Q2 2020 Potbelly Corp Earnings Call
One of us than it was when I accepted the position.
Now before I go any further I think it's important to recognize the outstanding contribution all of potbelly stakeholders over the last few months.
This has obviously been a fairly unprecedented quarter in the restaurant space and it took the extended team's efforts to navigate the pandemic short term impact on our business.
From our team members and franchisees on the front lines, who are working extremely hard to service our customers safely and to protect our communities to our vendors in landlord partners, who understand that we're all in this together and everyone in between.
I offer my most heartfelt thank you.
For those who view I havent met yet I'm looking forward to meeting all of you in the near future and I look forward to the growth that I know, we can accomplish together.
Now as you turn to slide three you can see some details on my background I'm, a restaurant Guy and had been for over 30 years with experience in both fast casual and quick service.
Most recently I was the Chief operations Officer, Wendy's, which as you likely know is the third largest quick service restaurant company in the Hamburger space with over 6800 restaurants globally.
Previously I served as President Chief operating Officer, and interim Chief Executive Officer at Charlie's Philly States.
And going back in time way back in time I started in this industry delivering pizzas for dominoes. The summer after my freshman year in college before moving up the management ranks there.
Now someone who's been in the restaurant industry my entire career I've admired potbelly, both as a brand and one of my favorite sandwich spots and at this stage in my career unfortunate and to be in that position to be able to decide what I wanted to do next so let me reinforce wide potbelly is exactly where I want to be.
First is the brand Potbelly has a brand that is centered around quality and freshness, great brands have staying power that others simply don't have and we have that here at potbelly.
One thing I've learned in my decades in the business is that building offering great established brands is a significant competitive advantage.
Second fast casual.
We're fortunate to be in what is still one of the fastest growing segments in the restaurant space fast casual and fast casual sandwiches are strong growth areas, where I know I can leverage my skill set and experience to be successful as we move forward.
It's also a space that has shown true resilience in spite of today's challenging times and we're going to talk about those and walk you through just how resilient. This organization has been over these last few months.
And how it has adapted quickly to a rapidly evolving marketplace.
Third store mix, we have a blend of company owned shops and franchise shops in our business today.
90% of our shops are potbelly owned which has a tremendous advantage.
When you're executing a turnaround.
This also allows us to test tweak and succeed across our entire platform and then leverage those successes to generate growth across both platforms.
Fourth is scale.
With our scale, we can build stronger unit level economics, we can build and implement other competitive advantages and technology and menu offerings and we can offer exciting career growth opportunities for a team members.
And while we have solid scale today, we still have great opportunity for growth in the future.
I've been highly impressed with the team that I've had the chance to interact with so far here at Potbelly, all of which have shown true dedication in helping this company navigate this crisis.
I've also enjoyed my first of many days in shops, working with our team members and engaging with our customers.
And we have plenty of work to do but many of the intangibles are in place for us to build upon and I'm truly looking forward to the challenge.
I'll now turn over the call to Steve to talk more specifically about our execution and performance during the second quarter.
Then I'll come back at close with a few big picture thoughts before we take your questions Steve.
Well.
Thanks, and good afternoon, everyone.
Please turn to slide four of the presentation, where I'll walk you through some of the key takeaways from the second quarter.
As Bob outline a keen phase so it was clearly the most challenging quarter in the company's history, we not only stabilized the business, but we strengthened it for the future that includes solidifying our management team with Bob's hiring my own in April and the addition of two New Board members also with significant restaurant experience.
While I have only officially been in the CFO role for about four month now and have only had the opportunity to work with Bob for a few weeks. We're excited about the caliber of this leadership team and about our road ahead.
So, let's recap the quarter and where we ended up as of June 28.
Building off our update in early June we said that our business Troughed at the end of March had a negative 68% same store sales comp driven by dining room closures and stayed home orders, we acted decisively by implementing aggressive cost controls.
As the quarter progress, we began to see significant adoption of our off premise option.
Innovated with new offerings, and our comps improved significantly over the large majority of the quarter.
These improving same store sales in conjunction with our proactive cost mitigation actions reduced our weekly cash burned by approximately 75% in the quarter.
We had cash flow neutrality at the shop level in late May and have remained above that level since even though we have started to pay the majority of our rent again starting in June.
We ended the quarter with $45.8 million and total liquidity. This includes cash on hand of just over 29 million and access to our revolver.
Total liquidity was flat quarter over quarter.
As a result of proactive operating tactics and improving health of our business. The factors that led to the going concern disclosure in the company's first quarter financial statement has been resolved.
We've also continued to have constructive conversations with our landlords across all of our shops as we look to build a stronger long term partnership for both parties.
Through this work we are improving the profitability of our shops and the health of our real estate portfolio.
As of this week.
We've reached agreements to close 16 shops permanently and and renegotiated over 187 of our leases.
