Q3 2020 Jack in the Box Inc Earnings Call
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Yes.
[music].
So when and welcome to the Jack in the box Inc. third quarter fiscal 2020 earnings conference call today's call Im seeing black Knight fly over the Internet.
He played out the call will be available on the Jack in the box corporate website starting today.
Next question and answer period Pcs your handset asking a question. Please do not Oh first speaker phone.
The queue up first question. Please press star one on your telephone keypad at this time, the opening remarks, and introduction I would like to kinda call over to Rachel wet.
And it's tricky strategic.
Back in the box. Please go ahead.
Thank you Stephanie and good morning, everyone. Joining me on the call today, our Chief Executive Officer, Darrin, Harris, and executive Vice President and CFO Lance Tucker.
Our comments this morning per share amounts referred to diluted earnings per share.
We will refer to non-GAAP items throughout today's call, including operating earnings per share adjusted EBITDA as well as restaurant level margin and franchise level margin.
Please refer to the non-GAAP reconciliations provided in Yesterdays earnings release.
Following today's presentation, we will take questions from the financial community. Please be advised that during the course of our presentation and our question and answer session. Today, We may make forward looking statements that reflect management's expectations for the future which are based on current information.
And while management will provide current thinking on this call around the potential impacts of cobot 19 on our business given the unprecedented nature of its pandemic and the rapidly changing environment any forward looking statements should be considered with this elevated level of uncertainty.
Actual results may differ materially from these expectations based on risks to the business.
The Safe Harbor statement, and yesterday's news release and the cautionary statement in the company's most recent form 10-K are considered a part of this conference call material risk factors as well as information relating to company operations are detailed in our most recent 10-K 10-Q and other public documents filed with the S. P C.
These documents are available on the Investor section of our website at www dot dropping the box dot com.
Our fourth quarter ends on Sunday September 27.
We tentatively planned to announce results on Wednesday November 18th after market close our conference call as tentatively scheduled to be 88 am Pacific time on Thursday November 98.
With that I will turn the call over to there.
Thank you Rachel and good morning.
The first like to pick a moment to express my heartfelt. Thanks to our restaurant team members for keeping every once they do a top priority because we provide for the needs of our guest in first responders.
I also want to think or corporate employees franchisees and suppliers for their partnership flexibility ingenuity. During these unprecedented times I've only been in the role for a little over six weeks now, but they've done a very busy six weeks about the opportunity to.
Make burgers cooked tacos with team members in our restaurant.
Met with many of our valued franchisees and I've onboarded with many of the corporate staff.
Just one of also spend a significant amount of time with my executive leadership team.
Do all of these interactions.
Extremely impressed with the nimbleness of this brand in the willingness of our employees at our franchisees 'cause it towards keeping our gift safe.
As well as our stuff C.
Which has enabled us to drive strong results in the middle of a pandemic.
The pattern for the brand has been evident in every interaction.
As mentioned last quarter, Jack <unk> early in a pandemic to capitalize on changing consumer trends, including changing media placements.
Leaning into delivery and offering and doldrums flavorful and portable menu items.
So for the third quarter was a direct result of this up 6.6%.
Sales accelerated throughout the third quarter and the momentum from the end of the.
Quarter.
We won't get it.
As our continued outlook to be cautiously optimistic.
Additionally, we will be thoughtful about what we've learned throughout the pandemic and apply it to future strip.
How did you use to help preserve this moment when cash flow remain robust and.
Positioned to Miss the pandemic.
Lance will share more detail on this in a minute.
As we look at the results through the third quarter same store sales were the strongest in five years. So it's a third quarter of 2015.
Line some of the key success drivers.
The team has been dialing in the right value equation to drive overall sales.
In 2019 and into two drill 2020, we experienced success with our for 99 bundles and Upselling.
Matt on strategies, we can they need to see these price pointed offers during this time.
We also continue to benefit from.
Launch in mid January time tacos.
Performance.
