Q1 2020 Earnings Call
And that undo reliance should not be place on such statements are forward looking statements speak only as of today's date may 7th 2020.
We undertake no obligation to publicly and update or invite any forward looking statements or to make any other forward looking statements, whether as a result of new information future events or otherwise unless required to do so by the securities laws investors to refer to the full discussion of risks and uncertainties associated with bored looking state.
Contained in the company filing with the Securities and Exchange Commission.
Thanks Renault.
As we all know our business was turned upside down in a matter of weeks in March as the Corona diverse pandemic too cold across the United States and to Crow.
Given the business updates we've provided since the onset of the virus I will summarize the steps we have taken in adjustments we have made in our business and how we are executing in the early days of the gradual reopening of dining rooms in our restaurants.
We first started restricting dining kid capacities in enacting social distancing practices, and then or restaurants in the first two weeks of March.
Government restrictions put in place over the following two weeks legend full closures of all of our dining rooms, leaving us with only delivery and take a channels to drive sales.
Pre crisis are off kinda misrepresented about 10% of our revenue or roughly $11000.
Our sales reach their lowest level in the fourth week of March ending 324.
Declining 82% year over year, and reaching a weekly average of approximately 21300 for a restaurant.
Yeah.
By mid March we are already implementing cost savings actions that new we had to push further in order to conserve cash in rigid reduce our burn right.
Early on we quickly eliminated discretionary G.N.A. spending stopped all non essential capital expenditures, including halting construction activity on three new restaurants, and temporarily delaying or canceling all other new restaurant opening for 2020.
In total we currently have only one incremental assigned lease obligating us to open a new restaurant beyond the three we recently postponed.
We also suspended our dividends pleaded to be paid March 24th and future quarterly dividend in share repurchases.
Scaled back our marketing and media spend significantly.
And unfortunately, the severity of the situation necessitated us temporarily temporarily laying off roughly 16000 of our approximately 21000 hourly team members and Furloughing roughly 200 of our restaurant managers.
And that are at restaurants support centre in Huntington Beach, we furloughed approximately 20 per cent of our staff and implemented salary reductions ranging from 10% for team members, making more than 100000 per year.
220% for our senior team and board of directors.
These were difficult and painful choices for sure, but consistent with our strategy throughout all throughout all of this to do what it takes to address the near term challenges well positioning D.J.'s to emerge from the pandemic with strength.
We then set out to work on our plan to keep as many of our restaurants open as possible and in so doing Keith as many of our team members working as possible.
Our first decision in this regard was to reduce the number of menu items available from about 145.
<unk> 85.
This enabled us to provide our guests with the quality the quality they've come to expect but at staffing levels well before the below our norm.
Our operations team stepped up to an amazing fashion learning each and every day better ways to approach and execute in this new reality.
Through our operations leadership, and the hard work and problem solving creativity of a restaurant teams, we have been able to keep all but four of our 209 restaurants operating today.
And the sales volumes of our off premises business have nearly tripled since the started the crisis.
Proximately $31800.
Side from strong execution at the restaurant level or commentary and marketing teams quickly assembled new product offerings.
Bundles and promotional price points that up clearly resonated with our guess.
Or six dollar chilled to do entrees introduce late last fall are half off large pieces, all day, and every day and our family feasts, which feed four to six have all of them names days of our sales each day.
We have also so sold more of our award winning beer to go than ever in six pack hands, along with new disposable Growlers price attractively at $12 for 64 ounces.
We've also promoted our 10 dollar bottles of wine to go along with higher price varietals also available at price points competitive with like guess, we pay at local retail.
All of which speaks to the nimbleness of our team despite more than doubling our revenues since 2000 in 10.
Worked hard to not lose the decision, making and speed to market advantages, we've always used to our benefit.
While our overall check is a bit lower year over year are off premise check is higher by approximately 15% from <unk> levels do to large parts of these recently launched an expanded check building add ons.
Our current level of promoted items have led to hire promotional mix.
28% versus 12% <unk>, but the favorable food costs of selling a higher mix of pizza pasta and less than or the play proteins has resulted in a cost of sales similar to ours steady state.
Mm.
D.J.'s top line growth combined with our limited menu in our operators obsession with running our restaurants safely for our gifts and team members resulted in a reduction of our burn rate by nearly half to a level of approximately 2.5 million per week.
The next phase we have begun is the gradual reopening of our dining rooms across the country.
Over the last week, we opened our Texas, Florida, Tennessee, Oklahoma, and Kansas restaurants to partial dining rooms.
Are most substantial data set comes from Texas, which opened last Friday, two dining area said at 25% capacity.
Our dining rooms are typically larger than our competitors and we have less fixed boom seating then most as well.
Both are nice advantages, enabling us to provide a safe environment for large number of guess.
The Great news is as we expected guests are eager to get back out to a social dining experience and they are doing so in a manner that respects the prudent safety protocols. These times demand.
Sales levels are encouraging even at these low levels of effective capacity.
In early results, we've not seen a decline and off premise sales. After these dining rooms have reopened in fact off premise sales are modestly higher when compared to the average sales from same days in the three weeks prior to the dining rooms being reopened.
