Q2 2020 Texas Roadhouse Inc Earnings Call
Greetings and welcome to the Texas Roadhouse second quarter earnings Conference call.
Today's call is being recorded all participants are now in listen only mode. After the speaker's remarks, there will be a question and answer session.
Turning if you'd like to ask your question. Please press Star then a number one on your telephone keypad.
Should anyone need assistance at any time during the conference. Please press Star Zero and then operator will assist you.
I would now like introduced Tonya Robinson, Chief Financial Officer, I have to Texas Roadhouse, you may begin your call.
Thank you April and good evening, everyone by now you should have access to our earnings release for the second quarter ended June Thirtyth 2020. It may also be found on our website to Texas Roadhouse Dot com any investor section.
Before we begin our formal remarks I need to remind everyone that part of our discussion today will include forward looking statements.
These statements are not guarantees of future performance and therefore undue reliance should not be placed upon that we refer all of you to our earnings release and our recent filings with the FTC.
These documents provide a more detailed discussion of the relevant factors that could cause actual results could differ materially, but not as forward looking statement.
Leading factors related to the code at 19 outbreak. In addition, we may refer to non-GAAP measures if a predictable reconciliations of the non-GAAP measures to GAAP information can be found in our earnings release.
On the call with me today, its Kent, Taylor, founder and Chief Executive Officer, Texas Roadhouse. Following our remarks, we will open the call for questions now I'd like to turn the call over to Ken.
Thanks, Tony Oh, legendary food and legendary service, it's as simple mission statement that has got to Texas Roadhouse, Robert 27 years and despite the events over the last four and a half months. These words have remained a cornerstone of our culture and philosophy.
Pivoting to to go only back in March two now excuse me.
Limited capacity and outdoor dining along with traditional and curbside pickup or managing partners deserve a huge thank you.
They continue to work tirelessly to make sure they take care of every guests while at the same time, providing a safe environment for our Roadies.
Their jobs have never been more difficult as they now have added the added responsibility of ensuring compliance with local capacity guidelines for operating their dining rooms.
While managing through unique set of circumstances that has a.
See their restaurants to go volumes remained well above historical levels. Despite this our operators continue to find creative ways to adapt to the daily challenges they face.
And the upward momentum of our sales true that their efforts are paying off we would all picking gerber employers as remain a top priority as we have previously talked about earlier on we provided P.P.H. or employees and since then have added symptom surveys temperature checks and fortunes in.
Our dining rooms.
Particularly proud to note that in the second quarter up 2020, we spent approximately 4.7 million on added compensation sick pay and benefits for our frontline folks and we will continue to focus on their safety, both near and long term. This quarter showed us that our guest remain loyal to our.
Brad and we're willing to adapt as our dining rooms reopen through the quarter, we saw our sales volumes increase.
And as our sales improve we also saw improved financial results, where they returned to positive restaurant margin and cash flow in June.
With our cash position to stabilize and over 95% of our company restaurants operating their dining rooms in a limited capacity. We have moved forward with some of the new restaurant development that had been placed on hold in March during the second quarter, We open to Texas Roadhouse is one bubbas 33.
In addition, we have opened two additional Texas roadhouse locations in July.
We plan to open for restaurants during this quarter and are moving forward with construction on eight additional sites that could open before they ended the year, including one jaggers well, it's too early to get specific on developments for the next year. We expect to continue opening new restaurants in 2021, we have also been.
Working on potential changes to our building prototype that could further enhance our ability to handle hired to go sales, we believe uncertainty and volatility will remain with us over the coming months in quarters, regardless of what comes our way I have full confidence and the ability of our operators and restaurant Roadies.
I would respond in a death.
Also note that our dedicated sports center Roadies will continue to make sure that our operators are taking care of and have the resources. They need at the end of the day. It's about that's remaining focused on legendary food and legendary service no Tony will provide a financial update.
