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Investors burned Shake Shack shares after the company cut its full-year forecast for a key sales metric and posted disappointing sales in the first three months of the year.

Shares in the New York-based company fell as much as 12 per cent in extended trading —before trimming its losses to trade 8 per cent lower — after it said it now expects same-store sales, a key industry metric, to remain flat relative to last year, compared with its previous outlook for growth of between 2 to 3 per cent.

However, the company lifted its revenue outlook to a range of between $351m to $355m, from $349m to $353m previously.

Shake Shack, which began as hot-dog cart in Manhattan’s Madison Square park in 2001 to support the park conservancy’s first art installation, said same-store sales fell 2.5 per cent in the first quarter, compared with Wall Street expectations for a 0.2 per cent gain. The decline consisted of a 3.4 per cent decrease in guest traffic offset by a combined increase in price and sales mix of 0.9 per cent.

“We are clearly dissatisfied with our comp result in [the first quarter], but as a reminder our small comp base is made up of only 32 Shacks, the majority of which exist in the Northeast region which was most affected by cold weather and the holiday shift in March,” Randy Garutti, chief executive, said.

Average weekly sales for domestic company-operated stores fell to $86,000 for the first quarter, compared to $90,000 the same quarter last year. But revenues rose 42 per cent to $76.7m, topping expectations for for $74.7m.

Meanwhile, profits climbed to $3.86m or 9 cents a share in the three months ended March 29, compared with $3.35m or 7 cents a share in the year ago period. The EPS beat estimates by a penny.

Shake Shack and its rival burger chains have been competing for share of the consumer wallet amid a rising preference of healthier food options.

The company’s shares are down more than 7 per cent so far this year as of Thursday’s close following a near 10 per cent drop last year.

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