Q2 2020 Fiesta Restaurant Group Inc Earnings Call

Thank you for standing by this at the conference operator, good afternoon, and welcome to the Fiesta Restaurant Group Inc. second quarter 2020, <unk> earnings Conference call.

Today's conference is being recorded at this time all participants are in listen only mode. Following our presentation. We will conduct a question answer session.

Instructions will be provided for you at that time to queue up for questions I would now like to turn the call over to Mr. Rafael Grosse managing director at I see our please go ahead Sir.

Thank you, yes, your restaurant group second quarter 2020 earnings release was issued after market close today.

Not a ready access that it could be found on the company's website www Dot F. RG <unk> dot com under the Investor Relations section before we begin I'd like to inform you that during the call today. The company will make various statements that are not based on historical information. These forward looking statements include.

Good without limitation statements regarding the company's future financial position and results of operations business strategy budget projected cost some plans and objectives of management for future operations actual outcomes and results may differ materially from what is expressed or forecasted in such forward looking.

Statements and the company can give no assurance that such forward looking statements will prove to be correct important factors that could cause actual results could differ materially from those expressed or implied by the forward looking statements can be found at the company's FCC filings. Please note that during today's conference call certain non-GAAP.

Financial measures will be discussed, which the company believes can be useful in evaluating its performance any discussion of such information should not be considered an isolation warden substitute results prepared in accordance with GAAP reconciliation to comparable GAAP measures is available in the copies earnings release.

On the call today, our president and Chief Executive Officer, which Stockinger and Chief Financial Officer, Dirk Montgomery and now I'll turn the call overture rich.

Thank you Ray.

I'd first like to thank all of the investors and other participants on the call today for their continued support during the cold with 19 crisis.

I'll be covering three topics today.

Key priorities for the balance of the year.

An update on the status of our sales driving efforts and second quarter results highlights.

Dark will then provide a financial update.

Our top priority has been and we'll continue to be effectively managing through the Tobin 19 crisis with a focus on the safety and well being of our team members.

Our decision to temporarily closed our dining and effective July 12 was primarily driven by our concerns about the increased infection rates in our markets and we will continue to make changes to our operations model as needed to safely operate.

Our leadership in operations teams had been spending a significant amount of time, taking the right steps to ensure team member bank customers safety through covert 19 employee and guest protocols and to caution.

And we are continually adapting those procedures to changing conditions.

Our second priority is maximizing liquidity.

In July we secured alone amendment that we believe allows us adequate covenant cushion and liquidity to operate in this challenging environment.

We generated positive adjusted EBITDA at both brands and also generated net cash provided by operating activities of $24.5 million through the positive brand level profit at both brands and improved working capital management.

Since the beginning of the Colvin crisis, we have significantly reduced our outstanding revolving credit facility and net revolver debt balances.

As of July 31st our net revolver debt was $48.4 million.

Please see the non-GAAP disclosure in our earnings release for more details on how we calculate net revolver debt.

By the way.

We also Karen on all lease obligations as of July 31st.

And the second half of the year, we will continue to pursue additional actions to improve liquidity, including the sale of own real estate properties.

Derek will provide additional details.

On our liquidity plans.

In his uptick.

Our third key priority is finding new and better ways to drive sales.

We made very good progress during the second quarter on developing a better business model designed to enable our customers to enjoy our brands safely.

Wherever and however, they choose including expanded delivery options, new curbside pickup capabilities and a much enhanced online ordering experience.

With drive through now being even more critical component of our business, we're not process of improving the drive through experience through investments in technology and kitchen line reengineering to improve speed of service, including upgrading our drive through remote pod ordering system and testing a modular kitchen.

That is more flexible and reduces order processing time.

We will continue to invest in ongoing product innovation that will contribute to check and traffic growth such as our alcohol expansion at Taco Cabana and continued LTL dosed and menu add ons at both brands.

Now I'll highlight Q2 results and the status of our initiatives to accelerate sales in this changing environment at each brand.

Starting with oil Tropicana second quarter comparable restaurant sales declined 31.6, but improved significantly over the course of the quarter and into July.

April comp sales were the lowest of the koby timeframe at nine is 49.2%.

However, each month of the second quarter polio comp sales improved significantly driven by improved traffic and check.

This improvement continued into July with comp sales of minus 13.8%.

Which were 400 basis points better than June.

The state of Florida has been more negatively impacted by Colby related challenges compared to other regions, which impacted our sales as compared to other national brands.