Thanks, Ken we were pleased to see the reopening of dining rooms throughout the second quarter and the resulting sales improvement which continued into July average weekly sales for all company restaurants claims from about 55000 in April to nearly 89000 in June and a 499 restaurants operating.
Entre limited capacity dine in model generated average weekly sales of over 96500 in June with to go sales accounting for roughly 25% if those sales.
Our expectation based on recent trends is that we will continue to see this higher level of to go sales for the foreseeable future.
Weekly sales in July moderated slightly to just over 86000 for all company restaurants with limited dining capacity restaurants, averaging almost 88000 July sales started off lighter compared to June due to normal seasonality along with the negative impact of the shift of the July 4th holiday to a Saturday.
Hey, this year.
Additionally, with several states increasing restrictions in recent weeks, we have seen a slight moderation in sales relative to genes performance. However, this moderation has not been significant enough cabin material impact on our overall comp sales performance.
On average weekly sales at restaurants in most of these impacted Steve remains above our overall weekly sales average and we are pleased to see average sales were trying to over 90000 for the last week at the July period.
Comparable restaurant sales for the second quarter decline, 32.8% in my mind comparable sales decreased 46.7%, 41.9% and 14.1% for April may and June periods, respectively.
Comparable sales for July period were down, 13%, including an approximately 1.2% negative impact from the calendar shift mentioned earlier.
Restaurant margin as a percentage of total sales decreased to 2.5% in the second quarter well. This is certainly well below pre code at levels. We were encouraged by the monthly trajectory of our margins in for used with the return to a positive restaurant margin NRG period.
At current sales levels, we expect to generate low to mid teen restaurant margins over the coming month.
Cost of sales as a percentage of total sales increased to 34.7% in the second quarter. This line was negatively impacted especially earlier in the quarter by the higher ticket sales mix at these transactions typically do not have the benefit of the higher margin beverage attachment.
Additionally, commodity inflation of approximately 2.9% for the second quarter was primarily driven by higher beef costs in the back office support or due to the shutdown of many beat processing plant.
With these facilities back online we are seeing supply increase in prices normalized.
Labor as a percentage of total sales increased to 41.1% in the second quarter labor dollars per store, we were down 17.3% compared to the prior year period, including a declining hours of 26.3%, partially offset by 9% of wage and other inflation.
Higher wage rate is due to the increasing the number it to go hours, which is a non tipped wage position.
Additionally, as Kent mentioned, we occur incurred approximately 4.7 million up labor costs in a second quarter related to ready really payments in sick pay as well as additional benefits to our frontline employees.
Finally, other operating cost as a percentage of total sales with 18.9% other operating costs were negatively impacted by the lower sales volume as well as the added expense purchasing glide masks and other personal protective equipment and supplies.
Moving below restaurant margin DNA cost for the quarter decreased 10.3 million as compared to the prior year period.
The primary drivers of the decrease where a savings of 4.9 million from the cancellation of this year's managing partner conference at 2.5 million reduction of cash bonus and equity compensation and 2 million of reduced travel and meeting expenses.
We expect DNA as a percentage of revenue to return to more normalized level in the back half of 2020 based on current sales trends.
We ended the second quarter with 282 million of cash, which is up 52 million from the end of the first quarter. The primary drivers of the increase for proceeds of 15 million under our revolver, along with 40 million of cash flow from operations.
Weve inflows were offset by 35 million of capital expenditures, the increasing cash flow from operations for the quarter included 48 million of working capital inflows.
In June we generated positive cash positive operating cash flow with higher sales in improved to restaurant performance and expect to do the same in July and for the remainder of the year, assuming current capacity restriction.
We will continue to allocate capital to the development of new restaurants based on the development plan test outlined earlier, however to the extent that state and local guidelines begin to further reduce capacity in the dining rooms, we would reduce capital expenditures accordingly.
Finally, I'd like to reiterate Kent's comments about the strength of our operators and our employees. Despite the challenges we have faced they continue to keep their heads up and stayed focused on taking care of our guest and each other there resilience in compassion or what keeps this brand strong not only over the course of this crisis, but also into the future.
