Shake Shack stock fell 19.9% after the company said first-quarter revenue came in below Wall Street’s target and profit measures also missed expectations. The burger chain reported revenue of $366.7 million in Q1 CY2026, up 14.3% from a year earlier but still short of the $372 million analysts were looking for.
Adjusted earnings were flat at $0 a share, missing the $0.12 estimate, while adjusted EBITDA reached $36.97 million, below the $45.64 million forecast. The company’s adjusted EBITDA margin was 10.1%, and its operating margin slipped to -0.7% from 0.9% in the same quarter last year.
The miss landed after a stretch of expansion that had helped support the business. Shake Shack ended the quarter with 685 locations, up from 589 a year earlier, and same-store sales rose 4.6% from 0.2% in the comparable period last year. Over the past 12 months, the company generated $1.49 billion in revenue, and its annualized revenue growth over the last seven years was 17.1%.
But the quarter also showed pressure beneath the top line. Free cash flow was negative $38.7 million, compared with positive $1.87 million a year earlier, suggesting the chain is still paying for growth even as sales rise. Sell-side analysts expect revenue to grow 14.9% over the next 12 months, but investors on Friday focused less on the pace of expansion than on the shortfall in profits and cash generation.
For now, the market is treating the quarter as a warning that Shake Shack’s growth story is no longer enough on its own. The question is whether the company can turn a bigger restaurant base and stronger same-store sales into the kind of margin improvement that would make the stock recover.