Q1 2020 Earnings Call
Welcome to the Vivek Conference Center index available for specialist will be with you momentarily.
[noise].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[noise].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[music].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[music].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[music].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[music].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[music].
Welcome to the Vivek Conference Center next available conference specialist will be with you momentarily.
[music].
Conference Center <unk>.
Our first lien baby last name wrong.
Okay I'm sorry, what was your first then again.
David.
Okay, and whats called the tea joint long.
Both ACO.
Oh hi.
And are you with a company or a private investor.
Company era.
Right.
I will go ahead inflation to the del Taco.
Okay.
Third enhanced restaurant communications, including a covert 19 hotline.
Group communication platforms to share best practices and changes.
Finally, we are recognizing our general managers and restaurant teams for their efforts to serve our communities through several key programs, including guaranteed first and second quarter bonuses for all company General managers.
Changing our planet annual merit increases and launching a free meal program for a company team members.
These programs have been funded by a series of cost cutting measures, including voluntary salary reductions for all vice presidents and above and reductions to board of director's compensation.
Well remain attentive to our employees and recognize the special people that are serving our guests.
The next work stream is business continuity with a focus on technology.
Our advanced planning and fore sight enabled the successful transition of our support center to a virtual office on March 16th since then the combination of existing and new technologies has maintained our business continuity joint effective flow of information and in some cases has provided new best practices to drive future efficiencies in our.
Business, which will aid our business recovery.
Next and importantly operations led by our COO Chad Reitsma.
We have made dozens of changes to our operating system based on government requirements and our effort to be ahead of the curves to enhance employee and guest safety.
These changes include social distancing procedures in the kitchens and for guest carry out closure of dining rooms gloves and face masks for all employees increased cleaning frequency improved contact list service and preparing for employee health and wellness procedures.
In addition.
Detailed daily scorecards are used to manage key metrics, including sales by restaurant by our by day and by geography, including a focus on labor and productivity metrics. This focus has leveraged our new Labour management system, and led to reduced operating hours and some restaurants to further enhance profitability.
We are proud to announce these changes and the guest service. We are providing recently has resulted in an all time high order accuracy and guest satisfaction scores.
Building off operations is our franchise partnership work stream.
Franchising is a key part of our strategy and we have actively partnered with our franchise owners to help ensure their success.
To enhance franchise liquidity, we're deferring half of their royalty payments for the first seven weeks of the crisis waving 1.5% of the typical 4% system wide marketing fee payment for eight weeks and deferring franchise sublease rent payments for six weeks.
The partnership with our franchise owners remains strong and include sharing best practices regular owner conference calls with the executive team ongoing discussions with our franchise support teams and providing assistance with respect to various programs available to our franchisees under the care Zack.
The next important area is finance.
As previously communicated to enhance our financial flexibility, we elected to drawdown $50 million on our revolving credit facility as a precautionary measure as we also deferred plan non essential planned nonessential capital expenditures and adjusted our operating expenses due to the economic uncertainties.
These adjustments include eliminating all non essential gionee salary reductions for all vice presidents and above reductions to board member compensation deferring, our eliminating all open support center positions and a small reduction enforce at the support center to achieve a tightened focus of resources on our crisis manner.
Agent business recovery and brand acceleration efforts.
Supply chain is also a critical focus whereby daily calls with our distributor and proactive communications with suppliers have helped to avoid any meaningful disruptions to our supply chain.
This effort includes real time sales forecasting to support the continuity of supply inappropriate labor staffing as sales volumes continue to improve during our business recovery phase.
Next is marketing led by our new CMO Tim Hackbart.
Although the eight weeks of reduced marketing funding required a recent reduction in traditional media under Tim's leadership, our marketing strategy has been nimble and entrepreneurial.
Our del Taco mobile App and delivery have been key assets during this crisis.
The database has grown to more than 1 million registered users in part due to a regular disruptive offers only available to app users such as a free chicken Crunch burrito on National Burrito day, and turning our Tuesday, Taco night into an all day offer while harnessing the power of one of our delivery partners to engage their large Hungary user base.
In fact, our recent 10 tacos for 420 promotion on April Twentyth was our most successful ever yielding the highest redemptions of any app promotion to date.
We have been aggressively promoting delivering as a limited contact ordering option with free delivery across postmates door at ash and Grubhub.
