Q1 2020 Earnings Call
[music].
Welcome to the Carrols restaurant group Inc. first quarter 2020 earnings conference call.
At this time all participant lines.
Uh huh.
Following the presentation, we will conduct a question after session and instructions will be given at that time.
I would like to remind everyone that this conference call is being recorded today Thursday may 20.
Decline this put a lot of pressure on us to protect every shift in every job that we could.
[noise] to address near term financial flexibility, we look for every efficiency, including cutting executive salaries, starting with my own.
We put on hold any nonessential operating expenses and capital expenditures other than those necessary to maintain restaurant operations and we had an additional safety protocols to protect our team members in our gas, including space Master monitors and greater usage of a multitude of cleaning products.
In many cases, we have reduced operating hours based upon sales volumes day part traffic and mandated curfews. We have also temporarily closed 46 restaurants, consisting of 42 Burger Kings and four popeye's, where we could improve overall operations by shifting gas to nearby locations in those situations, we re assigned team.
Members where possible.
We have lowered our current cash payments on rent, although let me be clear that we are not in breach of any of our laces as we are working with each of our nearly 600 landlords on an individual basis in an effort to mutually agree on accommodations. During this period in order to preserve cash in the near term.
Relationship with our landlord is very important to us and we have sought through this process to maintain our hard hard earned reputation. We are also communicating proactively with many of our largest vendors and suppliers in order to optimize payment terms, while preserving these long term relationships.
In addition, we showed up liquidity by increasing our revolve or borrowing capacity through several amendments to our senior credit facility and taking other actions to improve working capital Sony will review, our current liquidity cash balances and first quarter financials in a moment.
I am encourage that are April comparable restaurants sales numbers have steadily improved from the weakest buried in late March to give you contacts during the last week or March comparable restaurants sales that are Burger King restaurants were negative in the mid thirties for the month of April or Burger King comparable restaurants sales were down in the low 20%.
Range and over the past work past week, they were down mid single digits, even with the vast majority of our dining room still closed.
Hopefully this trend can continue in built over the next several months as restrictions are lifted businesses begin to open and more people leave their homes to go back to work and chap.
We're also seeing the average check improve at our Burger King restaurants that increase about 18% from January and February to April.
We believe they increase is due to more frequent group ordering adding delivery capability to almost 700 of our restaurants is also gaining traction in the last week or March company wide a delivery revenue was about 270000 and if we for the weekend did April 26th delivery revenue approach 800000.
Annual icing that weekly Runrate. This will definitely move the noodle for us, especially given that we are in their early stages of rolling out this distribution channel.
In order to support our team members. During this difficult time the company created a carols cares fund a fun created to assist our employees who are experiencing financial hardship funding for the program comes from my three months salary holiday and from other senior executive contributions ultimately I believe the carols will come out of 2020.
<unk> costing capital foundation that will enable us to realize the full potential of our restaurant portfolio.
Will continue to focus on our recently acquired restaurants that we've read we'll add to our overall growth with operating efficiencies and improve margins.
In the meantime, we are working through the present challenges and protecting our businesses business and team to the extent that weekend.
The close let me say than on behalf of the management team I would like to personally thank each and every one of our employees, but are tremendous efforts and adapting our restaurant operations to the current environment and for their commitment to help feed America. During this challenging time.
<unk> that let me turn the call over to Tony to review our financial.
Thanks them before I go into <unk>, Hello review of first quarter since I'm bored looking comments I would like to walking through some financial steps were taken in response to cope with 19.
The focus since the onset of the pandemic has been to reduce cash up close to the extent possible as quickly as possible.
Hi proportion of our costs are variable we worked swiftly to ensure a restaurant expenses were properly aligned with a revenue trends. We also reduce fixed operating costs were possible, but temporarily shuttering 46 restaurants were able to immediately avoid a certain amount of costs. The bulk of the expense reduction. However, it wasn't fishing executed at each and every one of our restaurants.
