Shake Shack (NYSE: SHAK) shares plummeted 5.16% in the pre-market trading session on Friday, February 21st, 2025, following the company's mixed fourth-quarter 2024 earnings report and tempered growth outlook for 2025.

The fast-casual burger chain reported revenue of $328.7 million for Q4 2024, up 15% year-over-year, driven by the opening of 19 new company-operated Shacks and a same-Shack sales growth of 4.3%. However, the company's net income fell by 50% to $10.2 million compared to the previous year, which missed analysts' expectations.

While Shake Shack's restaurant-level margins improved by 290 basis points to 22.7%, the company's profit margins were impacted by higher labor costs and increased advertising expenses. Furthermore, the company's pre-opening costs for new Shacks rose significantly, weighing on its overall profitability.

For the full-year 2025, Shake Shack issued a revised guidance, tempering expectations for revenue and earnings growth. The company cited headwinds from inflationary pressures, particularly in beef prices, and lingering impacts from recent natural disasters in key markets like Los Angeles.

Investors also expressed concerns about the company's ability to sustain its aggressive expansion plans, with plans to open at least 1,500 company-operated Shacks over time. While Shake Shack remains committed to its long-term growth strategy, the higher costs associated with new restaurant openings and operational challenges in the near term have dampened the market's enthusiasm for the stock.