Q3 2019 Earnings Call
Good day and welcome to the Fiesta restaurant Group incorporated third quarter 2019 earnings Conference call.
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Issued after the market close today.
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We begin I'd like to inform you that during the call today the company will make in various states that are not based on historical information. These forward looking statements include without limitation statements regarding the company's future financial position and results of operations business strategies, but yet projected cost these plans and objectives.
Management for future operations.
Outcomes and results may differ materially from what is expressed or forecasted such forward looking statements.
And he can give no assurance that such forward looking statement.
Let me correct.
Worried about.
That could cause actual results could differ materially from those expressed or implied by the boulder is getting them can be found as a company.
The violent.
Please know that during today's conference call certain non-GAAP financial measure will be discussed, which the company believes it can be useful in evaluating its performance.
Scott.
Such information should not be considered in isolation orders jungle results prepared in accordance with Jack.
Conciliation comparable GAAP measures is available in the Companys earnings release on the call Tonight, Cousin's, Chief Executive Officer, which stoppage, our Chief Financial Officer, Circling summary, and Chief Accounting Officer, Sherry tender and now I will turn call over to rich. Thank you Ray I like to begin by.
Coming to exceptional individual store leadership team.
There can be joined us as a new CFO brings to us is a significant experience.
Financial and operational executive in the restaurant.
Retail apparel and consumer products industries.
This includes multiple role as a chief financial officer at various public companies such as Bloomin brands.
And Sina retail group. Most recently he was CFO Hooters international the $1 billion iconic restaurant chains with 425 units globally in 25 countries.
Second opened yet joined us as a CMO, which is an entirely new position that yes.
Well. This is successful marketing executive with over 20 years of proven experience focused on developing bolt and effective brand strategies and marketing campaigns for concepts such as possible.
And Burger King most recently, she was global Chief marketing marketing Officer I apologize.
Well what is the Miami native.
And she was already a big oil tropical fan boy joining our team.
I am very excited to have these talented people on board and know that we will all benefit tremendously from their efforts in strengthening our company.
Before we review third quarter results I want to highlight a few thoughts.
The state of the business and strategic direction of the company.
She used to the future if he has to his nurturing the existing oil tropichop business and positioning that concept to achieve its full potential.
Our team has been and we'll continue to be focused on the oil business as a top priority.
Although we've had a tough year with continuing market environment cheap challenges, we're optimistic that we're beginning to turn the corner on returning to sustainable comp store sales growth of coil Tropicana driven by a refined value menu offerings.
Business platform simplification and accelerating growth in off premise channels, including catering delivery and online.
We also continue to believe that oil tropical brand has significant growth potential in existing and new markets.
We're in the early stages of beginning work with third party research firms does better positioned the brand to broaden consumer appeal, while maintaining our strong core customer follow.
This effort will progress.
Throughout 2020.
Regarding Taco Cabana, we are seeing early signs of sales transaction stabilization based on recent results.
We're in the process of simplifying the menu and operations platform to improve efficiency and customer service and will combine those efforts with continued improvement in promotional effectiveness and off premise channel sales to return to growth.
This brand has a long and successful legacy and the Texas market and the management team is very focused on regaining momentum.
As I mentioned.
We now have what we consider to be a completion very strong management team comprised of industry veterans that we'll continue to gain traction as they settle into their roles.
We believe all those factors will lead to 2020 being a better year for the company with that let's discuss third quarter results and more specific details on our growth initiatives.
As you know since boiled Tropicana Taco Cabana operate mainly in Florida, and Texas, respectively. We think it's best to compare our brands comparable restaurant sales and transaction trends. So their peer group within the markets, which we operate first as a national industry benchmark or peer reporting for their entire domestic footprint.
This in mind, we fared reasonably well despite lapping formidable year ago comparison, and notably ended the third quarter in a better position then when we started it due to a stronger September at both brands.
Starting with oil Tropicana comparable restaurant sales fell 3.8% during the third quarter versus a positive 6.5% comparison from the previous year or Alternatively rose, 2.7% on a two year stack spaces.
There's a black box fast casual, Florida benchmark for the markets in which we operate boiled tropic out were slightly below benchmark by 8.5% on a comparable restaurant sales basis, but outperformed by 2.9% on a comparable restaurant transaction basis, our focus on sales building initiatives resulted in March.