And remember these off premise sales are me that we're maintaining our growing or roughly three times is higher than our premise sales at the start of the year.
So we believe the dining in off premise sales are largely independent at least in this current environment, where certain gas excited to return to our to the social experience of dining out.
In other still using take out and delivery orders to feed themselves and their families in the comfort of their own homes.
Time will tell but we're hopeful that guess, but have now enjoyed the convenience of take out and delivery from V. Jones will continue to do so in addition to dining and say well. After this crisis has passed.
We have a comprehensive plan in place to ensure the safety of our guests and team members. So are great food and serve as can be enjoy with a high degree of comfort and security.
Our recent technology and <unk> digital investments are serving as well in the current environment. So we can provide our guests in experience, which is that touch lists as possible.
We're taking reservations by phone and through our website and.
We have moved our host outside our Entryways to meet our guess what with mobile Weightless management devices and utilizing text communication to let guess know when they are able to be seated.
In addition, we're encouraging them to download our menus to their phones.
Text link Q.R. codes and website landing pages, which eliminates the need for any physical touching of menus by our I guess and also enables us to link their check processing and payment directly to their mobile devices.
And guess or quickly adopting and using digital payment as a result, which adds convenience and improve speed at the end of the dining experience.
Undoubtedly there's opportunity for further into the innovation as our guess preferences and needs evolved beyond this crisis.
We look forward to more partial dining room openings beyond these first states and are driving to the next milestone in all of this to achieve cash flow break even if the company level.
At our current management staffing levels, which average a bit less than five managers per restaurant.
We believe our average weekly sales levels needed to reach.
Two needs needed to reach about 65 k. per week to attain causative cash flow for the company.
Including corporate costs and current levels of Catholics there.
We were averaging about 30 k. per week before starting to reopen our dining rooms.
While it's less than a full we'd since Texas riocan, it's dining rooms that only 25% capacity or dine in sales in Texas, or adding roughly 20500 of additional weekly sales.
As more dining rooms, riocan permitted capacities grow.
We expand our menu closer to our pre coded offerings, we can see a clear path to reaching this next milestone in the near term and continuing to grow well beyond it.
In terms of liquidity I previously mentioned that we're running about negative 2.5 million per week prior to dining room openings.
Initially, we don't think dining rooms limited to 25% capacity will improve that run rate and impact may put some near term pressure on that level as the costs involved in safely opening or significant.
However, we're confident and we will see steady improvement as effective capacities grow to 50 per cent and and the.
The end of last week, we announce inequity rays of $70 million through the sale of common stock to Ron shakes, a pack three holdings and findings and accounts advised by T. Rowe price associates.
We are grateful for the confidence expressed by X. three M.T. Rowe price M.B.J.'s long term outlook as we begin reopening our dining rooms and continue to deliver that delicious food.
Excellent dining experiences and gold standard guess service and hospitality that guest have come to love and expect from D.J.'s.
Before I turn the call over to Greg on behalf of the executive leadership team.
Our board and all of our stakeholders I Wanna again, thank all of our restaurant in operating teens and everyone at the artist C. for their unique ability to deliver D.J.'s gold standard level of of gifts service regardless of the circumstances.
We stand by each one of our team members and loyal guess and look for two resuming normal operations as conditions permit.
And with that altering the call over to Greg.
Right.
Greg mention things are very different if it hadn't press and at times.
I'll keep my commentary on Port Hawaii.
Provide from top level highlights before we transition.
<unk>.
The second quarter Ace I've only seen today on we can save a V.L.
Including capacity restrictions.
Measures as well can update have a certain position.
Yeah.
Situation with the different tiny estate reopening coupled with national state and local strict local districts and.
Challenging to provide E.V.L. visibility on the second quarter Ernie I think her in time.
[laughter]. Please remember that all this commentary today is subject.
An uncertain associated with forward looking statements.
Okay.
<unk>.
From a cue one perspective as being a in today's passionately are comparable that sounds sales through February positive winter and a half percent.
<unk> sales in the first weeks at March I can see my worried around to buy it around the virus.
Impact traffic.
Washington, You can't tell on the earliest stay at home orders, followed quickly by northern California, and stuff like that neither back to California, and then the entire country.
<unk>.
First as Cogan he started to dominate the airwaves, it's ultimately glad to all of our last time so.
Food and beverage.
Takeout until every channel.
As a result.
<unk> <unk> down approximately 40%.
<unk> decline of more than 15% that's a quarter.
Prior to last switching to an apprentice yes.
Margins are fairly consistent with the prior year cost a sales was in the mid 24% range to February and this is off study wage pressures are <unk> pretty much in line with the prior year.
As we put it into an Oh, there's a.
We can sales average for all of March declined to 70000, Toby and that's compared to more than 115000 per week in March of last year.
As a business to leverage against <unk> sound bite variable costs paid and we had for negative working capital costs remarks sales decline, we adjust our operations.
Aligned with the sale of levels, including a limited menu you scheduled environment.
Eliminating all non essential span in a restaurant.
Yeah, I can quickly demands that sound level, resulting in praise we can cast on raising a 2.5 million level right previously outline.
