivable Agreement" for more information.

18 | Shake Shack Inc. Form 10-Q

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of June 28, 2017, we concluded, based on the weight of all available positive and negative evidence, that all of our deferred tax assets (except for those deferred tax assets described above relating to basis differences that are expected to result in a capital loss upon the eventual sale of our interest in SSE Holdings) are more likely than not to be realized. As such, no additional valuation allowance was recognized.

Uncertain Tax Positions

No uncertain tax positions existed as of June 28, 2017. Shake Shack Inc. was formed in September 2014 and did not engage in any operations prior to the IPO and related organizational transactions. Shake Shack Inc. first filed tax returns for tax year 2014, which is the first tax year subject to examination by taxing authorities for U.S. federal and state income tax purposes. Additionally, although SSE Holdings is treated as a partnership for U.S. federal and state income taxes purposes, it is still required to file an annual U.S. Return of Partnership Income, which is subject to examination by the Internal Revenue Service ("IRS"). The statute of limitations has expired for tax years through 2012 for SSE Holdings.

Tax Receivable Agreement

Pursuant to our election under Section 754 of the Internal Revenue Code (the "Code"), we expect to obtain an increase in our share of the tax basis in the net assets of SSE Holdings when LLC Interests are redeemed or exchanged by the other members of SSE Holdings. We plan to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interest occurs. We intend to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

On February 4, 2015, we entered into a tax receivable agreement with certain of the then-existing members of SSE Holdings (the "Tax Receivable Agreement") that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of SSE Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the "TRA Payments"). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or us. The rights of each member of SSE Holdings, that is a party to the Tax Receivable Agreement, are assignable to transferees of their respective LLC Interests.

During the twenty-six weeks endedJune 28, 2017, we acquired an aggregate of 482,600 LLC Interests in connection with the redemption of LLC Interests, which resulted in an increase in the tax basis of our investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement. We recognized an additional liability in the amount of $9,413 for the TRA Payments due to the redeeming members, representing 85% of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemption of LLC Interests, after concluding it was probable that such TRA Payments would be paid based on our estimates of future taxable income. During the twenty-six weeks endedJune 28, 2017, payments of $1,471, inclusive of interest, were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement. No amounts were paid to the members during the twenty-six weeks endedJune 29, 2016. As of June 28, 2017, the total amount of TRA Payments due under the Tax Receivable Agreement, was $280,426, of which $3,110 was included in other current liabilities on the Condensed Consolidated Balance Sheet. See Note 13 for more information relating to our liabilities under the Tax Receivable Agreement.

Shake Shack Inc. Form 10-Q | 19

NOTE11: EARNINGS PER SHARE

Basic earnings per share of Class A common stock is computed by dividing net income available to Shake Shack Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to Shake Shack Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

			Thirteen Weeks Ended				Twenty-Six Weeks Ended
			June 28 2017		June 29 2016		June 28 2017		June 29 2016
Numerator:
	Net income		$	8,184	$	6,549	$	12,046	$	9,900
	Less: net income attributable to non-controlling interests		3,305		3,251		4,900		5,140
	Net income attributable to Shake Shack Inc.		$	4,879	$	3,298	$	7,146	$	4,760
Denominator:
	Weighted-average shares of Class A common stock outstanding—basic		25,798		22,553		25,587		21,453
	Effect of dilutive securities:
		Stock options	494		497		523		478
		Performance stock units	20		—		23		—
	Weighted-average shares of Class A common stock outstanding—diluted		26,312		23,050		26,133		21,931
Earnings per share of Class A common stock—basic			$	0.19	$	0.15	$	0.28	$	0.22
Earnings per share of Class A common stock—diluted			$	0.19	$	0.14	$	0.27	$	0.22

Shares of our Class B common stock do not share in the earnings or losses of Shake Shack and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

20 | Shake Shack Inc. Form 10-Q

The following table presents potentially dilutive securities excluded from the computations of diluted earnings per share of Class A common stock for the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 28 2017		June 29 2016		June 28 2017		June 29 2016
Stock options	6,258	(1)	—		6,258	(1)	—
Performance stock units	84,755	(2)	63,200	(2)	84,755	(2)	63,200	(2)
Shares of Class B common stock	10,770,992	(3)	12,983,596	(3)	10,770,992	(3)	12,983,596	(3)

(1) Excluded from the computation of diluted earnings per share of Class A common stock because the exercise price of the stock options exceeded the average market price of our Class A common stock during the period ("out-of-the-money").

(2) Excluded from the computation of diluted earnings per share of Class A common stock because the performance conditions associated with these awards were not met assuming the end of the reporting period was the end of the performance period.

(3) Shares of our Class B common stock are considered potentially dilutive shares of Class A common stock. Amounts have been excluded from the computations of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive under the if-converted and two-class methods.

NOTE 12: SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information for the twenty-six weeks endedJune 28, 2017 and June 29, 2016:

		Twenty-Six Weeks Ended
		June 28 2017		June 29 2016
Cash paid for:
	Income taxes, net of refunds	$	1,595	$	1,325
	Interest, net of amounts capitalized	357		28
Non-cash investing activities:
	Accrued purchases of property and equipment	7,690		3,059
	Capitalized landlord assets for leases where we are deemed the accounting owner	7,634		—
	Accrued purchases of marketable securities	80		—
	Capitalized equity-based compensation	78		62
Non-cash financing activities:
	Class A common stock issued in connection with the redemption of LLC Interests	—		3
	Cancellation of Class B common stock in connection with the redemption of LLC Interests	—		(3		)
	Establishment of liabilities under tax receivable agreement	9,413		65,356
	Accrued distributions payable to non-controlling interest holders	—		607

Shake Shack Inc. Form 10-Q | 21

NOTE 13: COMMITMENTS AND CONTINGENCIES

Lease Commitments

We are obligated under various operating leases for Shacks and our home office space, expiring in various years through 2035. Under certain of these leases, we are liable for contingent rent based on a percentage of sales in excess of specified thresholds and are typically responsible for our proportionate share of real estate taxes, common area maintenance charges and utilities.

As security under the terms of several of our leases, we are obligated under letters of credit totaling $160 as of June 28, 2017. The letters of credit expire in April 2018 and February 2026. In addition, in December 2013, we entered into an irrevocable standby letter of credit in conjunction with our home office lease in the amount of $80. The letter of credit expires in September 2017 and renews automatically for one-year periods through September 2019.

Purchase Commitments

Purchase obligations include legally binding contracts, including commitments for the purchase, construction or remodeling of real estate and facilities, firm minimum commitments for inventory purchases, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts. These obligations are generally short-term in nature and are recorded as liabilities when the related goods are received or services rendered. We also enter into long-term, exclusive contracts with certain vendors to supply us with food, beverages and paper goods, obligating us to purchase specified quantities.

Legal Contingencies

In November 2015, we participated in a voluntary mediation with counsel representing two former Shake Shack managers, who alleged that we improperly classified our restaurant managers as exempt from overtime protections. At the conclusion of the mediation, the parties mutually agreed to fully and finally resolve the matter by settling, rather than litigating. In connection with the settlement, the parties entered into a memorandum of understanding, pursuant to which we agreed to create a settlement fund in the amount of $750 and, in exchange for their participation in the settlement fund, all participating employees (current and former) were required to release Shake Shack from all federal and/or state wage and hour claims that may have existed through the settlement date. In March 2016, the parties entered into a settlement agreement in the amount of $750 million. In May 2017, we paid to the claims administrator $774 in full satisfaction of the amounts owed by us under the settlement agreement and related expenses.

We are subject to various legal and regulatory proceedings, claims and liabilities, such as employment-related claims and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance. As of June 28, 2017, the amount of ultimate liability with respect to these matters was not material.

Liabilities under Tax Receivable Agreement

As described in Note 10, we are a party to the Tax Receivable Agreement under which we are contractually committed to pay certain of the members of SSE Holdings 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions. We are not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized. Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then we would not be required to make the related TRA Payments. During the twenty-six weeks endedJune 28, 2017 and June 29, 2016, we recognized liabilities totaling $9,413 and $65,356, respectively, relating to our obligations under the Tax Receivable Agreement, after concluding that it was probable that we would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits. As of June 28, 2017 and December 28, 2016, our total obligations under the Tax Receivable Agreement, including accrued interest, were $280,426 and $272,482, respectively. There were no transactions subject to the Tax Receivable Agreement for which we did not recognize the related liability, as we concluded that we would have sufficient future taxable income to utilize all of the related tax benefits.

22 | Shake Shack Inc. Form 10-Q

NOTE 14: RELATED PARTY TRANSACTIONS

Union Square Hospitality Group

The Chairman of our Board of Directors serves as the Chief Executive Officer of Union Square Hospitality Group, LLC. As a result, Union Square Hospitality Group, LLC and its subsidiaries are considered related parties.

USHG, LLC

Effective January 2015, we entered into an Amended and Restated Management Services Agreement with USHG, LLC ("USHG"), in which USHG provides reduced management services to SSE Holdings comprised of executive leadership from members of its senior management, advisory and development services and limited leadership development and human resources services. The initial term of the Amended and Restated Management Services Agreement is through December 31, 2019, with renewal periods.

Total amounts paid to USHG for general corporate expenses were $1 and $6 for the thirteen and twenty-six weeks endedJune 28, 2017. For the thirteen and twenty-six weeks endedJune 29, 2016 total amounts paid to USHG for general corporate expenses were $1 and $6, respectively. These amounts are included in general and administrative expenses on the Condensed Consolidated Statements of Income.

No amounts were payable to USHG as of June 28, 2017. Total amounts payable to USHG as of December 28, 2016 were $1, which is included in other current liabilities on the Condensed Consolidated Balance Sheets. No amounts were due from USHG as of June 28, 2017 and December 28, 2016.

Daily Provisions

In May 2017 we began purchasing coffee cake from Daily Provisions, a restaurant owned by Union Square Hospitality Group, to offer as a breakfast item at our Madison Square Park Shack. No amounts were paid to Daily Provisions during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016. Total amounts payable to Daily Provisions as of June 28, 2017 were $1, which are included in accounts payable on the Condensed Consolidated Balance Sheets. No amounts were payable to Daily provisions as of December 28, 2016.

Hudson Yards Sports and Entertainment

In fiscal 2011, we entered into a Master License Agreement (as amended, "MLA") with Hudson Yards Sports and Entertainment LLC ("HYSE") to operate Shake Shack branded limited menu concession stands in sports and entertainment venues within the United States. The agreement expires in January 2027 and includes five consecutive five-year renewal options at HYSE's option. As consideration for these rights, HYSE pays us a license fee based on a percentage of net food sales, as defined in the MLA. HYSE also pays us a percentage of profits on sales of branded beverages, as defined in the MLA. Amounts paid to us by HYSE for the thirteen and twenty-six weeks endedJune 28, 2017 were $115 and $135, respectively. For both the thirteen and twenty-six weeks endedJune 29, 2016 amounts paid to us by HYSE in the were $103. These amounts are included in licensing revenue on the Condensed Consolidated Statements of Income. Total amounts due from HYSE as of June 28, 2017 and December 28, 2016 were $58 and $11, which are included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets.

Madison Square Park Conservancy

The Chairman of our Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which we have a license agreement and pay license fees to operate our Madison Square Park Shack. Amounts paid to Madison Square Park Conservancy as rent amounted to $133 and $332 for the thirteen and twenty-six weeks endedJune 28, 2017, respectively. Amounts paid to Madison Square Park Conservancy as rent amounted to $195 and $390 for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. These amounts are included in occupancy and related expenses on the Condensed Consolidated Statements of Income.Total amounts due to MSP Conservancy as of June 28, 2017 and December 28, 2016 were $79 and $1, respectively. These amounts are included in accrued expenses on the Condensed Consolidated Balance Sheets.

Additionally, we received tenant improvement allowances from MSP Conservancy related to a reconstruction project which ended in 2015. No amounts were paid to us from MSP Conservancy during the thirteen weeks endedJune 28, 2017. During the twenty-six weeks endedJune 28, 2017 amounts paid to us from MSP Conservancy totaled $200. No amounts were paid to us during the thirteen and twenty-six weeks endedJune 29, 2016. No amounts were due to us from MSP Conservancy as of June 28, 2017.

Shake Shack Inc. Form 10-Q | 23

Total amounts due from MSP Conservancy as ofDecember 28, 2016 were $200, which are included in accounts receivable on the Condensed Consolidated Balance Sheets.

Share Our Strength

The Chairman of our Board of Directors serves as a director of Share Our Strength, for which Shake Shack holds the "Great American Shake Sale" every year during the month of May to raise money and awareness for childhood hunger. During the Great American Shake Sale, we encourage guests to donate money to Share Our Strength's No Kid Hungry campaign in exchange for a coupon for a free cake-themed shake. All of the guest donations we collect go directly to Share Our Strength.

During the thirteen and twenty-six weeks endedJune 28, 2017 the Great American Shake Sale raised $631 for Share Our Strength, which was payable to Share Our Strength as of June 28, 2017 and included in accounts payable on the Condensed Consolidated Balance Sheets. Amounts paid to Share Our Strength for both the thirteen and twenty-six weeks endedJune 29, 2016 were $587. We incurred costs of approximately $119 for both the thirteen and twenty-six weeks endedJune 28, 2017 and $98 for both the thirteen and twenty-six weeks endedJune 29, 2016. These costs represent the cost of the free shakes redeemed and are included in general and administrative expenses on the Condensed Consolidated Statements of Income.

Mobo Systems, Inc.

The Chairman of our Board of Directors serves as a director of Mobo Systems, Inc. (also known as "Olo"), a platform we use in connection with our mobile ordering application. Amounts paid to Olo during the thirteen and twenty-six weeks endedJune 28, 2017 were $20 and $38, respectively, which are included in other operating expenses on the Condensed Consolidated Statements of Income. No amounts were paid to Olo for the thirteen and twenty-six weeks endedJune 29, 2016. No amounts were payable to Olo as of June 28, 2017 and December 28, 2016.

Square, Inc.

On July 20, 2017, our Chief Executive Officer joined the Board of Directors of Square, Inc ("Square"). Square provides point-of-sale solutions and other business management tools. Square also owns Caviar, a food ordering service. We currently use the Square payment application to process a limited number of sales at our Shacks and sales for certain off-site events. In March 2017, we partnered with Caviar for a limited-time delivery promotion.

Tax Receivable Agreement

As described in Note 10, we entered into a tax receivable agreement with certain members of SSE Holdings that provides for the payment by us of 85% of the amount of tax benefits, if any, that Shake Shack actually realizes or in some cases is deemed to realize as a result of certain transactions. No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the thirteen weeks endedJune 28, 2017. During the twenty-six weeks endedJune 28, 2017, payments of $1,471, inclusive of interest, were made to the members. No amounts were paid to the members during the thirteen and twenty-six weeks endedJune 29, 2016. As of June 28, 2017 and December 28, 2016, total amounts due under the Tax Receivable Agreement were $280,426 and $272,482, respectively.

Distributions to Members of SSE Holdings

Under the terms of the SSE Holdings LLC Agreement, SSE Holdings is obligated to make tax distributions to its members. During the thirteen and twenty-six weeks endedJune 28, 2017 distributions paid to non-controlling interest holders were $2,024 and $2,379, respectively. For the thirteen and twenty-six weeks endedJune 29, 2016 tax distributions of $1,602 were paid to non-controlling interest holders. Notax distributions were payable to non-controlling interest holders as of June 28, 2017. As of December 28, 2016 tax distributions of $607 were payable to non-controlling interest holders.

24 | Shake Shack Inc. Form 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, such as our expected financial outlook for fiscal 2017, expected Shack openings, expected same-Shack sales growth and trends in our business. Forward-looking statements can also be identified by words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "outlook," "plan," "potential," "predict," "project," "seek," "may," "can," "will," "would," "could," "should," the negatives thereof and other similar expressions. All forward-looking statements are expressly qualified in their entirety by these cautionary statements, except that the safe harbor provisions of the PSLRA do not apply to any forward-looking statements relating to the operations of any of our partnerships or limited liability companies. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended, ("2016 Form 10-K"), subsequent Quarterly Reports on Form 10-Q and Part II, Item 1A of this Form 10-Q. The following discussion should be read in conjunction with our 2016 Form 10-K and the condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years and the associated quarters, months and periods of those fiscal years. We undertake no obligation to revise or update any forward-looking statements for any reason, except as required by law.

OVERVIEW

Shake Shack is a modern day "roadside" burger stand serving a classic American menu of premium burgers, chicken sandwiches, hot dogs, crinkle cut fries, shakes, frozen custard, beer and wine. As of June 28, 2017, there were 134 Shacks in operation, system-wide, of which 75 were domestic company-operated Shacks, nine were domestic licensed Shacks and 50 were international licensed Shacks.