We've seen some.
Same success from them over the past six or so a month and they certainly appeal to off premise occasion is very portable consumer.
First sponsor remain strong and time entire Taco category.
Tiny talk was drilled transactions and book.
Frequently added on the guest orders.
[noise], then indulgent products that is again portable and snackable during this pandemic, while capitalizing on tourism trends.
Our success.
A thoughtful upsells strategy the popcorn chicken has been the most successful offering double that.
These upsell strategies are not only easy for our crews to execute being able to guests to get what they want at a great value and support cross.
And our franchisees.
Customers also addressed speed improvement.
Customer perceptions of speed of service.
Pretty significantly in the third quarter.
Selecting our continued focus on giving the guests an experience that is consistent.
A quick and we'll make them want to return.
The aside from these continued strategies. We're also seeing shifts in our business as a result of changes from consumer behavior admits cobot.
First.
Consumers are utilizing delivery and our mobile out more than ever.
Delivery and mobile apps sales remain approximately double what they were prior to the pandemic.
As a reminder, over 95% of our restaurants are covered by at least providers.
We continue to integrate our Pos systems with these third party providers, allowing for simpler procedures for the restaurants.
Sorry.
Second occasions that shifted away from the traditional breakfast day part what consumers no longer commuting to work, but since we offer anything on the menu anytime if they were seen plenty of breakfast items selling later in the day.
Well the breakfast day part, it's certainly been impacted by the end of the third quarter. All five of our day parts were positively contributing to overall sales performance.
Third we have increased sales are more premium and indulgent items items, such as our homestyle chicken Sandwich and classic Buttery, Jack you shifts in consumer behavior of led to sustain significant increase in our check sizes during the pen.
And then Mike.
As ourselves have improved we shifted some of our marketing spend.
Immediate team has been extremely nimble leveraging consumer consumption trail show and video content.
Really meet the consumer where they are during this time.
For example, if you recall, we move media away from sports last quarter as most events were cancelled.
Now that they're back, albeit in a very different capacity.
[noise] now switching gears to unit growth.
Franchisees.
Close six restaurants. This brings our year to date totaled 22 rough.
One of which was company owned.
For those of you that attended by meeting.
Very strong background in development.
The process and tools in place to really just jump start growth.
But it's going to take some time.
You are aware developing strong new unit pipeline and takes anywhere from 18 to 24 months.
Looking at.
Overall at the business, we're feeling especially in light of our strong performance at this time last year and continued momentum into the fourth quarter.
Moving over to call the Lance I'd like.
That's it take a moment to address his departure. Please it certainly has been a pleasure.
Pretty short time.
But I'd like to thank lands for his many contributions and leadership to the company strengthening our strengthening our financial position and managing cash well through the pandemic on behalf of the leadership team you will be missed and we wish you. The best of luck in your new opportunity.
Yeah.
And while we have already initiated the search freelancers replacement.
Just know.
Reprioritizing finding the right person.
Good.
I'll now turn the call over to Lance for a closer look at our third quarter results.
Words, and good morning, everyone.
Operating periods for the third quarter was $1.37 cents.
As compared with one dollar nonsense last year.
It was primarily driven by strong sales results across the system, coupled with lower DNA costs.
Systemwide comparable sales.
Increased 6.6% in the third quarter company called sales increased 4.1% comprised of check increases of 21, Cooper's now in transaction declines of just over 16%.
Franchise comps sales increased 6.9% for the quarter.
Similar to last quarter sales results continued to be strong across our system.
With all regions positive in the third quarter.
The difference between company and franchise same store sales was primarily driven by a few company owned locations that are heavily dependent upon down in traffic those locations have the drag of just over a percentage point on overall company same store sales.
As mentioned in Yesterdays release.
For the four weeks ending August 2nd the strong trends we experienced at the end of Q3 has continued to this point in Q4.
During the third quarter.
Company restaurant level margin decreased to 25.4% down from 27% last year.