That concludes our prepared remarks, operator, please open the line for questions.
Yes, ma'am and again as a reminder that is start one two and ski question.
And your first question comes from line of John Glass from Morgan Stanley.
Thanks very much like.
My question I see what the Comping promise you seen recently how much now are you experiencing just the underlying capacity guiding them in dining room capacity restrictions or do you think you're still more room to go I would like shoulder periods can you talk about maybe outdoor dining I've seen a number of red houses that have impromptu patios. If you will construct and the parking lot what what kind of capacity is that at.
It and how many restaurants is that that in in total.
Hey, John.
Go ahead, Tony you take an old Oh, that's why I like afterwards.
Perfect I was just gonna give a little color on you know just the Com. There's limited capacity restaurants, you know I'm for July were up 11.2 person or I'm, sorry were down 11.2% I mean, we've got a pretty fair next you know, 100% capacity restaurant 70, 550, I'm down to two.
Many five so we're seeing a lot of different results across the board and and a lot of times. Its capacity levels, you know with outdoor dining doesn't mean, you know exactly 50% or 75%. So we're seeing you know sales in fruit you know higher sales levels coming in earlier in the week.
Right at lower decline in sales earlier in the week, you know when I was little bit higher sales decline on weekends, which would be expected given how our volumes typically run on you know crop the days a week. So we definitely see our operators taking advantage of shoulder to shoulder opportunities opening a little bit earlier, having that outdoor.
Mining different things like that as they are working to on you know you know get as much sale to there as they can.
Oh, that's kinda give me a lot of its weather related to a like a where we were able to do some outdoor dining in Texas now. It's 100 degrees. So it's a little different California, a that it's been a effectively shut down except for outdoor dining you know we're doing better there and then.
You have places us in like Minnesota, Michigan, where it's working well so it just depends on whether in a lot of cases.
Okay. Thank you very much.
Your next question comes from on a Brian.
Please go ahead.
Thanks, Hi, guys. It looks like you to go sales are studying out at around 25% of sales and and it sounds like you expect is to continue moving forward and as it relates to the go to go business can you just help us understand the profitability or the margins of the to go.
No business versus your core dine in business.
Sure. Brian This is tania and yes, typically that that should go is going to be you know about $4 last for my P.P.A. perspective, because you do leaves that alcohol that a beverage attachment overall, not just alcohol, but stop at a time attachment, which had you know a higher margin.
So typically that's what you're gonna see now from it to go perspective, you typically need less labor hours on it together transaction, but you are paying out higher wages because that is a minimum wage position versus a tipped wage position inside the restaurant. So you are going to have a little bit I you know from a higher.
Page perspective from that but you know we've been really looking at those transactions pretty carefully understanding where there's some opportunities.
On to gain efficiencies and can't might want to speak a little bit too you know that the prototype that we're looking at where we're taking advantage of those higher to go sales and making some changes there were looking at some things from a technology standpoint.
To help make those transactions you know just easier to try you know to reduce maybe reduce the labor impact a little bit more.
Yeah. That's gen. Our operators had been all summit figuring out.
How to take either all or part of our a waiting rooms, and I put a door on it put on sliding window on it.
Curbside, a walk up to the window or you know six feet away from the next window or so so we've really adapted our buildings to take on this additional volume and as you said, we believe this additional volume will continue or even as stores get back to 50 or even 75%.
Thank you.
Your next question comes from online Peter from B T G.
Great. Thanks for taking my question.
Congrats on the sales.
I've talked to ask about probably about the free cash flow.
Comment.
Sounds like at this level.
Self funding.
You know cutbacks in Capex [laughter].
Correct cellphone these levels.
Yes.
Yeah that yes, that's true Peter I'm you know that's what we're seeing that's what we saw in June.
You know that with a higher sales volumes, we were able to on our operators were able to create you know enough cash flow from operations to help us from that perspective. So you know we expect to kind of T that going forward and we did have some working capital inflows that benefited us to enjoy.