Development Highlights

During the quarter, we opened four domestic company-operated Shacks, including our first Shack in Lexington, Kentucky, as well as Shacks in Melville, New York, Chicago at the West Loop and Orlando at the Florida Mall. Additionally, we opened two domestic licensed Shacks, which included a Shack at the Minute Maid Park in Houston and LAX Airport Terminal 3, as well as two additional international licensed Shacks in South Korea.

Financial Highlights for the Second Quarter 2017:

▪ Total revenue increased 37.4% to $91.3 million.

▪ Shack sales increased 36.6% to $88.0 million.

▪ Same-Shack sales decreased 1.8%.

▪ Operating income increased 31.4% to $11.7 million, or 12.9% of total revenue.

▪ Shack-level operating profit*, a non-GAAP measure, increased 27.6% to $25.3 million, or 28.8% of Shack sales.

▪ Net income increased 25.0% to $8.2 million and net income attributable to Shake Shack Inc. was $4.9 million, or $0.19 per diluted share.

▪ Adjusted EBITDA*, a non-GAAP measure, increased 36.4% to $19.4 million.

▪ Adjusted pro forma net income*, a non-GAAP measure, increased 38.7% to $7.3 million, or $0.20 per fully exchanged and diluted share.

▪ Seven net system-wide Shack openings, including four domestic company-operated Shacks and three net licensed Shacks.

Shake Shack Inc. Form 10-Q | 25

* Shack-level operating profit, adjusted EBITDA and adjusted pro forma net income are non-GAAP measures. See "—Non-GAAP Financial Measures" for reconciliations of Shack-level operating profit to operating income, adjusted EBITDA to net income, and adjusted pro forma net income to net income attributable to Shake Shack Inc., the most directly comparable financial measures presented in accordance with GAAP.

We continued to execute on our growth strategies in 2017 and the second quarter of 2017 was positively impacted by the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017 and the approximate 1.5% menu price increase implemented at the end of December 2016, offset by a decline in same-Shack sales of 1.8% and increased labor and related expenses resulting from increases in hourly wages that were implemented at the end of fiscal 2016, investments in our management team to support future growth and the opening of more target-volume Shacks.

Net income attributable to Shake Shack Inc. was $4.9 million, or $0.19per diluted share, for the second quarter of 2017, compared to $3.3 million, or $0.14 per diluted share, for the same period last year. On an adjusted pro forma basis, which excludes certain non-recurring items and assumes that all outstanding LLC Interests were exchanged for shares of Class A common stock as of the beginning of the period, we would have recognized net income of $7.3 million, or $0.20per fully exchanged and diluted share, for the second quarter of 2017 compared to $5.2 million, or $0.14 per fully exchanged and diluted share for the the second quarter of 2016, an increase of 38.7%.

FISCAL 2017 OUTLOOK

For the fiscal year ending December 27, 2017, we have revised our financial outlook to the following:

	Current Outlook	Previous Outlook
Total revenue	$351 to $355 million	$351 to $355 million
Same-Shack sales growth (%)(1)	-2% to -3%	0	%
Domestic company-operated Shack openings(2)	23 to 24	23 to 24
Licensed Shack openings	15, net	12, net
Shack-level operating profit margin	26.5% to 27.5%	26.5% to 27.5%
General and administrative expenses	$38 to $40 million	$38 to $40 million
Depreciation expense	$22 million	$22 million
Interest expense	$1.6 to $2.0 million	$1.6 to $2.0 million
Adjusted pro forma effective tax rate (%)	40% to 41%	40% to 41%

(1) Includes approximately 1.5% to 2.0% of menu price increases taken at the end of December 2016.

(2) The average annual sales volume for the domestic company-operated Shacks to be opened in fiscal 2017 is expected to be at least $3.4 million in the current outlook ($3.3 million in the previous outlook).

26 | Shake Shack Inc. Form 10-Q

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016:

		Thirteen Weeks Ended										Twenty-Six Weeks Ended
(dollar amounts in thousands)		June 28 2017					June 29 2016					June 28 2017					June 29 2016
Shack sales		$	88,003		96.4	%	$	64,406		96.9	%	$	162,158		96.5	%	$	116,559		96.6	%
Licensing revenue		3,313			3.6	%	2,066			3.1	%	5,907			3.5	%	4,078			3.4	%
TOTAL REVENUE		91,316			100.0	%	66,472			100.0	%	168,065			100.0	%	120,637			100.0	%
Shack-level operating expenses(1):
	Food and paper costs	24,712			28.1	%	18,104			28.1	%	45,886			28.3	%	33,136			28.4	%
	Labor and related expenses	22,426			25.5	%	15,262			23.7	%	42,886			26.4	%	28,424			24.4	%
	Other operating expenses	8,486			9.6	%	5,979			9.3	%	16,151			10.0	%	10,898			9.3	%
	Occupancy and related expenses	7,043			8.0	%	5,209			8.1	%	13,219			8.2	%	9,532			8.2	%
General and administrative expenses		9,678			10.6	%	7,496			11.3	%	18,148			10.8	%	14,380			11.9	%
Depreciation expense		5,258			5.8	%	3,404			5.1	%	10,006			6.0	%	6,510			5.4	%
Pre-opening costs		1,876			2.1	%	2,085			3.1	%	4,291			2.6	%	4,110			3.4	%
Loss on disposal of property and equipment		100			0.1	%	—			—	%	113			0.1	%	—			—	%
TOTAL EXPENSES		79,579			87.1	%	57,539			86.6	%	150,700			89.7	%	106,990			88.7	%
OPERATING INCOME		11,737			12.9	%	8,933			13.4	%	17,365			10.3	%	13,647			11.3	%
Other income, net		198			0.2	%	23			—	%	393			0.2	%	46			—	%
Interest expense		(366		)	(0.4	)%	(91		)	(0.1	)%	(669		)	(0.4	)%	(178		)	(0.1	)%
INCOME BEFORE INCOME TAXES		11,569			12.7	%	8,865			13.3	%	17,089			10.2	%	13,515			11.2	%
Income tax expense		3,385			3.7	%	2,316			3.5	%	5,043			3.0	%	3,615			3.0	%
NET INCOME		8,184			9.0	%	6,549			9.9	%	12,046			7.2	%	9,900			8.2	%
Less: net income attributable to non-controlling interests		3,305			3.6	%	3,251			4.9	%	4,900			2.9	%	5,140			4.3	%
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.		$	4,879		5.3	%	$	3,298		5.0	%	$	7,146		4.3	%	$	4,760		3.9	%

(1) As a percentage of Shack sales.

Shack Sales

Shack sales represent the aggregate sales of food, beverages and Shake Shack branded merchandise at our domestic company-operated Shacks. Shack sales in any period are directly influenced by the number of operating weeks in such period, the number of open Shacks and same-Shack sales. Same-Shack sales means, for any reporting period, sales for the comparable Shack base, which we define as the number of domestic company-operated Shacks open for 24 months or longer. Effective December 29th, 2016, we changed our methodology for calculating same-Shack sales whereby Shacks enter the comparable base at the beginning of their 25th full fiscal month, whereas previously they entered at the beginning of their 105th full fiscal week.

Shack sales were $88.0 million for the thirteen weeks endedJune 28, 2017 compared to $64.4 million for the thirteen weeks endedJune 29, 2016, anincrease of $23.6 million or 36.6%. The growth in Shack sales was primarily driven by the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017. Same-Shack sales decreased $0.9 million, or 1.8% during the thirteen weeks endedJune 28, 2017. The decrease in same-Shack sales is due to a decrease in guest traffic of 4.3% offset by a combined increase of 2.5% in price and sales mix. For purposes of calculating same-Shack sales growth, Shack sales for 37 Shacks were included in the comparable Shack base.

Shack sales were $162.2 million for the twenty-six weeks endedJune 28, 2017 compared to $116.6 million for the twenty-six weeks endedJune 29, 2016, anincrease of $45.6 million or 39.1%. The increase is primarily due to the opening of 24 new domestic

Shake Shack Inc. Form 10-Q | 27

company-operated Shacks between June 29, 2016 and June 28, 2017. Same-Shack sales decreased $1.9 million, or 2.1%. The decrease in same-Shack sales is primarily due to decreased guest traffic of 3.9% offset by a combined increase of 1.8% in price and sales mix. For purposes of calculating same-Shack sales growth, Shack sales for 37 Shacks were included in the comparable Shack base.

Licensing Revenue

Licensing revenue is comprised of license fees, opening fees for certain licensed Shacks and territory fees. License fees are calculated as a percentage of sales and territory fees are payments for the exclusive right to develop Shacks in a specific geographic area.

Licensing revenue was $3.3 million for the thirteen weeks endedJune 28, 2017compared to $2.1 million for the thirteen weeks endedJune 29, 2016, anincrease of $1.2 million or 60.4%. Licensing revenue was $5.9 million for the twenty-six weeks endedJune 28, 2017 compared to $4.1 million for the twenty-six weeks endedJune 29, 2016, anincrease of $1.8 million or 44.9%. The increases for the thirteen and twenty-six week periods were primarily driven by 15 net new licensed Shacks opened between June 29, 2016 and June 28, 2017, as well as $0.5 million of previously deferred royalty revenue recognized in connection with the initial publication of the Shake Shack book.

Food and Paper Costs

Food and paper costs include the direct costs associated with food, beverage and packaging of our menu items. The components of food and paper costs are variable by nature, changing with sales volume, and are impacted by menu mix and fluctuations in commodity costs.

Food and paper costs were $24.7 million for the thirteen weeks endedJune 28, 2017 compared to $18.1 million for the thirteen weeks endedJune 29, 2016, anincrease of $6.6 million or 36.5%. Food and paper costs were $45.9 million for thetwenty-six weeks endedJune 28, 2017 compared to $33.1 million for the twenty-six weeks endedJune 29, 2016, anincrease of $12.8 million or 38.5%. The increases for the thirteen and twenty-six week periods were primarily due to the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017.

As a percentage of Shack sales, food and paper costs remained constant at 28.1% for the thirteen weeks endedJune 28, 2017 and June 29, 2016. As a percentage of Shack sales, food and paper costs decreased to 28.3% from 28.4% for the twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively. This decrease was primarily the result of menu price increases implemented at the end of December 2016.

Labor and Related Expenses

Labor and related expenses include domestic company-operated Shack-level hourly and management wages, bonuses, payroll taxes, equity-based compensation, workers' compensation expense and medical benefits. As we expect with other variable expense items, we expect labor costs to grow as our Shack sales grow. Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs and the performance of our domestic company-operated Shacks.

Labor and related expenses were $22.4 million for the thirteen weeks endedJune 28, 2017 compared to $15.3 million for the thirteen weeks endedJune 29, 2016, an increase of $7.1 million or 46.9%. Labor and related expenses were $42.9 million for the twenty-six weeks endedJune 28, 2017 compared to $28.4 million for the twenty-six weeks endedJune 29, 2016, anincrease of $14.5 million or 50.9%. These increases for the thirteen and twenty-six week periods were primarily due to the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017.

As a percentage of Shack sales, labor and related expenses increased to 25.5% and 26.4% for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, compared to 23.7% and 24.4% for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. The increases for the thirteen and twenty-six week periods were primarily due to increases in hourly wages that were implemented at the end of fiscal 2016, investments in our management team to support future growth and the opening of Shacks at various volumes.

Other Operating Expenses

Other operating expenses consist of Shack-level marketing expenses, utilities, repair and maintenance costs, and other operating expenses incidental to operating our domestic company-operated Shacks, such as non-perishable supplies, credit card fees and property insurance.

28 | Shake Shack Inc. Form 10-Q

Other operating expenses were $8.5 million for the thirteen weeks endedJune 28, 2017 compared to $6.0 million for the thirteen weeks endedJune 29, 2016, anincrease of $2.5 million or 41.9%. Other operating expenses were $16.2 million for the twenty-six weeks endedJune 28, 2017 compared to $10.9 million for the twenty-six weeks endedJune 29, 2016, anincrease of $5.3 million or 48.2%. The increases for the thirteen and twenty-six week periods were primarily due to the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017.

As a percentage of Shack sales, other operating expenses increased to 9.6% and 10.0% for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, compared to 9.3% for both the thirteen and twenty-six weeks endedJune 29, 2016. The increase was primarily due to certain fixed operating expenses, deleverage from same-Shack sales and the introduction of Shacks at various volumes into the system.

Occupancy and Related Expenses

Occupancy and related expenses consist of Shack-level occupancy expenses (including rent, common area expenses and certain local taxes), excluding pre-opening costs, which are recorded separately.

Occupancy and related expenses were $7.0 million for the thirteen weeks endedJune 28, 2017 compared to $5.2 million for the thirteen weeks endedJune 29, 2016, anincrease of $1.8 million or 35.2%. Occupancy and related expenses were $13.2 million for the twenty-six weeks endedJune 28, 2017 compared to $9.5 million for the twenty-six weeks endedJune 29, 2016, anincrease of $3.7 million or 38.7%. The increases for the thirteen and twenty-six week periods were primarily due to the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017.

As a percentage of Shack sales, occupancy and related expenses decreased to 8.0% for the thirteen weeks endedJune 28, 2017 from 8.1% for the thirteen weeks endedJune 29, 2016, primarily due to the increased number of leases where we are deemed to be the accounting owner and for which less rent expense is recognized. This was partially offset by the introduction of Shacks at various volumes into the system. For the twenty-six weeks endedJune 28, 2017 and June 29, 2016, occupancy and related expenses as a percentage of Shack sales remained constant at 8.2%.

General and Administrative Expenses

General and administrative expenses consist of costs associated with corporate and administrative functions that support Shack development and operations, as well as equity-based compensation expense.

General and administrative expenses were $9.7 million for the thirteen weeks endedJune 28, 2017 compared to $7.5 million for the thirteen weeks endedJune 29, 2016, anincrease of $2.2 million or 29.1%. General and administrative expenses were $18.1 million for the twenty-six weeks endedJune 28, 2017 compared to $14.4 million for the twenty-six weeks endedJune 29, 2016, anincrease of $3.7 million or 26.2%. The increases for the thirteen and twenty-six week periods were primarily driven by higher payroll expenses from increased headcount at our home office to support our growth plans, costs incurred in connection with our executive transition and the recognition of previously deferred costs related to the initial publication of the Shake Shack book.

As a percentage of total revenue, general and administrative expenses decreased to 10.6% and 10.8% for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, from 11.3% and 11.9% for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. These decreases were primarily due to the increased level of Shack sales.

Depreciation Expense

Depreciation expense consists of the depreciation of fixed assets, including leasehold improvements and equipment.

Depreciation expense was $5.3 million for the thirteen weeks endedJune 28, 2017 compared to $3.4 million for the thirteen weeks endedJune 29, 2016, anincrease of $1.9 million or 54.5%. Depreciation expense was $10.0 million for the twenty-six weeks endedJune 28, 2017 compared to $6.5 million for the twenty-six weeks endedJune 29, 2016, anincrease of $3.5 million or 53.7%. The increases for the thirteen and twenty-six week periods were due primarily to incremental depreciation of property and equipment related to the opening of 24 new domestic company-operated Shacks between June 29, 2016 and June 28, 2017.

As a percentage of total revenue, depreciation expense increased to 5.8% and 6.0% for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, compared to 5.1% and 5.4% for the thirteen and twenty-six weeks endedJune 29, 2016, respectively,  primarily due to the deleverage from same-Shack sales and the entry of Shacks at various volumes into the system.

Shake Shack Inc. Form 10-Q | 29

Pre-Opening Costs

Pre-opening costs consist primarily of legal fees, rent, managers' salaries, training costs, employee payroll and related expenses, costs to relocate and compensate Shack management teams prior to an opening and wages, as well as travel and lodging costs for our opening training team. All such costs incurred prior to the opening of a domestic company-operated Shack are expensed in the period in which the expense was incurred. Pre-opening costs can fluctuate significantly from period to period, based on the number and timing of domestic company-operated Shack openings and the specific pre-opening costs incurred for each domestic company-operated Shack. Additionally, domestic company-operated Shack openings in new geographic market areas will initially experience higher pre-opening costs than our established geographic market areas, such as the New York City metropolitan area, where we have greater economies of scale and incur lower travel and lodging costs for our training team.

Pre-opening costs were $1.9 million for the thirteen weeks endedJune 28, 2017 compared to $2.1 million for the thirteen weeks endedJune 29, 2016, adecrease of $0.2 million or 10.0%. Pre-opening costs were $4.3 million for the twenty-six weeks endedJune 28, 2017 compared to $4.1 million for the twenty-six weeks endedJune 29, 2016, anincrease of $0.2 million or 4.4%. The variances for the thirteen and twenty-six week periods were due to the timing and total number of new domestic company-operated Shacks expected to open.