Nearly a point of this decline was driven by labor with wage inflation between six and 7% in the quarter.
And the addition of our emergency paid sick leave program, which added roughly 30 basis points.
Occupancy and other costs were also up nearly a percent driven primarily by delivery cost increases in kogan liking related supplies.
Food and packaging costs decreased 20 basis points during the quarter driven by favorable mix shift.
That's more purchases of premium items increased our average check.
Commodity inflation in the quarter was approximately 3.6%.
Franchise level margin increased $5.4 million when compared with the prior year quarter, primarily driven by the increase in franchise same store sales.
That's a percent of total franchise revenues greenstock level margin for the quarter was 41.5%.
Without the changes from the new lease accounting standard franchise level margin would have been 44.4%, 2% increase versus 42.4% in the prior year.
Advertising costs, which are included in SDMA.
For a $3.9 million in the third quarter compared with $4 million in the prior year.
This slight decrease was due to the reduction in marketing fees for the last couple of weeks of April which fell within the third quarter.
Marketing feed for the fourth quarter remain at the traditional 5% of sales.
You know decreased $10.6 million in the quarter as last year's DNA was inflated by $7 million due to legal settlement.
As a reminder, the settlement accrual was reversed in the fourth quarter of last year.
Mark to market adjustments related to company owned life insurance policies or coli policies as we refer to them also drove a favorable 2.6 million dollar reduction in DNA versus the prior here.
As we've discussed these policies are sensitive to swings in the stock market.
He's coli gains are nontaxable, which in combination with an improvement in earnings before interest and taxes.
Before income taxes, rather drove our tax rate in the third fully 27.9%.
Now to turn to our liquidity and debt like many in our industry, we have seen business performance change significantly.
Well our performance is certainly held up relatively well given the uncertainty around the magnitude and duration of the financial impacts caused by the pandemic.
We continue to believe it is prudent to take actions that will maintain and bolster our healthy liquidity position.
To provide a quick update on cash company ended the third quarter, but roughly 197 million in cash on the balance sheet of which 160 million lives unrestricted.
We temporarily paused or share repurchase program.
I have $122 million or share repurchase authorization remaining.
We do not expect to repurchased any shares for the remainder of the fiscal year.
We do however remain committed to returning cash to shareholders as we assessed our cash position for the quarter, we've decided to reinstate the quarterly dividend of 40 cents per share.
We'll continue to revisit and monitor our capital allocation policy each quarter as we gain further clarity around the impacts of the cobot 19 pandemic.
Our leverage ratio at the end as a third quarter was just over five times.
We continue to be in a strong position when looking at the covenants associated with our debt structure as well.
Lastly, we have scaled back capital spending for the year after spending only on a central projects at this time.
To put some color around this you can think of it as approximately half of what we were planning to spend for the full year initially.
That concludes our prepared remarks, I'd now like turn the call over to the operator to open the lines for questions. So Stephanie we'll turn it back to you.
As a reminder to ask a question. Please press star one on your telephone keypad [laughter] due to time consideration [laughter] Liase. Please limit yourself to one question and one follow up protection.
You have additional question maybe can you at that time. Thank you. Our first question is from Brian Bittner.
<unk>.
Please go ahead.
Thanks for the question Hi, there and it it feels like you could be a change agent for Jack in the boxes. It really two unit growth over the long term.
It would have thought like in the meeting agreed and that's what it feels like today and I'm just curious what do you believe.
He is really needed the crack the code on getting the brand Coca units outside of the other two regional core market, where most of the units or close to it seems like the company's never really crack that code and I'm wondering after six weeks if you haven't thought.
Brian I appreciate that they're commented and my thoughts as I've had a chance to to lean into the business somewhat.
It's really understanding what drives our success. So you know part of that is making sure that we have the people the process and the tools.
To focus on growing the brand.
Understanding what's driving our consumer behavior is another component that we will continue to focus on so that we can make sure. We're entering the right markets with the right economic model and the white box. So.