And just from a timing perspective, so but that doesn't include offsetting you know capex from a development needs store and also maintenance of existing assets.
Great and then the on the go business.
Totality ours.
<unk>.
So you think you're capturing and this you know 25% off sales or.
Our existing guess just coming in and.
Aren't way.
Oh, that's got a I would say, it's mostly existing guess, but.
But I've gotten some letters interestingly enough or you know specifically more in the March April timeframe.
People that have not been.
Ben regular guest of ours are that said they are really appreciate everything we've done and how safe we've made it and they're not going back to whatever restaurant they might have mentioned before but they're going to stay with us. So I think absolutely we've made a lot of new friends.
Alright, Thank you very much.
Your next question comes on line of David.
From there.
Hi, good afternoon.
My question is.
Basically about the unit growth outlook, it seems like you're thinking about.
Really.
Starting that effort.
After and taking a bit of a pause, but I wonder if you could talk about what you're seeing from a real estate.
Perspective, and whether you think there are more opportunities coming to that you can take advantage of 2021, and 2022 and what that might mean for the pace of growth.
We look out beyond this year.
Sure so.
No I will be like 2021. This year, we would have been over 30. So we kinda, we push say a 10 plus over the next year and next year was already looking Ah you know 30, plus so so we're we're seeing which of those stores. We can now pushed a 22 so.
The honest with you we haven't really been changed a lot of new stuff you know because we can't tell the up people were buying it from that we will build or or or or leasing. It from that we will build within the next 12 months.
But there's a lot of people like calling us and saying. This is opened this restaurant close or this business close.
Yeah, I would say that the availability is definitely on the increase.
And.
That is your comment meant to imply that next year could be more normal year on development that you mentioned the 30 number.
Or do you think you can maybe math that numbers to think about the next few years given the range of opportunities well if you could tell us what our occupancy is gonna be for the next four months or that would be great. Then like give you an answer.
Fair enough and then Tanya can I ask your question about the margin so.
It's in low to mid teens, if the current sales level.
With that imply if you're to recapture 100% of the sales.
With that gets you back into that 17.
Per cent restaurant margin range that.
2018, and 29 10 or would it be higher than that.
I I think a lot would depend on what the mix it scales, where you know how much more to go versus Diane.
Because as I mentioned earlier that to go transaction had a little bit different margin profile than maybe at nine and transaction. So I think a lot would depend on that and then our ability maybe to have that to go transaction be a little more profitable would certainly certainly help from that perspective, so that would that would probably you know that would certainly be at call.
All of ours is to get back to more you know and not 17, 18% range, where we then maybe then be able to you know.
To me that further but I think it's just a lot's going to depend kind of eye on how things play out with you know just the mix of sales and things like that.
Great. Thank you very much.
Your next question comes from in line Jeffrey Bernstein from Barclays.
Great. Thank you very much a cap Im just wondering I think you mentioned in your prepared remarks that you see some changes in the new unit prototype I just mentioned earlier in terms of unit growth bucket for this year at 21 22 I'm. Just wondering if you can give any context behind that I know, it's all about keeping the energy in the building.
It seems like more of the sales going to be to go. So you think it's more boxes or maybe just a whole different pick up delivery potential opportunity or outdoor dining any kind of thought some changes from a pandemic in terms of the core Texas brand.
Oh sure basically we're just taking our a waiting rooms and in some cases, where we've got an outdoor overhang call. It a where we had some outdoor waiting before we're pushing that wall out and that way, we have oh more space to do a to go curbside in that area and then and then on the other.
Her half.
That.
Prior waiting room call. It a we can now store to go supplies, but we're going to put a call. It up a barn door or that goes toward our lobby and then you slide that door and it can become ondecks seating.
Or waiting for elderly folks as an example that would be space to six feet apart.
So we'll have that ability for that room to pivot Ah depending on what's going on its.