Loss on Disposal of Property and Equipment

Loss on disposal of property and equipment represents the net book value of assets that have been retired and consists primarily of furniture and fixtures that were replaced in the normal course of business.

The loss on disposal of property and equipment for the thirteen and twenty-six weeks endedJune 28, 2017 was $0.1 million. The loss on disposal of property and equipment for the thirteen and twenty-six weeks endedJune 29, 2016 was not material.

Other Income, Net

Other income, net consists of interest income, dividend income and net realized gains and losses from the sale of marketable securities.

Other income, net for the thirteen and twenty-six weeks endedJune 28, 2017 was $0.2 million and $0.4 million, respectively. Other income, net for the thirteen and twenty-six weeks endedJune 29, 2016 was not material.

Interest Expense

Interest expense primarily consists of amortization of deferred financing costs, imputed interest on deferred compensation, interest on the current portion of our liabilities under the Tax Receivable Agreement, imputed interest on our deemed landlord financing liability as well as interest and fees on our Revolving Credit Facility.

Interest expense for the thirteen and twenty-six weeks endedJune 28, 2017 was $0.4 million and $0.7 million, respectively. Interest expense for the thirteen and twenty-six weeks endedJune 29, 2016 was not material.

Income Tax Expense

We are the sole managing member of SSE Holdings, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, SSE Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss generated by SSE Holdings.

Income tax expense was $3.4 million for the thirteen weeks endedJune 28, 2017 compared to $2.3 million for the thirteen weeks endedJune 29, 2016. Our effective income tax rate increased to 29.3% for the thirteen weeks endedJune 28, 2017 from 26.1% for the thirteen weeks endedJune 29, 2016.

Income tax expense was $5.0 million for the twenty-six weeks endedJune 28, 2017 compared to $3.6 million for the twenty-six weeks endedJune 29, 2016. Our effective income tax rate increased to 29.5% for the twenty-six weeks endedJune 28, 2017 from 26.7% for the twenty-six weeks endedJune 29, 2016.

As our ownership interest in SSE Holdings increases, our share of the taxable income of SSE Holdings will also increase. When compared to consolidated pre-tax income, this will result in increases to our effective income tax rate. Our weighted-average

30 | Shake Shack Inc. Form 10-Q

ownership interest in SSE Holdings increased to 70.4% and 70.0%for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, compared to 62.1% and 59.1% for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. This increase in ownership interest was the primary driver for the increase in our effective income tax rate for the thirteen and twenty-six week periods.

Net Income Attributable to Non-Controlling Interests

We are the sole managing member of SSE Holdings and have the sole voting power in, and control the management of, SSE Holdings. Accordingly, we consolidate the financial results of SSE Holdings and report a non-controlling interest on our Consolidated Statements of Income, representing the portion of net income attributable to the other members of SSE Holdings. The LLC Agreement of SSE Holdings provides that holders of LLC Interests may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis. In connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in SSE Holdings. The weighted average ownership percentages for the applicable reporting periods are used to attribute net income and other comprehensive income to Shake Shack Inc. and the non-controlling interest holders.

Net income attributable to non-controlling interests remained constant at $3.3 million for the thirteen weeks endedJune 28, 2017 and June 29, 2016, driven by the decrease in non-controlling interest holders' weighted average ownership on an increased level of net income. The weighted average ownership for non-controlling interest holders for the thirteen weeks endedJune 28, 2017 and June 29, 2016 was 29.6% and 37.9%, respectively.

Net income attributable to non-controlling interests was $4.9 million and $5.1 million for the twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively, a decrease of $0.2 million or 4.7%. This decrease was primarily driven by a decrease in the non-controlling interest holders' weighted average ownership, which was 30.0% and 40.9% for twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively.

Shake Shack Inc. Form 10-Q | 31

NON-GAAP FINANCIAL MEASURES

To supplement the consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use the following non-GAAP financial measures: Shack-level operating profit, Shack-level operating profit margin, EBITDA, adjusted EBITDA, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share (collectively the "non-GAAP financial measures").

Shack-Level Operating Profit

Shack-level operating profit is defined as Shack sales less Shack-level operating expenses including food and paper costs, labor and related expenses, other operating expenses and occupancy and related expenses.

How This Measure Is Useful

When used in conjunction with GAAP financial measures, Shack-level operating profit and Shack-level operating profit margin are supplemental measures of operating performance that we believe are useful measures to evaluate the performance and profitability of our Shacks. Additionally, Shack-level operating profit and Shack-level operating profit margin are key metrics used internally by our management to develop internal budgets and forecasts, as well as assess the performance of our Shacks relative to budget and against prior periods. It is also used to evaluate employee compensation as it serves as a metric in certain of our performance-based employee bonus arrangements. We believe presentation of Shack-level operating profit and Shack-level operating profit margin provides investors with a supplemental view of our operating performance that can provide meaningful insights to the underlying operating performance of our Shacks, as these measures depict the operating results that are directly impacted by our Shacks and exclude items that may not be indicative of, or are unrelated to, the ongoing operations of our Shacks. It may also assist investors to evaluate our performance relative to peers of various sizes and maturities and provides greater transparency with respect to how our management evaluates our business, as well as our financial and operational decision-making.

Limitations of the Usefulness of this Measure

Shack-level operating profit and Shack-level operating profit margin may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of Shack-level operating profit and Shack-level operating profit margin is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Shack-level operating profit excludes certain costs, such as general and administrative expenses and pre-opening costs, which are considered normal, recurring cash operating expenses and are essential to support the operation and development of our Shacks. Therefore, this measure may not provide a complete understanding of the operating results of our company as a whole and Shack-level operating profit and Shack-level operating profit margin should be reviewed in conjunction with our GAAP financial results. A reconciliation of Shack-level operating profit to operating income, the most directly comparable GAAP financial measure, is as follows.

32 | Shake Shack Inc. Form 10-Q

		Thirteen Weeks Ended						Twenty-Six Weeks Ended
(dollar amounts in thousands)		June 28 2017			June 29 2016			June 28 2017			June 29 2016
Operating income		$	11,737		$	8,933		$	17,365		$	13,647
Less:
	Licensing revenue	3,313			2,066			5,907			4,078
Add:
	General and administrative expenses	9,678			7,496			18,148			14,380
	Depreciation expense	5,258			3,404			10,006			6,510
	Pre-opening costs	1,876			2,085			4,291			4,110
	Loss on disposal of property and equipment	100			—			113			—
Shack-level operating profit		$	25,336		$	19,852		$	44,016		$	34,569
Total revenue		$	91,316		$	66,472		$	168,065		$	120,637
Less: licensing revenue		3,313			2,066			5,907			4,078
Shack sales		$	88,003		$	64,406		$	162,158		$	116,559
Shack-level operating profit margin		28.8		%	30.8		%	27.1		%	29.7		%

EBITDA and Adjusted EBITDA

EBITDA is defined as net income before interest expense (net of interest income), income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA (as defined above) excluding equity-based compensation expense, deferred rent expense, losses on the disposal of property and equipment, as well as certain non-recurring items that we don't believe directly reflect our core operations and may not be indicative of our recurring business operations.

How These Measures Are Useful

When used in conjunction with GAAP financial measures, EBITDA and Adjusted EBITDA are supplemental measures of operating performance that we believe are useful measures to facilitate comparisons to historical performance and competitors' operating results. Adjusted EBITDA is a key metric used internally by our management to develop internal budgets and forecasts and also serves as a metric in our performance-based equity incentive programs and certain of our bonus arrangements. We believe presentation of EBITDA and Adjusted EBITDA provides investors with a supplemental view of our operating performance that facilitates analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance.

Limitations of the Usefulness of These Measures

EBITDA and Adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of EBITDA and Adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude certain normal recurring expenses. Therefore, these measures may not provide a complete understanding of our performance and should be reviewed in conjunction with our GAAP financial measures. A reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP measure, is as follows.

Shake Shack Inc. Form 10-Q | 33

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
(in thousands)	June 28, 2017		June 29, 2016(1)		June 28, 2017		June 29, 2016(1)
Net income	$	8,184	$	6,549	$	12,046	$	9,900
Depreciation expense	5,258		3,404		10,006		6,510
Interest expense, net	347		68		630		132
Income tax expense	3,385		2,316		5,043		3,615
EBITDA	17,174		12,337		27,725		20,157
Equity-based compensation	1,285		1,210		2,534		2,240
Deferred rent	302		657		527		1,247
Loss on disposal of property and equipment	100		—		113		—
Executive transition costs(2)	517		—		651		—
ADJUSTED EBITDA	$	19,378	$	14,204	$	31,550	$	23,644

(1) Effective September 28, 2016, we no longer excludes pre-opening costs from our computation of Adjusted EBITDA. Adjusted EBITDA for the thirteen and twenty-six weeks endedJune 29, 2016 has been restated to conform to the current period computation methodology.

(2) Represents fees paid to an executive recruiting firm and a non-recurring signing bonus paid upon the hiring of our chief financial officer.

Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share

Adjusted pro forma net income represents net income attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests ("LLC Interests") for shares of Class A common stock, adjusted for certain non-recurring items that we don't believe directly reflect our core operations and may not be indicative of our recurring business operations. Adjusted pro forma earnings per fully exchanged and diluted share is calculated by dividing adjusted pro forma net income by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC Interests, after giving effect to the dilutive effect of outstanding equity-based awards.

How These Measures Are Useful

When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share are supplemental measures of operating performance that we believe are useful measures to evaluate our performance period over period and relative to our competitors. By assuming the full exchange of all outstanding LLC Interests, we believe these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in net income attributable to Shake Shack Inc. driven by increases in our ownership of SSE Holdings, which are unrelated to our operating performance, and excludes items that are non-recurring or may not be indicative of our ongoing operating performance.

Limitations of the Usefulness of These Measures

Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should not be considered alternatives to net income and earnings per share, as determined under GAAP. While these measures are useful in evaluating our performance, it does not account for the earnings attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the net income attributable to Shake Shack Inc. Adjusted pro forma net income and adjusted pro forma earnings per fully exchanged and diluted share should be evaluated in conjunction with our GAAP financial results. A reconciliation of adjusted pro forma net income to net income attributable to Shake Shack Inc., the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully exchanged and diluted share are set forth below.

34 | Shake Shack Inc. Form 10-Q

			Thirteen Weeks Ended						Twenty-Six Weeks Ended
(in thousands, except per share amounts)			June 28 2017			June 29 2016			June 28 2017			June 29 2016
Numerator:
	Net income attributable to Shake Shack Inc.		$	4,879		$	3,298		$	7,146		$	4,760
	Adjustments:
		Reallocation of net income attributable to non-controlling interests from the assumed exchange of LLC Interests(1)	3,305			3,251			4,900			5,140
		Executive transition costs(2)	517			—			651			—
		Income tax expense(3)	(1,432		)	(1,310		)	(1,753		)	(1,853		)
	Adjusted pro forma net income		$	7,269		$	5,239		$	10,944		$	8,047
Denominator:
	Weighted-average shares of Class A common stock outstanding—diluted		26,312			23,050			26,133			21,931
	Adjustments:
		Assumed exchange of LLC Interests for shares of Class A common stock(1)	10,869			13,748			10,977			14,824
	Adjusted pro forma fully exchanged weighted-average shares of Class A common stock outstanding—diluted		37,181			36,798			37,110			36,755
Adjusted pro forma earnings per fully exchanged share—diluted			$	0.20		$	0.14		$	0.29		$	0.22

(1) Assumes the exchange of all outstanding LLC Interests for shares of Class A common stock, resulting in the elimination of non-controlling interests and recognition of net income attributable to non-controlling interests.

(2) Represents fees paid to an executive recruiting firm and a non-recurring signing bonus paid upon the hiring of our chief financial officer.

(3) Represents the tax effect of the aforementioned adjustments and pro forma adjustments to reflect corporate income taxes at assumed effective tax rates of 39.9% and 38.3% for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, and 40.9% and 40.5% for the and thirteen and twenty-six weeks endedJune 29, 2016, respectively. Amounts include provisions for U.S. federal and certain state and local income taxes, assuming the highest statutory rates apportioned to each applicable state and local jurisdiction.

Shake Shack Inc. Form 10-Q | 35

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand, short-term investments and availability under our Revolving Credit Facility. As of June 28, 2017, we maintained a cash and cash equivalents balance of $22.4 million, a short-term investments balance of $63.1 million and had $19.9 million of availability under our Revolving Credit Facility.

Our primary requirements for liquidity are to fund our working capital needs, operating lease obligations, capital expenditures, deemed landlord financing obligations and general corporate needs. Our requirements for working capital are not significant because our guests pay for their food and beverage purchases in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the supplier of such items. Our ongoing capital expenditures are principally related to opening new Shacks, existing Shack capital investments (both for remodels and maintenance), as well as investments in our corporate infrastructure.

In addition, we are obligated to make payments to certain members of SSE Holdings under the Tax Receivable Agreement. As of June 28, 2017, such obligations totaled $280.4 million. Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then we would not be required to make the related TRA Payments. Although the amount of any payments that must be made under the Tax Receivable Agreement may be significant, the timing of these payments will vary and will generally be limited to one payment per member per year. The amount of such payments are also limited to the extent we utilize the related deferred tax assets. The payments that we are required to make will generally reduce the amount of overall cash flow that might have otherwise been available to us or to SSE Holdings, but we expect the cash tax savings we will realize from the utilization of the related deferred tax assets to fund the required payments.

We believe that cash provided by operating activities, cash on hand and availability under the Revolving Credit Facility will be sufficient to fund our operating lease obligations, capital expenditures, deemed landlord financing obligations and working capital needs for at least the next 12 months and the foreseeable future.

Summary of Cash Flows

The following table presents a summary of our cash flows from operating, investing and financing activities.

	Twenty-Six Weeks Ended
(in thousands)	June 28 2017			June 29 2016
Net cash provided by operating activities	$	33,730		$	24,436
Net cash used in investing activities	(25,351		)	(26,604		)
Net cash provided by (used in) financing activities	2,450			(310		)
Increase (decrease) in cash	10,829			(2,478		)
Cash at beginning of period	11,607			70,849
Cash at end of period	$	22,436		$	68,371

Operating Activities

For the twenty-six weeks endedJune 28, 2017 net cash provided by operating activities was $33.7 million compared to $24.4 million for the twenty-six weeks endedJune 29, 2016, anincrease of $9.3 million. This increase was primarily driven by the opening of 24 new domestic company-operated Shacks.

Investing Activities

For the twenty-six weeks endedJune 28, 2017 net cash used in investing activities was $25.4 million compared to $26.6 million for the twenty-six weeks endedJune 29, 2016, adecrease of $1.2 million. This decrease was primarily due to a decrease in capital expenditures for the period, partially offset by a net increase in purchases of marketable securities.

36 | Shake Shack Inc. Form 10-Q

Financing Activities

For the twenty-six weeks endedJune 28, 2017, net cash provided by financing activities was $2.5 million compared to net cash used in financing activities of $0.3 million for thetwenty-six weeks endedJune 29, 2016,anincrease of $2.8 million. This increase is primarily due to an increase of $4.6 million in proceeds from the exercise of employee stock options, offset by $1.5 million in payments made under the Tax Receivable Agreement.

Revolving Credit Facility

We maintain a Revolving Credit Facility that provides for a revolving total commitment amount of $50.0 million, of which $20.0 million is available immediately. The Revolving Credit Facility will mature and all amounts outstanding will be due and payable in February 2020. The Revolving Credit Facility permits the issuance of letters of credit upon our request of up to $10.0 million. Borrowings under the Revolving Credit Facility bear interest at either: (i) LIBOR plus a percentage ranging from 2.3% to 3.3% or (ii) the prime rate plus a percentage ranging from 0.0% to 0.8%, depending on the type of borrowing made under the Revolving Credit Facility. As of June 28, 2017, there were no amounts outstanding under the Revolving Credit Facility. We had $19.9 million of availability, as of June 28, 2017, after giving effect to $0.1 million in outstanding letters of credit.

The Revolving Credit Facility is secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors. The obligations under the Revolving Credit Facility are guaranteed by each of SSE Holdings' wholly-owned domestic subsidiaries (with certain exceptions).

The Revolving Credit Facility contains a number of covenants that, among other things, restrict our ability to, subject to specified exceptions, incur additional debt; incur additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve ourselves; pay dividends or make distributions; engage in businesses that are not in a related line of business; make loans, advances or guarantees; engage in transactions with affiliates; and make investments. In addition, the Revolving Credit Facility contains certain cross-default provisions. We are required to maintain a specified consolidated fixed-charge coverage ratio and a specified funded net debt to adjusted EBITDA ratio, both as defined under the Revolving Credit Facility. As of June 28, 2017, we were in compliance with all covenants.

