Q3 2020 Kura Sushi USA Inc Earnings Call
Good day, ladies and gentlemen, thank you for standing by welcome to the current Sushi USA Inc. third quarter 2020 earnings conference call. At this time Oxfords have been placed in listen only mode and the launch will be open for your questions. Following the presentation. Please note that this conference is being recorded today July 14.
2020.
On the call today, we have gene Lowe, President and Chief Executive Officer Publishing, our Chief Financial Officer, and Benjamin <unk> Investor Relations manager.
I'd now like turn the conference over to Mr. cord. Dick you you may begin.
Thank you operator, good afternoon, everyone and thank you all for joining by now everyone should have access to our fiscal third quarter 2020 earnings release.
Www dot person, she dot com and the Investor Relations section.
The earnings release. This also bidding forget and an 8-K resubmitted, yes, you see before we begin our formal remarks I need to remind everyone that part of our discussions today will include forward looking statements as defined under private Securities Litigation Reform Act Nike Nike sides.
These forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them.
These statements are also subject to numerous risks and uncertainties that could cause actual results could differ materially from what we expect we were for all of you already see filings for a more detailed discussion of risks that could packer future operating results in financial condition.
Also during today's call will discuss certain non-GAAP measures, which I believe can be useful in evaluating our performance.
I think they seem to have this additional information should not be considered in isolation doors and substitute for results prepared in accordance with GAAP and the reconciliations to comparable GAAP measures are available in our earnings release.
I have the way I would like to turn the call over to Kevin.
Thank you Ben on the thank everyone for joining us today.
As most of all the you know I listed on helping Dougherty close to do anything off he's got a public portal.
I thought he is out.
Correct defend the trade coal for lighting, but you'll be them up to date on all of <unk> operational and Egypt.
Usually have a specific questions about the about political Delphi necessarily thought maybe to be happy to answer your question forgive each one day.
I believe you've got the Odessa quote we enter 2020, we've put the momentum of course I guess, what on the continued into January I'm afraid without eat or would you feel.
Watch, what's I try and give a month I would've thought here from indefinitely.
Can you talk about Koby, CA 19 began to spread.
How much 18.
Instead of guidelines featured a few months equity shut down or indifferent Danny.
He made a difficulty jumped the coolest, although less on for Jason White.
From the start of the Palm Danny.
But I might come from hoping to safety, although I guess, the I'm going to hit on do pay a lot team our liquidity and the ability to quickly on the beach, Anthony if im all British pound wintertime whats right.
To support our team what do you see these clinical time, we maintained payroll and for all in each through equity to fix it.
Extended the paid on full older <unk> east through May not change.
We have also continue to pay the food of close to Okay. This is he should on well auto <unk> on the state of connected to be double <unk> Audi team will then bus.
Out of the object.
Yeah, I just want to allow for money just thinking about you can't stop Nimbus, probably remained on payroll I believe you need to that the near time expense already tangible <unk> instead of what do you still have due to the stocking.
Finally oldest started but and believe that <unk> equity to look at it you would have already done ball enough Jim to thought that you're thinking about they'll become too cool.
These actions have allowed us to bring about go up people quickly on the open our restaurant Minamata today.
Thanks to our team engagement efforts to let them component of all employees and for the company between the end too much to already July which had placed on us to dump truck fleets Cody.
Into a dineequity fixed ones are lifted underfeeding check to see didn't change what are your next.
Oh Saturday functional vindictive across the company.
We have opened our lifted off comfortably under success. Pete However, you do such by deep in accordance with it all caught a couple of anybody Guatemala.
We began buddy opening the process on May 20 pick on.
By the end of May be how did he opened seven well artists lunch.
Booking additional listed on the <unk> open to fill out the June.
As of today all questions left on opened four Bcf.
Oh, you bought I'll do you want an equity, albeit somewhat unusual or California announced or do you think so.
All in but I need on July paused for a minimum open phebe.
Our bodies, both overall, California slots, most all of each hot the open will be an immediate indoor gardening. According to the Oklahoma People's hobby on the.
And now up to be walking on building out I'll put anything business on the infrastructure for all of our that's all.
We haven't taken a number of steps to create a favorite entitlement.
[laughter], providing popping up sort of pick <unk> meant for our team member.
I think screening to proceed maintaining supposed to do something.
Forming team member health checks before the start over each saved.