Good share growth both for the quarter and year to date, we gained 130 basis points versus the competitive set on a transaction basis year to date through the third quarter.
If we weren't exclude the plan impact that mystore cannibalization from our peer comparison, we outperformed the black box slightly by 0.3% on a comparable restaurant sales basis and by 3.7% on a comparable restaurant transaction fees.
As we noted in the press release September was boiled tropic out strongest month during the third quarter exceeding black box on both a comparable restaurant sales and transaction basis, both including and excluding cannibalization.
Tribute far strain following hurricane Dorian to the popularity of deploy all time value platform and the successful Transco state Platter LTL.
In terms of media focus our everyday value platform oil time continued as the primary campaign, that's 390 399 quarter chicken meal.
Lunch seven days a week by 99 have taken me out to dinner seven days, a week and 12 99 original with family mail or weekends. These items are featured on TV, which we all get testimonials and emphasis on freshness Ben quality.
We continue to make progress on our key sales building initiatives over the quarter, including catering delivery and online sales.
[noise] catering, but we'll try to Macau now features a new lower price menu to broaden our appeal as a compelling b to b.
B to C option and our party five coil platform places greater emphasis on party fighters various either designed to meet the need I didnt formal families and social gathering.
Oil Tropic out is also now available on easy care, the largest marketplace for corporate catering catering orders are still in the early innings.
8% of total sales in September , but growing at a healthy sequential pace.
We're very optimistic as to what catering can become for this brand and therefore investment in infrastructure, including salespeople catering hub operational units and delivery vehicles to ensure that the offering uphold our high standards for delicious fresh flavorful food that we are known for within.
Hi restaurants.
Delivery is currently available through door das to all coiled tropical restaurants, but this sales channel is still in its infancy, representing only 2.3% of our total sales in September .
We think that in time to delivery Mexican reach 10, or even 15% of sale.
Given industry data points, coupled with the fact that ARPU travel, so well and that these sales should become increasingly incremental.
We have also raise menu prices for orders placed to door to us to offset the high cost of delivery and have not seen get claims as result of that increase.
To increase efficiency, we have created rapid pick up at 36 spoiled tropical restaurants for those of ordering online for picked up themselves or for delivery via door less.
This feature has been well received and will be rolled out to all oil tropichop locations by Q1 of 21.
Although it is early in this role out we're seeing a very solid sales picked up in the locations in which we have added rapid pick up.
Notably our exclusivity Windoor dashboard wasn't tropical in Taco Cabana ends in February and we have begun discussions with additional deliveries at the service providers to expands our reach wallboard ashes a leader in the Florida market and has a meaningful presence in our largest Texas markets as well, we believe making our food available.
On a variety of marketplace platforms is important to gain share within the massive market for delivery.
Turning to brand profitability, our margin performance was solid considering the comp decline.
Absent the impact of lease accounting and hurricane impact coil adjusted EBITDA margins would have been up slightly versus last year and our dollar decline would've been approximately 8.6 million versus last year third who will provide more details in a moment.
A major operations focus for us is improving speed of service and we have a number of initiatives underway on this is Brian .
The remote Pos tablets that were rolled out early this year are enabling us to improve our drive to speed of service and guess interactions.
We will also be simplifying our menu and operations platform over the next year by eliminating lower selling menu items that had operations complexity and improving food preparation efficiency.
Finally for boil Tropicana will be remodeling about a dozen restaurants this year to better match their interior with our food quality. Many of these projects are underway and we expect to wrap up all of them by yearend.
With that let's turn our attention to Taco Cabana at Taco Cabana rest comparable restaurant sales fell 4.8% during the third quarter versus a positive 12.2% comparison from the prior year or Alternatively rose, 7.4% on a two year stack phases.
Impaired the black box fast casual pension, Texas benchmark, where the markets, which we operate Taco Cabana underperformed by 1.9% on a comparable restaurant sales basis and mirrored was appears on a comparable restaurant transaction basis.
Well I get sister brand comparable restaurant sales trends at Taco Cabana between September driven by the launch of the PC time value platform. So we ended the third quarter in a stronger position and when we started.