Operating timeframe is during the quarter were significantly disrupted in our geographies by coded and protests that resulted in temporary store closures and shortened hours.

We estimate the impact of those operating constraints on sales was significant and may have impacted polio more significantly than our peers due to our relatively higher pre kobin mix of dine in sales of approximately 24% of net sales.

From a market share perspective, we maintained our share in the second quarter in our core markets as measured by Black box fast casual, Florida benchmark in terms of both comp sales and transaction.

Our off premise initiatives are gaining traction with total off premise sales penetration of 11.5% compared to 4% in the second quarter last year.

Delivery sales in the second quarter, roughly tripled compared to last year driven in part by the expansion to for delivery service providers Dsps from only one last year.

And we launched a curbside initiative that was rolled out to all stores by the end of July and is showing promise.

We were happy with check growth compared to last year in both drive thru and delivery of over 10% and 20% respectively.

Drive to check averages were driven by increased transactions transaction size, while delivery check growth also came from increases in items per order as well as setting minimum order sizes for free delivery promotions.

Our new App developed by a leading digital design developer bought a rocket went live portfolio in late July and we expect to significantly grow our online sales through this much improved app.

Although the App was just recently launched loyalty club sign up since the apps went live have increased 45% to the weekly.

Average weekly signup rate prior to the new App.

On the margin side, our operations team has done a great job adjusting staffing and food cost management to approve efficiency.

Second quarter hourly and management labor as a percentage of net sales decreased 90 basis points, excluding cobot 19 incentives and quarantine pad.

Cost of sales as a percentage of net sales was up 40 basis points versus last year, largely due to packaging costs higher promotions and discounts and commodity costs.

However, we significantly reduced food waste to offset a significant portion of those cost increase.

Restaurant adjusted EBITDA margins for the quarter were significantly impacted by very low April comp sales.

May and June restaurant level, adjusted EBITDA margin trends were much improved.

An estimated to be in the range of 19% to 20% of sales.

Colby costs were significant factor in comparing year over year performance with estimated total koby costs of labor incentives.

Safety supply and quarantine related labor, resulting in increasing costs for the quarter for point of $1.6 million.

Turning to Taco Cabana second quarter comparable restaurant sales declined 19.2%, but also improves significantly over the course of the quarter and into July.

April comp sales were the lowest of the Colby timeframe at 26.2% down.

May and June comp sales were both significantly better than April with May comps benefiting from the successful Cinco de Mayo Margarita promotion.

Which drove roughly $161000 in Margarita revenue in a single day.

And the highest total revenue for Cinco de Mayo holiday in five years.

Driven impart by another successful Margarita promotion on July 24th for National to kill a day July comps were minus 14.4% more than 350 basis points above June comp sales.

Alcohol sales and related promotions have helped increase average strive to sales per week by more than 20% versus the first quarter of 2020.

Alcohol and related food sales have been a primary contributor to drive through check average growth in the second quarter of 20% compared to last year.

We also believe Alco wholesales and promotions are bringing new customers to the brand.

And expect alcohol mix run rates of roughly 8% to continue due in part to the state of Texas announcement that drive through sales of alcohol will be allowed for the foreseeable future.

The state of Texas has been more negatively impacted by co related challenges compared to other regions, which impacted our sales compared to national brands.

We estimate the impact of those operating constraints on sales was significant given our relatively high historic level of dine in sales penetration of 25%.

From a market share perspective, we maintained our share in the second quarter as measured by the Black box fast casual, Texas benchmark in terms of comp sales and lag by 140 basis points on a transaction basis.

Tacos off premise initiatives continue to gain traction over the quarter.

With total off premise sales penetration of 8% compared to 3.7% last year.

Delivery sales in the second quarter grew by over double last year's second quarter total and we launched a curbside initiative that was an all restaurants by mid July.

The new Taco Cabana App scheduled to go live in September is in the final stages of development and will include similar attractive features to the polio.

We expect to significantly grow our online sales through this much improved app.

Second quarter restaurant level, adjusted EBITDA margins for Taco improved versus last year.

From 12.1% to 12.6%.

The restaurant margin improvement was driven by significant labor efficiencies as a percentage of net sales of 210 basis points excluded cobot 19 incentives in quarantine pay.

And by cost of sales decreases of 130 basis points compared to last year.

Those efficiencies were partially offset by Colby related labor and operating expense increases, including quarantine related labor costs and special incentives as well as the negative impact of a very soft April comps sales trends on margins.