[laughter] under 50 of our gift on the team member will always be about top priority.
Part of what's your thought process, we have a customer sabi, which is now focused on another cobiz the 1960 procedure.
I'm pleased with that by the end of June.
How do they see with a more than 15 calls on get pretty frequencies and over 96% Nagy our efforts as a four or five out of five point the scale.
Okay, letting our left a lot could also do body most over the father quota.
Let's discuss somebody's out for the month Jim.
Oh, the old we've improved will be essentially thought about opening.
Well, we're both of you might imagine settlement Overvalue opening and closing policy changes.
Our body markets.
That's where our other koby to 19 <unk> issue to us the company.
I've made recent saves Torrance more challenging to assess.
Due to our target you opening schedule in May and June.
Only favorites taught by opening for the entire muscle Joe.
Oh Gee entertainment for quite understood. What you know accomplish under so things go through the granting of 48.6% largely reflecting the 50% proceeding celestine switched on for me the stuff.
We are extremely encouraged by these comps would you be feel yesterday that the strong consumer demand for our unique dining experience.
We'd be although the opening a movie indirect that's shown on the opening up but I need to do them has allowed us to bid on money a lot continues to be ready to roll fish.
Now I'd like to provide a brief update our development efforts.
As most of you know me begins yeah. This expectation of opening six new restaurant in peace consists of them to any.
That sounds Kt takes us on the Glendale, California Open did you ended the fiscal Q2.
Yes to that temporarily shut down however, as we mentioned on the do it investor quarterly earnings call.
Oh opening schedule has been sold due to its upon that.
Or restaurants under construction in need to much property, New Jersey <unk> in the function of Washington, D.C. on the summer on California.
I'll start but are you can put up some older for hub needs into the construction onto we have started to work on I'll, Let me review, Washington site as well.
Property unquiet on both need very nearly complete all of the OXXO opening can take it depends on the current nobody to situational easily fictive area.
Doing about temporary closure. We also completed you know based on for tripling our disruption.
By completing these innovations do what ends up on did.
We are able to avoid the heavy losses associated with these cords unfold innovations do any non public peers.
I would have announced today, if I just want to our interactive chain robust krueger.
Faster cheaper development officer.
Most recently robot was a senior vice president over development for rich visa.
We are here over sort of the company's grows from 140 350 units.
But I got to bridge P., though he spent six yeah, panera bread, obtaining pretty becoming their senior manager of the franchise development.
On the true yeah. The part that is on group.
He was vice president corporate real estate and the strategy.
So about having been responsible for over 1000 also openings, there's nothing already successfully branch and we're incredibly excited about impact maybe he can have on our long term growth.
Speaking to our liquidity despite the ongoing uncertainty.
We are very fortunate to have entity unique situation is a strong chapter voice.
As of today, we have approximately $14 million just on hand under no debt.
On $20 million evolving growing or credits from Christmas Japan remains a secure.
Although we have not the bottle any among I guess.
Maybe to likely to begin topping our liberal Buck to fund our capital expenditure anybody in the upcoming he's got to you.
We appreciate the support of credit Japan did have confidence in the long term success of a hobby.
Considering gabbana news announcement that you thought it compounding I just want to call. The Tonineteen presidential measure which include the more expansive the dining we will give you some in California.
Appeared on equity that we'll be able to the open our California dining balloon prior to the end of our he thought it yeah.
During our California dining <unk> gorgeous, we expect a weekly Chester mandate to be either idea of 802, Athree hundred $50000, which included 400000 dollar or topics.
Once we are able to the open our California lifted on <unk>.
We expect the deep weekly bundy to be deals go by approximately $50000.
Although we've been able to leave open it English by the opening our restaurants these gains helping offset by the additional chapter expenditures associated with the construction of fiber new unique previously mentioned.
Well final reminder, due to the on travel de driven by Koby Tonineteen, we've been enough issue financial guidance for the remainder of fiscal year 2020 at this time.
Thank you for joining us this afternoon on before your interest in practice you can say.
We were extremely excited about the potential of our business before the threat or probably to 19 redeeming equally confidence that they described if possible.
How about long runway for opportunity I had off.
Before we open time for questions I'll address the sunk although our team members for their hard work flexibility support has to be navigate unchartered territory.
This concludes our prepared remarks, we are now happy to answer any questions you Hopper.