Based on the building momentum on the PC time platform Taco Cabana September transactions exceeded the Black box, Texas Benchmark index.
Which we view as very encouraging topline progress. The TC time platform includes the following value offerings across key occasions for breakfast to Bacon and two bacon egg and cheese tacos for $2, a 99 cents for lunch to ground beef cargos with beans and right.
For $3, a 99 cents.
For dinner two chicken for you did talk goes with means the rights for $4, a 99 cents never family weekend dining six chicken feed it tacos and six cloud as wouldn't be the rights for $14 a night.
Similar to point, we have made very good progress on our key sales building initiatives during the quarter, including catering and delivery.
Catering by Taco Cabana now features a new lower price menu of delivered delicious fresh flavorful food, but any business or social occasion. The menu. It's been rolled out to all restaurants went online at the end of September and is expected to launch an easy caters marketplace in November .
Similar foil we're very optimistic as to what catering can become for this brand and therefore invested in infrastructure, including salespeople catering help operation unit and delivery vehicles to ensure that the offering uphold our high standards for delicious fresh flavorful food that we're known for within our restaurants.
Delivery represented 1.4% of total sales burn in September .
Similar to boil tropical to offset delivery costs, we raised prices on new delivery menu.
What we see no pushback as a result.
From a profit perspective.
Oh, good banner restaurant level, adjusted Eagles, Dublin fell in absolute dollars through to the impact of negative comp sales and lease accounting changes.
Absent the impact that lease accounting tropical storm impacted restaurant level adjusted EBITDA margin would've been roughly flat versus last year and the brand successfully flex labor down in response to the sales decline.
As a reminder.
Restaurant level adjusted EBITDA is a non-GAAP financial measure.
To conclude we made strong progress during the third quarter on our sales building initiatives, consisting of menu innovation everyday value platforms and wall premise dining including online delivery indicator.
The improved sales momentum in September is only partially reflective of what we can accomplish as we've been investing for growth across all these initiatives.
We believe they will continue to accelerate results for the remainder of the year and into 2020.
Our focus will remain on building sales growth capabilities across all channels, both in store and off premise by continuing to enhance our brands attractiveness to guess, we further believe that we have an opportunity against our digital connection and interactions have therefore partner with bottle rocket three leading digital strategy.
Design development company to grow our digital business you create experiences that minimize friction within our digital product platforms.
With that let me turn the call over to start to go through our financials in greater detail.
Thank you Richard Good afternoon, everyone is this is my first conference call SBS as CFO I'd like to express how excited I am to be part of the team and appreciate this opportunity to speak to you since joining in September I had been immersing myself in all things be asked and spending time with team members that are three support centers our restaurants. These interim.
Actually it's a validated my belief that we have great growth opportunities at both of our brands and a very strong leadership team.
As I have my other public companies CFO roles, they intend to develop to develop an opening constructive dialogue with our shareholders and analysts some of whom I know from my prior industry experience. My philosophy is to be a good partner to the investment community in the be transparent and accessible I look forward to engaging with all of you as well.
Moving forward.
I also want to take a moment to thanks, Sherri candor, our chief Accounting Officer Controller, you stepped up as the interim Chief Financial Officer, and did a great job I very much look forward to working with share going forward and our chief accounting officer role and she has already proven to be a great partner with that let's dive into quarterly results.
Total revenues decreased 6% from the prior year period to 164.2 million due primarily to comparable restaurant sales declines at both oil tropical at Taco Cabana, coupled with restaurant closures as we operated 15 fewer locations at quarter end versus a year ago appear.
Yes.
We continue to make progress and off premise sales during the quarter, consisting of online catering and delivery orders, which comprised 4.4% of web traffic cows total restaurant sales and 3.6% of Taco cabanas sort of restaurant sales and the third quarter 2019.
These results compare favorably to the 1.7% and 1.4% of total restaurant sales for boil Tropicana and Taco Cabana, respectively in the third quarter 2018.
Our net loss was 22.2 million or 0.84 cents per diluted share, including a 0.84 cents per diluted share negative impact from 3.3 million an impairment charges 21.4 million a noncash impairment of goodwill and point 7 million in close restaurant rent charges net.
Income tax benefits of 3.8 million.