CONTRACTUAL OBLIGATIONS

There have been no material changes to the contractual obligations as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended, other than those made in the ordinary course of business.

OFF-BALANCE SHEET ARRANGEMENTS

There have been no material changes to our off-balance sheet arrangements as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended.

Shake Shack Inc. Form 10-Q | 37

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our consolidated financial condition and results of operations is based upon the accompanying condensed consolidated financial statements and notes thereto, which have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates, judgments and assumptions, which we believe to be reasonable, based on the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Variances in the estimates or assumptions used to actual experience could yield materially different accounting results. On an ongoing basis, we evaluate the continued appropriateness of our accounting policies and resulting estimates to make adjustments we consider appropriate under the facts and circumstances. There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended.

Recently Issued Accounting Pronouncements

See "Note 2: Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements” under Part I, Item 1 of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our exposure to market risks as described in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended.

Item 4. Controls and Procedures.

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes to our internal control over financial reporting that occurred during the quarter ended June 28, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

38 | Shake Shack Inc. Form 10-Q

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item is incorporated by reference to Part I, Item 1, Note 13: Commitments and Contingencies—Legal Contingencies.

Item 1A. Risk Factors.

There have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Shake Shack Inc. Form 10-Q | 39

Item 6. Exhibits.

Exhibit Number		Incorporated by Reference			Filed Herewith
	Exhibit Description	Form	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation of Shake Shack Inc., effective February 4, 2015	8-K	3.1	2/10/2015
3.2	Amended and Restated Bylaws of Shack Shake Inc., dated February 4, 2015	8-K	3.2	2/10/2015
4.1	Form of Class A Common Stock Certificate	S-1/A	4.1	1/28/2015
10.1	Employment Agreement, dated April 28, 2017, but effective as of a date to be agreed upon by the parties, no later than July 31, 2017, by and among Tara Comonte, Shake Shack Inc. and SSE Holdings, LLC	8-K	10.1	5/1/2017
10.2	Amendment No. 2 to Stockholders Agreement, dated and effective as of May 11, 2017, by and among Shake Shack Inc., SSE Holdings, LLC, the Meyer Stockholders, the LGP Stockholders and the SEG Stockholders				*
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				*
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				*
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				#
101.INS	XBRL Instance Document				*
101.SCH	XBRL Taxonomy Extension Schema Document				*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				*

# Furnished herewith.

40 | Shake Shack Inc. Form 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Shake Shack Inc.
	(Registrant)
Date: August 4, 2017	By:	/s/ Randy Garutti
		Randy Garutti
		Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer)
Date: August 4, 2017	By:	/s/ Tara Comonte
		Tara Comonte
		Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

Shake Shack Inc. Form 10-Q | 41

EX-10.2

Exhibit 10.2

AMENDMENT No. 2 TO STOCKHOLDERS AGREEMENT

THIS AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT, dated and effective as of May 11, 2017 (this “Amendment”), is entered into by and among (i) Shake Shack Inc., a Delaware corporation (the “Company”), (ii) SSE Holdings, LLC, a Delaware limited liability company (“Holdings”), (iii) the Persons listed on the signature pages hereto under the caption “Meyer Stockholders” (the “Meyer Stockholders”), (iv) the Persons listed on the signature pages hereto under the caption “LGP Stockholders” (the “LGP Stockholders”) and (v) the Persons listed on the signature pages hereto under the caption “SEG Stockholders” (the “SEG Stockholders”). All capitalized terms defined herein but not used herein shall have the meanings as ascribed to such terms in the Stockholders Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, the Company, Holdings, the Meyer Stockholders, the LGP Stockholders, the SEG Stockholders and certain other stockholders of the Company (together with their Affiliates and the Meyer Stockholders, collectively, the “Management Stockholders”) have previously entered into a Stockholders Agreement, dated and effective as of February 4, 2015, as amended by Amendment No. 1 to Stockholders Agreement, dated and effective as of October 8, 2015 (collectively, the “Stockholders Agreement”); and

WHEREAS, the Meyer Stockholders, the LGP Stockholders and the SEG Stockholders desire to amend the Stockholders Agreement as hereinafter provided to remove certain persons as Management Stockholders.

NOW, THEREFORE, Meyer Stockholders, the LGP Stockholders and the SEG Stockholders hereto agree as follows:

A. Schedule 2 (Management Stockholders) to the Stockholders Agreement is hereby amended and restated in its entirety and replaced by Schedule 2 attached hereto.

B. As hereby amended by this Amendment, the Stockholders Agreement remains in full force and effect.

Exhibit 10.2

IN WITNESS WHEREOF, each of the undersigned has signed this Amendment No. 2 to Stockholders Agreement as of the date first above written.

COMPANY:
SHAKE SHACK INC.
By:	/s/ Ronald Palmese, Jr.
Name:	Ronald Palmese, Jr.
Title:	General Counsel
HOLDINGS:
SSE HOLDINGS, LLC
By:	/s/ Ronald Palmese, Jr.
Name:	Ronald Palmese, Jr.
Title:	General Counsel

[Signature Page to Amendment No. 2 to Stockholders Agreement]

Exhibit 10.2

MEYER STOCKHOLDERS:
GRAMERCY TAVERN CORP.
By:	/s/ Daniel H. Meyer
Name:	Daniel H. Meyer
Title:	Authorized Signatory
By:	/s/ Daniel H. Meyer
Daniel H. Meyer
DANIEL H. MEYER 2012 GIFT TRUST U/A/D 10/31/12
By:	/s/ Audrey Meyer
Name:	Audrey Meyer, not individually but solely as Co-Trustee

[Signature Page to Amendment No. 2 to Stockholders Agreement]

Exhibit 10.2

LGP STOCKHOLDERS:
GREEN EQUITY INVESTORS VI, L.P.
By:	GEI Capital VI, LLC, its General Partner
By:	/s/ J.T. Schumacher
Lance J.T. Schumacher
Vice President - Tax
GREEN EQUITY INVESTORS SIDE VI, L.P.
By:	GEI Capital VI, LLC, its General Partner
By:	/s/ J.T. Schumacher
Lance J.T. Schumacher
Vice President - Tax
LGP MALTED COINVEST LLC
By:	Peridot Coinvest Manager LLC, its Manager
By:	Leonard Green & Partners, L.P., its Manager
By:	LGP Management, Inc., its General Partner
By:	/s/ J.T. Schumacher
Lance J.T. Schumacher
Vice President - Tax

[Signature Page to Amendment No. 2 to Stockholders Agreement]

Exhibit 10.2

SEG STOCKHOLDERS:
SEG PARTNERS, L.P.
By:	SEG Partners Holdings, LLC, its general partner
By:	/s/ George Loening
Name:	George Loening
Title:	Managing Member
SEG PARTNERS II, L.P.
By:	SEG Partners II Holdings, LLC, its general partner
By:	/s/ George Loening
Name:	George Loening
Title:	Managing Member
SEG PARTNERS OFFSHORE MASTER FUND, LTD
By:	/s/ George Loening
Name:	George Loening
Title:	Director

[Signature Page to Amendment No. 2 to Stockholders Agreement]

Exhibit 10.2

SCHEDULE 2

MANAGEMENT STOCKHOLDERS

Daniel H. Meyer

Daniel H. Meyer 2012 Gift Trust U/A/D 10/31/12

Gramercy Tavern Corp.

Jeff Flug

Flug 2015 GS Trust U/A/D 12/29/15

Randy Garutti

The Randall J. Garutti 2014 GST Trust

Robert Vivian

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Randy Garutti, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 28, 2017 of Shake Shack Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017
	/s/ Randy Garutti
	Randy Garutti
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Tara Comonte, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 28, 2017 of Shake Shack Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017
	/s/ Tara Comonte
	Tara Comonte
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Shake Shack Inc. (the “Company”), for the quarterly period ended June 28, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 4, 2017
	/s/ Randy Garutti
	Randy Garutti
	Chief Executive Officer

Date: August 4, 2017
	/s/ Tara Comonte
	Tara Comonte
	Chief Financial Officer

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Document and Entity Information Document and Entity Information - shares	6 Months Ended
	Jun. 28, 2017	Jul. 26, 2017
Document Information [Line Items]
Document type	10-Q
Amendment flag	false
Document period end date	Jun. 28, 2017
Document fiscal year focus	2017
Document fiscal period focus	Q2
Entity registrant name	Shake Shack Inc.
Entity central index key	0001620533
Current fiscal year end date	--12-27
Entity filer category	Accelerated Filer
Entity current reporting status	Yes
Class A Common Stock
Document Information [Line Items]
Entity common stock, shares outstanding (in shares)		25,981,176
Class B Common Stock
Document Information [Line Items]
Entity common stock, shares outstanding (in shares)		10,729,992

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016
Current assets:
Cash and cash equivalents	$ 22,436	$ 11,607
Marketable Securities, Current	63,106	62,040
Accounts receivable	5,078	6,006
Inventories	968	806
Prepaid expenses and other current assets	1,591	3,485
Total current assets	93,179	83,944
Property and equipment, net	160,383	136,264
Deferred income taxes, net	320,015	313,207
Other assets	4,679	4,779
TOTAL ASSETS	578,256	538,194
Current liabilities:
Accounts payable	9,482	6,921
Accrued expenses	8,615	8,538
Accrued wages and related liabilities	4,758	6,084
Other current liabilities	10,252	10,173
Total current liabilities	33,107	31,716
Deemed landlord financing	11,166	2,007
Deferred rent	33,524	31,107
Liabilities under tax receivable agreement, net of current portion	277,316	267,902
Other long-term liabilities	2,145	4,109
Total liabilities	357,258	336,841
Stockholders' equity:
Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of June 28, 2017 and December 28, 2016.	0	0
Additional paid-in capital	145,102	135,448
Retained earnings	23,865	16,719
Accumulated other comprehensive loss	(17)	(15)
Total stockholders' equity attributable to Shake Shack Inc.	168,987	152,188
Non-controlling interests	52,011	49,165
Total equity	220,998	201,353
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	578,256	538,194
Class A Common Stock
Stockholders' equity:
Common stock	26	25
Class B Common Stock
Stockholders' equity:
Common stock	$ 11	$ 11

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Jun. 28, 2017	Dec. 28, 2016
Preferred Stock, no par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A Common Stock
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares, issued (in shares)	25,939,866	25,151,384
Common Stock, Shares, Outstanding	25,939,866	25,151,384
Class B Common Stock
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	35,000,000	35,000,000
Common stock, shares, issued (in shares)	10,770,992	11,253,592
Common Stock, Shares, Outstanding	10,770,992	11,253,592

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CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Income Statement [Abstract]
Shack sales	$ 88,003	$ 64,406	$ 162,158	$ 116,559
Licensing revenue	3,313	2,066	5,907	4,078
TOTAL REVENUE	91,316	66,472	168,065	120,637
Shack-level operating expenses:
Food and paper costs	24,712	18,104	45,886	33,136
Labor and related expenses	22,426	15,262	42,886	28,424
Other operating expenses	8,486	5,979	16,151	10,898
Occupancy and related expenses	7,043	5,209	13,219	9,532
General and administrative expenses	9,678	7,496	18,148	14,380
Depreciation expense	5,258	3,404	10,006	6,510
Pre-opening costs	1,876	2,085	4,291	4,110
Loss on disposal of property and equipment	100	0	113	0
TOTAL EXPENSES	79,579	57,539	150,700	106,990
OPERATING INCOME	11,737	8,933	17,365	13,647
Other income, net	198	23	393	46
Interest Expense	(366)	(91)	(669)	(178)
INCOME BEFORE INCOME TAXES	11,569	8,865	17,089	13,515
Income tax expense	3,385	2,316	5,043	3,615
NET INCOME	8,184	6,549	12,046	9,900
Less: net income attributable to non-controlling interests	3,305	3,251	4,900	5,140
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.	$ 4,879	$ 3,298	$ 7,146	$ 4,760
Earnings per share of Class A common stock:
Basic (in dollars per share)	$ 0.19	$ 0.15	$ 0.28	$ 0.22
Diluted (in dollars per share)	$ 0.19	$ 0.14	$ 0.27	$ 0.22
Weighted-average shares of Class A common stock outstanding:
Basic (in shares)	25,798	22,553	25,587	21,453
Diluted (in shares)	26,312	23,050	26,133	21,931

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Statement of Comprehensive Income [Abstract]
Net income		$ 8,184	$ 6,549	$ 12,046	$ 9,900
Available-for-sale securities:
Change in net unrealized holding losses	[1]	(8)	(6)	(17)	(8)
Less: reclassification adjustments for net realized losses included in net income	[1]	11	0	14	0
OTHER COMPREHENSIVE INCOME (LOSS)		3	(6)	(3)	(8)
COMPREHENSIVE INCOME		8,187	6,543	12,043	9,892
Less: comprehensive income attributable to non-controlling interest		3,306	3,249	4,899	5,137
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAKE SHACK INC.		$ 4,881	$ 3,294	$ 7,144	$ 4,755

[1] Net of tax benefit of $0 for the thirteen and twenty-six weeks ended June 28, 2017 and June 29, 2016.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Statement of Comprehensive Income [Abstract]
Income tax benefit	$ 0	$ 0	$ 0	$ 0

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - 6 months ended Jun. 28, 2017 - USD ($) $ in Thousands	Total	Class A Common Stock	Class B Common Stock	Common stock Class A Common Stock	Common stock Class B Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Non- Controlling Interest
Beginning balance (shares) at Dec. 28, 2016		25,151,384	11,253,592	25,151,384	11,253,592
Beginning balance at Dec. 28, 2016	$ 201,353			$ 25	$ 11	$ 135,448	$ 16,719	$ (15)	$ 49,165
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	12,046						7,146		4,900
Other comprehensive loss:
Net unrealized losses related to available-for-sale securities	(3)							(2)	(1)
Equity-based compensation	2,612					2,612
Activity under stock compensation plans (in shares)				305,882
Activity under stock compensation plans	5,871			$ 1		3,502			2,368
Redemption of LLC Interests (in shares)				482,600	(482,600)
Redemption of LLC Interests	0			$ 0	$ 0	2,042			(2,042)
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	1,498					1,498
Distributions paid to non-controlling interest holders	(2,379)								2,379
Ending balance (shares) at Jun. 28, 2017		25,939,866	10,770,992	25,939,866	10,770,992
Ending balance at Jun. 28, 2017	$ 220,998			$ 26	$ 11	$ 145,102	$ 23,865	$ (17)	$ 52,011

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016
OPERATING ACTIVITIES
Net income (including amounts attributable to non-controlling interests)	$ 12,046,000	$ 9,900,000
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	10,006,000	6,510,000
Equity-based compensation	2,534,000	2,240,000
Deferred income taxes	2,561,000	(21,000)
Non-cash interest expense	154,000	141,000
Excess tax benefits on equity-based compensation	0	(35,000)
Loss on sale of marketable securities	15,000	0
Loss on disposal of property and equipment	(113,000)	0
Changes in operating assets and liabilities:
Accounts receivable	3,964,000	1,740,000
Inventories	(162,000)	(92,000)
Prepaid expenses and other current assets	2,310,000	169,000
Other assets	(633,000)	(492,000)
Accounts payable	1,024,000	347,000
Accrued expenses	1,324,000	2,497,000
Accrued wages and related liabilities	(1,326,000)	(1,403,000)
Other current liabilities	(1,390,000)	409,000
Deferred rent	603,000	2,768,000
Other long-term liabilities	587,000	(242,000)
NET CASH PROVIDED BY OPERATING ACTIVITIES	33,730,000	24,436,000
INVESTING ACTIVITIES
Purchases of property and equipment	(24,986,000)	(26,548,000)
Purchases of marketable securities	(5,993,000)	(378,000)
Sales of marketable securities	5,628,000	322,000
NET CASH USED IN INVESTING ACTIVITIES	(25,351,000)	(26,604,000)
FINANCING ACTIVITIES
Proceeds from (Repayments of) Notes Payable	0	(313,000)
Proceeds from Deemed Landlord Financing	530,000	0
Payments On Deemed Landlord Financing	(101,000)	0
Distributions paid to non-controlling interest holders	(2,379,000)	(1,602,000)
Tax Receivable Agreement Payments To Related Parties	(1,471,000)	0
Proceeds from stock option exercises	6,187,000	1,570,000
Payments Related to Tax Withholding for Share-based Compensation	316,000	0
Excess tax benefits from equity-based compensation	0	35,000
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	2,450,000	(310,000)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	10,829,000	(2,478,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	11,607,000	70,849,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 22,436,000	$ 68,371,000

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NATURE OF OPERATIONS

6 Months Ended

Jun. 28, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF OPERATIONS

NATURE OF OPERATIONS

Shake Shack Inc. ("we," "us," "our," "Shake Shack" and the "Company") was formed on September 23, 2014 as a Delaware corporation for the purpose of facilitating an initial public offering and other related transactions in order to carry on the business of SSE Holdings, LLC and its subsidiaries ("SSE Holdings"). On February 4, 2015, we completed an initial public offering ("IPO") of 5,750,000 shares of our Class A common stock at a public offering price of $21.00 per share. We used the net proceeds from the IPO to purchase newly-issued membership interests from SSE Holdings ("LLC Interests"). Following the organizational transactions completed in connection with the IPO, we became the sole managing member of SSE Holdings. As sole managing member, we operate and control all of the business and affairs of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. We report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. As of June 28, 2017 we owned 70.7% of SSE Holdings. Unless the context otherwise requires, "we," "us," "our," "Shake Shack," the "Company" and other similar references, refer to Shake Shack Inc. and, unless otherwise stated, all of its subsidiaries, including SSE Holdings.