As a reminder, doing that you want they said some pay me onsite in Japanese before my desk once if the current trade it in English please bear with us.
Operator, please open the line for questions.
Thank you at this time will be conducted a question and answer session. If you would like to ask questions. Please press star one on your telephone keypad, a confirmation until indicator as long as in the question Q.
You mean first start to people liked your move your question from the Q for participants using speaker equipment and may be necessary to pick up your handset before parts in the Sarkies one moment, please as we call for questions.
Our first question comes on line of Andrew Strelzik with BMO. Please proceed with your question.
Hey, good afternoon hope everyone's doing well my first question is just our more recent sales trends. So although you gave news June numbers, probably never just the June numbers I'm curious if you could maybe give an update on the stores that are the main to open.
Or dine in that are in the comp base, how how the sales have trended sense or even those outside the comp is kind of how the trajectory has been.
More recently.
Sure. Thank you Andrea will you look at some pretty thought on the contract in Japan.
Then mother and all the hook up with another Oakland and on a particular, but I'm going to get them all on a 50%. When you think about you can have an indoor lighting bolt on all contributed to read any cost well well. He does a gate on or do you think about it was important when it's right on a deliberate about them associated with it must go on a current final data or indicative of what am I going to national.
Looking at the up.
Our oh performance over to into wise for the restaurants, where we've had.
Where we've been able to keep our dining rooms open with a 50% seating capacity limit, we've seen comps and sales levels.
[music].
Up approximately half of prepaid data levels or past year, more or less mapping perfectly on to be capacity limits.
Okay at them on a go then probably holding our people on the no based on what they must not at all for when it comes on already on all global mining credit book on all the speed reading about them.
That being said to California is now Curt over restaurants, California currently open for to go only so unfortunately, we have seen a sales declined in California relative to pre pandemic.
Okay. That's very helpful. Oh, I'm sorry go ahead.
I, just got a little bit more color in terms of our to go cells whatever reasons that we decided to keep or to grow stores opened this time as opposed to Marxist when we meet or mid marks foreclosures.
We kept a couple of our stores open for to go only but our June to grow sales you can first stores that we're open for inward I'd were significantly outpacing the sales that we saw in March and so.
We are we're seeing an upward trend in that respect.
Okay. So that branching into my next question I wanted to ask a little bit about the off premise strategy generally I mean, it seems like a little bit more of a push behind to go you know how are you communicating to the gas I think you made some comments about some investments behind infrastructure. There can you just talking about what that.
Sales and have you changed your view or thinking it all around delivery I know it has not been a priority and just curious where that it's in the to go in the off premise picture for you at this point <unk>.
My mother people do anybody any profit and I'll come back or how do you know what I call them up on a feed to the key marketing budgets get them on what are what in the poor.
On a dining experience that they when it comes what a lot Mcculloch emotion.
So to.
Answer your last question first we'd like to reiterate that the core of our business remains the ER.
Our indoor dining experience and we believe that its.
No it's still very popular with our just as demonstrated by ourselves and our reopened dining room areas.
No.
Well go ahead.
[music].
Oh, no now on a one off on like a pharma dining experience in a little mental to see any matsuoka signal, but I'm not report on a towards picking up on all to both it to go that anybody to implement that I'd say that most appropriate thought neophyte. There I don't like you said it all on appeal to put up over the and I got them from it.
What do you come up probably will be able to them up over that nothing like I did I not by almost everybody on the if I'm not an oddity on our yield any type of units open up quite even has.
So as we mentioned in our previous earnings call or because of our focusing primarily on the indoor dining experience. The last three months Weve focused on developing the projects that we've mentioned before being the touch pedal drinkwater system and be tableside delivery I'm, sorry tables, I cant system and given that we've made significant cross.
US on both of those where we've decided to shift our energies towards off premises and again well.
We think this is a long term and.
In addition to our business and if there's going to be incremental sales or profitability from that from that there's absolutely no reason not to capture that.
Not at all.
Yeah, then I'll pick up in the time to get them up and down but what are they know about that at the holding it will not have done a panel there, but it could go on all I can definitely going to be able to their imogen Dillon on for upsell them, if they didn't want mother.
On the father Party, then I'll put up the whole madill simple so what am I getting a little difficult. The equity book, you starting off with anybody but at the home and type of equal if they give you an outcome that EMA.
