Shake Shack closing 5 LA stores amid falling sales, new wage laws

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Shake Shack’s YoY trailing 8-week sales growth in Los Angeles decelerated 18.2 points from mid-April to late September 2024, compared to roughly 3.4 points nationally according to Earnest credit card data. This worsening performance disparity comes as Shake Shack announces the closure of nine company-owned restaurants, including five locations in Los Angeles. Shake Shack attributed the closures “in part due to changes in the trade area and, in some cases, [locations that] are negatively impacting other Shacks within their proximity by cannibalizing sales,” which broadly aligns with credit card spending trends. 

The closures also come as a new California law implemented in April increased minimum wage for fast food workers 25% from $16 to $20 an hour. Customers only spent 4.8% more YoY in August 2024 at Shake Shack locations in California.