Spare original stuff organization to reflect revised restaurant hours and accessibility.
We also reached out to her landlords to reduce or defer rent payments.
Regional on corporate overhead has been reduced by $5 million to $7 million on an annualized basis savings reflect the reduction in real estate development training efforts regional field administration as well as a company wide pay reduction of 10% for all non restaurant employees, a hiring freeze and the elimination of all discretionary spending to the extent possible.
Mccaskill standpoint, you've taken many actions that further improved our financial position.
Worked closely with our suppliers and vendors to optimize.
Payment terms, we closed 11 restaurants that were either done negative and had near term leasing franchise turn maturities and we move forward to sell leasebacks I'm several existing feeling properties and our portfolio.
Finally, we are suspended our stock purchase program.
Terms of capital expenditures, we are delaying all projects and not yet commenced and expect total outflows of about $35 million to $40 million for the full year that upset leaseback proceeds approximately $20 million of the spending is behind us as at the end of the first quarter. The majority, which was carry overspends from projects commence in 2000.
19.
<unk> bolster our financial flexibility, we increased our revolver borrowing capacity at it now stands at a total of $145.8 million a quarter end or cash balance was $41.3 million total outstanding debt financed lease liabilities was $536.7 million.
Fast forward to May 5th 2020, our cash balance was $53.4 million and liquidity in the form of cash deposits available borrowings under bobbing credit facility total $77.8 million.
We expect to remain in compliance with our first lean net leverage ratio.
And our current revenue <unk> trajectory combined with operational actions, we executed we estimate that the company is on a path to generating positive free cash flow during the second quarter of 2020.
Would that let's discuss our quarterly results for the first quarter revenue increase 20.9% over the prior period to $351.5 million and this included $67.4 million in restaurants sales restaurants acquired a mccambridge acquisition completely April 30th last year.
Or Burger King comparable restaurants sales during the quarter outpaced the U.S. Burger Kims <unk> Burger King system by 80 basis points decreasing 5.7%.
Adjusted either died declined $9.4 million during the quarter to $4 million from $13.3 million in the first quarter last year adjusted that you've been done margin decreased 345 basis points to 1.1% of restaurants sales.
Adjusted <unk> restaurant level, he would decrease $5.9 million to $22.8 million in the quarter, So I'm $28.7 million in the first quarter of last year.
Restaurant level adjust to me, but that margin was 6.5% of restaurants sales and decrease 345 basis points.
On expense line items cost of sales increased approximately 90 basis points in the I'd get ground beef average $2.21 per pound on the first quarter of 2020 and increase 10.8% from the first quarter of last year.
It was however, 2.4% lower than Q4 levels over the last two weeks, we've seen an increasing based class, but it's too it is too early to evaluate its impact on the year.
Restaurant Labor expense increase 90 basis points in the percentage of sales compared to the prior your quarter inclusive of a 5.9% increase in the hourly wage rate in our legacy Burger King restaurants, and the impact of fixed labor costs against lower restaurants sales.
Restaurant rent expense increased 90 basis points to the percentage of sales compared to the prior your period, primarily due to the higher rents higher rents the percentage of sales on restaurants, we acquired in 2019 and the impact of lower restaurants sales.
Other restaurant operating expenses increased 80 basis points to the percentage of sales compared to the prior year period due to proportionally more credit card usage and higher utility costs.
General and an administrative expenses were $18.9 million and the first quarter of 2020, excluding $800000 in one time costs, primarily related just site development write offs. This compares to $15.4 million and the prior period on an apples to apples basis, which excludes $2.8 million in acquisition another costs.
As a percentage of net revenues generated and there's an administrative costs and expenses increased slightly to 5.4% and the first quarter of 20, 25.3% and the same period last year.
But the year, we expect the ratio will be favorable on a year over year basis, given the cost reductions that had been implemented.