Based on May and June sales and margin trends restaurant level adjusted EBITDA margin trends are estimated in the range of 13% to 15% of net sales.

<unk> costs were significant factor in comparing year over year performance with estimated total corporate costs for labor incentives.

Safety supply.

And quarantine related labor, resulting in an increasing costs for the quarter of $1.8 million.

In summary.

We are happy with the progress we made over the quarter on managing the Colby crisis successfully and finding new ways to meet our customers' needs and improve sales.

I personally want to thank our leadership team our support staff our operations team members and my Executive Committee for not only persevering during this tough quarter, but in seizing the opportunity to reimagine, our business defined better ways to meet our customers' needs. Thanks to our team we.

Believe we're stronger today than when the crisis began and will even be stronger at the end of the year ready to capitalize on opportunities that await beyond the crisis.

I'll now turn it over to direct to cover the financial highlights in more detail.

Thank you rich and good afternoon, everyone Im going to review our second quarter results and then provide an update on our cash and liquidity.

Total revenues decreased 28.9% from the prior year period to 121.9 million due primarily to the comparable restaurant sales declines at both brands due principally to the impact of covered 19 and a decrease in sales related to close restaurants at Taco Cabana.

The total revenue decline in quarterly comp sales totals are not fully reflective of the sequential improvement in same store comparable sales that we generated at both brands, which continued into July July same store comp sales improved the down 13.8% proposed Tropicana and down 14.4% for Taco.

Cabana.

From a channel perspective, we were pleased with our efforts to maximize off premise and drive through sales.

Consolidated off premise sales as a percentage of total sales almost doubled versus last year growing to 10% of total revenue.

Drive through sales rates in terms of revenue per week in check average during the second quarter increased at both brands compared to last year, driven by successful promotions, such as Taco Cabanas Margarita promotions and successful add ons at both brands such as the top to Sonys and cheesy you goodbyes had quite a trap account.

And your tell Empanadas offered at both brands.

The consolidated net loss in the second quarter of 2020 was 8.3 million or 33 cents per diluted share and included a 22 cents per diluted share negative impact primarily from items, such as 1.7 million an impairment charges and 1.4 million in close restaurant rent charges.

This compared to a net loss of 43.4 million or $1.62 cents per diluted share in the prior year quarter, which included a dollar and 83 cents per diluted share negative impact primarily from 46.5 million and goodwill impairment charges.

On an adjusted basis. The net loss was 2.9 million or 11 cents per diluted share this year as compared to adjusted net income of 5.7 million or 21 cents per diluted share in the second quarter 2019.

Please see the non-GAAP reconciliation table in our earnings release for more details.

Now turning to our individual brands and player traffic count comparable restaurant sales decreased 31.6% for the quarter compared to 1.3% decrease in the second quarter of last year. This year's decline consisted of 38.2% decrease in comparable restaurant transactions, partially offset by a six.

Good morning, and 6% increase in the net impact of pricing and product and channel mix.

The increase in pricing and product and channel mix was driven primarily by increases in delivery and drive to check average and sales channel penetration and menu price increases of approximately 0.2%.

Drive through sales penetration increased to 70% of net sales in the second quarter and average check for dry through grew by over 10% versus the second quarter of last year.

Very sales penetration grew to 8% of net sales and the average check for delivery grew by over 20% versus the second quarter of last year, driven by an increase in items per order.

Turning to the brand profitability for the second quarter restaurant level adjusted EBITDA, a non-GAAP measure is defined in our SEC filings decreased deploy a tropical by 11 million to 10.3 million or 16.3% of restaurant sales for 21.4 million or 23.1% of restaurant sales last year.

As a percentage of restaurant sales for Tropicana experienced higher cost of sales due to sales mix and higher commodity costs and promotions and discounts partially offset by operating efficiencies.

Our restaurant wages and related expenses due to covert 19 related special incentives higher rent expenses and higher other operating expenses, which included higher third party delivery fees and covered related supplies.

These increases were partially offset by lower advertising costs.

As rich mentioned Bouygues second quarter margins were significantly impacted by low April comp sales may and June restaurant level. Adjusted EBITDA margins were much improved and estimated in the range of 19% to 20%.

We incurred incremental costs relative to cover 19 at 1.6 million during the second quarter, including special incentive pay quarantine pay and costs related to masks and sanitizer, one time special incentive pay totaling point 9 million was offered to hourly employees during the second quarter.