What I would suggest is that as we as we look at whether it's a or existing markets, where we have plenty of room to grow or new it's really understanding our consumer behavior, what demographics are important and making sure that we have the flexibility and what type of units that we opened or the prototype in essence, a kid of parks. So.
Whether it's in line any cap.
Whether its non traditional we need to be able to meet consumers, where they want to experience jackpot.
Thanks for that and my follow up is there any color you can provide on franchisee level cash whoa I'm in that and how it's trending right now relative to past few years.
And maybe tied into that we're franchisee sentiment stands right now.
Yeah at this point, what I would say is that.
Its sales across all geographic region for franchisees are trending in a positive direction.
And we Havent disclosed.
Cash flow.
For our franchisee.
As you are aware.
We provided relief.
And many of our franchisees were able to get a PPP loans overall, what I would say as many of them have.
Decided not to defer rent payments and have paid early on some of those are you adjustments that we made or relief that we provided.
Your next question comes from Alex Slagle with Jefferies.
Please go ahead.
Hey, Thank you good morning, there and I realize it's only been there at the company for several weeks now, but one doesn't franchisees asking for any where do you see the nose in any way to help them keep moving the system forward based on what they told you.
Yeah, Great question I mean, it's been a great for six weeks of getting a chance to connect with franchisees I've had a chance to spend time with.
Over 60, 65 of them or or 55% of the system. So it's been a great opportunity just connect and get to now some of what's on their mind, what I would tell you. It's the biggest thing they're looking for pharma is visibility to have a seat at the table and really being engaged in you know.
How we think about the path forward, but the business. So really the ability to provide feedback for us to listen for us to engage and get their input on initiatives. We're rolling out because a lot of times. They have great ideas on how they can make us better and so we want to make sure that we take the opportunity to hear engage them and all the right areas of our business that will Justin.
Hence the strategies that we put in place.
That's helpful. Thank you.
Your next question comes from Dennis Geiger you'd be yes.
Please go ahead, great. Thank you great. Thank you Don wondering if you could talk a bit more about your impressions around.
Both to the new products pipeline is a strategy would seemingly has as you did very well in recent quarters as well as you kind of the overall value strategy any kind of update that you see going forward anything as it relates to two value and new products any kind of tweaks.
You know that you see depending on the pressure that can consumers are coming on new over the coming quarters I'm just kind of on on on that strategy and you know whether anything new to change or how confident you. All did this is kind of the right strategy to drive continued momentum for the business in coming quarters and going forward. Thanks.
Yeah, Great question.
So let me, let me talk about value first and the value strategies, Jack and how I think we can set to set ourselves up for success.
If if if we see you know our competitors lean into price. When it offers an example over the past couple of years you know the team has really been working on getting the approach to value right.
We've focused on these 499 bundles that the product team has created to have to help insulate our margin as well as dr. transactions in this environment.
Some of our successful add ons at a three dollar price point can also mean different types of value for different consumers. So while the vast majority of our customers at all at these onto their checks. Many you know one or $3 mill tiny tacos and they can have those as well too so to me for the value piece, it's really meeting our consumers.
Desire to you know value what what they get for what they pay and we'll continue to focus on innovation around doing that whether its upsells, whether its unique snackable items that they can treat as their their main entree.
Or whether its indulgent items like our buttery, Jack or homestyle chicken.
We want to give consumers what they desire from Jack at anytime in the day.
Great and then if I could you kind of a quick follow up just a rounded the discussions that you mentioned with franchisees can you just described kind of the demand for growth does does it seem to be there I know that pipeline will take the time to build but they're just seem to be a strong interest and demand for new units based on the conversations you've had to date and thank you very much.
Yeah, Great question, what I would tell you that my discussions with our franchise system. What I found is that they're eager to grow they they want to grow now what I would say we need to do in order to.
Accelerate that gives them the tools provide the correct crosses fees.