[noise] Arnett lost with a quarter was $22.2 million or 44 cents per diluted share. The net loss includes a 2.9 million dollar charge, primarily do impairment charges relating to 300 plumbing restaurants, and other at least charges relating to nine restaurants close during the corridor.
Before such such items the key when adjusted net loss was $19.3 million worth 38 cents per share privileged shit.
Finally, while we are withdrawing or previous times do the uncertainty surrounding club in 19. Please note that are full year 2020 has one additional operating we compared to 2019.
That concludes our prepared remarks, so would that operate it let's go ahead and open lines for questions.
Cleveland topic and question in in that sense.
Can I ask a question you may pet dog, then one on your touch 10 pounds.
If you're using a speaker phone please pick up your hand <unk>.
Well that Guy your question things Pentastar then cam.
I press time, well past momentarily to assemble Iraq okay.
I first question comes from take part right next time trying to please go ahead.
Great. Thanks for taking the question <unk> Yeah. My first when it is only commentary round a free cash flow being positive you know and detract George being positive in the second quarter, what what is that assume in terms of things source sales and maybe if you can kind of frame at the sensitivity yeah, what we what would free cash flow.
B if it seems for sales 'cause remained at the current negative 6% level or some some level that we can kind of you access to the the sensitivity towards that.
Well, we gave guidance at free cash for it will be positive for the second quarter and the trajectory definitely is impacting that you know we were.
Down on Burger King, 6.4% through May 3rd and if you look at the last seven days, it's actually down 1.9%. So we're we're seeing you know week to week very dramatic improvement and that you know, we believe that's going to generate positive free cash flow for.
For the second quarter get especially given the cost cuts that we've put in place.
Okay, Great and then you'll get <unk> on that same thing does that include <unk>. What does that include in terms of temporary you know savings like deferred rents or or even <unk> payments. If that's what you're what you're doing I'm trying to assess you know whether.
Whether there's more and more pressure are you in the third quarter or just from a a free cash flow Bernie perspective.
There are no differed royalties [laughter]. So we have not that has not been suffering that we ask for or received from our franchise or.
So it's you know there there has been some working capital management on costs some of those are.
Sort of permanent in nature for the year and some of those will come back, but we think it. This kind of you know at this kind of even without those sort of short term you know eases to cash flow. We think that you know, we're we're going to be in a cash flow positive position.
Great and then and then last question you know, it's such a sharp acceleration or you know tribune changing stretch reading the last week and and that the last seven days as you. Just mentioned you have two what do you attribute that to I I know that on the last few weeks, you've gotten delivery, which has been incremental but what are the other you drivers.
That <unk> you know is it exposure to the states that are relaxing stayed home orders in any kind of color see can help us understand what what is driving fichus sharp improvement.
Yeah, Jake this is Dan Ah.
The some of that is because states are relaxing their their stay at home orders, we have not yet open any dining rooms. So that's really other than for take out we don't have any dining I'm dropping proceeding yet, but there there just seems to be at a increased amount of traffic across our entire portfolio and 23 state you're more people on the road in.
Our our drive through a business is picked up pretty significantly as well as a delivery continues to increase dramatically on a week or per week basis.
Great I appreciate it good luck out there.
Thank you.
Again, if you'd like to ask a question. Please press start then one.
Hi next question concerns jammy gambling with crank on Capitol Group. Please go ahead.
Thanks, a nice job guys navigating some pretty top environment out there I wanted to come back to be prices for a second and just get a sense for the arc that you've seen in terms of the weekly deliver price per pound you know what started the or a relatively.
Hi levels, I think that probably came down quite a bit and now it sounds like there's been a little bit of an uptick.
Can you give us you know dance, maybe some numbers behind that in terms of you know if you were at kind of too.
I'd say 240, a pound to 45 pound maybe early on in the year, yeah that get down to let's say you know 10 to five tool five and then what would have been you know the prices you pay the last couple of.
I'd be.