This helped to accelerate our delivery volume for over 3% accompanies sales in Q1, two approximately 8% of company sales thus far during Q2.
We have now expanded third party deliveries through one or more dsps to more than 90% of franchise restaurants and expect to launch recoveries by the end of Q2.
Lastly, our strong value position and barbell menu strategy anchored in the new Delis dollar deals menu has provided gas great value and variety throughout this crisis.
We have seen high satisfaction associated with this menu and continued high usage with the dell's dollar deals menu serving to enhance value perceptions and as an add on strategy also given its ease of execution our operators also love it.
Our digital transformation strategy, coupled with the great value and variety provided by the Dell's dollar deals menu will serve as foundational elements of our marketing strategy to deliver on guest expectations moving forward.
And finally, we have legal and governmental policies. This is our final work stream.
We remain close to all state local and federal regulations related to covert 19, and our legal team has helped inform many other work streams to ensure appropriate direction.
The discipline, we've established as we navigate elements of crisis management and move into business recovery will help ensure our ability to further accelerate performance as we move toward brand acceleration.
In fact over the past five weeks, we have seen a stabilization and improvement in comparable restaurant sales trends across the system with company and franchise comparable restaurant sales trends improving from approximately negative 30% to start the second quarter, two approximately negative mid teens and negative 10% for company and franchise restaurants, respectively.
During the two most recently completed fiscal weeks.
These trends include impact from comparable restaurant sales that are more negative than our late snack graveyard in breakfast dayparts compared to our lunch snack and dinner dayparts.
We believe our improved trends benefited from the reinforcement of our contact list and limited contact ordering options such as drive-thru takeout and delivery. We also contend that as consumers began to experience stay at home fatigue and grow tired of pantry stocking they become more willing to order at the drive through window carry out.
And increased utilization of delivery options.
We also believe stimulus checks may or that contributed to the improvement.
Looking forward, we are confident that our QSR plus brand position category, leading value and affordability perceptions and recent operational adjustments will continue to service catalyst to support the following planned actions as we move forward as a brand.
On the operations front, we Havent initiative focused on the guest experience related to safety and sanitation with a goal of standing out as a trusted brand and we expect many of our safety and sanitation changes will become a permanent part of our operation.
These changes along with an operation simplification initiatives are expected to improve our ability to enhance guest satisfaction.
On the marketing front, we have developed a nimble and exciting calendar for the remainder of the year, which includes a focus on furthering our digital transformation reinstating traditional media in June to highlight our everyday value barbell strategy paired with new product innovation.
This includes plan high impact launches of several new products on the Dell's dollar deals menu, including the introduction of new protein that will be unique within our category as well as other exciting new forms and flavors.
We will also leverage the mid tier and upper end of the bar Bell with strong relative value highlighting complementary to dollar to $5 price points, including the launch of fresh guacamole and a new simplified epic burrito lineup.
Overall, we are well positioned to leverage our QSR plus strengths, which includes a lack of reliance upon our dining rooms due to our ability to offer no contact or limited contact channels as well as our strong value heritage.
These attributes will be increasingly important in the months ahead and set up unique opportunity for del Taco to over index on restaurant occasions, as the consumer seeks limited contact food options for lower cost alternatives without having to sacrifice high quality fresh ingredients and flavor.
Finally in all our entire team has managed this crisis better than I could have hoped at the outset and it's a reinforcement of the pride culture. We have created across the brand. Our teams are helping their communities and our proud of the work. They are doing a del Taco whether that is in the restaurant serving our guests.
Or in a support role setting our teams up for success.
Now, let me hand off to Steve and he'll provide a financial update.
Thanks, John before I cover first quarter results I want to summarize our first quarter cadence in certain coded 19 dynamics starting with development.
There were three system wide openings in the first quarter, including two company operated and one franchise restaurant as well as one company operated into franchise closures as a reminder, during the first quarter. We Refranchise all five company operated restaurants in the Yuma, Arizona, and El Centro, California region to an exam.
Shifting franchisee in the transaction that included a development agreement for four additional new restaurants.
Looking ahead, one additional new company operated restaurant in three new franchise operated restaurants are expected to open by summer and we're currently evaluating the appropriate timing for the remainder of originally planned fiscal 2020 system wide openings. In addition, due to cover 19, we have terminated the refresh.