We operate and license Shake Shack restaurants ("Shacks"), which serve hamburgers, chicken sandwiches, hot dogs, crinkle-cut fries, shakes, frozen custard, beer, wine and more. As of June 28, 2017, there were 134 Shacks in operation, system-wide, of which 75 were domestic company-operated Shacks, nine were domestic licensed Shacks and 50 were international licensed Shacks.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 28, 2017

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Shake Shack Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and on a basis consistent in all material respects with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended ("2016 Form 10-K"). In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.

The accompanying Condensed Consolidated Balance Sheet as of December 28, 2016 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our 2016 Form 10-K.

SSE Holdings is considered a VIE. Shake Shack Inc. is the primary beneficiary as we have the majority economic interest in SSE Holdings and, as the sole managing member, have decision making authority that significantly affects the economic performance of the entity, while the limited partners have no substantive kick-out or participating rights. As a result, we consolidate SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of our consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of June 28, 2017 and December 28, 2016, the net assets of SSE Holdings were $177,437 and $158,845, respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreements. See Note 7 for more information.

Fiscal Year

We operate on a 52/53 week fiscal year ending on the last Wednesday in December. Fiscal 2017 contains 52 weeks and ends on December 27, 2017. Fiscal 2016 contained 52 weeks and ended on December 28, 2016. Unless otherwise stated, references to years in this report relate to fiscal years.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements     

We adopted the Accounting Standards Updates (“ASUs”) summarized below in fiscal 2017. The effects of adoption did not have a material impact on our consolidated financial statements.

Accounting Standards Update (“ASU”)	Description	Date Adopted
Improvements to Employee Share-Based Payment Accounting (ASU 2016-09)	This standard simplifies certain aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, certain classifications on the statement of cash flows, and an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur. Upon adoption, we made such policy election. The adoption methodology applied varied based on each applicable provision of the standard, and none of the provisions had a material impact on our consolidated financial statements.	December 29, 2016
Simplifying the Measurement of Inventory (ASU 2015-11)	This standard applies to inventory measured using methods other than last-in, first-out (LIFO) or the retail method, and requires entities to measure such inventory at the lower of cost or net realizable value. It was applied prospectively.	December 29, 2016

Recently Issued Accounting Pronouncements       

Accounting Standards Update (“ASU”)	Description	Expected Impact	Effective Date
Statement of Cash Flows: Classification of Certain Cash Receipts and Payments (ASU 2016-15)	This standard provides guidance on eight specific cash flow issues with the objective of reducing diversity in practice. It should be applied retrospectively to each period presented, subject to certain conditions.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 28, 2017

Accounting Standards Update (“ASU”)	Description	Expected Impact	Effective Date
Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01)	For public business entities, this standard requires: (i) certain equity investments to be measured at fair value with changes in fair value recognized in net income; (ii) a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) elimination of the requirement to disclose the method(s) and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) separate presentation of financial assets and liabilities by measurement category and form of financial asset in the financial statements; and (vii) an entity to evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The standard should be applied by means of a cumulative-effect adjustment to the balance sheet at the beginning of the fiscal year of adoption. Early adoption is permitted, subject to certain conditions resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 28, 2017
Revenue from Contracts with Customers and related standards (ASU’s 2014-09, 2015-14, 2016-08, 2016-10, 2016-12, 2015-20)	This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. Early adoption is permitted.	We are currently in the process of evaluating the impact this standard is expected to have on our consolidated financial statements. It is still too early in our process to determine the magnitude of the potential impact. However, based on our preliminary assessment, we believe that further evaluation of the fixed fees associated with our licensing agreements (such as the initial territory fees) may reveal differences in the timing of revenue recognition from current policy, but that it is likely that recognition of sales-based royalties will not significantly change. In addition to further evaluating each of our licensing agreements, we are in the process of assessing whether any sales promotions or discounts we currently offer related to our Shack sales could be considered separate performance obligations. As we continue our evaluation, we will further clarify the expected impact of the adoption of the standard. We plan to adopt the standard on December 28, 2017, and we have not yet selected a transition method.	December 28, 2017
Leases (ASU 2016-02)	This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 27, 2018

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 28, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis as of June 28, 2017 and December 28, 2016, and indicate the classification within the fair value hierarchy.

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of June 28, 2017 and December 28, 2016:

		June 28, 2017
		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash		$	17,417	$	—	$	—		$	17,417	$	17,417	$	—
Level 1:
	Money market funds	5,019		—		—			5,019		5,019		—
	Mutual funds	60,566		—		—			60,566		—		60,566
Level 2:
	Corporate debt securities(1)	2,570		2		(32		)	2,540		—		2,540
Total		$	85,572	$	2	$	(32	)	$	85,542	$	22,436	$	63,106

		December 28, 2016
		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash		$	6,322	$	—	$	—		$	6,322	$	6,322	$	—
Level 1:
	Money market funds	5,285		—		—			5,285		5,285		—
	Mutual funds	60,232		—		—			60,232		—		60,232
Level 2:
	Corporate debt securities(1)	2,473		3		(30		)	2,446		—		2,446
Total		$	74,312	$	3	$	(30	)	$	74,285	$	11,607	$	62,678

(1) Corporate debt securities were measured at fair value using a market approach utilizing observable prices for identical securities or securities with similar characteristics and inputs that are observable or can be corroborated by observable market data.

Net unrealized losses on available-for-sale securities totaling $30 and $27 were included in accumulated other comprehensive loss on the Condensed Consolidated Balance Sheet as of June 28, 2017 and December 28, 2016, respectively.

The following tables summarize the gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June 28, 2017 and December 28, 2016, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:

		June 28, 2017
		Less than 12 Months					12 Months or Greater					Total
		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	Money market funds	$	—	$	—		$	—	$	—		$	—	$	—
	Mutual funds	—		—			—		—			—		—
	Corporate debt securities	1,445		(8		)	455		(24		)	1,900		(32		)
Total		$	1,445	$	(8	)	$	455	$	(24	)	$	1,900	$	(32	)

		December 28, 2016
		Less than 12 Months					12 Months or Greater					Total
		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	Money market funds	$	—	$	—		$	—	$	—		$	—	$	—
	Mutual funds	—		—			—		—			—		—
	Corporate debt securities	1,244		(10		)	540		(20		)	1,784		(30		)
Total		$	1,244	$	(10	)	$	540	$	(20	)	$	1,784	$	(30	)

A summary of other income from available-for-sale securities recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

		Thirteen Weeks Ended					Twenty-Six Weeks Ended
		June 28 2017			June 29 2016		June 28 2017			June 29 2016
Available-for-sale securities:
	Dividend income	$	191		$	—	$	369		$	—
	Interest income	19			23		39			46
	Loss on investments	(12		)	—		(15		)	—
Total other income, net		$	198		$	23	$	393		$	46

A summary of available-for-sale securities sold and gross realized gains and losses recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

		Thirteen Weeks Ended						Twenty-Six Weeks Ended
		June 28 2017			June 29 2016			June 28 2017			June 29 2016
Available-for-sale securities:
	Gross proceeds from sales and redemptions	$	473		$	322		$	628		$	322
	Cost basis of sales and redemptions	484			322			642			322
	Gross realized gains included in net income	—			1			—			1
	Gross realized losses included in net income	(12		)	(1		)	(15		)	(1		)
	Amounts reclassified out of accumulated other comprehensive loss	11			—			14			—

Realized gains and losses are determined on a specific identification method and are included in other income, net on the Condensed Consolidated Statements of Income.

The estimated fair value of our investments in corporate debt securities that are accounted for as available-for-sale securities are all due within one year and are included within marketable securities on the Condensed Consolidated Balance Sheets.

We periodically review our marketable securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and our intent to sell. For our debt securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. As of June 28, 2017 and December 28, 2016, the declines in the market value of our marketable securities investment portfolio were considered to be temporary in nature.

Other Financial Instruments

The carrying value of our other financial instruments, including accounts receivable, accounts payable, and accrued expenses as of June 28, 2017 and December 28, 2016 approximated their fair value due to the short-term nature of these financial instruments.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Assets and liabilities that are measured at fair value on a non-recurring basis include our long-lived assets and indefinite-lived intangible assets. There were no impairments recognized during thethirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

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INVENTORIES

6 Months Ended

Jun. 28, 2017

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories as of June 28, 2017 and December 28, 2016 consisted of the following:

	June 28 2017		December 28 2016
Food	$	578	$	543
Wine	56		47
Beer	71		58
Beverages	93		79
Retail merchandise	170		79
Inventories	$	968	$	806

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PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 28, 2017

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

Property and equipment as of June 28, 2017 and December 28, 2016 consisted of the following:

	June 28 2017		December 28 2016
Leasehold improvements	$	139,252	$	120,629
Landlord funded assets	4,644		—
Equipment	27,069		23,194
Furniture and fixtures	8,535		7,342
Computer equipment and software	10,057		8,710
Construction in progress (includes assets under construction from deemed landlord financing)	18,067		13,510
Property and equipment, gross	207,624		173,385
Less: accumulated depreciation	47,241		37,121
Property and equipment, net	$	160,383	$	136,264

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SUPPLEMENTAL BALANCE SHEET INFORMATION

6 Months Ended

Jun. 28, 2017

Supplemental Balance Sheet Disclosures [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of other current liabilities as of June 28, 2017 and December 28, 2016 are as follows:

	June 28 2017		December 28 2016
Sales tax payable	$	1,601	$	1,324
Current portion of liabilities under tax receivable agreement	3,110		4,580
Gift card liability	1,105		1,153
Deferred compensation	2,455		—
Other	1,981		3,116
Other current liabilities	$	10,252	$	10,173

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DEBT

6 Months Ended

Jun. 28, 2017

Debt Disclosure [Abstract]

DEBT

DEBT

In January 2015, we executed a Third Amended and Restated Credit Agreement, which became effective on February 4, 2015 (together with the prior agreements and amendments, and as further amended, the "Revolving Credit Facility"), which provides for a revolving total commitment amount of $50,000, of which $20,000 is available immediately. The Revolving Credit Facility will mature and all amounts outstanding will be due and payable five years from the effective date. The Revolving Credit Facility permits the issuance of letters of credit upon our request of up to $10,000. Borrowings under the Revolving Credit Facility bear interest at either: (i) LIBOR plus a percentage ranging from 2.3% to 3.3% or (ii) the prime rate plus a percentage ranging from 0.0% to 0.8%, depending on the type of borrowing made under the Revolving Credit Facility. As of June 28, 2017 and December 28, 2016, there were no amounts outstanding under the Revolving Credit Facility. As of June 28, 2017, we had $19,920 of availability under the Revolving Credit Facility, after giving effect to $80 in outstanding letters of credit.

The Revolving Credit Facility is secured by a first-priority security interest in substantially all of the assets of SSE Holdings and the guarantors. The obligations under the Revolving Credit Facility are guaranteed by each of SSE Holdings' wholly-owned domestic subsidiaries (with certain exceptions).

The Revolving Credit Facility contains a number of covenants that, among other things, limit our ability to, subject to specified exceptions, incur additional debt; incur additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve ourselves; pay dividends or make distributions; engage in businesses that are not in a related line of business; make loans, advances or guarantees; engage in transactions with affiliates; and make investments. In addition, the Revolving Credit Facility contains certain cross-default provisions. We are required to maintain a specified consolidated fixed-charge coverage ratio and a specified funded net debt to adjusted EBITDA ratio, both as defined under the Revolving Credit Facility. As of June 28, 2017, we were in compliance with all covenants.

As of June 28, 2017 and December 28, 2016 we had deemed landlord financing liabilities of $11,166 and $2,007, respectively, for certain leases where we are involved in the construction of leased assets and are considered the accounting owner of the construction project.

Total interest costs incurred were $409 and $733 for the thirteen and twenty-six weeks endedJune 28, 2017, respectively, and $91 and $178 for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. Total amounts capitalized into property and equipment were $43 and $64 for the thirteen and twenty-six weeks endedJune 28, 2017, respectively. No amounts were capitalized for the thirteen and twenty-six weeks endedJune 29, 2016.

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NON-CONTROLLING INTERESTS

6 Months Ended

Jun. 28, 2017

Noncontrolling Interest [Abstract]

NON-CONTROLLING INTERESTS

NON-CONTROLLING INTERESTS

We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. We report a non-controlling interest representing the economic interest in SSE Holdings held by the other members of SSE Holdings. The Third Amended and Restated Limited Liability Company Agreement, as further amended, (the "LLC Agreement") of SSE Holdings provides that holders of LLC Interests may, from time to time, require SSE Holdings to redeem all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis. In connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in SSE Holdings. Changes in our ownership interest in SSE Holdings while we retain our controlling interest in SSE Holdings will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Interests in SSE Holdings by the other members of SSE Holdings will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital.

The following table summarizes the ownership interest in SSE Holdings as of June 28, 2017 and December 28, 2016.

	June 28, 2017			December 28, 2016
	LLC Interests	Ownership %		LLC Interests	Ownership %
Number of LLC Interests held by Shake Shack Inc.	25,939,866	70.7	%	25,151,384	69.1	%
Number of LLC Interests held by non-controlling interest holders	10,770,992	29.3	%	11,253,592	30.9	%
Total LLC Interests outstanding	36,710,858	100.0	%	36,404,976	100.0	%

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income and other comprehensive income (loss) to Shake Shack Inc. and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the thirteen and twenty-six weeks endedJune 28, 2017 was 29.6% and 30.0%, respectively. The non-controlling interest holders' weighted average ownership percentage for the thirteen and twenty-six weeks endedJune 29, 2016 was 37.9% and 40.9%, respectively.

The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

		Thirteen Weeks Ended					Twenty-Six Weeks Ended
		June 28 2017		June 29 2016			June 28 2017			June 29 2016
Net income attributable to Shake Shack Inc.		$	4,879	$	3,298		$	7,146		$	4,760
Other comprehensive income (loss):
	Unrealized holding gains (losses) on available-for-sale securities	2		(4		)	(2		)	(5		)
Transfers (to) from non-controlling interests:
	Increase in additional paid-in capital as a result of the redemption of LLC Interests	720		5,736			2,042			10,378
	Increase in additional paid-in capital as a result of activity under stock compensation plans	632		161			3,502			404
Total effect of changes in ownership interest on equity attributable to Shake Shack Inc.		$	6,233	$	9,191		$	12,688		$	15,537

During the twenty-six weeks endedJune 28, 2017 and June 29, 2016, an aggregate of 482,600 and 3,477,145 LLC Interests, respectively, were redeemed by non-controlling interest holders for newly-issued shares of Class A common stock, and we received 482,600 and 3,477,145 LLC Interests in connection with these redemptions for the twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively, increasing our total ownership interest in SSE Holdings.

During the twenty-six weeks endedJune 28, 2017 and June 29, 2016, we received an aggregate of 305,882 and 77,935 LLC Interests, respectively, in connection with the activity under our stock compensation plan.

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EQUITY-BASED COMPENSATION

6 Months Ended

Jun. 28, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EQUITY-BASED COMPENSATION

EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 28 2017		June 29 2016		June 28 2017		June 29 2016
Stock options	$	863	$	1,053	$	1,827	$	2,083
Performance stock units	399		157		684		157
Restricted stock units	23		—		23		—
Equity-based compensation expense	$	1,285	$	1,210	$	2,534	$	2,240
Total income tax benefit recognized related to equity-based compensation	$	44	$	33	$	95	$	64

Amounts are included in general and administrative expense and labor and related expenses on the Condensed Consolidated Statements of Income.

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INCOME TAXES

6 Months Ended

Jun. 28, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

We are the sole managing member of SSE Holdings and, as a result, consolidate the financial results of SSE Holdings. SSE Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, SSE Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by SSE Holdings is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of SSE Holdings, as well as any stand-alone income or loss generated by Shake Shack Inc. We are also subject to withholding taxes in foreign jurisdictions.