So it's a really enhance their desire to grow so like I mentioned earlier kid of parts being able to go to many different locations with the Jack Brad.
I'm, giving them the tools to find real estate more rapidly.
And and then more than anything focused on the unit economic model and getting the right size box for them to bill and the markets.
Your next question comes from you try and glass Morgan Stanley.
Please go ahead.
Thanks, Good morning.
Fortunately get some context on the sales acceleration given or Lance.
What do you see underneath it it's just easier I know you said Oh legions your positive but is your regional skiing, you talked about I think breakfast out contributing which are the surprising to me you do anything you see other than we've seen Qs ourselves getting better would obviously you've got some product news in the market is any sort of granularity you come to wide about why you're you're so much ahead of a lot of your peers right now and.
GAAP basis.
Hey, John this is retail I'm going to take that one so first of all from a regional standpoint, we're not gonna share specific by region I guess now in areas, where places it started to reopen and we really haven't seen degradation and its Lance mentioned, we continue to see strength across the region.
Hi in terms of a daypart trends that we've seen transactions really drive our improvements throughout the third quarter, we see not across the part is have you think about breakfast in particular really those hours writer right before the lunch day part is really where we've seen a growth flipping to positive for that pipe.
That's helpful and then and then during just one more in development.
One other thing as you've gone through re franchising process.
You know, but as you meet condo development, sometimes companies like the lead the company stores just want to prove the economics are approved a new model do you see any change in how you think about the company franchise are you thinking about the leading development in the system more aggressively to do to underscore your confidence in model or do you see it not changing.
No at this point it would be too early for me to provide any guidance around how will approach growth outside of will continue to focus on it and in something and providing the tools for our franchisees to grow.
But we'll continue to evaluate that into our both our short term and long term strategy.
In essence of all the company and grow.
Units alongside franchisees at this point in time, it's focused around Francesco.
Thanks.
Okay.
Your next question comes from Gregory plant worked with <unk> and <unk> Securities.
Okay.
Hey, Thank you very much for the question.
Just just maybe on on the margins that I, just I would think that the company store margins are probably not agreed proxy for franchise margins because of the regional SKU and also the comp difference. It can you maybe help just just they'll each frame up it did franchise margins are kind of up on the current comps and in given kind of how much.
For the business is going to drive through and then and then a follow up would be just because I guess, how much is going to drive through change your plans for what the assets you're going to look like on a go forward basis in terms of the store design the percent of the dining room, Oh square footage or anything like that.
Hey, drags thanks for the question I'm I'm going to answer your first question and then switching over to Darrin on your second question, but I think you're right in terms of company being a little more outsized in terms of margin impact first based on our largely California footprints.
Like you mentioned, we should see some benefit from the dining rooms being largely closed across the system and the company in particular kept our staffing entire time with no reduction in hours.
Our non emergency sick leave program also so couple of things that I would say are a little bit unique for company compared to franchise results and given the sales performance, we would expect them to be a little bit in a little bit stronger position from a margin standpoint.
I'll kick it over today on for the unit piece.
Yeah as you think about how we evaluate the current economic model on the boss as it relates to off premise. It clearly we're learning some things through through the pandemic and one is we have to continue to focus on how do we create this incredible guest experience to our drivers.
Or any off premise occasion, and so we're definitely going to take some some of the opportunity into our future save you have to evaluate that I do think dependent nickel changed some things where we have to ask ourselves from questions about as we develop a kit apart some locations should have a very limited dining room, we have something like that today.
So I think you know what are your question was waiting as we absolutely will evaluate.
Both the size of a box and the size of our dining rooms to meet.
The guest needs in the way that they want to experience shaft.
Okay. Thank you Beth.
Your next question comes from Jeffrey Bernstein with Barclays.
Please go ahead.
Great. Thank you very much.
Two questions just walking down broadly speaking and how does he joins the very interesting time so welcome.