So in terms of infrastructure investments our ultimate goal is to build out our own online ordering platform, which would ideally be hosted in it and all in one tactics that would include our waitlist app or rewards program that our online ordering system that being said given the sort of Sutton the suddenness of you announced.
From Governor News has pushed the timeline board and our top priority is to roll out.
Online ordering capabilities as soon as possible so.
We're thinking I just any interest of time that we're going to use this period and we're going to use a third party service to see to power our online ordering capabilities right now, it's going to be less profitable than having our own in house ordering system, just because of a service fees, but this is all.
Oh, we're treating all this as like an investment.
It's a learning process were all up everyday we're learning work things about how to operate off premises and we're hoping that we can implement all of using learnings into the development of our online ordering system.
And if I don't know focusing a little but.
Again.
The only they don't let me not they know that online get off and you pay model that some of that looks almost identical.
So in terms of your first question about advertising right now our orders were limited to in store orders or phone orders and so up the online ordering is the top priority because that would.
Make things vastly more convenient and you know it's easier to advertise as well.
You can you just.
You know I guess my question is where is whereas take out to go mixing right now and what is kind of breakeven level. There can you just give us any sense for how we should think about the economics of that piece of the business and I'll leave it there.
Oh I'm sure I'm of the pumped at all if OPEC has evolved it isn't the hip looking at what out not get hit a multi.
Let me start opening will have to handle them up I'd holding element of coupons simply doing albeit on a complete audience.
I don't hasn't.
So.
Looking at June and this includes our restaurants are open for indoor lighting as well.
Our art off premises mix was 6.5%, which is significantly higher than our historical mix, which is around 1% looking specifically, California about half of our system had a deliberate are off premise mixes of around 9% or more.
Okay, great. Thank you very much.
Thank you Andy.
Our next question comes on line of Jane benefit with Stephens, Inc. Please proceed with your question.
Hey, good afternoon, and thanks for taking the question.
My first one is just on the various kind of ways you can reopen for indoor dining my understanding is in certain cases, you can open with the express felt only in certain cases, it has to be table service only.
So I'm just curious what impact those different statuses wouldn't be are those different levels of operations on your comps or average check or really anything else you care to speak to on that particular topic.
Sure mother.
Well I must get a mall on all of it but it definitely got that you'll hold them. All on all look at all they don't let me tell people that you guys.
Well I came up in multiple homeowners.
So in in terms of average ticket up so we havent changed pricing as a result is having the conveyor belts.
But we've actually seen ticket growth year over year.
Which was a pleasant surprise for us.
Although not all of them at the expense creditable dependable I don't get them on a plane I don't want any cost on a probably to help them all that sort of on uptake on the didn't gave up without either put them up what about on one of the lucky to get interpreted it now and all I wanted I noticed leaks on differently.
Okay got it and I didnt quite well.
And so the most of the most onerous restrictions in terms of a conveyor belts are in California, and so in those markets were not operating or express belt, and we did have incremental labor from the additional servers, we needed to hire to run the food, but as everybody is aware California's close for indoor dining now anyway. So it's.
It's kind of a midpoint for.
Uh Huh one thing that was really interesting is that we're very understanding and forgiving UBS.
You know.
No not having the kundera slugs, just because it's dependent but given that is one of the signature features of our restaurant.
We plan on bringing this back as soon as we think the timing is right. We don't want to lose something but so core to our identity I spoke the customer service Department and like we there's only a one complete and that was because of family had driven 30 40 minutes for the excitement of conveyor belt and there were a little bit disappointed that we were able to.
Slide that so it's just wonder if this this use of the primary belt were to continue for a long time, we do think this would make us a little bit less attractive, but I'm on the exact flip side.
We think that experience will make are really positions as positions us as a destination restaurant.
Great. That's helpful. And then my second question is on development I understand there's a lot of moving pieces here, but [noise].
I believe at one point you had said that the construction on a couple of the up and coming units are nearing completion and so I'm just curious your view on the possibility that Fort Lee or Koreatown would open this fiscal year or if those would be.
More likely to open kind of next year and beyond.
So my mother, and all going on within <unk>, you'll get it get a mall and hopefully nickel until they might find out are you fix all on all of that you know broken up there my company on oil contracts on what that is will that they had to put it out and you call them up more context I'll look at it otherwise could fund until it gets I'll give it back until then.
