EARNINGS PER SHARE
Basic earnings per share of Class A common stock is computed by dividing Net income attributable 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 attributable 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 (in thousands, except per share amounts):
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| | | 2025 | | 2024 | | 2023 |
| Numerator: | | | | | |
| Net income attributable to Shake Shack Inc.—basic | $ | 45,725 | | | $ | 10,207 | | | $ | 20,264 | |
| Reallocation of net income attributable to non-controlling interests from the assumed conversion of Class B shares | — | | | 613 | | | 726 | |
| Net income attributable to Shake Shack Inc.—diluted | $ | 45,725 | | | $ | 10,820 | | | $ | 20,990 | |
| Denominator: | | | | | |
| Weighted average shares of Class A common stock outstanding—basic | 40,212 | | | 39,830 | | | 39,419 | |
| Effect of dilutive securities: | | | | | |
| | Stock options | 2 | | | 52 | | | 75 | |
| | Performance stock units | 35 | | | 69 | | | 11 | |
| | Restricted stock units | 131 | | | 173 | | | 85 | |
| | Convertible Notes | 1,467 | | | 1,467 | | | 1,467 | |
| | Shares of Class B common stock | — | | | 2,612 | | | 2,842 | |
| | | | | | | |
| Weighted average shares of Class A common stock outstanding—diluted | 41,847 | | | 44,203 | | | 43,899 | |
| | | | | | | |
| Earnings per share of Class A common stock—basic | $ | 1.14 | | | $ | 0.26 | | | $ | 0.51 | |
| Earnings per share of Class A common stock—diluted | $ | 1.09 | | | $ | 0.24 | | | $ | 0.48 | |
The effect of potential share settlement of the Convertible Notes outstanding for the period is included as potentially dilutive shares of Class A common stock under application of the if-converted method in the computation of diluted earnings per share, except when the effect would be anti-dilutive. Refer to Note 8, Debt, for additional information.
Shares of 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. However, shares of Class B common stock outstanding for the period are considered potentially dilutive shares of Class A common stock under application of the if-converted method and are included in the computation of diluted earnings per share, except when the effect would be anti-dilutive.
The following table presents potentially dilutive securities excluded from the computations of diluted earnings per share of Class A common stock:
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| | 2025 | | | 2024 | | | 2023 | |
| | | | | | | | | |
| Performance stock units | 120,706 | | (1) | | | 50,556 | | (1) | | | 99,718 | | (1) | |
| | | | | | | | | |
| Shares of Class B common stock | 2,434,789 | | (2) | | | — | | | | — | | |
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(1)Number of securities outstanding at the end of the period that were 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.
(2)Number of securities outstanding at the end of the period that were excluded from the computation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive.
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.