Income Tax Expense

A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax expense is as follows:

	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	June 28 2017					June 29 2016					June 28 2017					June 29 2016
Expected U.S. federal income taxes at statutory rate	$	4,050		35.0	%	$	3,014		34.0	%	$	5,982		35.0	%	$	4,595		34.0	%
State and local income taxes, net of federal benefit	659			5.7	%	472			5.3	%	1,008			5.9	%	744			5.5	%
Foreign withholding taxes	227			2.0	%	117			1.3	%	413			2.4	%	357			2.6	%
Tax credits	(248		)	(2.1	)%	(87		)	(1.0	)%	(378		)	(2.2	)%	(126		)	(0.9	)%
Non-controlling interest	(1,303		)	(11.3	)%	(1,200		)	(13.5	)%	(1,982		)	(11.6	)%	(1,955		)	(14.5	)%
Income tax expense	$	3,385		29.3	%	$	2,316		26.1	%	$	5,043		29.5	%	$	3,615		26.7	%

Our effective income tax rates for the thirteen weeks endedJune 28, 2017 and June 29, 2016 were 29.3% and 26.1%, respectively. The increase in our effective income tax rate for the period is primarily due to an increase in our ownership interest in SSE Holdings. As our ownership interest in SSE Holdings increases, our share of the taxable income of SSE Holdings also increases. Our weighted-average ownership interest in SSE Holdings was 70.4% and 62.1% for the thirteen weeks endedJune 28, 2017 and June 29, 2016, respectively. The impact to the effective income tax rate related to the increase in ownership was partially offset by higher tax credits.

Our effective income tax rates for the twenty-six weeks endedJune 28, 2017 and June 29, 2016 were 29.5% and 26.7%, respectively. The increase in our effective income tax rate for the period is primarily due to an increase in our ownership interest in SSE Holdings. As our ownership interest in SSE Holdings increases, our share of the taxable income of SSE Holdings also increases. Our weighted-average ownership interest in SSE Holdings was 70.0% and 59.1% for the twenty-six weeks endedJune 28, 2017 and June 29, 2016, respectively. The impact to the effective income tax rate related to the increase in ownership was partially offset by higher tax credits.

Deferred Tax Assets and Liabilities

During the twenty-six weeks endedJune 28, 2017, we acquired an aggregate of 788,482 LLC Interests in connection with the redemption of LLC Interests and activity relating to our stock compensation plan. We recognized a deferred tax asset in the amount of $7,876 associated with the basis difference in our investment in SSE Holdings upon acquisition of these LLC Interests. As of June 28, 2017, the total deferred tax asset related to the basis difference in our investment in SSE Holdings was $215,457. However, a portion of the total basis difference will only reverse upon the eventual sale of our interest in SSE Holdings, which we expect would result in a capital loss. As of June 28, 2017, the total valuation allowance established against the deferred tax asset to which this portion relates was $16,334.

During the twenty-six weeks endedJune 28, 2017, we also recognized $3,801 of deferred tax assets related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement and related deductions for imputed interest on such payments. See "—Tax Receivable Agreement" for more information.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of June 28, 2017, we concluded, based on the weight of all available positive and negative evidence, that all of our deferred tax assets (except for those deferred tax assets described above relating to basis differences that are expected to result in a capital loss upon the eventual sale of our interest in SSE Holdings) are more likely than not to be realized. As such, no additional valuation allowance was recognized.

Uncertain Tax Positions

No uncertain tax positions existed as of June 28, 2017. Shake Shack Inc. was formed in September 2014 and did not engage in any operations prior to the IPO and related organizational transactions. Shake Shack Inc. first filed tax returns for tax year 2014, which is the first tax year subject to examination by taxing authorities for U.S. federal and state income tax purposes. Additionally, although SSE Holdings is treated as a partnership for U.S. federal and state income taxes purposes, it is still required to file an annual U.S. Return of Partnership Income, which is subject to examination by the Internal Revenue Service ("IRS"). The statute of limitations has expired for tax years through 2012 for SSE Holdings.

Tax Receivable Agreement

Pursuant to our election under Section 754 of the Internal Revenue Code (the "Code"), we expect to obtain an increase in our share of the tax basis in the net assets of SSE Holdings when LLC Interests are redeemed or exchanged by the other members of SSE Holdings. We plan to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interest occurs. We intend to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

On February 4, 2015, we entered into a tax receivable agreement with certain of the then-existing members of SSE Holdings (the "Tax Receivable Agreement") that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of SSE Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the "TRA Payments"). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in SSE Holdings or us. The rights of each member of SSE Holdings, that is a party to the Tax Receivable Agreement, are assignable to transferees of their respective LLC Interests.

During the twenty-six weeks endedJune 28, 2017, we acquired an aggregate of 482,600 LLC Interests in connection with the redemption of LLC Interests, which resulted in an increase in the tax basis of our investment in SSE Holdings subject to the provisions of the Tax Receivable Agreement. We recognized an additional liability in the amount of $9,413 for the TRA Payments due to the redeeming members, representing 85% of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemption of LLC Interests, after concluding it was probable that such TRA Payments would be paid based on our estimates of future taxable income. During the twenty-six weeks endedJune 28, 2017, payments of $1,471, inclusive of interest, were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement. No amounts were paid to the members during the twenty-six weeks endedJune 29, 2016. As of June 28, 2017, the total amount of TRA Payments due under the Tax Receivable Agreement, was $280,426, of which $3,110 was included in other current liabilities on the Condensed Consolidated Balance Sheet. See Note 13 for more information relating to our liabilities under the Tax Receivable Agreement.

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EARNINGS PER SHARE

6 Months Ended

Jun. 28, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share of Class A common stock is computed by dividing net income available to Shake Shack Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to Shake Shack Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

			Thirteen Weeks Ended				Twenty-Six Weeks Ended
			June 28 2017		June 29 2016		June 28 2017		June 29 2016
Numerator:
	Net income		$	8,184	$	6,549	$	12,046	$	9,900
	Less: net income attributable to non-controlling interests		3,305		3,251		4,900		5,140
	Net income attributable to Shake Shack Inc.		$	4,879	$	3,298	$	7,146	$	4,760
Denominator:
	Weighted-average shares of Class A common stock outstanding—basic		25,798		22,553		25,587		21,453
	Effect of dilutive securities:
		Stock options	494		497		523		478
		Performance stock units	20		—		23		—
	Weighted-average shares of Class A common stock outstanding—diluted		26,312		23,050		26,133		21,931
Earnings per share of Class A common stock—basic			$	0.19	$	0.15	$	0.28	$	0.22
Earnings per share of Class A common stock—diluted			$	0.19	$	0.14	$	0.27	$	0.22

Shares of our Class B common stock do not share in the earnings or losses of Shake Shack and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

The following table presents potentially dilutive securities excluded from the computations of diluted earnings per share of Class A common stock for the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 28 2017		June 29 2016		June 28 2017		June 29 2016
Stock options	6,258	(1)	—		6,258	(1)	—
Performance stock units	84,755	(2)	63,200	(2)	84,755	(2)	63,200	(2)
Shares of Class B common stock	10,770,992	(3)	12,983,596	(3)	10,770,992	(3)	12,983,596	(3)

(1) Excluded from the computation of diluted earnings per share of Class A common stock because the exercise price of the stock options exceeded the average market price of our Class A common stock during the period ("out-of-the-money").

(2) Excluded from the computation of diluted earnings per share of Class A common stock because the performance conditions associated with these awards were not met assuming the end of the reporting period was the end of the performance period.

(3) Shares of our Class B common stock are considered potentially dilutive shares of Class A common stock. Amounts have been excluded from the computations of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive under the if-converted and two-class methods.

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SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 28, 2017

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information for the twenty-six weeks endedJune 28, 2017 and June 29, 2016:

		Twenty-Six Weeks Ended
		June 28 2017		June 29 2016
Cash paid for:
	Income taxes, net of refunds	$	1,595	$	1,325
	Interest, net of amounts capitalized	357		28
Non-cash investing activities:
	Accrued purchases of property and equipment	7,690		3,059
	Capitalized landlord assets for leases where we are deemed the accounting owner	7,634		—
	Accrued purchases of marketable securities	80		—
	Capitalized equity-based compensation	78		62
Non-cash financing activities:
	Class A common stock issued in connection with the redemption of LLC Interests	—		3
	Cancellation of Class B common stock in connection with the redemption of LLC Interests	—		(3		)
	Establishment of liabilities under tax receivable agreement	9,413		65,356
	Accrued distributions payable to non-controlling interest holders	—		607

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 28, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Lease Commitments

We are obligated under various operating leases for Shacks and our home office space, expiring in various years through 2035. Under certain of these leases, we are liable for contingent rent based on a percentage of sales in excess of specified thresholds and are typically responsible for our proportionate share of real estate taxes, common area maintenance charges and utilities.

As security under the terms of several of our leases, we are obligated under letters of credit totaling $160 as of June 28, 2017. The letters of credit expire in April 2018 and February 2026. In addition, in December 2013, we entered into an irrevocable standby letter of credit in conjunction with our home office lease in the amount of $80. The letter of credit expires in September 2017 and renews automatically for one-year periods through September 2019.

Purchase Commitments

Purchase obligations include legally binding contracts, including commitments for the purchase, construction or remodeling of real estate and facilities, firm minimum commitments for inventory purchases, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts. These obligations are generally short-term in nature and are recorded as liabilities when the related goods are received or services rendered. We also enter into long-term, exclusive contracts with certain vendors to supply us with food, beverages and paper goods, obligating us to purchase specified quantities.

Legal Contingencies

In November 2015, we participated in a voluntary mediation with counsel representing two former Shake Shack managers, who alleged that we improperly classified our restaurant managers as exempt from overtime protections. At the conclusion of the mediation, the parties mutually agreed to fully and finally resolve the matter by settling, rather than litigating. In connection with the settlement, the parties entered into a memorandum of understanding, pursuant to which we agreed to create a settlement fund in the amount of $750 and, in exchange for their participation in the settlement fund, all participating employees (current and former) were required to release Shake Shack from all federal and/or state wage and hour claims that may have existed through the settlement date. In March 2016, the parties entered into a settlement agreement in the amount of $750 million. In May 2017, we paid to the claims administrator $774 in full satisfaction of the amounts owed by us under the settlement agreement and related expenses.

We are subject to various legal and regulatory proceedings, claims and liabilities, such as employment-related claims and slip and fall cases, which arise in the ordinary course of business and are generally covered by insurance. As of June 28, 2017, the amount of ultimate liability with respect to these matters was not material.

Liabilities under Tax Receivable Agreement

As described in Note 10, we are a party to the Tax Receivable Agreement under which we are contractually committed to pay certain of the members of SSE Holdings 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions. We are not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized. Amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then we would not be required to make the related TRA Payments. During the twenty-six weeks endedJune 28, 2017 and June 29, 2016, we recognized liabilities totaling $9,413 and $65,356, respectively, relating to our obligations under the Tax Receivable Agreement, after concluding that it was probable that we would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits. As of June 28, 2017 and December 28, 2016, our total obligations under the Tax Receivable Agreement, including accrued interest, were $280,426 and $272,482, respectively. There were no transactions subject to the Tax Receivable Agreement for which we did not recognize the related liability, as we concluded that we would have sufficient future taxable income to utilize all of the related tax benefits.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 28, 2017

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Union Square Hospitality Group

The Chairman of our Board of Directors serves as the Chief Executive Officer of Union Square Hospitality Group, LLC. As a result, Union Square Hospitality Group, LLC and its subsidiaries are considered related parties.

USHG, LLC

Effective January 2015, we entered into an Amended and Restated Management Services Agreement with USHG, LLC ("USHG"), in which USHG provides reduced management services to SSE Holdings comprised of executive leadership from members of its senior management, advisory and development services and limited leadership development and human resources services. The initial term of the Amended and Restated Management Services Agreement is through December 31, 2019, with renewal periods.

Total amounts paid to USHG for general corporate expenses were $1 and $6 for the thirteen and twenty-six weeks endedJune 28, 2017. For the thirteen and twenty-six weeks endedJune 29, 2016 total amounts paid to USHG for general corporate expenses were $1 and $6, respectively. These amounts are included in general and administrative expenses on the Condensed Consolidated Statements of Income.

No amounts were payable to USHG as of June 28, 2017. Total amounts payable to USHG as of December 28, 2016 were $1, which is included in other current liabilities on the Condensed Consolidated Balance Sheets. No amounts were due from USHG as of June 28, 2017 and December 28, 2016.

Daily Provisions

In May 2017 we began purchasing coffee cake from Daily Provisions, a restaurant owned by Union Square Hospitality Group, to offer as a breakfast item at our Madison Square Park Shack. No amounts were paid to Daily Provisions during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016. Total amounts payable to Daily Provisions as of June 28, 2017 were $1, which are included in accounts payable on the Condensed Consolidated Balance Sheets. No amounts were payable to Daily provisions as of December 28, 2016.

Hudson Yards Sports and Entertainment

In fiscal 2011, we entered into a Master License Agreement (as amended, "MLA") with Hudson Yards Sports and Entertainment LLC ("HYSE") to operate Shake Shack branded limited menu concession stands in sports and entertainment venues within the United States. The agreement expires in January 2027 and includes five consecutive five-year renewal options at HYSE's option. As consideration for these rights, HYSE pays us a license fee based on a percentage of net food sales, as defined in the MLA. HYSE also pays us a percentage of profits on sales of branded beverages, as defined in the MLA. Amounts paid to us by HYSE for the thirteen and twenty-six weeks endedJune 28, 2017 were $115 and $135, respectively. For both the thirteen and twenty-six weeks endedJune 29, 2016 amounts paid to us by HYSE in the were $103. These amounts are included in licensing revenue on the Condensed Consolidated Statements of Income. Total amounts due from HYSE as of June 28, 2017 and December 28, 2016 were $58 and $11, which are included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets.

Madison Square Park Conservancy

The Chairman of our Board of Directors serves as a director of the Madison Square Park Conservancy ("MSP Conservancy"), with which we have a license agreement and pay license fees to operate our Madison Square Park Shack. Amounts paid to Madison Square Park Conservancy as rent amounted to $133 and $332 for the thirteen and twenty-six weeks endedJune 28, 2017, respectively. Amounts paid to Madison Square Park Conservancy as rent amounted to $195 and $390 for the thirteen and twenty-six weeks endedJune 29, 2016, respectively. These amounts are included in occupancy and related expenses on the Condensed Consolidated Statements of Income.Total amounts due to MSP Conservancy as of June 28, 2017 and December 28, 2016 were $79 and $1, respectively. These amounts are included in accrued expenses on the Condensed Consolidated Balance Sheets.

Additionally, we received tenant improvement allowances from MSP Conservancy related to a reconstruction project which ended in 2015. No amounts were paid to us from MSP Conservancy during the thirteen weeks endedJune 28, 2017. During the twenty-six weeks endedJune 28, 2017 amounts paid to us from MSP Conservancy totaled $200. No amounts were paid to us during the thirteen and twenty-six weeks endedJune 29, 2016. No amounts were due to us from MSP Conservancy as of June 28, 2017.

Total amounts due from MSP Conservancy as ofDecember 28, 2016 were $200, which are included in accounts receivable on the Condensed Consolidated Balance Sheets.

Share Our Strength

The Chairman of our Board of Directors serves as a director of Share Our Strength, for which Shake Shack holds the "Great American Shake Sale" every year during the month of May to raise money and awareness for childhood hunger. During the Great American Shake Sale, we encourage guests to donate money to Share Our Strength's No Kid Hungry campaign in exchange for a coupon for a free cake-themed shake. All of the guest donations we collect go directly to Share Our Strength.

During the thirteen and twenty-six weeks endedJune 28, 2017 the Great American Shake Sale raised $631 for Share Our Strength, which was payable to Share Our Strength as of June 28, 2017 and included in accounts payable on the Condensed Consolidated Balance Sheets. Amounts paid to Share Our Strength for both the thirteen and twenty-six weeks endedJune 29, 2016 were $587. We incurred costs of approximately $119 for both the thirteen and twenty-six weeks endedJune 28, 2017 and $98 for both the thirteen and twenty-six weeks endedJune 29, 2016. These costs represent the cost of the free shakes redeemed and are included in general and administrative expenses on the Condensed Consolidated Statements of Income.

Mobo Systems, Inc.

The Chairman of our Board of Directors serves as a director of Mobo Systems, Inc. (also known as "Olo"), a platform we use in connection with our mobile ordering application. Amounts paid to Olo during the thirteen and twenty-six weeks endedJune 28, 2017 were $20 and $38, respectively, which are included in other operating expenses on the Condensed Consolidated Statements of Income. No amounts were paid to Olo for the thirteen and twenty-six weeks endedJune 29, 2016. No amounts were payable to Olo as of June 28, 2017 and December 28, 2016.

