David Tarantino: Hi. Good morning. My question is about the October sales trends. And I specifically wanted to ask about the marketing and promotions that you called out. Can you just maybe explain what you did in October that maybe you haven’t done before or what drove the improvement in traffic and whether that’s a new strategy you think you can employ as you think about the go forward? Thanks.
Randy Garutti: Yes. Thanks, David. Some of the things are new. Some are just kind of the shifting of things we’ve done before at various times in the year and employing some of those tactics. So lots of different marketing on all channels as we tee up, of course, LTOs pushing that. And we noted that was a little bit of a pressure for lap, but it always begins with that. Stories we can tell. A few other things we’ve been leaning into additional performance marketing. We’re finding good success and strong returns on our ad spend in various performance channels. We’re doing various regional marketing in areas where we think we can go deeper and really hit a city a little bit harder, more directed in lots of performance digital ways.
Those tactics we continue to spend on and open up some ad spend as we prove that those have good returns and we’ve done that. Various things on different types of offers that feel good for Shake Shack, for instance, we did Free Fridays in our app channels, right? So that drove some strong uptick on Fridays where you could get a free fry when you order on our channels. We have an afternoon BOGO shake. And then we’re doing various things with our delivery service providers as well, where we see potential impact. So when you really look at it, it’s a balanced marketing approach towards the things that we believe work for us. We’ll keep doing some of that as we go. And it’s still a lot of test and learn. Traditionally, we have not been a company that spent a lot of money on true advertising.
And it’s time for us to ramp those up. We see that money being well received and strong returns on that. And we expect we’ll continue to do that in this quarter as well as we plan into next year. Doing it with discipline, but opening up as we scale as a company, there’ll be greater opportunity for us to spend better on marketing.
David Tarantino: Great. Thank you.
Operator: Our next question comes from Brian Mullan with Piper Sandler. Please go ahead.
Brian Mullan: Hey, thank you. Just had a question, if there’s a search for a Chief Operating Officer, is there a search going on? And maybe what are the key characteristics or factors the executive team and the Board is using or looking for in terms of finding the right candidate for Shake Shack?
Randy Garutti: Thank you. That’s a great question. And let me just start by saying our current operational leadership team is deep tenured and strong and doing a heck of a job continuing to run things in the absence of a direct COO at the moment. And I’ve obviously involved myself quite a bit more and a lot of our executive team jumping in and really supporting operations. So they are doing a great job. We’re looking for the next great COO and we have an incredible bench of candidates that we’ve been vetting, talking to and considering. And we’re going to take our time on this search. This is a critical position for the company. We expect to hire someone with deep operational expertise and who will help us continue the strategic plan that we’ve shared today. So we’ll look forward to it. I expect it’ll take some time and we’ll keep you posted as that gets closer to being finalized.
Brian Mullan: Thank you.
Operator: Our next question comes from Anisha Datt with Jeffrey Bernstein. Please go ahead.
Anisha Datt: Hi. Sorry. That’s for Jeffrey Bernstein at Barclays. This is Anisha on for him. Thanks for the initial unit growth guidance. Conceptually, how do you think about [indiscernible] in a challenging macro? And is there any change in your desire over time to focus on big cities and major metros, presumably suburbs, and drive throughs being more relevant?
Randy Garutti: Yes, all the above. I mean, if you look at the last couple of years, that’s exactly what we’ve done. We do certainly believe in urban centers and we’ll continue to grow shacks there as we have. But the majority of our growth is coming outside of traditional urban centers, suburbs and some level of drive throughs. And we’ll keep you posted on that. But we think 40 is a great number of company operated next year. I think that really balances us out similar to this year, keeps a strong class moving forward. I mean, we open almost 80 restaurants this year, totally worldwide. That’s a pretty strong unit growth. And we expect to be similar in that mid-teens unit growth next year. And we think that’s right as we also spend time to continue to refine the cost to build our profitability and this uncertain sales environment as we head into the next year.
We think that’s a really good number to appropriately focus the company on continuing to be a growth company while getting more and more profitable.
Anisha Datt: Great. Thank you.
Operator: Our next question comes from Brian Vaccaro with Raymond James. Please go ahead.
Brian Vaccaro: Hi, thanks. Just a quick follow up, Katie, on the 4Q revenue guidance. Could you be a little more specific just on what you layered in from a seasonality perspective? I’m just curious what you consider “normal seasonality” and also what you’ve layered in as it relates to your NSO sales performance? I think that’s outperformed your expectations this year. But correct me if I’m wrong there. Any help on those two would be great. Thank you.
Katie Fogertey: Yes, sure. So October better than historical seasonality in our guidance is kind of a return to more normal seasonality, kind of with where we would have been in October, kind of without that big boost at the low end and then carrying through some of the recent momentum towards the high end, but assuming normal seasonality. There’s some puts and takes there on the non-comp side that I think are important to just reiterate. So first of all, on development, we’re going to have – we’re expecting to have a little bit more of a back end weighted opening schedule in the fourth quarter. So that will skew some of the contribution from new Shack openings in the quarter versus if you were to assume kind of a midpoint opening.
And then the second point is we had 22 NSOs in the fourth quarter of last year and they opened up very strong. And those sales have settled to good levels. But that will continue to also be something to think about as you’re modeling for the fourth quarter.
Operator: There are no further questions at this time. I would like to turn the floor back over to management for closing comments.
Randy Garutti: Thanks, everybody. Really appreciate you taking the time, especially on this busy week. I know everybody’s got a lot going on. So thanks so much and we look forward to seeing you in the Shack soon. Take care.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