Analyzing the final noncore western market in California, and our ongoing portfolio optimization efforts are suspended pending further evaluation.
From a marketing standpoint, 2020 began with the return of our premium Turkey protein along with the two for three four and $5 promotion, including two for $3 Dell Talkers in late January we launched the new builds dollar deal menu consisting of 15 freshly prepared items praise from 69.
In sense to one dollar this menu replaced Buck in under and was designed to stimulate cryo in frequency with a modest check average in margin impact. The second half of Q1 included the return of our annual seafood promotion in advance of lamps, featuring our crispy jumbo shrimp.
Now turning to the first quarter results total revenue decreased 3.8% to 109.8 million from 114.2 million in the year ago first quarter.
System wide comparable restaurant sales decreased 3.1%, including negative 2.5% a company operated restaurants and negative 3.7% at franchise restaurants. The decrease a company operated restaurants was comprised of the 3.7% increase in average check and the transaction decline of 6.2.
Percent.
Coven 19 began to adversely impact our sales and transaction trends in the middle of March resulting in a stark contrast between company operated in franchise comparable restaurant performance. During the first 10 weeks of the quarter at positive, 1.5% and 0.3% respectively compared to company.
Operated and franchise comparable restaurant performance during the last two weeks of the quarter at negative, 21.1% and negative 21.6% respectively.
First quarter company restaurant sales decreased 5.3% to 100 point threemillion from $105.9 million in the year ago period. This decrease was driven by fewer company operated restaurants compared to last year due to our refranchising activity, coupled with the 2.5% decrease in company operated comparable restaurant sales.
Franchise revenue increased 8% year over year to 4.4 million from 4.1 billion last year. The increase was driven by additional franchise operated stores, it's as compared to last year from our refranchising activity and new restaurant growth, partially offset by a franchise comparable restaurant sales decline of three point.
7%.
Turning to our expenses food and paper costs as a percentage of company restaurant sales increased approximately 100 basis points year over year to 28.2% from 27.2%. This was driven by food inflation of approximately 6%, which exceeded our menu price increases of nearly 4%.
Plus impact from beyond Tacos, two for three del Taco and the new Dell's dollar deal menu that was designed to drive margin dollar contributions at a slightly lower than typical margin percentage, we expect food inflation to step down sequentially as the year progresses, particularly in the second half of the year.
Labor and related expenses as a percentage of company restaurant sales increased approximately 90 basis points to 34.8 from 33.9%.
This was driven by wage inflation from the one dollar, California minimum wage increased to $13 an hour and impact from the coven 19 related drop in sales that amplified our labor deleverage, partially offset by reduced workers compensation based on the underlying trends.
Occupancy and other operating expenses as a percentage of company restaurant sales increased by approximately 120 basis points to 24.3% from 23.1% last year, primarily due to an approximate 70 basis point increase related to third party delivery fees as well as the coven 19 rigs.
With a drop in sales at amplified our operating expense deleverage, partially offset by reduced general insurance expense compared to the prior year.
Based on this performance restaurant contribution was 12.7 million compared to 16.8 million in the prior year in restaurant contribution margin decreased approximately 310 basis points to 12.7% from 15.8%.
General and administrative expenses were $9.9 million down from 10.5 million last year and as a percentage of total revenue declined 20 basis points to 9.0%. The decrease was primarily driven by reduced performance based management incentive compensation and lower stock based compensation.
Adjusted EBITDA was 8.7 million down from 12.1 million last year and decreased as a percentage of total revenues to 7.9% from 10.6% last year.
Depreciation and amortization was 6.1 million up from 5.9 million last year and the increase primarily reflects the addition of new assets, partially offset by the impact of re franchising.
As a percentage of total revenue depreciation and amortization increased 40 basis points to 5.6%.
During the first quarter based on the impact of the Coven 19 pandemic, coupled with a sustained decrease in the company's market capitalization. The company performed quantitative goodwill and trademark impairment tests that resulted in a noncash impairment of goodwill charge totaling 87.3 million and a noncash and.
Chairman of trademark charge totaling 11.9 million.
Interest expense was 1.5 billion compared to 1.8 million last year. The decrease was due to its slightly lower average outstanding revolver balance in the decrease one month LIBOR rate compared to last year.
At the end of Q1 $175 million was outstanding under our revolver and as previously disclosed we recently drew down.