Square, Inc.

On July 20, 2017, our Chief Executive Officer joined the Board of Directors of Square, Inc ("Square"). Square provides point-of-sale solutions and other business management tools. Square also owns Caviar, a food ordering service. We currently use the Square payment application to process a limited number of sales at our Shacks and sales for certain off-site events. In March 2017, we partnered with Caviar for a limited-time delivery promotion.

Tax Receivable Agreement

As described in Note 10, we entered into a tax receivable agreement with certain members of SSE Holdings that provides for the payment by us of 85% of the amount of tax benefits, if any, that Shake Shack actually realizes or in some cases is deemed to realize as a result of certain transactions. No payments were made to the members of SSE Holdings pursuant to the Tax Receivable Agreement during the thirteen weeks endedJune 28, 2017. During the twenty-six weeks endedJune 28, 2017, payments of $1,471, inclusive of interest, were made to the members. No amounts were paid to the members during the thirteen and twenty-six weeks endedJune 29, 2016. As of June 28, 2017 and December 28, 2016, total amounts due under the Tax Receivable Agreement were $280,426 and $272,482, respectively.

Distributions to Members of SSE Holdings

Under the terms of the SSE Holdings LLC Agreement, SSE Holdings is obligated to make tax distributions to its members. During the thirteen and twenty-six weeks endedJune 28, 2017 distributions paid to non-controlling interest holders were $2,024 and $2,379, respectively. For the thirteen and twenty-six weeks endedJune 29, 2016 tax distributions of $1,602 were paid to non-controlling interest holders. Notax distributions were payable to non-controlling interest holders as of June 28, 2017. As of December 28, 2016 tax distributions of $607 were payable to non-controlling interest holders.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 28, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Shake Shack Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and on a basis consistent in all material respects with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 28, 2016, as amended ("2016 Form 10-K"). In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.

The accompanying Condensed Consolidated Balance Sheet as of December 28, 2016 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our 2016 Form 10-K.

SSE Holdings is considered a VIE. Shake Shack Inc. is the primary beneficiary as we have the majority economic interest in SSE Holdings and, as the sole managing member, have decision making authority that significantly affects the economic performance of the entity, while the limited partners have no substantive kick-out or participating rights. As a result, we consolidate SSE Holdings. The assets and liabilities of SSE Holdings represent substantially all of our consolidated assets and liabilities with the exception of certain deferred taxes and liabilities under the Tax Receivable Agreement. As of June 28, 2017 and December 28, 2016, the net assets of SSE Holdings were $177,437 and $158,845, respectively. The assets of SSE Holdings are subject to certain restrictions in SSE Holdings' revolving credit agreements. See Note 7 for more information.

Fiscal Year

Fiscal Year

We operate on a 52/53 week fiscal year ending on the last Wednesday in December. Fiscal 2017 contains 52 weeks and ends on December 27, 2017. Fiscal 2016 contained 52 weeks and ended on December 28, 2016. Unless otherwise stated, references to years in this report relate to fiscal years.

Use of Estimates

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted and Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements     

We adopted the Accounting Standards Updates (“ASUs”) summarized below in fiscal 2017. The effects of adoption did not have a material impact on our consolidated financial statements.

Accounting Standards Update (“ASU”)	Description	Date Adopted
Improvements to Employee Share-Based Payment Accounting (ASU 2016-09)	This standard simplifies certain aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, certain classifications on the statement of cash flows, and an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur. Upon adoption, we made such policy election. The adoption methodology applied varied based on each applicable provision of the standard, and none of the provisions had a material impact on our consolidated financial statements.	December 29, 2016
Simplifying the Measurement of Inventory (ASU 2015-11)	This standard applies to inventory measured using methods other than last-in, first-out (LIFO) or the retail method, and requires entities to measure such inventory at the lower of cost or net realizable value. It was applied prospectively.	December 29, 2016

Recently Issued Accounting Pronouncements       

Accounting Standards Update (“ASU”)	Description	Expected Impact	Effective Date
Statement of Cash Flows: Classification of Certain Cash Receipts and Payments (ASU 2016-15)	This standard provides guidance on eight specific cash flow issues with the objective of reducing diversity in practice. It should be applied retrospectively to each period presented, subject to certain conditions.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 28, 2017

Accounting Standards Update (“ASU”)	Description	Expected Impact	Effective Date
Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01)	For public business entities, this standard requires: (i) certain equity investments to be measured at fair value with changes in fair value recognized in net income; (ii) a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) elimination of the requirement to disclose the method(s) and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) separate presentation of financial assets and liabilities by measurement category and form of financial asset in the financial statements; and (vii) an entity to evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The standard should be applied by means of a cumulative-effect adjustment to the balance sheet at the beginning of the fiscal year of adoption. Early adoption is permitted, subject to certain conditions resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 28, 2017
Revenue from Contracts with Customers and related standards (ASU’s 2014-09, 2015-14, 2016-08, 2016-10, 2016-12, 2015-20)	This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. Early adoption is permitted.	We are currently in the process of evaluating the impact this standard is expected to have on our consolidated financial statements. It is still too early in our process to determine the magnitude of the potential impact. However, based on our preliminary assessment, we believe that further evaluation of the fixed fees associated with our licensing agreements (such as the initial territory fees) may reveal differences in the timing of revenue recognition from current policy, but that it is likely that recognition of sales-based royalties will not significantly change. In addition to further evaluating each of our licensing agreements, we are in the process of assessing whether any sales promotions or discounts we currently offer related to our Shack sales could be considered separate performance obligations. As we continue our evaluation, we will further clarify the expected impact of the adoption of the standard. We plan to adopt the standard on December 28, 2017, and we have not yet selected a transition method.	December 28, 2017
Leases (ASU 2016-02)	This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted.	We are currently evaluating the impact this standard will have on our consolidated financial statements.	December 27, 2018

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 28, 2017

Fair Value Disclosures [Abstract]

Schedule of Cash and Cash Equivalents

The following tables summarize our cash, cash equivalents and marketable securities by significant investment categories as of June 28, 2017 and December 28, 2016:

		June 28, 2017
		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash		$	17,417	$	—	$	—		$	17,417	$	17,417	$	—
Level 1:
	Money market funds	5,019		—		—			5,019		5,019		—
	Mutual funds	60,566		—		—			60,566		—		60,566
Level 2:
	Corporate debt securities(1)	2,570		2		(32		)	2,540		—		2,540
Total		$	85,572	$	2	$	(32	)	$	85,542	$	22,436	$	63,106

		December 28, 2016
		Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash		$	6,322	$	—	$	—		$	6,322	$	6,322	$	—
Level 1:
	Money market funds	5,285		—		—			5,285		5,285		—
	Mutual funds	60,232		—		—			60,232		—		60,232
Level 2:
	Corporate debt securities(1)	2,473		3		(30		)	2,446		—		2,446
Total		$	74,312	$	3	$	(30	)	$	74,285	$	11,607	$	62,678

(1) Corporate debt securities were measured at fair value using a market approach utilizing observable prices for identical securities or securities with similar characteristics and inputs that are observable or can be corroborated by observable market data

Schedule of Unrealized Loss on Investments

The following tables summarize the gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June 28, 2017 and December 28, 2016, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:

		June 28, 2017
		Less than 12 Months					12 Months or Greater					Total
		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	Money market funds	$	—	$	—		$	—	$	—		$	—	$	—
	Mutual funds	—		—			—		—			—		—
	Corporate debt securities	1,445		(8		)	455		(24		)	1,900		(32		)
Total		$	1,445	$	(8	)	$	455	$	(24	)	$	1,900	$	(32	)

		December 28, 2016
		Less than 12 Months					12 Months or Greater					Total
		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	Money market funds	$	—	$	—		$	—	$	—		$	—	$	—
	Mutual funds	—		—			—		—			—		—
	Corporate debt securities	1,244		(10		)	540		(20		)	1,784		(30		)
Total		$	1,244	$	(10	)	$	540	$	(20	)	$	1,784	$	(30	)

Schedule of Other Income From Available for Sale Securities

A summary of other income from available-for-sale securities recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

		Thirteen Weeks Ended					Twenty-Six Weeks Ended
		June 28 2017			June 29 2016		June 28 2017			June 29 2016
Available-for-sale securities:
	Dividend income	$	191		$	—	$	369		$	—
	Interest income	19			23		39			46
	Loss on investments	(12		)	—		(15		)	—
Total other income, net		$	198		$	23	$	393		$	46

Schedule of Available-for-sale Securities and Gross Realized Gains and Losses

A summary of available-for-sale securities sold and gross realized gains and losses recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

		Thirteen Weeks Ended						Twenty-Six Weeks Ended
		June 28 2017			June 29 2016			June 28 2017			June 29 2016
Available-for-sale securities:
	Gross proceeds from sales and redemptions	$	473		$	322		$	628		$	322
	Cost basis of sales and redemptions	484			322			642			322
	Gross realized gains included in net income	—			1			—			1
	Gross realized losses included in net income	(12		)	(1		)	(15		)	(1		)
	Amounts reclassified out of accumulated other comprehensive loss	11			—			14			—

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INVENTORIES (Tables)

6 Months Ended

Jun. 28, 2017

Inventory Disclosure [Abstract]

Inventories

Inventories as of June 28, 2017 and December 28, 2016 consisted of the following:

	June 28 2017		December 28 2016
Food	$	578	$	543
Wine	56		47
Beer	71		58
Beverages	93		79
Retail merchandise	170		79
Inventories	$	968	$	806

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PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

Jun. 28, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property and equipment as of June 28, 2017 and December 28, 2016 consisted of the following:

	June 28 2017		December 28 2016
Leasehold improvements	$	139,252	$	120,629
Landlord funded assets	4,644		—
Equipment	27,069		23,194
Furniture and fixtures	8,535		7,342
Computer equipment and software	10,057		8,710
Construction in progress (includes assets under construction from deemed landlord financing)	18,067		13,510
Property and equipment, gross	207,624		173,385
Less: accumulated depreciation	47,241		37,121
Property and equipment, net	$	160,383	$	136,264

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SUPPLEMENTAL BALANCE SHEET INFORMATION (Tables)

6 Months Ended

Jun. 28, 2017

Supplemental Balance Sheet Disclosures [Abstract]

Supplemental Balance Sheet Information

The components of other current liabilities as of June 28, 2017 and December 28, 2016 are as follows:

	June 28 2017		December 28 2016
Sales tax payable	$	1,601	$	1,324
Current portion of liabilities under tax receivable agreement	3,110		4,580
Gift card liability	1,105		1,153
Deferred compensation	2,455		—
Other	1,981		3,116
Other current liabilities	$	10,252	$	10,173

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NON-CONTROLLING INTERESTS (Tables)

6 Months Ended

Jun. 28, 2017

Noncontrolling Interest [Abstract]

Schedule of ownership interests in SSE holdings

The following table summarizes the ownership interest in SSE Holdings as of June 28, 2017 and December 28, 2016.

	June 28, 2017			December 28, 2016
	LLC Interests	Ownership %		LLC Interests	Ownership %
Number of LLC Interests held by Shake Shack Inc.	25,939,866	70.7	%	25,151,384	69.1	%
Number of LLC Interests held by non-controlling interest holders	10,770,992	29.3	%	11,253,592	30.9	%
Total LLC Interests outstanding	36,710,858	100.0	%	36,404,976	100.0	%

Schedule of non-controlling interest

The following table summarizes the effects of changes in ownership of SSE Holdings on our equity during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

		Thirteen Weeks Ended					Twenty-Six Weeks Ended
		June 28 2017		June 29 2016			June 28 2017			June 29 2016
Net income attributable to Shake Shack Inc.		$	4,879	$	3,298		$	7,146		$	4,760
Other comprehensive income (loss):
	Unrealized holding gains (losses) on available-for-sale securities	2		(4		)	(2		)	(5		)
Transfers (to) from non-controlling interests:
	Increase in additional paid-in capital as a result of the redemption of LLC Interests	720		5,736			2,042			10,378
	Increase in additional paid-in capital as a result of activity under stock compensation plans	632		161			3,502			404
Total effect of changes in ownership interest on equity attributable to Shake Shack Inc.		$	6,233	$	9,191		$	12,688		$	15,537

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EQUITY-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 28, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of equity-based compensation expense recognized

A summary of equity-based compensation expense recognized during the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016 is as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 28 2017		June 29 2016		June 28 2017		June 29 2016
Stock options	$	863	$	1,053	$	1,827	$	2,083
Performance stock units	399		157		684		157
Restricted stock units	23		—		23		—
Equity-based compensation expense	$	1,285	$	1,210	$	2,534	$	2,240
Total income tax benefit recognized related to equity-based compensation	$	44	$	33	$	95	$	64

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INCOME TAXES (Tables)

6 Months Ended

Jun. 28, 2017

Income Tax Disclosure [Abstract]

Schedule of effective income tax rate reconciliation

A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the recognized income tax expense is as follows:

	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	June 28 2017					June 29 2016					June 28 2017					June 29 2016
Expected U.S. federal income taxes at statutory rate	$	4,050		35.0	%	$	3,014		34.0	%	$	5,982		35.0	%	$	4,595		34.0	%
State and local income taxes, net of federal benefit	659			5.7	%	472			5.3	%	1,008			5.9	%	744			5.5	%
Foreign withholding taxes	227			2.0	%	117			1.3	%	413			2.4	%	357			2.6	%
Tax credits	(248		)	(2.1	)%	(87		)	(1.0	)%	(378		)	(2.2	)%	(126		)	(0.9	)%
Non-controlling interest	(1,303		)	(11.3	)%	(1,200		)	(13.5	)%	(1,982		)	(11.6	)%	(1,955		)	(14.5	)%
Income tax expense	$	3,385		29.3	%	$	2,316		26.1	%	$	5,043		29.5	%	$	3,615		26.7	%

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EARNINGS PER SHARE - Schedule of Antidilutive Securities(Tables)

6 Months Ended

Jun. 28, 2017

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Schedule of earnings per share

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the thirteen and twenty-six weeks endedJune 28, 2017 and June 29, 2016.

			Thirteen Weeks Ended				Twenty-Six Weeks Ended
			June 28 2017		June 29 2016		June 28 2017		June 29 2016
Numerator:
	Net income		$	8,184	$	6,549	$	12,046	$	9,900
	Less: net income attributable to non-controlling interests		3,305		3,251		4,900		5,140
	Net income attributable to Shake Shack Inc.		$	4,879	$	3,298	$	7,146	$	4,760
Denominator:
	Weighted-average shares of Class A common stock outstanding—basic		25,798		22,553		25,587		21,453
	Effect of dilutive securities:
		Stock options	494		497		523		478
		Performance stock units	20		—		23		—
	Weighted-average shares of Class A common stock outstanding—diluted		26,312		23,050		26,133		21,931
Earnings per share of Class A common stock—basic			$	0.19	$	0.15	$	0.28	$	0.22
Earnings per share of Class A common stock—diluted			$	0.19	$	0.14	$	0.27	$	0.22

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 28, 2017

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow Information

The following table sets forth supplemental cash flow information for the twenty-six weeks endedJune 28, 2017 and June 29, 2016:

		Twenty-Six Weeks Ended
		June 28 2017		June 29 2016
Cash paid for:
	Income taxes, net of refunds	$	1,595	$	1,325
	Interest, net of amounts capitalized	357		28
Non-cash investing activities:
	Accrued purchases of property and equipment	7,690		3,059
	Capitalized landlord assets for leases where we are deemed the accounting owner	7,634		—
	Accrued purchases of marketable securities	80		—
	Capitalized equity-based compensation	78		62
Non-cash financing activities:
	Class A common stock issued in connection with the redemption of LLC Interests	—		3
	Cancellation of Class B common stock in connection with the redemption of LLC Interests	—		(3		)
	Establishment of liabilities under tax receivable agreement	9,413		65,356
	Accrued distributions payable to non-controlling interest holders	—		607

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NATURE OF OPERATIONS (Details)	Feb. 04, 2015 $ / shares shares	Jun. 28, 2017 Restaurant	Dec. 28, 2016
Class of Stock [Line Items]
Ownership percent of noncontrolling interest		70.70%	69.10%
Number of restaurants		134
IPO | Common stock | Class A Common Stock
Class of Stock [Line Items]
Shares issued during the period (in shares) | shares	5,750,000
Shares issued, share price (in dollars per share) | $ / shares	$ 21
United States | Company-operated
Class of Stock [Line Items]
Number of restaurants		75
United States | Licensed
Class of Stock [Line Items]
Number of restaurants		9
Non-United States | Licensed
Class of Stock [Line Items]
Number of restaurants		50

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Net assets held by SSE holders	$ 177,437	$ 158,845

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FAIR VALUE MEASUREMENTS - Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016	Jun. 29, 2016	Dec. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Cost Basis	$ 22,436	$ 11,607	$ 68,371	$ 70,849
Cash and cash equivalents fair value	22,436	11,607
Gross Unrealized Gains	2	3
Gross Unrealized Losses	(32)	(30)
Fair Value Including Mutual Funds	85,542
Fair Value		74,285
Fair value of marketable securities	63,106	62,678
Total cost basis including Mutual Funds	85,572	74,312
Level 1 | Mutual funds
Schedule of Available-for-sale Securities [Line Items]
Mutual funds	60,566	60,232
Fair value of marketable securities	60,566	60,232
Level 2 | Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Corporate debt securities	2,570	2,473
Gross Unrealized Gains	2	3
Gross Unrealized Losses	(32)	(30)
Fair value of marketable securities	2,540	2,446
Cash
Schedule of Available-for-sale Securities [Line Items]
Cost Basis	17,417	6,322
Cash and cash equivalents fair value	17,417	6,322
Money market funds | Level 1
Schedule of Available-for-sale Securities [Line Items]
Cost Basis	5,019	5,285
Cash and cash equivalents fair value	$ 5,019	$ 5,285

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FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016	Dec. 28, 2016
Fair Value Disclosures [Abstract]
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax		$ 30		$ 30		$ 27
Fair value of investments with unrealized losses		32		32		$ 30
Change in net unrealized holding losses	[1]	(8)	$ (6)	(17)	$ (8)
Asset impairment charges		$ 0	$ 0	$ 0	$ 0

[1] Net of tax benefit of $0 for the thirteen and twenty-six weeks ended June 28, 2017 and June 29, 2016.