Although when we said we're going in ability into what I can go up on what you think so I came up from all the multi state of the looking at the money didn't Bodo hope if I look it up but lets go up but I get it almost seems logical thing going on over on that.
So in terms of the construction boats.
Most importantly in a pretty tight in Los Angeles are completely completed.
Currently is just has its final inspection to go through create out is actively going through.
The inspection process and so these stores are largely ready to open although like as you know again as everybody knows if importantly, new Jersey generally in California indoor dining is prohibited in so the gating factor for opening those stores.
Remains these extra realities and.
That being said, we are hopeful that we'll be able to open.
At least one of these stores this fiscal year, but again this is going to depend on the indoor dining restrictions being lifted.
Well, Michael they don't get quite I know that although it is obviously they'll book at about the other spoken them up quite a bit on it they still going to look like you didn't they thought most important going if you think <unk> capable of up on okay that it but I am although I'm wondering if somebody up little bit maybe taking a company got all tied into the case in connection with multiple states looking at all.
So we just wanted to give you some context behind the thinking.
Around our store openings during a pandemic and our calculations have indicated as long as we're able to open for at a 50% seating capacity limit we will be able to secure restaurant level operating profit from those stores and so as long as we can have so that's one of the major.
Situations in terms of the opening timing for given score.
Great. Thank you Jimmy Cogen, Ben I appreciate it.
Thank you Dennis James.
Our next question comes online or Peter saw good BTI G. P suited question.
Great. Thanks for taking my question I, just want to come back to the cash burn how quick.
It looks like you guys are unsure about $10 million or so of cash over the course.
Quarter.
Hard to correctly I think you're burning other call 850, I believe that was a weekly number.
You guys provided so what's the thought process behind you know a b.
Cash burn a if this continues if this environment continue is longer than you know another.
Call it three months.
How do you guys plant to a address that will we see a slowing of development well you put a halt on development to kinda is the cash burn or well your top revolvers to kind of a phone on development.
Thank you for mother's day city I know it took that into the on a minority of it in all placebo Naples.
I think it'll take them up my whole caught up on silicon thought what would accommodate them up in <unk> I couldn't make up almost identical to them.
We just want to make it really clear that the weekly Kasper, we gave during the prepared remarks or not.
Our near term, we do not expect that cash burn rate to continue for the next 12 months.
Take them all at once it goes up or do you mind, just looking up at the mall Cano testimonial to in a lot why do I don't know budget with both hands on without getting into jail nimble on a credible underneath it all automotive all okay. Let me study can I say Jochen tilk optimal KFC same update us intent well then <unk>, although you think would it yet that at the Mcconnell Stefano, but nothing nailing the oddly enough I don't testimony.
They would have got Oh, you won't go talk a little bit multiple on that I think.
Well on all of that on all well you're talking about on occasion part about it otherwise.
On all on the all seem to help a little Philadelphia critical debate about mall jubilant items. It gets a lot at all.
That Michael you put on the remote.
So there's no oh pressures on our cash burn rate.
The first one would be that this burn rate reflects a you know.
Our 14 sports and Calibrin, not being able to offer indoor dining and so that is.
A pressure downward pressure on our revenue you ever would be that we resumed construction on five new units and so.
You know we have a lot of capital expenditures because we've already executed. These leases. These are in mid construction before but you know the capital expenditures will.
That's that remains a lever that we can pull at any point and the capex represents about $400000 of that burn rate. So that would be a very material lever for us to pull and then in terms of up to the dining capacities. We think it's extremely unlikely that indoor dining will be.
Not allowed to four month for four quarters, we were hopeful that it's going to be.
Shorter than that so.
That pressure from the burn rates to be lifted as well when that happens.
Well no. They all told them pick them up multi but it'll get they were going up with Oh put about must have been about that what I'd love to acquire them to comfortable taking them on another study on off on little to stay and get to get equitable.
So again in terms of managing the burn rate.
Capex is something that are completely within our control and so it is also the most material.
Bucket.
And so we we think there is a lot of room in terms of our burn rate going forward, if the situation where to get worse or it became clear that it's gotta go on.
Much longer than initially expected.
Understood, Okay and I. Appreciate you guys gave the the takeout mix.
I think.
On the off premise mix, if you will but.
It can can you quantify that.
Dollars I know, there's a lot of moving parts here Mike.