$50 million under our revolving credit facility as the precautionary measure to increase our cash position and to enhance our financial flexibility as as the result of coven 19 $25 million that was drawn before the end of the fiscal first quarter and an additional 25 million was drawn during the second fiscal quarter as.
As of today, we have over 53 million of cash on hand, $200 million remains outstanding under our revolver and the remaining availability under the revolving credit facility is 32.7 million.
Net loss was 102.5 million or $2.76 per diluted share compared to net income of 1.4 million or four cents per diluted share last year.
The net loss compared to net income in the prior year was primarily due to noncash impairment of goodwill trademarks and long lived assets. We also reported adjusted net loss, which excludes impairment of goodwill trademark and long lived assets restaurant closure charges other income loss on disposal of assets and adjustments to.
Assets held for sale executive transition costs and sublease income for closed restaurants, adjusted net loss was 0.3 million or one cents per diluted share compared to adjusted net income of 1.9 million or five cents per diluted share last year.
As a reminder, we have already withdrawn our guidance for the 52 week fiscal year ending December 29, 2020, given the ongoing uncertainty related to covert 19, we're not in a physician to provide updated guidance at this time regarding our expectations for the remainder of 2020.
That concludes our formal remarks as always thank you for your interest in del Taco and we are happy to answer any questions.
Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad and confirmation to home indicate your line is in the question Q.
First our two if you'd like to remove your question from the Q.
Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please when we pull for questions.
My first question comes from Alex Slagle with Jefferies. Please proceed with your question.
Thanks, Hey, guys everyone's doing well.
One dead wanted to start off on cash flow of kind of talk about some of the metrics around cash flow breakeven levels for the company restaurants, and what you. Thank god for the franchisees as well.
Sort of comp.
We need at that level.
Sure Alex good to air permit Steve here in terms of overall break even level, starting with the company's side I would say Arden I'll call it all in basis, including fixed costs at the restaurant level.
On average company restaurants can absorb up to a 40% drops in same store sales volumes to maintain that breakeven level at the restaurant level now of course that will vary depending on the restaurant, the veeva restaurants and their specific fixed occupancy costs in particular.
But thats a good average and think about now in the franchise side.
Similar thought process with estimated.
All in costs for them the averages price closer to 25% reduction that they could absorb on average.
A bit lower of a negative compared to the company. It due to historically franchise has a bit of a lower HCV and also the impact of the 5% ongoing royalty. So thats, how we think about the same store sales to kind of hit that breakeven letter naturally we're very pleased that today throughout the trial.
Since we've been performing comfortably favorable to those breakeven levels, and obviously very much moving into right direction lately.
Okay Thats helpful. And then on day parts I think you mentioned some of the trends being impact in late night in some other areas just expand on that but some perspective on ended the year over year changes in seen in certain day parts and then any regional performance differences worth noting.
Yes in terms of Dayparts Theres definitely three day parts of that have been underperforming a few wells so that would be graveyard late snack and breakfast. That's those later evening hours into the early morning hours. So we've certainly seen on the same store sales for those three.
Day part C of notably more negative than our other three day parts of lunch dinner and snack so kind of makes sense right that those three day parts, where the late night overnight you had the complete loss of the bar business.
People being out in about gathering socially so the late night has taken a bigger hit and then breakfast to a very habitual day part as you know, which has also seen a bit of outsize disruption. So that's what we're seeing in terms of Daypart performance.
You asked about geography.
Very very pleased to report that we are seeing some relative strength across many franchise only states, particularly over the last two weeks. This includes certain states that are significantly over performing the recent franchise same store sales trends, including several states or.
Markets, who have turned positive over the past two weeks, so thats all very encouraging.
That said I want to point out that company and franchise performance in California has been similar since the start of covert 19, and although California has also improved quite significantly over the last two weeks the California same store sales trends remain the most challenging on an absolute basis.
Likely due to in stringent stay at home orders here in California.
I know it thank you.
Youre welcome.
Our next question comes some Nicole Miller with Piper Stanley. Please proceed with your question.
Thank you and good afternoon.
Congratulations on really ramping the delivery business up to decent percentage of comp. It also seems like you're able to get into direct channels. So can you talk a little bit more about what you're doing as a tactic to drive the customers to you on your website.
Or your App and and how much of sales I am sorry.