Yeah, you're right Jeremy did you hear a number here right and that we started out it yet and and you know Toot Toot Toot 30 to 40 10 arrange it went down to two old three I think was the low point and the last two weeks, it's a it's accelerated pretty significantly and our forecast assumes that.
We will be more elevated level until probably the first week in June and then we think that that's going to go start to stabilize again.
You could you put like a a little more specific than you know numbers in terms of where it's celebrated too I mean as it.
He said about 250 no no no no. It's two 243.
Okay.
That's super helpful. And then just in in terms of what you know typically the company will a job you know based on you know some of the pro teams, but it's or you know where it might be highlighting you know again. This is such an unusual environment. You know, but you do have you know the impossible you know whopper off rain.
You know, if that's something where you're getting you know anything out from corporate that they may.
You know marketing dollars are being spent are you seeing you know is there any potential adjustment in terms of pricing I know, that's probably difficult in this environment, but you know how do you respond when you know I think the prices are you know generally about 25% of your car.
What do you have a scenario like this or do you just write out.
You know kind of until we hopefully see a break and in about a month.
Yeah, it's only for for a month no we're not going to adjust probably this is absolutely not the correct time to making making any price increases.
Certainly the the guest feedback that we're getting is is from value is very important during this period of time, given the unemployment rate and so forth.
So we're not going to be adjusting prices. The Burger King marketing really has been focusing on the from mobile app standpoint, focusing on food safety and the things that we're doing in the restaurants to make sure that the employees are safe and the guests are safe. We've got the we continue to have the eight.
Piece, a nugget for a dollar promotion, which is helping we still have the impossible whopper. So I think that the the focus on the marketing calendar will continue to be on those delivery.
Food safety restaurants safety and that sort of thing Jeremy I don't I don't see a a major change in the next stuff for weeks.
And it just along those lines and in terms of thinking about you know you've had a really dramatic you know upturn in business, which is great to see in terms of the composition of that <unk> is this be driven by check you know what what was your you know.
In terms of the composition of cops and Q1, you know what was check you know versus transaction.
You know over these last five or six weeks. You know are you seen orders I I have to assume you know larger tickets, because you know and and what do you seen from a day par perspective of you know we've pretty frequently heard that you know breakfast is is taking a little bit of hit and you know kind of after hours or snack.
Whereas there seems strength and one for different day parts, but can you provide some color on that.
Well as we said in as I said in my script the.
Average check is increased about 18% from January to April.
And that is bundled orders to the drive through I mean, it's for you you're not seeing as many singling version orders a average check it out for delivery is is a much higher than the average check typically we would having a burger king.
So that's primarily what is driving the the check.
What was the second part of your question Jeremy did tape ours.
Oh, Dave part, Yeah, you're right breakfast breakfast and late night or the two day parts that are the most problematic. Some of that is simply a function and as you would know people aren't out and about going to work and so forth and the other part of that is yeah. They did it tends to be somewhat of a second.
Coal phenomenon in that as your breakfast sales during the beginning of the pandemic primarily back in March and the first part of April breakfast sales weren't there and consequently operating hours were adjusted in somebody's restaurants didn't open for breakfast until 730 or eight o'clock and also or.
Closing at night, it maybe nine o'clock because it would just wasn't much traffic those hours are now back to.
<unk> pull normal hours meant they start to see a a tick up in both breakfast on late night from that standpoint.
And what that would that have a positive impact on your margin profile.
Yes.
Okay last question I wanted to get into with just you know in terms of labor. We've got you know some I, obviously unusual things happening here and I imagine that the staffing overall it to produce because you know partly because of the hours, but in terms of just the number of people that you're using store are.
You know have you yeah. I mean, this is a high turnover business and I would imagine you're probably focused on your best employees and and keeping them employed and because you want to have them you know they're on a long term basis, but you know how if you had to it DAPT you know just the your labor pool overall.
And then you know the second part of the question is you know we've got this unusual scenario, where those that are unemployed or are getting.