Prevent damage compose pandemic and you V. So can you quantify what the what the actual.
Maybe dollar weekly sales or per restaurant in anyway on off premise.
So we're oh.
Go ahead sorry.
Oh, My mother done all the amount or something will take us into law, there, but I'm not I'm just look on day on cope with almost inevitable in other words <unk> cycling almost smoked in Oklahoma City.
So in terms of absolute numbers for July we've only been operating for to go only for a couple of weeks and so.
You know our advertising pushes havent really began in earnest and this isn't necessarily reflective of where just can go and in terms of June just the nature of our staggered schedule means that every are staggered reopening scheduled means that every single restaurant.
A different number of opening operating days, so giving you an absolute number for June as well would also not necessarily give you.
A meaningful look into you know what we can do in the future.
<unk>, <unk>, but getting little autocam, something but obviously as an up all the indicative of how did you come up let me think well.
I don't look at all put at Cobiz Almighty Legit buttons opinion, Luckenbill nobody would I know that what are they on old acquisition on a quickly over them into a disposal.
That being said up in terms of your modeling purposes. We do believe it will be able to capture tend to 20% of our pre pandemic sells through off premises.
Okay.
Very helpful. Okay, just last question.
Are you seeing are getting any sort of rent concessions or.
And the opportunity is still to lower the youre your rent expense from landlords or see any of that yet.
Well my mother on all put a another but of course <unk> I don't think equipment. The team an important I'm just getting a program you onboard up it though on the let me is an open but none of them. We can open up some of it if we pull on all money, probably just give them a update them entity, although my husband's government. They bought the mom and pop up on EMA pick them up but all of you don't need on if I got one I'm excited to welcome.
So our development team has been working very hard on this and having or new CEO Robert quicker join us has been.
Immensely helpful were very we're very happy to use on our team and so we've been in ongoing negotiations since April.
We negotiated for April May June and we're currently negotiating for July but for both May and June we received modest abatements and then a deferrals representing approximately half of the the cash rent expense.
Local digital.
Could you just like we just gave them a theater deal with booked well I'll handle that or are they bought the part about that less than what most but at the end to get onto them on albeit it but at April on all could actually you know what at the moment smoking crispy, but no one thing we'd like to note is that because we use as we book are right on a straight line basis. This is not going to these deferrals are not going to be roughly.
Acted on up up you know level.
[laughter] understood alright. Thank you very much that's all I got.
Thank you beat up.
Once again, if you like to ask question. Please press star one on your telephone keypad once again and fuel like Jeffs question. Please press star one on your telephone keypad. Our next question comes a lot of Jeremy Hamblin with Craig Hallum. Please proceed with your question.
Okay.
Thanks, guys. Thanks for taking the questions and providing so much color.
I wanted to just start with thinking about your average.
Location and the level of sales like on an average weekly sales level that you need to break even I think you said that Youd open.
If you had 50% feeding capacity, but if you're a to make that more granular and just look at the.
The average weekly sales volume that you needed to do to breakeven at a restaurant level could you give you know a range on where that would be.
Well my mother.
Well well that it's all mobile deposit, though that my noticed something all taking that Michael just popped into their product and then I will say I don't like any color on that that's a little bit disconnect.
We did a monthly data adult.
On Monday, but on a put it about not to do both but at Cleveland, We're getting started to pick up on like quite a bit.
So up you know our eight or pretend that I gave you sort of three and a half million for able to secure a passive preparing themselves levels that brings us to about a monthly.
Revenue of $150000, which would allow us to breakeven.
Great that's helpful.
And then thinking about you know cash burn and moving forward.
Yes, good five restaurants under construction I just wanted to confirm that excludes Fort Lee and Korea town.
You know.
Yeah.
That does the Red hat importantly, sorry to interrupt.
Okay. That's helpful and as we think about you know I know this is such a fluid situation and it's hard to forecast.
But thinking ahead to fiscal 21, and the unit growth rate that you have maintained.
Is there a threshold on cash on that you need to think about you know we're going to back off the capex for new unit construction because you know this is Jeff.
Prolonged recovery that we get a we hit whether it's you know something that you're below.
You know 8 million, let's say on on your cash and you still have untapped. Your revolver is there a total level liquidity. We say you know at this point, we want to make sure.