Got it and then there was no mention of Bubbas in the prepared remarks I'm just wondering if any thoughts on the future unit growth. There I know if there's anything during the pandemic that would leave you more or less excited about the brand. It seemed like it's a little tougher because there's less alcohol sales and what sports and whatnot, but any changes you might consider there.
Oh, well believe it or not they're probably our best group, Oh about putting tencent outdoor seating in and because the garage doors. We haven't the bar, we can create kinda that outdoor component in our bar area as well and then we've got some Ah Ah outdoor patios of which summer covered in some more.
And then we'll look to maybe covers for more and then you put fans out there and Tvs and it is you may recall or not or we have a music videos as an option plus tribe TV and the Bubbas and Ah. So when there's no sports on we just have more TV is on the a on the music.
Videos and so when you come in to get some amazing food you can like stand up by your table and that's just as long as you stay six feet away from the next table.
It sounds like it would be hard to do but so it doesn't sound like there's any change in terms of enthusiasm for bump is on the heels in a pandemic.
Oh, not at all or more so.
Great. Thank you.
Your next question comes online, Jeff Farmer from Gordon Haskett.
Thank you I'm just curious what the last six to seven weeks of look like in states like Florida, Texas and the gets more recently, Ohio in terms of the jump in Cobra Kids counts.
Are you seeing consumer behavior change.
Well I'll customers attributed to it to to off premise anything you can you can provide would be helpful.
Sure. Jeff. This is Tanya you know in some situations and in certain states. We did see slight moderation as I mentioned, though it it wasn't anything significant from a comp perspective.
It's interesting in Ohio, we've seen really strong really strong performance from a lot of those restaurants and you know they came out of the gate opened 100 per site with the partitions and we have opened stores in Ohio with you know positive sales year over year. So I think that that's that's pretty positive. So you know overall.
You know a little bit of a moderation again, but nothing nothing at this point that's two significant.
And then Tony just as a follow up you did touch on it but you need dollars decrease materially year over year first two quarters, how should we be thinking about out for the back half of Twentytwenty in into 2021.
Sure I think you know at the current sales levels were seeing you know assuming those kinda you know continue into the back half the year I would expect you know gene and the percentage of total revenue you get a little more normalized level, which is kind of in that 5.5% range is what we would expect to see so.
You know we do continue to look at DNA look for ways to reduce costs things like that on a all the time, but it feels like you know just from a normalized perspective, that's where we could be for the back half of the year and and looking ahead on you know I think we've learned something you know so far and we'll continue to learn things this year that we'll be able to.
Carry over into 2021, and you know maybe even be able to keep can't continue to keep teenage a little bit more moderate. It. So on you know that would be that would be our goal quite helpful. Thank you.
Your next question comes from the line Dennis Geiger from yes.
Great. Thank you just wondering if you could talk a bit more about further gains from here. Ken told you know you gave good color on shoulder periods outdoor dining et cetera, but but beyond increase consumer mobility and willingness to dine out and restrictions eating maybe if you could just kind of frame that the biggest opportunities from from here to continue. This recovery is is it acts.
Standing outdoor dining anything else to drive shoulder periods or greater capacity days, a week partitions I'm just kind of curious how you're looking at the biggest driver is within the context of current restrictions. Thank you can't Oh, well, we've definitely learned about outdoor dining and a I would tell you that you know I could see us.
Adding a little more outdoor dining to some specific location says there's lot of our guests are seem to like that and then if we mentioned that to go rooms, converting that hopeless or be more efficient and quicker.
To go which makes the gets might want to come back more because they can ever quicker experience with us.
And then as you know Bubbas same kind of thing. So those are the big thing sport kitchens, we did all of our restaurants. It took a six weeks and we put these upward titians separating the boost.
In separating diners from the other boots on the other side of a wall. So we've done that and all of our existing restaurants, and we're now adding those purchases to new restaurants.
So Tony if I've missed something take it away.