Additionally, as part of a temporary last.
We can't put it in in an emergency paid time off program 14 members, who are not eligible for a second paint benefits under state and local laws.
As a result in March we incurred almost $5 million of additional labor as long as we paid out.
Point 7 million.
T numbers, which includes the new emergency paid time off program as well as opposed to paintings in time.
We have also continued to find a portion of health insurance and offer a restaurant see benefits.
Yeah.
Kicking forward to today, we have 55 restaurant or 27% or 205 operating restaurant.
He opened in operating under capacity restriction.
Included in this first wave every opening their taxes 10 Bucks to Florida.
He lives it stays behind California.
Okay, Texas and the areas, where we are hoping for dining room service in Florida are allowed to operate at 25% capacity.
You think that's most current week and a small sample yeah very encouraged with additional sales increase since we are saying Oh.
<unk> and processes that are often the sales line <unk>.
I mean pretty consistent.
Even increased slightly recover week as <unk> reopening our dining room.
Oh, Yeah spread commented earlier, we believe that we need our sales to reach about $65000 a week cash flow breaking then.
<unk>.
<unk>.
Corporate Cos it also.
Manage their cars.
In the menu we have a place it's sounding name recognition any additional cost for personal protective equipment for our team members.
Yeah.
Ask was.
Away many sanitizers alright.
Well he's our only estimates if we continue to hold on a large percentage of our our private sales even at certain times realtime.
<unk> very attainable in order for us for 10 minutes and generating positive cash flow.
I think the guy so eloquently, we currently have 134 million on our balancing.
<unk> phonetically off any kinda full drawdown online.
In line of credit.
We also ended our current line of credit to provide additional flexibility for during this time.
As part of this amendment on leverage and fixed.
Capital waiting for the second and third quarter.
Yeah, I agree that started in the fourth quarter I'm, a mental spaces in the beginning believe in November.
For more details on our menu credit agreements see see our findings with the S. and see what's the file.
<unk>.
In regards to capital expenditures <unk> cap x. for the time game.
Do you have one restaurant under construction, which is close to 80% complete.
Currently anticipate opening this restaurant sometime later this year.
Restaurant in Cleveland market, we Oh, the underlying land. So we have total flexibility as to why do we well up in this presentation.
The opportunity to monetize underlying real estate.
Well.
A couple of block before you turn it over the question.
I try to mention a passionate commitment I'd like to members is unparalleled in casual dining.
We were able to pick it out hopping bottles and comedy saving if our gas and our team members five simultaneously rolling off Kremlin sales and you got into 100%.
Yeah, now beginning to slow it'd be open a restaurant based on the local for it is.
<unk>.
Are leading edge technology allow us to provide our gas.
Checking <unk> payment options directly sounds I phone, but do not take away from the personal service level I guess expect from James.
Additionally are large restaurants are flexible feeding give us a competitive advantage to be able to welcome more yeah, I can try restaurants to to enjoy the great <unk> food here, Yeah service in a dying and Betty.
He attributes that are strengthened balance sheet and being good is poised to take advantage of the opportunity to continue taking market share your casual dining the three four years huh.
Okay.
For question.
Thank you if you would like to ask a question simply press to start key followed by the Cook at one on your telephone keypad.
So if you're using a speaker phone. Please make sure give me some is turned off till I or signal tray tar equipment. Once again pressed star one at this time.
Well first care from chat free Bernstein of park place.
Yeah.
Great. Thank you very much.
Couple of questions.
And I'll be free in terms of the most recent investment you took in.
Clearly run shaking the pioneer and we hold them in high regard from his days with an air so congratulations on that would that fit I'm. Just wondering how you evaluate the different funding options you've had in front of you before openly deciding on that particular investment.
Yeah, Yeah, Yeah, I'd love it here Ah Great question, I, I think like we've seen a across the industry.
Darden's as she yeah. The Cheesecake factory, just me something when you wake up rank or we evaluated a combination of.
Opportunities out there I think we basically felt that end of important really have any or had to have basically and clean balance sheet. I think as they continued growth companies a lot of opportunity out there we felt that straight equity and is a better way to go for us and allows us to really neat.
Okay.
Capitalist doctor that doesn't mean calendar out of any other additional costs.
And therefore as they move through the it's kind of <unk>. The other side today. It allows as I believe more flexibility to continue executing an hour long or 10 or not.
It must be.
He he said it but you know the other element of of here is being able to attract you to run in and his team and the experience. They have you know thinking though the path of growing off premise that that drove so much grotesque and arrows you know overlaps a great opportunity for our concept is.
As well and we look for.
To to tapping into that knowledge and experience and.
Other elements of it as well and then you know you guys are well aware of of heroes track record in depth of of experience in the retail restaurants space. So.
Happy to have two two investors, okay, well, if the caliber of though tax free and N.T. room during during our teams in even greater level.
Understood and then I'm just curious your thoughts in terms of your ability to.
Retain the current 30 from what percent of your former <unk> everything with to go.
The same time reopening.
Restaurants, I'm just wondering obviously the early stage and maybe you all the opening a 25% so maybe that definitely helps but.