Compared to net income of 2.0 million 4.08 cents per diluted share in the third quarter of 2018.
On an adjusted basis net income was point 2 million or 0.01 cents per diluted share and would have been 0.02 cents higher absent lease accounting changes.
This is compared to an adjusted net income of 3 million or point 11 cents per diluted share in the third quarter 2018.
Please see the non-GAAP reconciliation table in our earnings release for more details.
I'd like to highlight a few significant cat significant accounting items in the quarter.
As we noted in prior quarters, the new lease accounting standard impacted our results of operations. The summary level Gifford leaseback gains that were previously amortized as a benefit to rent expense were eliminated amortization of deferred gains from sale leaseback transactions for the three months ended Septemberthirty 2018 total.
Approximately point 4 million and point 5 million for coiled Tropicana and Taco Cabana, respectively.
We also have a number of close restaurants for which we had previous reserves. It would not have recognized current period expense under the previous accounting standard.
This reserve was recorded as an adjustment to the right. It used to assets, we adopted the new lease accounting standard and rent expense related to closed restaurants is now recognize each period.
Close restaurant rent expense net of sublease income for three months ended September 29, 2019, so to the point 6 million end point 1 million for quite a tropicana in Taco Cabana, respectively.
Finally, we recorded an additional goodwill impairment for Taco Cabana in the quarter, the 21.4 million non cash impairment charge resulted in a whole impairment of Taco Cabana reporting unit goodwill and had an unfavorable impact on net income of 19.3 million or 0.73 cents.
Per diluted share third quarter of 2019.
Additional details regarding the impact of these significant accounting items can be found in our earnings release as well as the 10-Q.
Consolidated adjusted EBITDA margins decreased to 120 basis points versus last year. However, the year over year comparisons are difficult due to accounting due to the accounting changes I've noted as well as the impact of the hurricane.
After factoring in those items, our total company consolidated adjusted EBITDA margins would've been down only slightly compared to last year and this decrease was driven by the timing of incentive compensation accrual adjustments.
As a reminder, consolidated adjusted EBITDA as a non-GAAP financial measure.
Now turning to our individual brands.
The player traffic count comparable restaurant sales decreased 3.8% compared to 6.5% increase a third quarter of last year.
This year's decline consisted of a 2.7% decreasing comparable restaurant transactions and a 1.1% decrease in average check inclusive of approximately 1.1% in pricing.
Which was more than offset by lower sales mix, that's a lower price point of time offerings, which accounted for 11% in total sales was the primary cause of the lower mix.
Hurricane Dorian negatively impacted comparable restaurant sales by approximately 150 basis points. We also experienced an estimated 80 basis point impact during the third quarter from cannibalization within our core South Florida market, particularly in Broward County, where we have opened three player traffic restaurants.
Over the past year, and a half and are not yet and the cost base. However, we view new development, excluding the cannibalization factor as a positive for the brand overall since it allows us to enhance the guest experience while growing our total share in the market.
As rich indicated we ended the quarter with positive momentum, it's clear traffic how comparable restaurant sales were positive for the period after the hurricane and we outperformed the blackrocks benchmarks on both a comp sales and a transaction basis in September .
Turning to the brands profitability player traffic, how restaurant level adjusted EBITDA, a non-GAAP measures defined in our SEC filings decreased by 1.4 million or 17.8 to 17.8 million or 20.1% of restaurants sales from 19.1 million or 20.4% of restaurant sales last.
Here, there was a point 4 million negative impact associated with adopting the new lease accounting standard and an estimated point 6 million of lost profit because of hurricane door. It.
Absent the negative impact of the hurricane and lease accounting changes restaurant level adjusted EBITDA margins would've improved.
Maximally 80 basis points.
As a percent of restaurants sales square traffic out benefited from lower cost of sales because a favorable commodities, particularly chicken.
Led by higher for your time and loyalty discounting and lower our anam expenses due to outsourcing and reduced internal head count.
However, in addition to the negative impact of lower comparable restaurant sales the brand experienced higher restaurant wages and related expenses due to rising wage rates in the greater use of overtime and higher other operating expenses due to increased third party delivery fees and contracted cleaning services.