Management hourly wage costs as a percentage of net sales improved compared to last year by 0.9%, excluding the coated 19 incentives and quarantine peg due to labor efficiency initiatives adjusted EBITDA, a non-GAAP measures to find interest SEC filings decreased by 9.7 million to five.

Point Onemillion for player traffic count in the second quarter 2020.

At Taco Cabana comparable restaurant sales decreased 19.2% compared to a 3.0% decrease in the second quarter of last year. This year's decline consisted of a 29% decrease in comparable restaurant transactions, partially offset by 9.8% increase and then and impact of product.

In channel mix, the increase in product and channel mix was driven primarily by increases in drive thru and delivery sales channel penetration and an increase in average check for drive through orders driven in part by an increase in transactions with alcohol sales.

Taco.

Taco drive through revenue per unit grew roughly 25% versus last year, representing 81% of net sales driven in part by increased check average approximately 20% over last year again, driven by alcohol promotions.

Turning to the brands second quarter profitability restaurant level adjusted EBITDA, a non-GAAP measures to find interest SEC filings decreased to Taco Cabana by 2.2 million 7.3 million or 12.6% of restaurant sales from 9.5 million or 12.1% of restaurant sales last year as a person.

Management restaurant sales Taco Cabana incurred a higher restaurant wages and related expenses due to covert 19 related special incentives rent expense and other operating expenses, which included higher third party delivery fees. In addition to the negative impact of lower comparable restaurant sales.

These were partially offset by lower cost of sales due to lower commodity costs and advertising expense.

Despite lower same store comp sales Taco Cabana did an exceptional job managing food cost in labor to improve restaurant level, adjusted EBITDA margins compared to last year.

Based on May and June sales and margin trends restaurant level adjusted EBITDA margins are estimated at 13% to 15% of net sales.

Taco Cabana incurred incremental costs related to covert 19 at 1.8 million for the second quarter, including special incentive pay quarantine pay and costs related to masks and sanitizer, one time special incentive pay totaling 1 million was offered to hourly employees during the second quarter.

Driven by efficiency initiatives management, and hourly wage cost as a percentage of net sales decreased versus last year by 2.1%.

Adjusted EBITDA, a non-GAAP measures defined in our SEC filings decreased to Taco Cabana by 1.4 million to 2.7 million in the second quarter 2020.

Let me quickly touch on our cash and liquidity, we amended our senior credit facility on July 10, the details of which are included on our Investor Relations website in the 8-K filed the same day, we believe that the amendment will allow us to adequate will allow us adequate covenant cushion to liquidity to operate the business through the end of.

The loan term, which expires in November of 2022.

A few key points I'd like to highlight from the amendment.

The covenants were revised to reflect current sales and profit trends and include only two financial covenants through the remainder of 2020, which are a minimum liquidity covenant and a maximum capital expenditure covenant.

The minimum liquidity covenant generally defines liquidity is available revolver capacity plus cash balances and were required to maintain minimum liquidity of 40 million in the third quarter of 2020, and 30 million in the fourth quarter of 2020.

As of July 31.

Our liquidity as defined in the loan Amendment was 71.6 million, leaving a significant amount of cushion compared to the covenant target of $40 million and at current sales trends. We believe we will continue to improve liquidity.

The facility size will be reduced from 150 million to 95 million in a phase production beginning with a 30 million reduction at the closing of the loan Amendment on July 10 at 15 million reduction in the fourth quarter of 2020, and a 10 million reduction in the first quarter, Tony 21 to the extent that our revolving credit facility back.

So at the time of the scheduled reductions is already below the reduced capacity no additional loan pay down as required.

The interest rate on the loan is LIBOR, plus 500 basis points with an undrawn fee at 50 basis points in the LIBOR floor of one percentage point.

This compares to a pre amendment interest rate on a scale based on the adjusted leverage ratio that averaged LIBOR plus 250 basis points and then second quarter of 2020 with an undrawn fee of 30 basis points.

At the second quarter end, we had 101.4 million in cash and a 148.5 million in debt of which 146.5 million outstanding was under our amended senior senior credit facility. In addition to the 30 million repayment on July 10, we paid an additional 62.5.

In through July 30, Onest. This resulted in 54 million outstanding revolver credit borrowings as of that date.

Notably as of July 30, Onest were also current on all lease obligations with no rent deferrals.

We are tightly managing capital expenditures total capital expenditures in the second quarter of 2020 or 2.6 million. Our expenditures primarily included 1.4 million for maintenance.