That seems like all the restaurants that are reporting tend to talk about despite a horrible situation, but there's been some silver linings and the industry, whether its technology adoption or drive through usage real estate availability speed of service lots of potential positive Im just wondering maybe what trends.
Have you seen change over the past few months, you underlying business and maybe what would you do differently going forward to maybe further accelerate the change that you've seen maybe well because there is an opportunity when I had one follow up.
No so different good question.
You know.
One other things with the trends is.
Permit I think it's going to continue to remain important.
I think it's just accelerated and now we have to amplify how we pay attention to it and how we.
Still give the guest the divest experience, we can't whether it's through delivery or whether it's through.
The drive through.
Oh, the consumer data also indicate one of them. This is going to continue to remain top line for consumers. After the end limit so continuing focus around our cleanliness and taking care of our guest and and letting them know that they should feel safe as well as our employees I think it was a trend that's going to continue.
I also think about from an operation standpoint.
And this time, what what we've recognized is you know through our ability to focus say for example, more of our energy through delivery and were the drivers.
You know what we've we've tried to do is focused on you're taking care of our guess.
And in ways that are really focused around their experience and teaching our teams to make sure that focused on the experience delivering a product that's flavorful at a good speed and then also that factor. So just by that focus along being able to focus on drive through we've seen enhancement to our business.
Got it and then just a follow up a maybe a clarification you talk about in the press release momentum through June.
Well that it accelerated I guess through the third quarter and based on the fact that we've already had some.
We could bits of information earlier in the quarter. It does seem like perhaps you ended the quarter in a low double digit range and then there was mention that.
The acceleration continued thus far into the fourth quarter. So just trying to interpret when you say the acceleration continue does that mean that trends have further improved or you just happy to say that the momentum had record quarter has sustained at the same level just because we did have so much granularity through the fiscal third quarter, just trying to get a sense to what the implication was thus far in the fiscal fourth quarter.
Yes, so based on the tidbits of information we gave throughout the third quarter you can calculate the exit rate that we experienced throughout the third quarter, how much does speak to the acceleration we felt throughout Q3 and based on the comments I know release, it's really pointing to that sustained performance.
Experience towards the end about every corner.
Your next question comes from Chris I will call.
Steve.
Please go ahead.
Thanks, Good morning, guys.
Daring based on your comments it sounds like you think the system does not have the development tools needed sport franchisees and which is surprising to me given a company of Jack size that they wouldn't have that capability. So can you elaborate on the magnitude of changes that you think are needed to support franchisee development.
Absolutely so Chris person.
Sure title. This morning was pretty interesting using my name. So I'll give you said it for that [laughter], but beyond that what I would say to answer your question specifically.
Jack has tools, but I don't want to mislead anybody.
I'm talking about as you know seeing how we can upgrade doesn't take it to another level for example, multiple different unit economic model and multiple different ways to to open locations, whether it's true.
In line.
It's in the cap units and freestanding we need to figure out even if its conversions in this environment. We're taking advantage of some of their real estate opportunities that may exist.
We have to continue to develop our processing systems.
Adjusted and be more agile and adapt rapidly so that's more where I'm, referring to and then just continuing to find ways to value engineer.
Our new developed.
Our unit economic model.
And so thats really what I'm talking about making sure that we have continuing to make our tools.
Our prototype and everything.
More efficient and effective to to be prepared for more aggressive growth.
[laughter] Justice I cannot.
Yes.
You know over the past few years that really getting back off price I guess going forward is even more and I felt it for us just to add a little straight.
That's helpful. And then just given the elevate important dates to your thinking of some of that.
The company had been working on previously.
And why not maybe accelerate the program given franchisee cash flows it improves.
You know as you can imagine covert certainly through this.
Wrench in our plans as far as increasing improvements so we focused on safety and health for employees.
And we focus more on.
And the behaviors that we needed to implement during pandemic to stay consistent.
But what are we willing.