In terms of your confidence level of being able to sustain that to go component of your bayes nets, while at the same time grow along the Guy then.
Any thoughts there in terms of the ability to do that as more and more states open up and maybe you can open up a closer to 50%.
Yeah, no. It's a good really good question and look we're only like you said a few a few days into this experience, but you know my perspective, there's always back then when we've talked about off promising delivery in the past, you'll remember me being very vocal about these are different occasions, when are driven by different guess needs.
Such are a lot more incremental undifferentiated then can they overlap and we've shown that as we've grown you know take out up to this point is you remember we started just journey at about 5% of sales on and off premise and we had a double that before you know <unk>, so and and.
Every piece of evidence in data, we'd look look look at 'em tells us that we did not cannibalize you know in restaurants dining while while we did that so I I don't think you know it's not my expectation that will hold on because it'd be you know uniqueness of these circumstances, obviously that we're going to hold on to.
All of the dollars now that we've grown to here certainly been pleasant, though that we have you know in the early early days hearing Institute indicator and I do think we're going to hold onto a whole lot of it you know I think I think the trial we've generated in some of the you know innovating we've done around product in pricing, it's it's going to serve.
And I'd also say alcohol delivery you know the the the latitude from a legal perspective, most states to municipalities loosening liquor delivery logging take out laws has really opened up a an opportunity for us to particularly on our beer side of things to deliver.
Or six packs, which we've been doing for awhile now and and also the <unk> and then impressive so.
So I do I I I'm very optimistic about continuing to grow and you know this accelerated growth.
<unk> Prime Minister in this county.
Got it and just like my last question I'm, just curious from terms with the pay for the recovery.
Said your bottom get down 82%.
And late March.
Here in the down 68% range I guess, it really made for looks like maybe 15 percentage point improvement I.
I know some of your peers have gotten cops into the down only 40 or so range I'm. Just wondering what you think differentiates or leads to the differential and you're a piece of recovery, thus far only with to go relative to to somebody or other casual dining peers like you know picky. Thanks for asking that question. So look structurally you have to remember a couple of different.
Things about the F.D.J.'s one is the amount of consistent we've business, we do throughout the day and shoulder periods and I'm, particularly late night. The amount of you know food and beverage. We so I'm late night, all of which are highly experienced tunnel okay.
<unk> right those can't be replicated in a in a takeout or or a delivery kind of kind of water and so that's the biggest reason you. He you know from a cost perspective look lower our rate of growth at off premises actually been higher than any any industry.
But the the sales fall because of the dynamic I mention and the fact that we as you know not so long time, you know that we do a high alcohol and beverage mixed a much higher than other concepts as well, which is you know we're never going to going to to duplicate to duplicate that kind of.
Consumption and then in an off premise way. So all of that works into you know a a percentage number from a calm perspective of a follow up that's going to be a bit a bit more than others, Yeah, Hey, Jack <unk> just.
Doing.
In the hospital after that if I think out on late night.
Pushing eventually does not exist today.
And kind of look at cops for this last week.
In that regard alright, yeah, we can have we'd actually be down summarize any kind of negative 43, 45% range and probably a little bit more in line.
Here. So we just have a segment of our today yeah.
Zero.
Very interesting thank you for the clarity.
Oh.
<unk>.
Mm.
<unk>.
Hi, good afternoon.
Obviously he could job.
<unk>.
But trying to get a horrible on where your G.N.A. run rate is at this point average.
Nearly a mile in the first quarter of L.S.M.'s yet.
Good.
Plus understand what right correct channels on right is that would be helpful. And then just signed me seven here, we are putting in Texas.
Oh, my meal or you still using that curtailed nine here that they just had to turn off.
We're opening was the same limited menu is another question Sharon and so that.
We didn't do to my remarks is some upside for us because a lot of are you.
Favorable center the play Trentino items in minutes before you know so hard a growing the last few years, particularly or slow roast items are primary rather than try to them so successful or not on our men right. Now. So so we look forward to you know when when we see a line of sight around the house Giants.
You know settle in from a traffic perspective, and then also supply chain restarted up all that stuff, but that's real that's.
Obviously significant upside for us.
Yeah, <unk> or together down here [laughter] I would probably say that.
First corridor because the way this yeah.
Market.
I came down we have in this happens to have some time to time, we add that to 35 and a as a result, when am I could come down we get a credit in G.N.A. at the same time, we have to take an expansion out or any kind of any kind of see that on the on our t. and now you're over here.
Yeah that two and a half million dollar sounds like yeah. So low.
Well first quarter.
The second second part as far away.
Posted here about 30 million a quarter run right.
Thank you and then did you I I didn't hear that that you did mention that out of the yeah customer you're getting the enemy.
<unk>.
Mm.
Hi.
Answer to that I would tell you are loyalty is out from the <unk>, we're seeing nice increasing we'll have to get can reach out there might be seen very effectively.
L.C. program.
Seem nice increasing their other than that though I don't know.
I can speculate let's say in gas.
Thank you.
Mm.
And next we'll hear from cotton class of Morgan Stanley.
Thanks. Good afternoon Hope you all are well did you talked about some potential started after we start cost if you open dining <unk> sense of what those are.