Point 9 million for Tech and point 9 million for technology and corporate.

Capital expenditures in the first half 2020 totaled 8.7 million compared to 21.7 million in the first half of 2019.

Our 2020 capital expenditures will not exceed 22 million.

Working capital efficiency has been significantly improved as a result of our vendor payment term and pricing renegotiations, which contributes contributed to cash flow from operations of $24.5 million during the second quarter of 2020.

We believe that a significant portion of the improvement in working capital efficiency represent sustainable improvements in cash flow.

We're also marketing 16 owned properties for sale or sale leaseback, which are expected to result in cash flow increases going forward as of July 31. We had received offers for the purchase of 12 properties, where the average offer per site in the range of 1.7 to 2.0 million.

The marketing process for these properties will continue through the second half of the year and we believe we will close transactions on a number of the properties through for which we have offers by the end of 2020. However, there can be no assurance that any such sales were sale leaseback transactions will be consummated.

To conclude our operations team is doing an exceptional job keeping our restaurants operating safely while improving efficiency in the face a challenging conditions as a result of their efforts and supported by recent sales trends. We feel confident that we will be we will be able to improve liquidity based on current sales trends.

We are optimistic that a number of our growth initiatives will accelerate in the second half of this year as they gain traction, including curbside capabilities, our new apps and continued growth growth in delivery channel sales. Our entire team is focused on evolving our business to emerge stronger competitive position poor.

Just to take advantage of future growth opportunities. Thank you for listening and we will now open up the call it a questions operator.

Certainly sir.

We will now begin the question answer session.

He joined the question can you hear me Press Star then one on your telephone keypad.

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Using speakerphone, please pick up your handset before passing any key.

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We'll pause for a moment this call is trying to Q.

First question comes from Nicole Miller Reagan from Piper Sandler. Please go ahead.

Thank you and good afternoon, we appreciate the update.

I know this is the tedious question I'll apologize that when you think about the first 12 days of July.

Until now because you helped us with July comps, which is incredibly helpful. Thank you what would you say about does dining room closures and impact on trend.

Well first of all an identical first of all.

When we made July 12 decision on closing the dining rooms, we were a day or two before the mayor of Miami Dade County, who then said that old again at the close right. So we were ahead of the curve on that yet.

The impact we were not getting much in terms of sales through the dining room anyway.

In fact.

It's why we made the decision throughout the entire company.

The dining sales were very small.

Okay.

We're probably not surprised by that being two two and half weeks into earnings season. So if we take the July numbers that use those somewhat as a run rate and I use that term very loosely because it's a fluid situation and I think we've concluded there is nothing dramatically happening dramatically different than then when people can't get and so that goes back to what you said this is dry.

Through an off premise that that's pretty much domestic right.

That's correct as well as the drive-thrus one the curve side is another.

Inline watering and pickup and delivery and that's what's driving our business for improvements throughout this post crisis.

I also wanted to let you know we really appreciate the store level margin commentary because that's been something we've been taking in time.

The monthly basis as best as we can from commentary.

Active.

Fantastic.

You take that in apply the comp in the store level margin commentary I want to talk cash burn I will just how you haven't had time to really run the numbers the way I would have liked but.

Not even sure that you're in cash burn territory. So can you walk to your premise previous commentary on cash burn and then how you're thinking about it right now please.

Sure. So I mean, we are not experienced any cash burn right now on a run rate basis, we had indicated.

At the end of the first quarter that at the comp trend even in the first at the kind of at the tail end of the first beginning in the second to that we you know that we were.

Out of that out of that cash burn situations. So as we've as we said.

At the current sales rate, we expect to continue to improve liquidity.

And that's that's kind of kind of where we're at.

Nicole that that includes we're we're now current on all our leases in our right Theres no deferrals. So we don't have a cash burn.

One other thing it's certainly benefited us as we said in the second you know in second quarter was just.

Maximizing working capital efficiency.

Okay. Yes may noted that model that okay, and then the last one on margins on I've always gone back and forth on Nelson I feel like I.

You know here both sides of it but when you think about those alcohol sales and that's a great run rate is there any margin benefit embedded in that or is that going to be fairly similar with pretty much a mix shift benefit that you could get in these other channels.

Are they going to be more similar to food than not.

Nicole I would tell you when you're doing $2 Margarita is.

It's not agree.

So that's not helping the margin, but it sure is bringing in traffic.

And with that with the increase in check size.

We believe that the dollar ring. The net dollar profit ring is accretive which is one of the thing thats driving up our check our check average and drive through.