But we have ample liquidity, we don't want to get you know in a in a situation where this is carry no longer and we're not going to develop new units is there kind of a level or a range that you have in mind.
Who before you make that top difficult decision.
Well not not funny I know they didn't need it that's all I get that <unk>, what are what a quota going about it I don't you might well sort of holding off autocam that I've got out of permitting it still taking it on a medical dilemma that I'm not quite as a publicly it and they'll go up and if he does it give up on a blended don't Wanna get back into getting off Mccormick off the on a different stuff that even if they are double click on equal nickel Eagle and I will say signal.
So Jeremy that's that's really been top of mind I imagine, it's probably the mines or you know pretty much any other.
Player in the restaurant industry, and it's certainly guiding our thinking and our development strategy going forward.
One thing that we can say is that we're very confident that we'll be able to meet or.
Meet or beat the 20% unit growth CAGR that we've been discussing in the past.
Oh, that's quite as opposed to the.
Conveyable expensive thing Oh, not impossible identical and that's what it would have a difficulty I wish it was almost anything get them all get them up but the audio like him at the must apply on the live I don't know much showed up in a high not sort of couple of Oh stuff that they got mcmullen by almost a little bit Hum missed a multi buttons and if you think jealousy demo I've seen into what is now when I guess it under the old, but I think a little bit of its critical that we thought personally.
They get it though you took what am I gonna stepping up and I put it up into muscle oaky, not what do I didn't know on one hand them on get an optimal none of them accordingly, because it at the by almost at all on then I'll stick with it.
So up in terms that we realize that our development strategies more aggressive in comparison for the rest of the restaurant space right now, but we have to me two main things that are really working in our favor and is driving a sport and one what is the ongoing financial support from the parent.
And you know, they're very strong financial position and the other would be that.
Our calculations have indicated that we're able to touch restaurant level operating profit. It goes we're able to open it 50% or more.
So.
If one of these factors were no longer be true than we would certainly reevaluate.
Understood that's helpful.
Last question is Youve been I think very generous relative to your public company restaurant peers, and then how Youve managed youre.
Your staff, providing full health care benefits and really have weighted.
Furlough really any you know employees for extended periods is that another Oh, you know situation that you would reevaluate at some point how much of your staff is furloughed at this point, but how do you make.
That decision moving forward as well.
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The on all put on the hung up in a lot you want to give me, yes, everybody I know what are what it depends on me, though because it doesn't have definitely didn't need prepared remarks, among us once that based on that.
Well, then you're going to opening an open it anymore, but do you think them head because you'll consider will then you'll do I'm a little bit the whole that will keep them out there to deal with Oh play not that if I don't know Honda the an open ammonia.
Some of that one has to.
Just to give you some context on our.
The reasons why we were at you know more more generous and some of our peers.
This was a financially strategic move by Us where we believe that the <unk>.
Being able to maintain high retention rates and being able to reopen immediately when it was right time to do so were reopened.
Timing, where we wanted to be able to reopen and capture those profits without having to worry about understaffing the profits we'd be able to capture we're more meaningful.
Then.
Sure I'll go ahead sorry.
Oh cws coming in on the vehicles when you put a an old anybody PBB don't but well give me Mcconnell on a focus on what I'll do a local logical.
Do you mind EPS if people are still catalog.
And just just as a reminder.
The.
Or or lack of furloughing anybody until August.
It was predicated on the assumptions.
We would be receiving the PDP load.
And I thought it seemed like India I call on all get caught them up to an all in one of the get better could have a ripple effect. That's all I'll take that on a home business and also maybe there's no putting it wasn't I'm wondering optimum almost anything you can handle Simone.
And then you know the situation, obviously changed and continues to change so there's been a pretty material difference. So oh in may we did another significant furloughed kitchen employees, we brought them back in June but.
You know July.
The number of shifts that we need has been significantly cut in California, and so not every employees.
Is working right now, but the cash support is largely.
Don.
Great. Thanks for taking the questions guys in providing all the detail best wishes for getting back to normal business soon.
Thank you get any.
Our final question comes on line of George Kelly with Roth capital They see with your question.
Hi, everybody thanks for taking my questions.
So just choose for yet.
First.
No I understand there's all sorts of.
Barriers and kind of issues with getting.
Your guess into a seat.
But my question you mentioned on that.
In response to your question that average ticket has grown I know, it's just wondering if you could expand on that and.
What too.