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FAIR VALUE MEASUREMENTS - Other Income From Available For Sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Available-for-sale securities
Other Income	$ 198	$ 23	$ 393	$ 46
Available-for-sale Securities
Available-for-sale securities
Dividend income	191	0	369	0
Interest income	19	23	39	46
Loss on investments	(12)	0	(15)	0
Other Income	$ 198	$ 23	$ 393	$ 46

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FAIR VALUE MEASUREMENTS - Available for Sale Securities and Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Available-for-sale securities:
Gross proceeds from sales and redemptions		$ 473	$ 322	$ 628	$ 322
Cost basis of sales and redemptions		484	322	642	322
Gross realized gains included in net income		0	1	0	1
Gross realized losses included in net income		(12)	(1)	(15)	(1)
Amounts reclassified out of accumulated other comprehensive loss	[1]	$ 11	$ 0	$ 14	$ 0

[1] Net of tax benefit of $0 for the thirteen and twenty-six weeks ended June 28, 2017 and June 29, 2016.

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FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS - Unrealized Loss on Investments (Details) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 1,445	$ 1,244
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(32)	(30)
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(8)	(10)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	455	540
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(24)	(20)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1,900	1,784
Corporate debt securities
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,445	1,244
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(32)	(30)
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(8)	(10)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	455	540
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(24)	(20)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 1,900	$ 1,784

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INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016
Inventory [Line Items]
Inventories	$ 968	$ 806
Food
Inventory [Line Items]
Inventories	578	543
Wine
Inventory [Line Items]
Inventories	56	47
Beer
Inventory [Line Items]
Inventories	71	58
Beverages
Inventory [Line Items]
Inventories	93	79
Retail merchandise
Inventory [Line Items]
Inventories	$ 170	$ 79

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 207,624	$ 173,385
Less: accumulated depreciation	47,241	37,121
Property and equipment, net	160,383	136,264
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	139,252	120,629
Buildings, Deemed Landlord Financing [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	4,644	0
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	27,069	23,194
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,535	7,342
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	10,057	8,710
Construction in progress (includes assets under construction from deemed landlord financing)
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 18,067	$ 13,510

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SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) - USD ($) $ in Thousands	Jun. 28, 2017	Dec. 28, 2016
Other Liabilities, Current
Sales tax payable	$ 1,601	$ 1,324
Current portion of liabilities under tax receivable agreement	3,110	4,580
Gift card liability	1,105	1,153
Deferred Compensation Liability, Current	2,455	0
Other	1,981	3,116
Other current liabilities	$ 10,252	$ 10,173

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DEBT (Details) - USD ($)			3 Months Ended		6 Months Ended
	Jun. 28, 2017	Feb. 04, 2015	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016	Dec. 28, 2016
Debt Instrument [Line Items]
Deemed landlord financing	$ 11,166,000		$ 11,166,000		$ 11,166,000		$ 2,007,000
Interest costs incurred			(409,000)	$ (91,000)	(733,000)	$ (178,000)
Interest Expense			366,000	91,000	669,000	178,000
Interest costs capitalized			43,000	$ 0	64,000	$ 0
Notes payable
Debt Instrument [Line Items]
Notes payable	0		0		$ 0
Letter of credit
Debt Instrument [Line Items]
Term to maturity					1 year
Revolving Credit Facility | Line of credit
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 50,000,000
Current borrowing capacity		$ 20,000,000
Term to maturity		5 years
Amount available under revolving credit facility	19,920,000		19,920,000		$ 19,920,000
Notes payable							$ 0
Revolving Credit Facility | Letter of credit | Line of credit
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 10,000,000
Current borrowing capacity	$ 80,000		$ 80,000		$ 80,000
Revolving Credit Facility | Minimum | Line of credit | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	2.25%
Revolving Credit Facility | Minimum | Line of credit | Prime rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.00%
Revolving Credit Facility | Maximum | Line of credit | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	3.25%
Revolving Credit Facility | Maximum | Line of credit | Prime rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%

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NON-CONTROLLING INTERESTS - Ownership Interest in SSE Holdings (Details) - shares	Jun. 28, 2017	Dec. 28, 2016
Noncontrolling Interest [Abstract]
Number of LLC Interests held by Shake Shack Inc. (in shares)	25,939,866	25,151,384
Number of LLC Interests held by Shake Shack Inc. (as a percentage)	70.70%	69.10%
Number of LLC Interests held by non-controlling interest holders (in shares)	10,770,992	11,253,592
Number of LLC Interests held by non-controlling interest holders (as a percentage)	29.30%	30.90%
Total LLC Interests outstanding (in shares)	36,710,858	36,404,976
Total LLC Interests outstanding (as a percentage)	100.00%	100.00%

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NON-CONTROLLING INTERESTS - Narrative (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Noncontrolling Interest [Line Items]
Non-controlling interest holders' weighted average ownership percentage	29.60%	37.90%	30.00%	40.90%
Units acquired during the period (in shares)			788,482
Number of units redeemed (in shares)			482,600	3,477,145
Redemption or Exchange of Units
Noncontrolling Interest [Line Items]
Units acquired during the period (in shares)			482,600	3,477,145
Employee Stock Option
Noncontrolling Interest [Line Items]
Units acquired during the period (in shares)			305,882	77,935

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NON-CONTROLLING INTERESTS - Changes in Ownership Interests in SSE Holdings (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Noncontrolling Interest [Line Items]
Net Income (Loss) Attributable to Parent	$ 4,879	$ 3,298	$ 7,146	$ 4,760
Net unrealized losses related to available-for-sale securities	3	(6)	(3)	(8)
Total effect of changes in ownership interest on equity attributable to Shake Shack Inc.	6,233	9,191	12,688	15,537
Redemption or Exchange of Units
Noncontrolling Interest [Line Items]
Increase (decrease) in additional paid-in capital	720	5,736	2,042	10,378
Employee Stock Option
Noncontrolling Interest [Line Items]
Increase (decrease) in additional paid-in capital	632	161	3,502	404
Accumulated Other Comprehensive Loss
Noncontrolling Interest [Line Items]
Net unrealized losses related to available-for-sale securities	$ 2	$ (4)	$ (2)	$ (5)

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EQUITY-BASED COMPENSATION - Schedule of compensation expense recognized (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 1,285	$ 1,210	$ 2,534	$ 2,240
Total income tax benefit recognized related to equity-based compensation	44	33	95	64
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	863	1,053	1,827	2,083
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	399	157	684	157
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 23	$ 0	$ 23	$ 0

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EQUITY-BASED COMPENSATION (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 1,285	$ 1,210	$ 2,534	$ 2,240
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	863	1,053	1,827	2,083
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 399	$ 157	$ 684	$ 157

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INCOME TAXES - Reconciliation of Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Income Tax Disclosure [Abstract]
Expected U.S. federal income taxes at statutory rate, percentage	35.00%	34.00%	35.00%	34.00%
Expected U.S. federal income taxes at statutory rate	$ 4,050	$ 3,014	$ 5,982	$ 4,595
State and local income taxes, net of federal benefit	$ 659	$ 472	$ 1,008	$ 744
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent	5.70%	5.30%	5.90%	5.50%
Foreign withholding taxes	$ 227	$ 117	$ 413	$ 357
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent	2.00%	1.30%	2.40%	2.60%
Tax credits	$ (248)	$ (87)	$ (378)	$ (126)
Effective Income Tax Rate Reconciliation, Tax Credit, Percent	(2.10%)	(1.00%)	(2.20%)	(0.90%)
Non-controlling interest	$ (1,303)	$ (1,200)	$ (1,982)	$ (1,955)
Effective Income Tax Rate Reconciliation, Noncontrolling Interest Income (Loss), Percent	(11.30%)	(13.50%)	(11.60%)	(14.50%)
Income tax expense	$ 3,385	$ 2,316	$ 5,043	$ 3,615
Effective income tax rate reconciliation (in percentage)	29.30%	26.10%	29.50%	26.70%

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INCOME TAXES - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016	Dec. 28, 2016
Income Tax Contingency [Line Items]
Effective income tax rate reconciliation (in percentage)	29.30%	26.10%	29.50%	26.70%
Noncontrolling Interest, Ownership Percentage by Parent, Weighted Average	70.40%	62.10%	70.00%	59.10%
Units acquired during the period (in shares)			788,482
Deferred tax asset recognized as a result of investment in partnership			$ 7,876,000
Deferred Tax Asset, Investment in Partnership	$ 215,457,000		215,457,000
Valuation allowance, deferred tax asset	16,334,000		16,334,000
Deferred tax asset related to additional tax basis			3,801,000
Uncertain tax positions	$ 0		$ 0
Percentage of tax benefits due to equity owners	85.00%		85.00%
Tax Receivable Agreement Payments To Related Parties	$ 0	$ 0	$ 1,471,000	$ 0
Percentage of tax benefits expected to be realized	15.00%		15.00%
Establishment of liabilities under tax receivable agreement			$ 9,413,000	$ 65,356,000
Liabilities under tax receivable agreement	$ 280,426,000		280,426,000		$ 272,482,000
Current portion of liabilities under tax receivable agreement	$ 3,110,000		$ 3,110,000		$ 4,580,000
Redemption or Exchange of Units
Income Tax Contingency [Line Items]
Units acquired during the period (in shares)			482,600	3,477,145

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EARNINGS PER SHARE - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Numerator:
Document period end date			Jun. 28, 2017
Net income	$ 8,184	$ 6,549	$ 12,046	$ 9,900
Less: net income attributable to non-controlling interests	3,305	3,251	4,900	5,140
NET INCOME ATTRIBUTABLE TO SHAKE SHACK INC.	$ 4,879	$ 3,298	$ 7,146	$ 4,760
Denominator:
Weighted-average shares of Class A common stock outstanding—basic (in shares)	25,798	22,553	25,587	21,453
Effect of dilutive securities:
Weighted-average shares of Class A common stock outstanding—diluted (in shares)	26,312	23,050	26,133	21,931
Earnings (loss) per share of Class A common stock—basic (in dollars per share)	$ 0.19	$ 0.15	$ 0.28	$ 0.22
Earnings (loss) per share of Class A common stock—diluted (in dollars per share)	$ 0.19	$ 0.14	$ 0.27	$ 0.22
Stock options
Effect of dilutive securities:
Stock options (in shares)	494	497	523	478
Performance stock units
Effect of dilutive securities:
Stock options (in shares)	20	0	23	0

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EARNINGS PER SHARE - Antidilutive Securities (Details) - Common stock - shares	3 Months Ended		6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016	Jun. 28, 2017	Jun. 29, 2016
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares (in shares)	6,258	0	6,258	0
Performance stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares (in shares)	84,755	63,200	84,755	63,200
Shares of Class B common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares (in shares)	10,770,992	12,983,596	10,770,992	12,983,596

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 28, 2017	Jun. 29, 2016
Cash paid for:
Income taxes, net of refunds	$ 1,595	$ 1,325
Interest, net of amounts capitalized	357	28
Non-cash investing activities:
Accrued purchases of property and equipment	7,690	3,059
Noncash Deemed Landlord Financing	7,634	0
Equity Securities Incurred But Not Yet Paid	80	0
Capitalized equity-based compensation	78	62
Non-cash financing activities:
Establishment of liabilities under tax receivable agreement	9,413	65,356
Accrued Distributions to Noncontrolling Interests	0	607
Redemption or Exchange of Units | Class A Common Stock
Non-cash financing activities:
Class A common stock issued	0	3
Redemption or Exchange of Units | Class B Common Stock
Non-cash financing activities:
Cancellation of Class B common stock	$ 0	$ (3)

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands		1 Months Ended	6 Months Ended
	May 01, 2017 USD ($)	Nov. 30, 2015 USD ($) manager	Jun. 28, 2017 USD ($)	Jun. 29, 2016 USD ($)	Dec. 28, 2016 USD ($)	Dec. 31, 2013 USD ($)
Loss Contingencies [Line Items]
Percentage of tax benefits due to equity owners			85.00%
Establishment of liabilities under tax receivable agreement			$ 9,413	$ 65,356
Tax receivable agreement liability			$ 280,426		$ 272,482
Exempt Classification Matter
Loss Contingencies [Line Items]
Number of former Shake Shack managers | manager		2
Settlement amount		$ 750
Loss Contingency Accrual, Payments	$ 774
Letter of credit
Loss Contingencies [Line Items]
Renewal term			1 year
Retail site
Loss Contingencies [Line Items]
Letters of credit outstanding			$ 160
Office building
Loss Contingencies [Line Items]
Letters of credit outstanding						$ 80

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RELATED PARTY TRANSACTIONS (Details)	3 Months Ended		6 Months Ended
	Jun. 28, 2017 USD ($)	Jun. 29, 2016 USD ($)	Jun. 28, 2017 USD ($) renewal_option	Jun. 29, 2016 USD ($)	Dec. 28, 2016 USD ($)
Related Party Transaction [Line Items]
Percentage of tax benefits due to equity owners	85.00%		85.00%
Tax Receivable Agreement Payments To Related Parties	$ 0	$ 0	$ 1,471,000	$ 0
Tax receivable agreement liability	280,426,000		280,426,000		$ 272,482,000
Distributions paid to non-controlling interest holders	2,024,000	1,602,000	2,379,000	1,602,000
Tax distributions payable to non-controlling interest holders	0		0		607,000
Affiliated Entity
Related Party Transaction [Line Items]
Amount paid to USHG for general corporate expenses	1,000	1,000	6,000	6,000
Due from related parties, current	0		0		0
Amounts due to related parties, current	0		0		1,000
Charity Campaign [Member]
Related Party Transaction [Line Items]
Expenses from transactions with related party	119,000	98,000	119,000	98,000
Charitable campaign flow through	631,000	587,000	631,000	587,000
Daily Provisions
Related Party Transaction [Line Items]
Amounts due to related parties, current and noncurrent	1,000		1,000
Revenue from related parties	0	0	$ 0	0
Amounts due to related parties, current					0
Subsidiary to Affiliated Entity [Member]
Related Party Transaction [Line Items]
Number of renewal terms | renewal_option			5
Renewal option period			5 years
Concession Income [Member] | Subsidiary to Affiliated Entity [Member]
Related Party Transaction [Line Items]
Due from related parties, current	58,000		$ 58,000		11,000
Revenue from Related Parties	115,000	103,000	135,000	103,000
Rent Expense [Member] | Madison Square Park Conservancy
Related Party Transaction [Line Items]
Expenses from transactions with related party	133,000	195,000	332,000	390,000
Amounts due to related parties, current	79,000		79,000		1,000
Tenant Improvement Allowance [Member] | Madison Square Park Conservancy
Related Party Transaction [Line Items]
Accounts Receivable, Related Parties, Current	0		0		200,000
Related Party Transaction, Other Revenues from Transactions with Related Party	0	0	200,000	0
Mobo Systems, Inc. [Member] | Board of Directors Chairman
Related Party Transaction [Line Items]
Expenses from transactions with related party	20,000	$ 0	38,000	$ 0
Amounts due to related parties, current	$ 0		$ 0		$ 0