No I I think you had on I'm just about everything you know we have seen party sized reduced slightly I'm on average and kind of makes some sense. When you think about folks coming in at a restaurant. So you know the table sizes and things like that potentially could you know there maybe some opportunity there we did a pretty good job at that.
Really pretty cold that and seat utilization and things like that and that would be the only one I might mention as as a possibility.
That's helpful. Thank you.
Your next question comes on line.
Please go ahead.
Yeah. Thanks, Good afternoon, guys I had a question just about new store performance, Kent I was wondering.
It would seem like the new stores are probably opening its softer honeymoons what are the implications of opening stores.
With softer honeymoons.
Well I would tell you that we've got some new stores that have open that are like even.
Outdoor dining and to go only.
That are doing quite well.
So oh I don't think there's any trends is just one location might be doing fair and the next one is doing amazing.
Our newest location to Bubbas is still doing amazing so.
It's just all over the board I don't think you can say, there's a specific trend unless tonya you have a thought on that.
No I don't think there's any implications necessarily from opening restaurants right. Now I think you know there's a lot of good learnings that come into play and then if it does lower volumes. It gets a chance to store a chance to really you know I'm get its legs underneath it it doesn't get slammed with those higher volumes right out of the game. So you know you can maybe see that is a little bit of a positive.
And and they felt good brand awareness in the community I think he certainly have folks out there looking for places to go right now and you know I think that maybe keep and help them out a little bit too.
Just one last one can how long do you think it'll take the real estate market to started to recognize the need for different pricing or for lease terms for restaurants.
Well, we're seeing some folks approaching us now Ah with that thought pattern, a so oh, we have a cut any deals specifically, yet, but I would say, yes, they're already been a little more flexible.
Okay, great. Thanks.
And your next question comes from the line Lauren Lieberman from Credit Suisse.
Thank you know we're restaurant opened that limited capacity they seem to be sustaining outside of volumes that every time, we call that level said on premise continues for a time do you think isn't yet average weekly sales ahead of prior peak cobot level with an incremental off kind of volume.
I think it you know it could be a possibility I'm you know I think we're going to learn a lot here in the back half. The year is capacities you know hopefully fingers crossed begin to increasingly you learn more about what needs to go volumes look like but I'll tell you, whether it's 100 capacity, 100% capacity store at 25% capacity.
Deals like that 25% go you know holds pretty well across the board, we don't see and you know any fall off from that with with a higher capacity restaurant. So.
You know I think again it'll.
I think we continue with all the things we're doing for me to go perspective. The focus we have I think I think you know we can continue to build those sales along with the dining room.
Great and then in an environment, where you're committed to do 100% capacity, how do we think about the dining room yield in an environment social the same thing requirements and I guess the Genesis of that is the greater bottleneck at this point capacity restrictions or demand to gasoline called this out.
I'm, 100% doesn't always mean, 100% I'm you know because you don't have all your parts eat and went to social distancing you know he may not have all of your cable available to you. So lot of times, you're not add 100% now if they have outsourced outdoor dining that could be helping them increase.
Their capacity on that we you know even with the stores.
And you know, whether it's 100% or even down to 50, we've got stores that are beating their you know their prior to your sales numbers in in July. So that's pretty you know encouraging to see for sure.
And so you know <unk> I think we remain positive on being able to take to grow the sale.
Yes, Ken and a 100% usually means closer to 80, 85%.
Great. Thank you so much.
<unk>.
Your next question comes from a line of Andy bars from Jefferies.
Hey, guys I'm just a couple of quick ones first on that on the people side any.
You know staffing issues with reopening and should we expect any of that.
Sort of extra.
Payments continuing into the Threeq you.
Oh this is Kent, yeah, it's been tough snapping a specifically are you know through July with the extra $600.
Is that you know kind of rolls off and we don't know what's going to happen with the the government on that.
We hope that some.
More people will be motivated to come back to work or so so we will see that in the next few weeks, it's hard to understand what that will look like until we've experienced another four weeks here.
Did anything just financially we should we should look at in terms of payments or or you know cobot related costs continuing into the Threeq you.