What's kind of changed versus February with an average customer how how is as an average guest.
How do they look or they cautious in general or just what have you seen.
Well my the other if it's been a little thing he can't fill up my follow up any I got on just get them all on a good they're getting make up when I got to be able to do a national debt on all let's talk about the opening a nice dental or the most of the.
Hey, I'm happy to say that I'm, a little dependable at an even cockatiel because whatever I know my model than I do that at all on all Gainesville that you've got to come on but what about how to open up when you look any notable hit that the equal to that and I guess it went up quite nicely.
Sure. So in terms of the average ticket while we have seen an increase we haven't been able to draw a direct inclusion behind what's driving it in terms of what our guests looks like we've seen a modest shrinking of our average order size. We're we're no longer CEO large parties of five or six and.
So that's been driving out it's possible that pure kids are coming because you know there are fewer large parties and children bring down average tickets and so not having as many children to be what are the reasons.
That I've heard.
Okay. Okay Gotcha, and then second question for me, it's just about your development pipeline.
So you mentioned the 20%.
CAGR of but I was just wondering if you could be more specifics for fiscal year 21.
And can you talk about any of the sites that you're continuing to.
You mentioned that Washington, D.C. in Sherman Oaks, but what else is on that.
Are you continuing to to.
Stinnett with plans to 2021 open.
Most most of the immediate need to beginning at the open you got though.
No. It does that give you those <unk>, none of them as well and they eat its couple on all you'll go look at city. So most of you know not just simple Arnold capital on a funny knowledgeable on on Pimple anymore.
Oh, well clunky, Mike in but they will go up although my Nike psyche, <unk> funk <unk> Fung and meet me to know he's got a look cool seats Cody and you look at their panel mccullum, it's actually been able to <unk> I thought we've done a good thinking about equal about Mcdaniel, let's do you look at it could be going to build out at the bottom of the company, let's face it will give them.
So if some contracts for for everything we'd like to go over how right. Now we have 10 leases that are executed we expect to open one of those 10 stores. This fiscal year and then for the remainder to be distributed over a fiscal 21 in fiscal 2002.
And that the pacing in the distribution is going to depend on what our burn rate looks like as a result of.
You know what how we picked up.
As a result of ourselves recovery.
So that's all my when all of my long It will simply you guide you can't doesn't get at temple.
Nike opens it up I don't think under the but do you still my introductory though not totally Michigan I come up so until something good idea on something I, just got mcmenemy could not do nothing but.
Well I need you can hypothetical one.
And then looking directly towards fiscal up 21 young the Oh, yes, physical very well beyond the five stores that are actively under construction now we think these three stores will be the likely candidates for fiscal 21 opening.
Which would be Aventura, Florida, Troy, Michigan, and then the Stonestown Galleria mall in San Francisco.
Okay, Great. That's helpful and I guess I do have one follow up to that or just any significant changes as you think oh just at an average you know your average store in the construction.
This does all this.
Oh good related.
Steph cause you to rethink any of that that.
The box looks like.
Well, then well set up some wasn't it wasn't something.
It's not so quickly I think on your book to Bill.
To make minsky that'll so.
Okay.
Our body bucket.
But what do they got their how did you do now they will underpin nicklin I don't know the Imogen Dillon on all working on volume of instead of had him out to all in all Nick what it ought to get that any must get them. We have to open ended enough on all that about putting it on behalf they've given us because you got to but Oh, I know, but the hoping it stays on well get a pick up well see well tend to think look at a couple of Hamilton.
So.
Every every construction, we do as a 20 year investments given the 20 year leases and dependent if you're talking about 20 years. So we're a little bit reluctant to make construction related changes related to the pandemic that being said in this was already part of our per plane pipeline, but we are testing new bodies that are designed.
More towards our promises whether that means that dedicated may find in the kitchen or pick up racks in front of house.
So that.
That would be the main thing.
That we're considering.
I don't know animal study that it doesn't want to Cleveland.
And on a cost level, there's not going to be a material difference between or to go.
You know a traditional sort of sorts geared more towards to go.
Okay got you. Thank you.
I think it helps.
This concludes today's question and answer session and I will turn the floor back over to Mr., Jimmy Baker for any closing remarks.
Okay. Thank everybody for joining us today, please take yet on the face it. Thank you very much.
This concludes today's teleconference. You may now disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
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