Well, maybe to keep out like a little bit dollars per week, or something <unk> or where do you mean shoes of getting employees to come back inside work <unk>.
Some concern for obvious reasons, but not working inside me includes <unk>.
<unk>.
Attracted to the attractiveness employees.
Mm.
I'll have to answer the last one first jobs, we really haven't experienced guy yeah. It. It. It you know generally think as an industry concern, particularly given you know the unemployment subsidies that are in in place you could argue there's an economic disincentive to to go back to to work for awhile, but.
We had that experience experienced that as we brought some people back as we both and dining room. So you know I think people who are looking in the medium the longer term like listen to a place I like to work and I want a job. So that's been that's been.
Good so far.
As far as the first part of your question John because it appears that we're going to be opening restaurants and may.
The way it doesn't look I studied.
Training costs and the guys you bring people back.
Ultimately one thing individuals that have worked with gays.
Training on Dallas, and then holidays.
Minimum we haven't really seen in our.
In a restaurant haven't yet.
Yeah, it's probably going to be the case again because.
Maybe I'm, hoping that they may.
Type of thing outside of that so I didn't mention calls today.
Increase.
Cleaning stand occasion in a restaurant.
<unk>.
And we do expect to see that incremental costs continue operating knocking side of our business I think everybody in in the restaurants, they see that for a while until that gets to anybody supply chain because one of his normalized cost.
Yes, so generally I think you see a little bit more on the operating occupancy five today than you.
Huh.
Thank you <unk>, what what just one last question no I understand job bloodiest restaurants back up and running and and real estate in development. It's been pushed inside but did you think about if you had time to think about hobbies is more look different.
Quite selection, it's going out at the store.
Do you anticipate changes to how how the bit.
Four walls work or decide to select to spend so much experience and maybe potentially permanent changes to how consumers pay.
You know what John.
Great question, though.
Right now probably in our spare time I'm thinking so I can.
I think there's a lot more.
Oh see that won't change thing will change and and and.
The primary reason I I say that is the foundation of our dining experience is is highly social and and I don't think that's going to going to go away. I mean, those are fun fundamental of going out with friends and family in the near term is that to make sure that.
You know that appears in actually is a super safe no experience, obviously, but that's what people are yearning to do and for that reason you know those elements of our business.
You know fundamentally from what have we build our restaurants and and and maybe where you know also where we building maybe not so much but I do think you know as you know we've been on this road of how can technology make this experience a a better one and not at that detriment of hospitality.
Increasing the convenience soon.
Just you know doing away with some of the pain points of dining in a restaurant and you know our our hope is that this current experience will accelerate some of that but I'm a technology perspective, you know what I mentioned some of these things that we're doing around you know a downloadable menu that our guess you know so far ever again.
Very early on our or or you know really appreciate I'm not having to.
Touching menu, but they're also finding the experience would be pretty convenient and you know when we can tie that in mobile device to to a guess and leads to pay me in in other elements that can drive more convenient and that's the kind of stuff that I think will change the experience and and for the for the better and then the obvious one.
It is is continuing to to I think this will involve more physical changes is if as off premise reaches these kind of of numbers and and and in fact, we are able to hold on to you know the majority of these dollars that will necessitate.
Yeah, we started going down the best happened to put some topics behind expanding or take out areas in our kitchen.
Situating, our kitchen lines to accommodate these kind of bones, but this little require further changes on on that side of the business.
<unk>.
I do.
Yeah.
Next slide here from <unk>.
Oh, great. Thanks in glad to hear that everyone as well got Super those 55 restaurants that have reopened to in restaurants.
Last week couple of different questions did did the capacity constraints come into play and what I mean by that is <unk> was there an actual weights lots of giving those restaurants and were there any common teams for those locations in terms of those that's all the strongest and we we just in restaurants traffic levels.
You know Jeff.
I'd say you know you'd has as usual we were going to see you know some level of of of weights, but but it is it was pretty even slow over the weekend, which is really the the the test of of that you know we were running.
Keep in mind is something we didn't really accent in our our remarks, it's not typical that we're taking the level of reservations that we're taking now in fact, we're encouraging guess to to reserve online or just call. The restaurants. So we can better manage that low because I don't see one of the thing.
Are worried about it's going to be tougher to manage his we can't q. people in our waiting areas right. So we're having our host literally outside the restaurant.
Meeting folks as as as that are coming up then and then.
Using tax to let them know when when they can come back to to the restaurant to be seated and so so far you know it's been like I said because of reservations I think you know people are using back into this.
We again, we were encouraged by the sales volumes, but it was like I said it was pretty evenly taste.
And then.
Second question.
It's too early to tease out you know much of a there.
<unk>. This is true of our business in General is you know we have obviously higher volume restaurants, and those that are lower around our average is that we need far extremes or not or or not that extreme you know in so we didn't we didn't see something where initially you're like Wow you know urban.
You might think more dense urban areas versus some counties in Texas, where you know they've had like you know such a low level of infection rates are we ever made that may have been different as one theory, but not not yet there's nothing that stands out this early on.
That's all form just one other follow up so you guys touched on this but in terms of thinking about that off from the sales growth any color in terms of how much of that cool with was was driven by curbside versus delivery.