And our own either.
Go ahead.
Oh, that's okay.
Right now not at this time I think we're going to continue well just continue to watch I think with the dining rooms, reopening and getting back to you know on.
Little bit higher levels of capacity doesn't feel like you know at this time side I will continue to evaluate Ed I'm actually afford.
Yeah. The folks that are you know serbin people inside and then the parking lot or make it up so it's a quite a different ballgame at this point.
Excellent and then one one quick got to go follow up just I think you've kept the family meals and ready to grow when a lot of leases and you know the full menu on can you kind of give us a sense of what a typical to go order you know the mix looks like in terms of.
Your regular menu items or or family packs and things like that.
Sure ready to Grill is only in a few stores and then Taunia up you know the mix between a family pack and a that to go I don't know that recently.
Yeah family packed are really less than 1% of the total net right now what we're seeing currently pretty small numbers.
Thank you.
Mhm.
Your next question comes from a line of Andrew Strelzik from B and.
Hey, Good afternoon first question for me, but there's been a lot of conversation in the industry about independent restaurants, and so I was curious if you could comment on what you're seeing in some of your markets and you know.
Field permission to do anything you know kind of incremental to maybe captures about markets your answer that arise.
Sure Angelakis Tanya go ahead and I can.
Oh, yes, it's hard to tell Oh, I really feel bad for those folks and the independents Oh, a lot of them or don't have the outdoor area that say, we have or or the parking lots that we have so it really kind of very city to city. So I don't I don't really have any insight on that.
Okay, and you mentioned.
Beef prices kind of normalize and now I'm just curious if you could comment on how the supply chain is holding up.
Have you been able to understand any coverage on before or just kind of how things dynamics are kind of shifted as other participants of all of that would be great. Thank you.
Sure. This is tania and yeah ours are purchasing team. It is phenomenal job working with all of her suppliers. So you know after the plants kinda back up and running yeah, we really haven't seen any disruptions at all from from our suppliers. They just in great partners. So as we look out ahead.
No I don't want to comment too much I on what we think the outlook for beef says, but it certainly seems right now that supplies are good.
We don't.
For see any issues there theres any opportunity and we have seen a lot something Apple we feel like we can get pricing and that you know it's beneficial compared to you know maybe what we think is going to happen. We're certainly doing that but we're not giving any color today on on any additional locking up up prices are or anything like that but on a so.
Our field it feels really good prices feel good demand you know well continue to improve we believe and.
In it that that's great.
Okay. Thank you very much.
Your next question comes from a line of John Ivan.
JP Morgan.
Hi, Thanks, so actually a follow up on the partitions. If I may do there seems to be so many different you kind of work rules and enforcement, whether either partition can actually override the need for six foot succeed or <unk> or whatever the number maybe you know dispensing do you have a sense you know anywhere restaurants, you know kind of what kind.
Capacity I'm getting those you had those barriers are those partitions actually give and <unk>.
But just because you're seeing this on a day to day basis I mean, what is the overall trend in that in those regulations as.
You know time, it's been happening.
Yeah, that's can't that you're correct.
Every state use them differently and even a various cities within a state will also view them differently, but the biggest positive is just our guess I think feel more comfortable knowing that you know somebody at the next booth.
So the air movement from them to the next Booth is traps you know bodies partitions ER and so so to me the biggest take away it's been the up positive comments from our guest.
It definitely and I've not seen that doesn't mean do you know one on a local level is that something that you guys are you kind of measuring on a consolidated basis and in <unk>, which ways that trend going in terms of regulation or you know wet weather at the state level, where local level.
Oh boy, it's all it's so much all over the board I you know you think it's moving like the positive direction and then all setting the stage shut you down inside so.
Hard to tell at this point.
Definitely hard to tell us it's flat so.
It was a tough question. Thanks.
Ladies and gentlemen, as a reminder to ask a question that of Star one.
Our next question comes from the line Jordan Garber from Goldman Sachs.
