(Updated at 2:38 p.m. EST with share price changes)

Shares of Shake Shack Inc. fell sharply in pre-market trading after the fast casual chain missed estimates on quarterly revenue, reported weaker same-store sales and said the transition to exclusive Grubhub food delivery was taking longer than originally planned. 

Same-store sales fell 3.6% in the fourth quarter, compared with the prior year, driven mainly by a 5.4% decrease in guest traffic. 

Shake Shack revenue rose 21% in the fourth quarter to $151.4 million, however, it missed consensus estimates of about $153 million. 

The company originally announced in August plans to consolidate food delivery with Grubhub as a single integrated partner, but by the end of the fourth quarter, most Shake Shack locations were still working with multiple delivery companies. 

"With the tech integration complete in Q4, we had originally planned for a speedier move to full exclusivity," Tara Comonte, Shake Shack president and chief financial officer told analysts during the company's fourth-quarter conference call. "Instead we decided to transition on a market-by-market basis, testing and assessing various market strategies to transition Shacks brands over from other marketplaces in the process."

Shake Shack shares were down 14%  $63 a share, in mid-afternoon trading Tuesday.

Comonte said just over one-quarter of Shake Shack locations were fully integrated with Grubhub by the end of the quarter, and about half were consolidated with Grubhub. She warned, however, that the company expected continued volatility in the delivery area for the rest of 2020, due to the phased approach of the rollout. 

Since Shake Shack announced the consolidation, it has suffered through less-prominent site placements from other delivery apps, pricing increases and in some cases removal from entire delivery markets, Comonte said.

Also, the shorter holiday season may have contributed to weaker same-Shack sales, as well as a record number of store openings, with 39 new company-operated locations and 80% of them in existing markets, contributing to reduced traffic in existing stores. 

Company executives attributed some of the margin impacts at Shake Shack to inflationary pressure in the price of beef, rising in the mid-single digits and higher dairy prices. Higher labor prices are also an issue, as the company raised average starting wages in 2019 and noted it was becoming more difficult to attract and retain talent. 

The company expects total revenue in 2020 to come in at $712 million to $720 million. 

Delays in Asia
Shake Shack also warned that coronavirus will delay openings in China, Hong Kong and other markets in Asia and said the company is experiencing an acute sales impact over the past five weeks. Asia represents one-third of the company's licensing revenue. 

The company's overall sales guidance was impacted by temporary closures of its Grand Central Station and Upper West Side (Manhattan) stores for renovations. 

CEO Randy Garutti said the chain planned to introduce new menu items, including hot Chick'n Bites during the second quarter and was testing a veggie Shack Burger, featuring 13 different vegetables, at its West Village Shack in Manhattan. 

Garutti said the company was planning 20 to 25 openings, with a focus on Asia, including a Beijing location. He cautioned that the coronavirus could impact the timing and performance of the new Shacks, however.

The company is also moving into new format Shacks, including a location on the New Jersey Turnpike. 

Cover image: iStock