Kind of an additional unemployment benefit that may make it.
You know a better for them to stay home and not work at least until you know the end of July.
Rather than you know out there looking potentially a jobs at at a B.K. or euro pop eyes, and so forth, but you know me.
A big question, but you know how are you adapting your your labor schedules sure.
The first the first part of your question, our staffing levels pre cold, but if you well we're operating at about 25 employees per restaurant or the Ah staffing levels went down to about 21. So we didn't I mean that was not.
African reduction, we reduce some of the hours of the employees in the restaurants, but we we kept a lot of the most of the employees are that we had still employed so we didn't have to we don't have to go and didn't have to add a whole lot of team members back to plug it back to full staffing given.
The the sales increases.
In terms of the.
600 dollar federal unemployment subsidy.
What we have told our <unk> first of all we have reached out to any of the employees that were laid off and invited them to come back to work.
Which most of them have done what we've told them is that based on the m- unemployment laws and most of these states if you reduce the employees hours.
<unk> from 20 hours, a week to 15 hours a week they can still apply for unemployment they would get to reduce level upstate unemployment, but they would still qualify for the full $600.
So that's what we have invited them to do is to while you're better off coming to work and working a few less hours and you'll still get the additional benefit until the in July.
I.
<unk> alright, thanks, so much for the color guys. Thanks Dare. Thanks.
Hi next class.
Nine the current with random James Please go ahead.
<unk>.
In the morning in the hope everyone is doing well I want it to drill down a little bit more on the Cambridge units. If if we could and then and he's been doing a lot of work where to improve operations et cetera. He could you give us 10 from the progress he's made in terms of core operating metrics and margins at those either that or you starting to see relatives.
Trends respond positively to these changes even even in the crazy environment, we find ourselves in.
Yeah, or all the prior to that and you're in February.
Yeah <unk>. Thanks for the question, Brian Yeah, as a matter of fact, the delta between the Cambridge restaurants, and the legacy restaurants is now down to around 2%, whereas if you recall back into for it was a six or 7%. So that delta has narrowed dramatically in terms of.
Of the same store sales performance between the the calm sales between the between the two groups in terms of the labor improvements that we.
Suggested we are right on target Wow are Cambridge restaurants, the labor number of hours used relative to sales is exactly the same as our legacy restaurants.
Ah so we've reduced that labour by a couple of hungry basis points since last fall.
The popeye's labor, we have reduced by 400 basis points was since last fall.
Costa sales metrics, where now 200, 200, and 220 240 basis points.
Better than we were last fall in terms of the Cambridge costs. The sales. So all of the things that we said we were going to do in terms of those operating metrics. We are have either exceeded the targets and in that time frame or we're right on target.
Right. So that's a that's encouraging to here.
I guess back to the the free cash flow and it's sort of more general outlook just to think about dyslexia model.
Yeah, I guess in <unk>, certainly did it looks like a day to sell a job service flexing the costs structured it's toenail I wanted to ask can you help me understand the slacks and that other out backs line and and he had frame how much of that line like a fixed versus variable.
Yeah, I mean, it's it's.
It's hard to I mean, after I didn't really look out to see how much space for instance, variable obviously, excluding ran because that's pretty fix but we variabilize it or at least have heard a bunch of it.
To 2021 2022.
I think where we've seen changes is you know some of the discretionary.
Repairs and maintenance has come down, but so that's been variabilized, but on the other hand, obviously, if if the restaurant you know need something to maintain you know to keep working efficiently, we'll we'll spend that money, but but some of the more discretionary stuff has come down a little bit and you don't think that's going to be you know.
An issue long term.
So I'm just trying to think you know some of the some of the cost that related to keeping the dining were opened my you know honestly like I'm getting down to like the muzak cost that we had we in the monitors and stuff like that.
Kinda shut off those spigots until you know until the restaurants gardening reopens and then obviously, there's a lot less maintenance in you know needed to you know to keep the front of house <unk> looking sparkling clean when the only thing people are coming into has to pick up take out orders. So I think there's a lot of costs there.