Hi, Thanks for the question both of them have been answered, but I did want to get a sense of if you're thinking about gross here any differently maybe than you had been prior.
Just as it relates to maybe some of those smaller market rural locations you'd been targeting.
Prior to circle, good and if there's any change in the strategy there. Thanks.
Oh This kid no knowing that you know when you pick a site, it's almost a year and a half. These days you know before you open Oh, yeah, we're still going to in a lot of these smaller markets that we picked you know like a year year and a half ago.
And as I'm looking at the development report Yeah, there's definitely still a bunch on the books for 2021 and a we've been very pleased at the sales on those a smaller cities.
Thanks, and if I could just have one follow up.
Tonya could you help us contextualize, maybe the margin difference that sort of a dine in order to go order maybe orders of magnitude or just kind of relative delta between the two I'd be very helpful. Thank you.
Yeah, you know probably that the biggest piece of information is really just there's about a four dollar difference on P.A. on scout was about $4 lower than what you would see on a dine in P.A.
And again, it seems like you're going to have less hours it should be a lower labor hot but you are paying a higher wage on those could go on so really you know the labor you don't really get any benefit on the labor side as it stands and then a lot of times the cost to sales is gonna be higher on there to go transactions.
Because you know you're losing losing that beverage attachment and that's that tends to be you know a higher margin. So you're gonna be spending a little bit more from a cost of sales perspective typically.
On this to go because typically what you see on to go is on they tend to stay away from bigger Stakes.
You tend to not be as much from a combo perspective and apps usually you don't have as much current you know occurrences on appetizers and so some of that just being higher margin on items, you know just kinda impact that transaction a little bit more also so it doesn't either.
I think Jared I would mention.
And you know it really you really just depends you know at the end today on on the labor side.
That's really good color. Thanks.
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Your next question comes on line of Brian I care from Raymond James.
Great Thanks, and good evening.
Pass City front could you share what percentage of units are currently operating at the different levels of in a indoor capacity restrictions and then on the outdoor dining piece also what percentage of the units currently offering expanded outdoor dining and how much of it incremental sales layer has that contributed on average.
Huh.
Yeah, Brian I'm I'll tell you money outdoor dining we don't have affirmed count on on the number of stores with outdoor dining because a lot of time the number at sea. It really varies he may have one location with just a couple of table because that's really all that they can accommodate versus some of that well have big tenants, what taking tables and different things like that so.
We haven't really on you know gone far it's trying to quantify that outdoor dining the number of seats or the with the volume there, they're just screenos up as dining room sales right now so that's from that perspective on the on the break down kind of a capacity really the bigger number isn't it.
50% capacity bucket, that's a little over 330 restaurants 332 restaurants. The exact based on on today's numbers and then you have about 115 would be the next biggest group the fall into 100% capacity.
You've got about 68 figure in the 25%.
And then 27 in the 75% and then you get into single digits at that point any other groups.
Yeah, there from that 100% is really more like 80 85 and that is telling you also mentioned where you might fill up a six top before was six people might be closer to four now. So that's in that is not yeah. When you add those numbers up you're going to get more more than just company and that is system.
Wide I'm our system like independent restaurant.
Yeah, Okay. That's helpful and sorry, if I missed earlier, but you haven't updated 2020 capex target range.
No we have not we have not done not yet kept going okay.
No. We don't know obviously, because we're a you know we're moving in shaking and a change in as as things go.
As as we just saw you know based on the strength.
But June and July we let loose some some more stores that we had not planned bond.
So really each month as we.
Reevaluate our cash flow then we'd cut I'll, let you know one or two or three or four go. So that's kind of how it's working these days.
Makes sense alright, thanks very much.
Thanks, Brian.
And we have no further questions at this time.
Turn call over to the management team.
Thanks April thanks, everybody for joining US Tonight I Hope you all are doing well if you have any other questions. Please reach out and let US now had a great night.
This concludes today's conference call.
Just a patient you may now disconnect.
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