Okay. So really make sure we look at it as doll.

Collectively together the power of of that side of the business and what it does for the check and not supporting margins is that is that the better way to think about it and to try to isolate it out.

Yes, correct and you're leveraging the labor.

Okay.

Okay. Thank you again.

Appreciate the time.

Thanks Nicole.

[noise]. Thank you.

Once again, if you have a question. Please press Star then one.

Thank you Pat.

Your next question comes from Brian Vaccaro from Raymond James Financial. Please go ahead.

Hi, Thanks, and good evening I wanted to start out with comps at oil Trabi call. It could you share a bit more on what you're seeing across regions I guess more recently.

But how is south, Florida, holding up relative to other markets.

A replay of specifically.

Sure. So I mean, we time, we we focus a lot on black box.

Hey, our trends are slack box and that the south Florida core market trend.

Is in line with the Black box, a black box market trends as we as we said.

In the noncore markets, which only represent about 25% of our sales.

Weve relative to black spot Black box, we've trailed slightly.

Particularly in Orlando, we think the hospitality tourism effect has impacted us more negatively then than some of the other some of the other concepts that were being compared to in that and that set.

All right that's helpful and Derek I appreciate the stats you gave on on sales channels and I wanted to just make sure I got it right for each concept could you share again, what was driving through sales mix and delivery sales mix for each brand in Q2 and could you share where those mix.

Say June in July sort of after you had launched some of the expanded off premise initiatives as it is it up further from those Q2 numbers.

Yeah. So.

It's I'll give you the quarterly numbers and then.

Yeah, we can talk about kind of overall overall trends, but by channel. So the 4.0.

The drive through mix in the second quarter was 71% of sales on the delivery mix was 8% of sales.

Those are both up significantly.

From from both a prior year and what we consider to be kind of the first.

Three or four weeks of post covert activity.

Which was actually in the first quarter.

And then.

For Taco Cabana.

Second quarter drive through penetration was 81% and delivery penetration was was 5%.

And I I think just in general.

You know we've seen.

Sequential improvement and drive through sales at Taco.

We're I think we feel like we're kind of.

Really in.

Probably the beginning stages of perfecting the alcohol promotion.

Cycle, but we you know as isn't as we've said the July permit we've had a couple of pretty major promotions now that have drove driven a pretty significant amount of traffic and I think we're going to continue to.

Connect connect those those purchase occasions.

As we move forward. So I think we we expect to continue to.

To maintain or improve those those drive through rates from a from a capacity perspective.

As rich said, we're working to try to increase the capacity in the speed of service.

On drive through for both concepts.

And it's not I mean, it's yes, little little increments make a big difference.

We invested in where we have been in our investing and better technology to improve speed of service in the drive thru and in kind of really simple things like pods that can see they can work further out from the restaurant a little things like that make a huge difference.

Mhm and can you remind me what we're talking drives your speed what are the drive through seeds recently or in the last quarter or so at each brand have you get done to have any thoughts on that.

Yeah, I mean, there, but there but down below the low five below five minutes here.

Okay, great great.

I also wanted to ask a couple on the amended credit facility and some of the milestones specifically and the asset sales I. Appreciate the detail. There. Thank you said, it's 16 units how many of those are poised choppy calls versus tacos, and how many of them or in South, Florida, The South Florida market.

Yeah, just the SEC weekend.

I can give you that look see 123.

Thanks.

So eight well it's half eight units Sir.

Hey units, Okay, Tropicana units are Taco Cabana.

In terms of the units in South Florida.

Let's see.

Hello.

Yes.

Like most of or not and yes. There is there a couple of units in South Florida. The most of them are are not in south Florida on the point is side okay.

Okay, Okay, great Great and there was also a a milestone in there related to hiring an outside consulting firm I think it was continues or could you just expand on what areas. There will be focused on are we talking store level are more focused on gionee and is there way to ballpark potential savings at this point.

Efficiency gains.

Yes, so to answer that second question no. Their work is still in process.

Their focus is really around back office.

And GSK, so, they're they're working with us to and their affirm that spend a lot of time process reengineering and.

And Permian and process improvement.

With a lot of other companies like ours that have multiple locations and so.

That work is underway and we.

We expect to be wrapping it up here in the next couple of months.

Alright, thank you.

Thank you.

This concludes the question answer session and today's conference call you may disconnect your lines.

Thank you for participating and have a pleasant day.

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Yes.

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