Given our business trajectory, we now expect to close fewer than 50 shops as we finalize these conversations with landlords in the coming months.
This is much lower than the 100 shops, we initially contemplated closes.
Lastly, we've had collaborative discussions with our lending partner and amended our credit facility, resulting in lower borrowing costs with the same level of available liquidity through early 2021.
Now, let's get into how we achieved those results starting with our cost reduction efforts. Please turn to slide five.
As the second quarter began it was clear that our entire industry was in crisis. Our team reacted quickly and cut cost across the board. This included significant reductions in DNA preparing of over one third of our salaried headcount above the shop level, the deferral or elimination of all but break fix maintenance capex and the nonpayment of non tripled.
That related rent in April may.
As we project some of those costs forward, we estimate that we've removed over $25 million and expenditures for the business.
As a result of those efforts, we reduced our weekly year to go cash burn from $2 million a week.
And we 13.
Roughly $500000 per week by the end of the quarter.
Our assumptions that support this forecast are fairly conservative and include the following.
First.
No substantial recovery in same store sales in the third quarter and slightly improving comps in the fourth quarter.
Two.
Relatively stable expenses from where we stand today and the inclusion of full rents in the second half of 2012.
And third.
Current and projected lease termination costs that will primarily hit the third quarter.
Under the assumptions.
We would have total cash usage of approximately $14 million for the back half of 2020.
It's worth noting that without these lease termination costs are projected burn rate would fall to approximately $200000 per week.
Now the intent of providing our investors with this information is not to offer guidance.
Rather we wanted to show that even under today's still muted conditions with nearly $46 million in liquidity, which includes $29 million and cash.
We have the ability to self fund our path forward.
Please turn to slide six which outlines key Q2 actions.
First we remain fully committed to prioritizing safety for our people our customers and our communities.
We installed plexiglass barriers and all of our shops.
We're implementing an automated solution for health checks for all of our team members.
Masked the Rick are required for all of our employees and Weve instituted regular required temperature checks as well.
Lastly, we've enhanced our cleaning protocols and continue to constantly monitor new health guideline.
All of these procedural enhancements have been met with support from our team members and customers alike.
We also continue to leverage the critical digital investments that we made last year.
This includes updates to our App expanded partnerships with door dash grubhub the new breed.
We recently added Postmates to put us on all the major third party delivery platforms.
Innovation was especially critical to our rebound.
We launched several new initiatives during the quarter to bring our loyal customers back.
Alluding patently pantry family meals and curbside pickup.
We're currently testing a number of other ideas now, including additional off premise convenience channels, we hope to outline some of those three next quarter.
Let's say more connected with our customers, we relaunched our potbelly perks program during the quarter.
As a reminder, our goal is to simplify the program, but was also to enhance the organizations use of data analytics moving forward.
There is much more we need to do on that front, but the early success of this relaunched program was very exciting as we saw a 53% increase in our membership quarter over quarter and now has over 2 million members. This is a great first step and lays the foundation to enhance our usage of data analytics and building of capabilities in the future.
Lastly, as I previously outlined we've made tremendous progress in managing our overall real estate portfolio and its associated leases.
We had to temporarily closed 55 shops, but of reopened four of those so far and are planning to open up another nine by the end of August.
Many of those are university related shops, where schools are planning to reopen at least partially if not at full.
I'm also pleased to report that all of our franchise partners remain healthy and are pushing forward with their programs. We opened two new franchise shops in the second quarter and expect to see another two to four opened by the end of the year.
Please turn to slide seven.
There we provided a more detailed look at our same store sales comp progress in fiscal Q2.
For the most part we've seen a steady improvement throughout the quarter with a brief dip in week 23 that coincided with some of the nationwide protesting curfews.
While the pace of the recovery has slowed somewhat with recent virus outbreaks. The trend is still highly encouraging as our customers established new behaviors and access across our channels.
You can see that we've been cash flow positive at the shop level since may.
We will be cash flow positive at the enterprise level before lease termination costs. If we achieve same store sales in the negative high teen.
Of course market conditions are changing all the time as a number of cobot 19 cases modulator and restrictions on dining capacity vary market by market.
Can't precisely predict when we'll reach those levels, but with some easing of pandemic related restrictions and as people become more comfortable with the nation opening up we should continue to see positive progress over the second half of the year.
I think it's helpful to offers from.
Store level examples of how our business improvement varies with changes in pandemic related restriction first our sunbelt markets of Phoenix, and Texas, We're outperforming other markets on a same store basis.
Up until the recent resurgence of Cobot cases, there is still strong performers, but theyre momentum was temporarily pause than is now rebuilding again.
In markets like Chicago that have opened up more slowly we are seeing solid improvements on the pace is continuing to improve.
In July Chicago cut it same store sales deficit in half.