All right delivery are you able to get.
Directly to you without going to the marketplace.
Yes, Hey, Nicole.
It's still a high it's still a high percentage of all of our delivery order here coming through marketplace.
Although it's exciting to see that we've really ramped up our capability with the with the mobile say solider over a million.
Registered users now.
And.
Thanks, Pat combination.
Mobile App and delivery in particular that we came out at 2019 with this this capability of really having.
Have a robust option there has really served us well over the last six or seven weeks throughout this crisis as you look at.
Where weve put most of our time and effort relative to marketing communications, it's really it's really in those in those two areas and especially as we've had the marketing reduction occur.
Over the last couple of months to just help us in the franchisees get through this period of time.
We found that the.
Mobile App is absolute.
Nimble and entrepreneurial way to go or Avalon move offers in and out very quickly be very disruptive what our offers because.
You need to be an app user to be able to activate those offer sourcing ball same store sales through redemptions and when we're doing that start activity, but we're also seeing more registered users come onto that commodity out through it and then obviously delivery has been a great story both.
Franchise ramping up over the last over the last couple of months I think we're somewhere just north of 50% towards the end of Q1 on the franchise size and now we're about 90% or franchisees that have at least one delivery service provider in the company. Obviously has been fully scaled with the three delivery service provider since the end of December so.
So thats been a great story and seeing the entire system move in a good direction with that which provides the consumer contact contact with ordering point, which is highly relevant right now so well we continue to expand.
Out of those two.
Digital platform here, we will right now we're leveraging on for what we have today and I think.
And we're doing a pretty good job just kind of harnessing bolt right now.
Thank you for that.
Terminating the final market you would have re franchised what's the next kind of input interim stage and then the long term plan does it fit as it is as you know still a very good market do you grow that.
The company owned stores and.
And what how might you treat that market now.
Good question of it is a market that over the last probably six months has begun to actually outperform it is a california market. It's outperforming overall in within California. So some good things are happening up there we did make some operational changes over the last six to nine months, we see that.
Kicking in in the announced she it's a moment to take a step back in pause across a lot of things, but certainly portfolio optimization, the potential sale that market being a natural thing to take a step back and reassess so.
That will be something we're working on among many other things here in the near term.
And I wouldn't rule anything out and maybe something that we have new life on that we do choose to develop but at the same time as you know we've said for a long time now having franchise growth lead our growth long term.
Definitely a priority and a focus for us so.
Consider us open minded on that at this point.
We're assessing a lot of things that being one of them and when appropriate we will formulate the rates further course of action and communicated to you all.
And just real quick if I can sneak it in our numbers on maybe would be good ticket and an update on your average check and actually the day part next maybe not as it stands today, clearly, but any otherwise pre co with normal environment. So we can.
Put some context around the pieces that are stronger versus other in terms of daypart. Thank you very much.
Sure Nicole so in terms of average check last year or company, we ran around eight dollar check average.
Since co bid.
Check average has been outside as it's been north of 20% significant growth, we largely attribute that to party size. So naturally that takes you into that mid to high nine dollar area in terms of recent check average we've seen a similar uptick and our delivery check average so delivery checks continue to be.
Not quite but close to two times you're in store check that was true before.
And post co bid in terms of overall Daypart mix on our 24 hour clock and most restaurants and most restaurants, so our 24 hours.
What we've seen is the main daypart that has gone down notably would be graveyard. It historically is a day part that's a little more than 9% of sales lately, it's been running about 6% of sales.
The beneficiaries of few well from that reduction would be kind of our mid day dayparts, so lunch snack and dinner evolve picked up slightly.
With breakfast and late snack mix kind of overall being about neutral.
Thanks again.
Thanks Nicole.
As a reminder, if you like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Our next question comes from Nick Yet John said John.
With Wedbush Securities. Please proceed with your question.
Thank you.
Yes include just drive through throughput.
Speed of service, obviously, now and I'm, probably going forward, we're going to have a lot more traffic going to be drive. Some how are you thinking about that.
Just to make sure to capitalize on those ankle Banco Brasil business.
Yes, it's a it's a it's a massive focus for US obviously as you look at you know drive through representing 80 580, 687% of sales.
When you layer on the peak day parts like lunch.