We have traffic our adjusted EBITDA decreased by 1.6 million to 11 million in the third quarter 2019, but would have been point 4 million higher absent accounting changes, resulting from adoption of the new lease accounting standard.
In addition to the lower restaurant level adjusted EBITDA referenced a moment ago. We also experienced higher DNA expenses due to the timing of incentive compensation accrual adjustments and investments in off premise support.
Absent the impact of Lisa County in the Hurricane our adjusted EBITDA margins for polio, what had been up slightly versus last year.
At Taco Cabana comparable restaurant sales decreased 4.8% compared to Q, a 12.2% increase in the third quarter last year. This year's declined consisted of a 5.6% decreasing comparable restaurant transactions offset by a 0.8% increase in average chat.
Increasing average check was due primarily to menu price increases of 1.4% and the introduction of higher price shareable items, partially offset by discounted pricing for the Tc time value platform.
We also note that the severe weather in the form the tropical storms resulted in store closures due to flooding, which resulted in a negative comparable restaurant sales impact of approximately 20 basis points.
Similar coil traffic counts comparable restaurant sales at Taco Cabana demonstrated solid improvement in September compared to the previous two months of the quarter driven by the launch of Tc time.
It into the brands profitability Taco Cabana restaurant level adjusted EBITDA, a non-GAAP measures defined in our SEC filings decreased by 1.1 million to 6.9 million or 9.2% of restaurant sales from 8.0 million or 10% restaurant sales last year.
There was a point 5 million negative impact associated with it the adopting the new lease accounting standard absent the negative impact of lease accounting changes and flooding due to travel the storm severe weather restaurant level adjusted EBITDA margins would have been essentially flat compared to the year ago period.
As a percent of restaurant sales Taco Cabana incurred a higher cost of sales due to increased discounting and promotional activity higher advertising expense due to increased media spend and higher other operating expenses due to third party deliberate delivery fees. In addition to the negative impact of lower comparable restaurant sales.
These were partially offset by lower restaurant wages and related expenses due to improved staffing utilization there was partially offset by higher wage rates and overtime as a percent of restaurant sales.
Taco Cabana adjusted EBITDA decreased by 1.3 million, it's a 1.2 million in the third quarter 2019, absent accounting changes, resulting from the adoption of the new lease accounting standard adjusted EBITDA would've been point 5 million higher.
In addition, we also experienced tire DNA expenses due the timing of incentive compensation accrual adjustments and investments in off premise support.
During the quarter, we recorded 3.1 million of non cash impairment charges, primarily related to underperforming Taco Cabana restaurants, and the 21.4 million noncash impairment charge to write down the value of the goodwill for Taco Cabana.
One final comment on the trend of the business third quarter results began to show only the partial benefit of the progress we're making on driving comparable restaurant sales as a result of our new product and promotion innovations and investments in off premise, particularly catering we expect to see the benefits that.
The benefits of that traction more fully in the fourth quarter and 2020.
Turning out of a few additional financial lives, we announced in our press release, an increase in that in the share repurchase program of an additional 1.0 million shares of common stock, bringing the total authorized shares for repurchase a 3.0 million shares. This additional repurchase authorization underscores our intend to improve.
Shareholder returns by deploying capital for continued share repurchases going forward.
Under our two previous authorizations, we have repurchased approximately 1.2 million shares of common stock since February 2018, including over 900000 shares during the third quarter itself. Following this increase there now approximately 1.8 million shares available for repurchase.
Please note that the number of shares repurchased in the timing of repurchases will depend on a number of factors and that the program also has no timeline that it may also be modified suspended superseded or terminated at any time by the board of directors.
With respect to development and capital expenditures, we maintain our we maintained our plan to open three pollo tropical restaurants, and three Taco Cabana restaurants this year.
We now expect to be at the bottom half of our previous 2019 Capex range of 45 million to 55 million. This year recall that our expenditures for 2019 included 11 million to 13 million to develop new company owned restaurants, 10 million to 12 million to implement IC and other systems projects and 1 million and.
Catering equipment. We're also investing 16 to 18 million for restaurant remodeling at both brands, including equipment to support new menu platforms that other facility enhancements as well as $10 million to $11 million per capital maintenance.