Yeah, Yeah about 70% of our increase is coming from takeout interestingly. So bad that is a though most threefold and and delivery still up nicely I don't know 90% of of.
A pre coded rates, but it's about 30% of the incrementality.
Okay. Thank you guys.
Okay.
Favorite parents, you know fair.
Mmm.
Hi, good afternoon how.
Wow.
My question about they'll crush and so on taxes, so much in that 20.
Like 5000 dollar less than the average really cool so <unk>.
<unk> that'd be frame up what that means relative to love prior file on business look like a year ago.
Yeah.
I'm sorry, Yeah, I mean, he broke out there you ask the question again.
Yeah I'm sorry.
All the work they now working at home.
20.5 thousand a maverick record sales in France and for the cracks, it's dying and there's more finger. So I was wondering if you could oh, how that compares to what the diamond business from Texas.
Same restaurants was a year ago, just so that we can frame about what percentage of the volume recovered.
I guess apples to apples versus the dinosaurs once a year ago.
Yeah.
I don't know if I have that.
I I'm, just trying to see if I have something on that.
You know the better way I would say it.
Yeah, Texas, Yeah <unk>.
<unk>, Texas is going down last couple of age like cocktails perspective.
In the negative 45% range.
I'd, probably I think about it that way I don't have.
And to me that difference between takeout or off color and dying and have last year I, just kind of have an athlete and where that new dining room.
Or.
Data okay. So that's that's helpful.
And then I guess.
You are you getting death feedback on the experience in on these restaurants are reopen I'm I'm I'm curious to know if.
Action has them to all the social person sitting out for so.
And and what what the experiences like in their in their of year. If you have it and then and then I guess, if there's anything share on how.
How they're using a restaurant on the same or differently than that but then the path.
But they apart or.
Oh, yeah for anything like that.
That's a great.
The question.
We can answer the first one better than than than tend to follow there David the because most people are wearing masks in our restaurants. They have gloves, we're asking me to download maybe there's a lot that's different and then just weeks ago right and.
And we use it listening it's kind of.
The you have guessed that are willing to be in the restaurants to begin with it's not the general population right. So you have folks that have an expectation, though like okay, I'm going out I'm going out in the world here.
So it's not necessarily representative of all of our guest but having said that people were actually.
Reception receptive, but glad we were doing what we were doing that because it made them feel safe and I think the visual cues and and at the actual things that we are doing and the others are doing a lot of them as well right or reassuring people and so so you know it so far.
Again, I think it's encouraging that the number of people that are going out or going out and and I think the the guest experience is one that people are gonna can come back for it's not like Wow. This is so compromise on I.
Yeah. That's just you know our anecdotal from our restaurants from from our teams. What we're hearing is people are just glad to be out and and they're going to come back you know.
Right. So that's interesting and then Greg Love and you have have a ballpark for what the restaurant contribution margin looks like at the curb sales volumes.
The for the industry over all not just Texas.
But for changing over on them and then what that would look like or what what level, maybe that's a break even specifically at the restaurant level.
Yeah, Yeah I John.
The current level.
And and Friday.
Generally when we look at our business.
Eating out 55000.
<unk> cash flow into all the restaurants.
You need additional from Dallas.
5000, together cover a G.N.A.
And other cost Uh huh.
Right.
Okay, great. Thank you thanks very much.
Yeah.
Nicole Miller off Piper Sandler.
Thank you good afternoon.
Hi, Thanks for the time I Wonder I understand so limited menu.
What are your learning or what is that informing so far about margin speed and accuracy. Obviously, it's very early gave <unk>. How do you think about a speech reintroduction person, perhaps elimination of certain items there are even platform.
Mm.
Yeah, another really good question.
Well, there's we are not just just started with the endpoint, we're not gonna rush into.
To Institute, our phone menu all at once.
And we will we will look at it in in stages for sure.
And as you know because you.
Didn't following our story along a long time you know we then this quarter so.
To reduce the number of items on our menu prudently, where you know or men or level of detail about 145 compares to you know 180 190 previously so we're we're going to look at it you know.
And and analyze it on on all different dimensions, but certainly not cost but.
Sales and and and and I think it represents an opportunity to take another step forward on reducing complexity, while while making sure. We don't compromise when are the best attributes of our concept, which is variety right. So.
In short answer is we think there's an opportunity to end up and stuff short of where where before the crisis here to the benefit of consistency equality team members et cetera.
Thank you very much.
Thank you.
How how far golf.
Great. Thanks for taking the questions just few for me first curious like Greg Trudging, you'd mentioned earlier that at the 25% capacity levels in Texas, you're you're not making at your furniture quite a bit of money and that markets I'm just curious to know why reopened full dining rooms.
If you're still burning pretty significant levels of cash in that market versus just keeping the the premise going and I got a few more questions of that.
But just for clarity I didn't say, we were burning through a pile of money I said it was good or not <unk>, you know greatly influence our our burn rate and and it may put a a bit of pressure on it but but we felt like the tradeoff of learning we think.
We're going to grow sooner rather than than later that that we wanted to get team members back to work.