Sorry, yeah, or some things that we did delay such as are holding cabinets, which will they are expected draw. It later this year that enable us to cook more products upfront that'll help speed also makes the product quality better.
Different ways to Cook to delivery speed. We've also prophecies, but would also say train thinking around speed and then measurement. So those are the areas that we will be.
I think will enhance.
What our guests are already telling us is that their perception of our speed.
Has improved.
So.
Now, we'll get it through tools.
That will enhance it.
Your next question comes.
With Keybanc capital markets.
Advertising spend it back half a year and I'm just wondering if that's something you'd consider that at Jack in a box maybe nationally.
Competition.
And perhaps help sustain your momentum.
What happened and and if so you know how might look like what impact like the.
You know the competitive.
The increase in advertising have under your current momentum.
Yes, so I mean right now we'll continue to focus on the plan that we have to the back half year.
With our with our current media spend.
Well, we will do is as you know field drive our ability to have additional marketing dollars to spend.
So we're going to look at all you know opportunities that may exist as I mentioned earlier, we're starting to go back into some of the sports opportunities that exist and then also with some targeted consumers.
Where we think we can meet them via social and digital channels.
If I could maybe ask the question like a follow up question on onto the development commentary. It seems like every brand wants to maximize the off premise capabilities in near future store growth.
And with that might need is there is sort of gold rush for good locations with a you know drive through capability. So we just wondering if the typical pipeline being 18 to 24 months out is this a time, we maybe you consider trying to rush that along in either get to the front end at 18 to 24 months or perhaps inside of that especially you can take advantage because we don't see opportunity.
Marketplace.
Yeah, I think you know we want to look for every opportunity that makes sense.
From a standpoint in our geographic areas and those yeah, you're right outside of it.
To accelerate growth through finding.
Yes.
As I mentioned earlier additional ways for people to consume Jack whether that's taking over closed restaurants or whether it's just.
Having a counterparts to go into different sized buildings.
So definitely I think there's going to be opportunity.
I think our franchisees will and have already expressed interest in pursuing some of those opportunities.
Thanks.
Your next question comes from David Tarantino with Baird.
Please go ahead.
Hi, good morning, and Lansburgh, but I just wanted to wish you well or whatever.
Are you you'll be enough.
And then Darrin, let my question is about.
Essentially the the drive through the conversation.
And one of the things that I guess, there's been a hallmark for exactly the box the crossover.
And perhaps complex from anywhere and I was wondering what the press that eyes.
On that because there's an opportunity to simplify.
The menu could get more focus.
And the drive better group or.
There's a good though.
Well I think you bring up a couple of good points one of things Jack is always been known for innovation and variety throughout all day parts.
We're going to continue to focus on that strategy and really enhance our product pipeline.
And when you do that we're going to look at our entire menu and we're going to make adjustments as needed.
But overall are we going to eliminate a substantial portion of menu that's not our focus our focus is how do we drive innovation and grow and create more variety for our guests and then decide in that process are there some menu items that we should eliminate.
Keep in mind to that.
Some initiatives we've had in the past to help with simplification happened with consolidating ingredients and.
So this is Rachel ill take that one Ami certainly talk a lot of data internally and externally, while we will comment on that right now you can imagine.
With the industry shifting fell nine real delivering an elevated experience at the on I don't know if you want to add anything to that but I think in terms of just the trends we're seeing.
Theme.
The ways that consumer behavior is shifting its important to meet them, where they are in continue to really drive that elevated experience.
Your next question comes from John Talent with Wells Fargo.
Okay. Thanks, gentlemen.
All right.
Thank you so darrin aside from the unit growth piece of the equation, which you talked about earlier on in this call and your intro call couple of weeks ago are there other pieces of business that you feel needs to be addressed that that wasn't necessarily being discussed under prior leadership, whether that be saying in operations or new products or marketing or anything like that that again a few.
Morning.
So I think more than anything Jack has this incredible.
On a brand personnel.