From a liquidity perspective, the company has more than adequate borrowing capacity at 77.3 million available on our line of credit as of the ended the quarter are simple leverage ratio defined as our revolver balance divided by adjusted EBITDA as defined in our loan agreement is low at 1.15 stops.
Looking ahead. The next year, we would expect our 2020 Capex ranked capex range to be about 5 million to 10 million lower than the current year due to lower expenditures for new equipment and facility enhancements and fewer new company owned restaurant openings.
But we're not prepared to provide any other specific forward looking comments areas. This time, we had our capex plans directionally, we can say that we expect stable food costs for the remainder of 2019 and 2020 versus the prior year based on supply commitments in place across key commodities, we own provided.
Additional details on our plans for 2020 early next year.
Thank you for your interest with the Essar restaurant group.
We look forward to meeting many of you at the Stephens Conference next week, and we will now open the lineup for questions operator.
Yes.
I will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up your handset.
Pressing the keys if at any time. Your question has been addressed in do you would like to withdraw your question. Please.
Please press Star then to at this time, we all pause momentarily to assemble our roster.
So first question comes from.
Well slot bought with Stephens incorporated.
Please go ahead.
Yeah. Thanks, Josh.
And in improvement in September at both brands I think you said.
Good morning.
Good morning, if you could give us some additional color in terms of the level of improvement there and if that continued into the quarter today.
Yes, so just in terms of our overall trend.
In October we can say that.
The trends that positive trends have continued.
Four point a topic, how we have outperformed the benchmark comparison.
Both the traffic and comp sales basis to date in October and at Taco Cabana, We've outperformed the benchmark index on a transaction basis.
Just in looking at the overall trend over the course of the quarter for the two brands. This is the third quarter. If you compare the July August trend.
To the September trend within the quarter Onpoint, Tropicana improved 155 basis points on its trend.
From July and August combine to Q September .
And Taco Cabana improved 240 basis points from the July August combine trend to September .
Got it thanks for that.
One other question if I could.
Can you talk a little bit more about your recent approach to value I know you've had some changes there.
And how you're thinking about the current strategy that we've seen recently.
Versus any change.
To be made going forward.
Sure.
Hey, well it's rich.
The point of time platform has been significant.
To the brand.
It is especially in difficult times as we see right now in South Florida. As you know is just now to Knapp track on the year to date the worst performing.
The tie between Honolulu, Hawaii, and Miami, Florida, So there's no doubt.
Time value offering has been significant with that though I'll say that we did test launch going from 399 to 449 with no negative impact down here in Miami Dade and we have now affected today raised that price the for 49 throughout the entire company.
So I don't like the raised prices, but.
I do see that discount a bit is helping us out.
The other thing is that we've just launched today was an 899.
Platform Grill Master trio and includes our stake item and includes the quarter chicken.
Bone in chicken and includes a chicken sausage right beans, and planting for 899.
Early we'll see what happened, but we still keep the oil kind platform as well as offsetting that with some.
Higher priced more protein food related items as we have right now with the Roadmaster trio.
Got it thank you.
Thanks will.
The next question comes from Joshua along with.
Piper Jaffray. Please go ahead.
Great. Thanks for taking my question exciting news to have the executive team filled out welcome aboard.
Good to see what initiatives that ideas you have I realize it's early but was curious if you might be able to share some early thoughts on the Brandon.
Portfolio brands, where you think theres opportunity.
Anything that can give us sense for what we might be able to expected.
Work on the operational initiatives you outlined and then also as we start thinking about the longer term model.
Sure as this historic so I mean, I think I would say that.
Both hope and I are I really excited about.
About the opportunities here and.
I can't say enough about the quality of the management team I mean at a general level the strategies in the priorities.
Rich laid out at the beginning of the call.
Really are what the entire team is focused on and frankly that those opportunities where the app. We're one of the main drivers along with the quality of management team I think and in both.
Opened I join in joining the team I think both of us.
See opportunities for us to more fully implement best practices, you know that we've seen at other.
The restaurant companies in our pass.
So from my perspective, and I think this is all this is a joint effort that open I will be working on.
In the that we think that we can refine and kind of hone in on is.
More impact more effective revenue.
Optimization analytics, so we were going to be working on optimizing our pricing and our promotion strategies I think brothers feel like we're on the right track, but there is some opportunities there for us too I think b.