We wanted to continue the momentum we don't think we're taking undue risk in doing that financially and I think the benefits of learning operationally how to get better because no look we we do think we're in this for quite a bit a period of time that we're in a world of social distancing operating differently.
Or.
For a long time and so.
We thought the trade off of.
I'm starting in in Texas.
Is what's the what's the right thing to do there and we're learning a lot and and most of its been you know exceeding our expectations for him I guess perspective.
Okay. Thank you okay kinda following that similar thread thinking about your business longer term and how it's going to change I know it was already asked about how your stories might look, but I'm kind of curious to think about the the company is a brand ended up itself. Obviously, you've got a strong beer business. That's out there has this kind of changed.
You're thinking about maybe extending the brand beyond the four walls and potentially going after new revenue streams or is it sticking within the fort Walton focusing purely on the restaurants.
Hey look I.
I'm glad you <unk> you asking the question again, because I think what.
Others might be missing here is we are optimist around people gathering and socializing and enjoying food and drink it gets.
One of the oldest most important elements of being a human being and it is not going to go away, so they're going to be challenges and timing and all of all of that yeah, well people well some of this.
Induced changes that they left so you know a long period of time, yes, but they're not going to impede our fundamental business model of people wanting to be in a restaurant, having good food and award winning d. or so that that is.
A a very strong.
Position that that we have as a company I those or C.E.O. I do think I do think well we're looking at at other revenue streams and you know they're not mutually exclusive right. So I think looking at the popularity of our beer that we have started to sell in retail.
Over the last couple of years as as an example, you know there's probably you know.
Other things that we can be dealing with our kazuki franchise outside of our four walls. So yeah. We do we do think their or their opportunities to to do that but but not you know not not driven so much because we think dining in its going away.
Understood and I appreciate that color at the last piece and kinetic perished along that same line of thinking.
I'm curious to you know you've mentioned earlier just the idea that's going to take a while for things to return back to normal and a lot of the commentary and the industry. So far is perhaps at the independence, particularly in the full service sector might have a more difficult time of of reopening and staying open for for much longer so I'm just.
Kind of curious.
Perhaps puts a numbers around you know in your around your stores do you have a general idea of the competitive set from the independence within say a three to five mile radius of your stores across your system.
No.
We really don't actually it's.
Valid question, but.
Look I don't I don't it does vary by by market, where you see more you know chain.
Representation, you know in Texas as opposed to the northeast just anecdotally because.
Obvious real estate development and other reasons, but you know we don't.
We don't look at it on a on a trade area market by market basis.
In in that way, it's an interesting question, but I really have much to offer you there.
Okay. Thank you I appreciate it and good luck.
Thank you.
<unk>.
[laughter].
[noise]. Thank you my question. It's a couple of follow up ones are I, just wanted to be clear <unk> the $25000 from the 25% capacity added in those Texas towards those stores saw a greater Casper. After that then we'll open is that correct no <unk> just <unk>.
We're what we're saying is don't expect us to convert it to a wildly different burn rate immediately based upon those that sales increase because of the cost of really the incremental costs of opening at those volumes right. It's still only $20000 a week right. So.
And the cost of the supplies et cetera, it's not gonna wildly change the two and a half million dollar burn burn rate until that number garage. That's really all the all we're trying to say there don't.
It's not based upon you know after a few days scientific you know analysis of R.P. you know we realize the cost of you know just the supplies et cetera that Greg outlined and you know we know the business well enough to tell you. It's it's not going to be while the incremental at those those numbers may put a little short term pressure.
But it's it's not you know we wouldn't be doing if we thought we were going to.
You know change change our burn rate significantly.
And then I think there.
Sort of that aspect for a little bit about hobbies 25 saved from the dining business, but then I think Greg loving yourself those stores were doing down 45. So.
Oh, those stores and growth in specifically embarrassed delivery business or we just talking an aggregate brand itself. So I'm just trying to understand the actual stores the pepperdine.
Oh, it's actually it's 20500 just to be clear now 25.
Okay, but we are saying in those stores.
So far those restaurants obscene continued growth again, we're talking days here, but the take out and delivery group.
In those restaurants, yeah, I I think it's important nah, we think about that 20500.
10, again, what hockey game Cats is hoping that.
Dining last Friday.
Friday today.
Aren't getting the data for information for that and number wildly came next week.
Positively and negatively so I just want to make sure as we talk about that we've added when we look at Texas is laughing County.
Added about $20500.
Okay take their sales models versus what they revealing before.
Yeah, you appreciate that.
<unk>.
Guys are ahead of the curve on telling no one's given us anything insight into some thunderstorms open so greatly appreciated that you've given us that but I'm going to ask another probably annoying question along those lines, though can you tell us a little bit about back yes, compared to your prior late night dinner or lunch break down.
Anecdotally or maybe hard numbers, what you've seen <unk> using you morning dinner or more lunch or.
<unk> late night, how does that sort of fall out that 25% capacity being used compared to your private business.
Thank you well that's it yeah, it's a good.
Good question that I don't know if you know the the okay. I can tell you before we opening is adding things do you saw it most of our growth had dinner, which probably won't you'd suspect but it also brings up a good 20 Nat. It's we're not opening late night, we're only staying open till 10 and 11 on weekends and most of these restaurants. So.
