Shake Shack (NYSE: SHAK) has lots of opportunities to expand by adding more locations, but it's going to struggle to increase same-store sales at existing locations as it gets bigger.
That problem was evident in its most recent earnings report. The company saw its total revenue rise by nearly 30% to $94.6 million, with sales up 26.8% to $91.1 million. The problem is those increases occurred only because it added restaurants -- same-store sales dropped by 1.6%.
Shake Shack can grow. It can make more money and it can continue to have a devoted fan base. What it's going to struggle to do is make more money at its existing locations, and that's going to act as an anchor on its stock price.
Source: Fool.com