You know that have gone away, but well you know would come back obviously to the extent that you know we are allowed to open up the times.
There's some.
Variable caught the variable cost to a large <unk> our sales related as Tony said that you don't have anybody in the dining I'm cleaning tables.
Oh, you reduce the amount of times that you have to have windows wash and that sort of thanks.
We've we've reduced number of sanitation pick up that was pretty pretty significant savings because when you're when you're buying homes down you don't need to have the folks come in and take away. The trash as many times is you you still mhm.
Utility costs are lower because you keep the dining room temperature at a different level. So there are certain things that we've done that as we turn the dining rooms back on those costs will you'll have a some of those costs will be reengaged [noise].
Okay, all right, that's how I would call and back to the the second quarter of free cash flow comment I, just Wanna make sure I understand correctly. The the rent their furrow that you you disclose that's about $7 million a benefit for the quarter and is that still due to be paid <unk> in the third quarter.
Well, it's actually about double that amount. The 7 million was one particular landlord and then we'd sort of doubled that with the other 599.
We spoke to a negotiated with.
Okay. So the the one you know the one you pointed out.
Is due to be repaid in July but the rest of them. We've we've worked with landlords and push most of them off until 2021 in 2022, maybe tacked onto the into the lease or something like that so it's it's kind of a mixture, but you know some about half is going to be pushed out of this year and half it's gonna be repaid this year the total.
Okay, Okay, <unk> and last one for me I just ask about the the tampax budget in in sort of the the capital allocation priorities I mean, you eat it obviously cut the cat backs budget that $35 million to $40 million I mean, what what does that include in terms of expected so at least that proceeds.
Did you ever see they in Q1.
No I think we I think we I think we got some we did some.
Pup I sell leasebacks and Q., what it was kind of a net wash.
In terms of purchases and and so leaseback proceeds in to to where we're going to do a little bit more there's some new restaurants that came online that were started last year that we're doing silly specs on.
But it's you know for the year, it's going to be a fraction of what it was obviously last year and.
You know most of the spending is kinda behind us <unk>, because you know out of the $25 million and.
And Q1, you know 17 or 16 million of that was really sort of carry overspend on stuff that was started in 2019.
And <unk> you know what we're not touching you know really is the maintenance <unk> for the rest of the year you know that's the both you know the bulk of about our spending is gonna be if the rest of years, just making sure the restaurants continue our operate efficiently. So.
But it's obviously going to be a much lower burn rate going forward than it was in the first quarter.
We we <unk>, we've we've opened five restaurants, so far which were under construction and the latter part of 2019. So that's the majority of the cap vaccine Q1. Some of that was sail leaseback, one one or two with the locations. We've got one more.
A restaurant that we're going to build a this year that'll open in June or July.
And no reading models and that's the primary Delta and meet a cat backs versus our initial forecast is there's there's no remodel so projected for the balance of.
Thousand and and 20.
Mm [noise].
Alright, Thank you I'll pass it along.
Hi next question, it's a follow up some jammy Ham with K. column capital Great. Please go ahead.
Thanks for taking the additional question actually just wanted to ask about popeye's for a second then and kind of the future plans. There. Obviously you know producing some pretty extraordinary results still theme benefit from you know the chicken sandwich paunch. It is noticeable you guys. The Burger kings are doing slightly better.
Then U.S. system average the the popeye's are are slightly trailing the you know the U.S. system average any particular reason you might you know identify as to why that might be that's part one of the question. Then then too is you think past 2020 and I know.
That's probably hard to do but you know if they're a sense that you know the popeye's brand that you may look at building that out in terms of 2021 and beyond.
As opposed to you know focusing on you know B.K. development.
The first part of your question Jeremy the previous owner, Cambridge in the first quarter of 2019 ran a five dollar big box promotion that most of the rest of the system didn't run and consequently, the there.