You know we're not we're not opening do the treaty late night Bad and we have traditionally you area and I.
I always keeps back again.
We'll have to add a little more time go by I don't think that late night business I think that's still going to be more impacted side.
Did he say you've seen it quiet down earlier than it normally would in regular operation.
Excellent. Thank you so much.
Yeah.
Next we'll hear from <unk>.
And you could <unk>.
Well two questions on different pain, but they're linked one if you could walk through.
Just what the what the reality was approaching your landlords and trying to renegotiate.
Hi, there are they mentioned rent or or deferrals too.
Maybe be at the end digital least period how.
How collaborative that was how how how you felt going to them. How successful you were and then secondly, just and you could or shooting the amendment for the.
Credit facility.
Same type of question how wasn't working with your with your lender partners. What's it costs you could get the amendment and.
How much recovery do we need to see too.
Q for covenants, which sounds like there's such a lot more flexible level. Thank you.
Just in terms of of the landlords those those discussions or or truly you know ongoing a number of our restaurants that says look we hear you, let's let a little little I'd say the majority of our restaurants are landlords reacted in that way to say.
Okay. We hear you we understand what you're going through we're not going to do pick any and make any broad commitments, let's let a little time pass and I think more those steps into it on going with the World you know might look like between us and landlords news like I said both ongoing.
And really starting to occur you know more now than it than it was than they were four or five weeks ago.
We have high volume restaurants, right and and you have been you know great tennis for a long time than we have some great landlords on the other the other side. So yeah. We we we have.
You know an asset in in in terms of of those relationships, but it's it's not not a happy time for for either either party on the side about conversation. So I just tell you. It's it's ongoing and inactive in that regard.
Yeah <unk> on the bank I I didn't the bank I can stand that there are a lot of really good business is out there.
Everybody's going to yeah.
Where the entire U.S. economy class World economy is shot down and not and he's off.
And so are working with the banks that has really been around that they've been very flexible and try to reach agreement that make sense for both parties.
News going our prior to encode and.
And that de Jager, you maintain that Harry I never balancing for most part in college.
They took out in front as as we worked through and come up with <unk> Green.
<unk>.
So I you know I don't think it was.
Crazy for both parties and they were trying to figure out.
Manages to make sure that he has the flexibility continued to operate isn't it so that when it comes out of it on the other side. Both parties are in good shape and get candy and.
<unk>.
Okay, great interest on the when we get back to having a covenant in place and.
<unk> talking about were kind of weekly sales volumes need to get to to consider that hurtle or any sort of color you can give us there.
I I wouldn't go into that much specific sign up and it really starts in November for us as he's talking about Canada, it'd be making leverage ratio.
The way you can see that all that information in our filing from that perspective.
Based on all of our analysis.
Oh God, we are not exactly.
In a position.
Cops sale positive in in November and December this year, we still had ourselves a negative from that perspective, I think 2020, probably would be a little bit not for you got from here from that standpoint, I wish that you expect to hold on my sounds to be open by November and December this year, but I'm not expecting isn't he a positive.
Sales quite yet.
<unk> three aren't company calculation based on.
Significant decline comparable restaurant.
<unk>.
Okay. Thanks for the color.
Mm.
And our next question from from prefer clause people.
[noise] Hi, good afternoon, guys the sexually Alec on for Chris just at a question on the the sales of beer outside the restaurants are there any restrictions on that and how much is is that contributing to your off kind of sales right now.
Oh the there.
As you probably know tied house loves vary by jurisdictions Dade County cities et cetera, So they're all over the over the place.
See I think.
Most important thing to know is many many of those jurisdictions loose and.
Stuff.
The delivery and take out legal and and as a result, that's that's.
Helped us grow that that area of our of our business. The it's still down versus you know, it's one of the areas most impacted because of the dining you know incidents is always going to be you know so much so much higher so hard to quantified as you know part of our.
A hard road, but it has grown apprentice I don't have that number.
My head I I do.
Would also add add.
Would be my expectation and this is just conjecture.
The legislative bodies or.
Those will stay in place pro our post a post crisis here.
<unk>.
Okay. Thanks for that and just one more following up on that it it seems like in the current environment with with gatherings unlimited and off promise usage, increasing it kind of lends itself well to that that beer club subscription you're planning on piloting layer. This quarter is there any opinion on that is that still plan any trial beyond California or any update their.
It's a good observation and we agree with you, but given given the priorities of all that we then didn't grappling with your you know we postpone the the bad rolled out and and ER testing in California, but it's you know I'd say it was in the eighth inning.
Plus even the top of the ninth ready to go so as soon as we have some you know a little more stability and dining room, you know guiding rooms have have to be open for people to come in and and pick up their beer et cetera. So so we're <unk>, whereas actually says as you to get back going that we don't really out of time.
Yeah.
Okay. Thanks.
[noise] and then no further questions at this time that does kind of <unk> conference. Thank you all for your participation you may know disconnect.
Thank you everybody.
Thank you.
Oh.
[music].
Oh.
Mm.
Mm.