Actually in the last couple of weeks, we've seen an outperformance year on year relative to comps App and drive through during at service for drive through at lunch. So so certainly throughput our main priority as we as we think about this peak periods would drive through it as guests are already.
Okay kind of coming through that service that certain that surface move more than ever on during some hours on the day. So operations is focused weve talked a lot about our transaction efficiency program.
We are looking at speed with service.
We're making sure that order accuracy is top of mind, that's been one of the big winners as we it's kind of narrowed our service mode focus here as you think about being narrowed to drive to carry out and delivery that's kind of enabled with some its business going through the drive through us to really tightened our focus and now.
It has yielded better order accuracy scores and actually higher OSAT score. So our teams have done a great job really becoming even more efficient at the drive through getting those cars through leveraging and some stores the.
The ability in some of the company restaurants in a few franchise restaurants, we've got an outside order take our technology that we are that we are leveraging in some locations and we're testing further that can be.
An incremental add down the road to help throughput and efficiency, but right now. The teams are just doing a really great. Good job kind of managing the process and getting great results. The draft Youre right now.
Thank you in terms of just labor variability Steve.
Given all the puts and takes obviously you've got some incremental wages so on gamal costs.
Thank you may be kind of flex.
Our hours worked et cetera, so down sort of panels, 15% type of comp environment, how should we think about the near term.
Variability of labor.
Yeah, right now our approaches to broadly manage the PML, but very specifically huge focus on labor and really that started with daily scorecards that are focused on sales by restaurant by our and by day and Theres a huge focus there.
Our on optimizing labor and that includes we definitely did reduce operating hours in just over a third of our locations.
The intent there was to really help optimize labor and protect profit margins.
That said as we now into our business recovery and brand acceleration phases I can say some of those hours are already being expanded back into the business as volume grows, especially over the last couple of weeks in terms of labor you. We do utilize regression to help set appropriate staffing it's all.
Based on having appropriate sales forecast so theres a huge focus there our recent new state of the Arts Ceridian workforce management system has been hugely helpful in that effort as well and new offices really done a tremendous job achieving the delayed labor targets really during in throughout the whole covance pandemic.
So we feel like we've done a really nice job aligning the labor hours.
With the reduced levels of demand that are starting to improve.
I wanted just last question you mentioned a couple of the franchise markets have turned positive is that a function of those markets opening up.
On.
On can you just kind of.
Remind us.
What percentage of your system is now open dying on.
Just given some of exposure to some of those states.
Yet Nick we don't have we are not our dining rooms are not open across the brand right now and even in markets that have announced reopening you either that these little just last week or so or even in the coming weeks, obviously, we're going to take our general approaches.
Make sure that we hope we opened on a timeline that's going to make sense for the brand our employees in our gas and there's just a lot of factors that go into reopening our dining rooms, we want to make sure that were watching that consumer.
Dine in demand, if you will add and opening safely for our guests and our employees and being profitable as well based on that demand. So so thats not factoring in at all and I'd say, so some of the markets.
Did not did not react as correlate to the pandemic as as others.
Some rebounded much more quickly so it's hard to put your exact finger on why and some of these markets are out performing I think theres a number of factors regarding now, but I'll say generally speaking.
The business right now there is a tightened focus on franchisees are highly engaged our company operators are highly engaged. So these are daily conversations that we're managing and I'd like to say that that goes.
Goes a long way in regards to that performance that we are starting to see here on the last couple of weeks.
Communication, it's really been we've been lockstep with our franchise owners, which is important really across the business notches operational adjustments when and how to reopen dining rooms, but cash preservation techniques landlord relations staffing suggestions is what to help them optimizer for.
Formats and also you know don't PREPA Cares Act, we've been very close to the franchisees, helping them really understand that program. The application process required information for those loans that help put them in the best possible position to protect their business I'm pleased to report that to date, you all but one of our franchise groups have.
Applied for funding and as of today, we believe approximately 80% of our franchise groups have been either funded or approved for funding. So that's another important aspect that we've been very on top of with our franchisees.
Very helpful. Thank you.
We have reached the end of the question and answer session. At this time I'd like to turn the call back over to the management team for closing comments.
Yes, thanks, operator, well, we wish you all the best out there. Thank you for your interest in our brand. We appreciate it and we look forward to sharing our progress on future calls every day.
This concludes todays conference you may disconnect your lines at this time and we thank you for your participate.
Okay.