Or things for sales into one of last year were higher than the balance of pop I system. So that's the reason why this year are <unk> numbers, Oh underperformed relative to the balance of the pop I system, but currently now that we've lap that are pop.
These numbers are back to being.
Consistent with the bounds of the system go running you know 14, 15% positive in the Popeye's World.
In terms of 2021, certainly we will be looking to for growth opportunities in the in the popeye's business and I I wouldn't exclude Burger King development, but certainly were very bullish and the popeye's business.
Great. Thanks, guys, that's the rock.
Hi next question is awesome.
Right right with God.
Go ahead.
Great. Thanks kicked me additional questions you know just one clarification or the comment that the last seven days that seems for sales were down just 1.9% that I think that implies a pretty strong positive results in the last few days, maybe if you can just <unk> confirmed that.
The second question is you know throughout 2000 in 17 and into 18. There was you know deep focus on value and it had a a pretty negative impact on your margins and so I'm wondering now I think Burger King you know corporate has talked about focusing on value in this environment thinking that.
You know one reason maybe the the brand is his underperformed some some period.
And so you as they as the marketing calendar focuses on on value. How concerned are you that that that will have a kind of a similar pressure to Mars and says it's done in the past.
Oh right. Now are are credits are our discounts are lower than they were during the same period of time last year and looking at the accounting around a go forward basis, we would expect that discounts will remain lower than they were last year if your balance.
<unk>.
Okay, but but promotions like they think the the the eight nuggets for a dollar that kind of thing does does it concern you that that it's going to kind of <unk>. You know go back into this cycle that we're in before that was pressuring margins.
No I mean as I said, we're we're for our I I would expect that right. Now are are discounts are lower than they were last year, even with the eight dollar Nuggets, which we don't had for I mean, the eight eight nuggets for a dollar that we've had for awhile and based upon the calendar that we've seen that we would expect that with the level of discounting nets.
Forecast at our our discounts will still be lower than they were <unk>.
Right and then they just something to comment about the the the trend of seems for sales. It seems like the could've been you're pretty meaningfully positive molest you know two two days. So we're two or three days given given the to do numbers you'd given.
That's true.
Okay. Thank you very much.
Thanks, Thanks [noise].
[noise] next question is a phone that Rhinebeck high on the train and Jane. Please go ahead.
Yeah, I didn't I just wanted to you were talking I briefly about development and growth opportunities, perhaps and the 2021, yeah hopefully in a a more normal operating environment, but can you help me understand how some of the friar cat backs commitment that that you had say late last year.
Entering into 2021, how does play into that house, they've been renegotiated with the franchise or whether they're thinking about the term renewables, whether it be cast tomorrow or <unk> or or other commitments that were that were made at the time can can you help me frame that a little bit.
Yeah, we're we're incomplete alignment with are the franchise or or even pre coded as we said on our queue for call. We had significantly reduce star capital expenditure a forecast and that we were reducing the number of restaurants that we were going to build it in.
The number of restaurants that we were going to remodel and in 2021 that will be the same that we're going to be primarily focused on a cash flow and paying down debt.
And the franchise or is completely an alignment with that strategy.
Okay. It has there been I guess a schedule for how many you would you would catch up under different or is it more of a a a flexible T.B.D. depending on how the code that environment is there a schedule that you've agreed to at the moment that you can fill would say on or or is that just.
Sort of T.V.D. and flexible.
Yeah, you're the second part no we have not agreed to anything yet and it's it's a flexible and it's going to be a continual dialogue with with Burger King in terms of you know what the business looks like and what our cash flow position looks like that in there weren't completely admit that we shouldn't be generating free cash flow and.
Paying down debt.
[noise] alright, thanks very much.
Yeah.
That's concludes that question and answer session and the conferences I'll send now can come in it.
Thank you for attending today's presentation, you may now that's kinda.
[noise].
[music].
[music].
[music].