Be more.
Deploy a higher level analytics.
Also.
Yeah, I think in terms of.
Our.
Where traffic how repositioning there again.
I hope and I, both in been involved in and repositioning efforts before different brands and I think we're going to bring that experience to that effort.
And I think we very much look forward to getting that work done as we head into 2020.
Great. Thank you for that curious on.
Any sort of investments or additions on your teams to help kind of make some of those revenue optimization.
Initiatives possible just trying to get us that's for the potential timeline of when we might be able to see.
A lot of these ideas come to fruition.
Sure I'd say on the staffing front.
Not not immaterial level of staff increases to I think to implement those strategies, we are evaluating bringing in.
A big data research firm to help us just run some of that some of the analytic.
Support behind that but behind that effort, which a lot of lot of the companies in the restaurant retail space of use third party firms to really do the and the sensitivity and regression analysis is required to actually do the analytics.
Great. Thank you and then one larger term one for me in terms of the opportunity to grow Oreo, both in new markets and existing markets haven't filed the brand for a while now we've seen some different opportunities over time, where the brand has expanded outside of its core markets curious on what we've learned over those.
Last couple years in terms of doing research due diligence and how we might start thinking about what that growth would look like for poor you're going forward.
Hi, its rich that's what this heavy research going forward.
As it relates to the food as to exactly what brand positioning we need to have in core versus what brand positioning we have outside the core in Florida as well as the brand positioning and other new markets and that's a to be determined and we'll keep you abreast as we move forward, but that's the major focus will be on the repositioning of boil gone.
We do not want to make any mistakes were made in the path.
And we feel very strongly as do the people that be when talking to about the potential at oil because of the food and the taste and healthiness of ARPU products.
Great. Thank you that makes sense and one last spring for me excited about the 12 Remodels oil this year, how much of the base needs to be touched after you go through these 12, remodels and how should we be thinking about kind of the look feel changes that will be going on at this dozen or so units is that consistent with what we've seen previously or there's some new.
Bells, and whistles, new positioning how anything you'd be able to share there.
Well right now again, it's rich.
We're projecting for next year, probably about the same amount of Remodels.
We don't have the work done yet what the new positioning brand may or may not look like so right now. It's just again about the same number about the same capital Capex that we spend in the normal type of remodel program right.
Thank you so much.
Thanks.
Okay.
Again, if you have a question. Please press Star then one.
The next question comes from.
Brian Vaccaro with Raymond James Please go ahead.
Hi, Thanks.
Circle back on oil time and.
No I know, it's still early days.
But could you elaborate on the sales mix that you're seeing in each brand within those programs and do you think thats the right balance on value for each and the current environment.
Sure. So in terms from the mix perspective, the the polio mix is trending at about 12% of total revenue.
The and it's early days on Taco.
We just launched in September , but the Taco mix is running at about half that 6% to 7% or the total mix I'm sorry could you repeat the second part of the question, Yes just.
And maybe it's rich.
Thank you struck the right balance.
Are you comfortable with that level of sales mix on the plan side.
Thank you need.
The current environment I'm I'm very comfortable to date, because its consistent weekend and we go.
It's almost like a guaranteed platform the value platform again keep in mind, and where we're where we are currently doing business. When when you have 90% in restaurant level EBITDA is in three counties in South, Florida, which has been negatively impacted on various socio economic conditions.
That's what we have to do right now based upon.
The social economic conditions, the competitive intrusion HHS delayed we think we are positioned just where we should be.
But again like we're doing right now offering some higher priced items to offset that and it's too early to tell us that will be successful.
Okay, and then on the commodity outlook could you elaborate a little bit on on the contracts that are in place over the key proteins looking into 2020.
Sure so I'm in a broad level.
We've locked in about 80% of our total commodity complex for the year.
We're pretty happy with that I think we're actually a little bit ahead of schedule from where we've been in prior years.
And.
As we said.
We're looking at pretty stable year over year costs, as we look out through 2020.
Alright, thank you.
This concludes our question and answer session I would like to turn the conference back over to Rafi all gross for any closing remarks.
Thank you so much for your interest and yes, the restaurant group and have a good evening everyone.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.