In general lease on average jump of around eight percentage points. The same store sales comp across the two weeks after markets opened their first and then the second 25% of dining capacity. This is highly encouraging and tells US. We can continue to recover lost sales when new cases of the virus waiting for extended periods.
And also our shops perform differently, depending on the real estate type.
Our suburban shops have consistently outperformed our other real estate types and continued to improve.
Our CBD and airport location, however remain challenged but our smaller part of our mix.
Slide eight provides a summary of the shift in our revenue mix over the last five months.
Our mix shift from 70% on premise to 70% off premise during the early stages of the pandemic validating all the investments we made in 2019 to build our digital foundation.
Delivery pickup and drive through all became larger contributors to our business in Q2.
This chart also shows the positive effects of easing dine in restrictions as both May and June sohn acceleration and visit to our dining rooms, which corresponded with improving comps.
Before I leave the slide I think it's important to note that potbelly has historically been seen primarily as a sandwich option for weekday lunch, but one of the bright spots of the situation is that we've seen solid strengthen the dinner day part and we can business that we didnt have in the path.
We have helped foster that trend with options like our family meal deal now while we can't say the shift is permanent we're encouraged by these results.
And the Daypart expansion.
Please turn to slide nine and I'll walk you through our income statement and specific financial performance for the quarter.
We finished the quarter total revenues decreasing 46.8% to $56.2 million.
Company operated same store sales declined 41.5% in the second quarter.
Breaking down same store sales our average check grew by 5.3%, but was offset by traffic decline of 44.5%.
Our shop level profit margin for the second quarter with a negative 13.9% sandwich shop sales as compared to positive 16.6% in the prior year.
Our general and administrative expenses.
Approximately $8.2 million in the second quarter, or 14.5% of total revenue compared to $13.8 million or 13.1%.
Adjusted DNA, which excludes store closure costs restructuring costs and proxy related costs.
In which we believe is the best indication of the core gene expenses in our business was $7.3 million in the second quarter or 13.0% of total revenue.
We will continue to tightly manage and control or DNA expenses in light of the current environment.
Adjusted EBITDA loss was $14.4 million for the second quarter compared to a positive $6.8 million last year.
The decline was driven by lower sales related to the impact of coded 19.
Like DNA or other cost areas, we're up as a percentage of sales due to deleveraging.
However.
Those cost areas were generally down in absolute dollar terms as we aggressively manage costs throughout the quarter.
Cost of goods sold expenses were $16.1 million in the second quarter or 28.8% of shop sales compared to $28.3 million or 27.0%.
Outside of coded related impacts this was primarily driven by cost inflation on certain products.
And by shifting product mix due to increase and off premise sales, partially offset by menu increases.
Labor expenses were $21.9 million in the second quarter, or 39.2% of shop sales compared to $32.1 million or 30.6%.
This was primarily driven by sales deleverage in certain labor cost.
And not directly variable with sales and was partially offset by a decrease in expense from close shops.
Occupancy expenses were $14.7 million in the second quarter, or 26.2% or shop sales compared to $15.2 million or 14.5%.
Drivers included sales deleverage and inflation in certain occupancy related costs, including lease renewals real estate taxes in common area maintenance.
Please note that while we may not have paid some of our rent in the quarter, we fully accrued for cash flow benefit, but not a direct expense one on the income statement.
Other expenses were $11.0 million in the second quarter, or 19.7% of shop sales compared to $11.8 million or 11.3%.
The decrease was attributable to sales deleverage in operating expense items, such as utilities and other expenses not directly variable sales.
I'd also like to point out the increase in our accounts payable. This period. This represents a negotiated restatement of payment terms with our vendor partners as Bob mentioned, our vendor partners have been supported of us through this process and we look forward to fostering these relationships.
Cash preservation remains a key priority our team would quickly at the onset of the pandemic to radically just cost and preserve capital. We continue this conservative cash posture and dramatically reduced our cash burn rate.
As of June 28, cash on hand was $29.1 million and we maintain $16.7 million of availability under our revolving credit facility, yielding total liquidity of $45.8 million as of June 28, 2020.
With that ill pass things back over to Bob for his closing remarks.
Thanks, Steve we're close our prepared comments on slide 10.
Again, my first two weeks with the company have been exciting.
Strong sense for the things that we do well and the things that we need to improve.
But the team and I will need another quarter to fully developed the key components of the next leg of our turnaround strategy and I look forward to sharing these with you on our next earnings call.
In the interim however, we have for immediate priorities.
Number one is brand strength potbelly is a tremendous brand and often hear from my friends and colleagues that travel to areas, where we have shops at potbelly is a must stop for them.
And as you saw by the same store sales data that Steve shared and the 53% acceleration in our recently relaunched perks program, we have a fantastic set of loyal customers that keep coming back.
But there is more we can do to reinvigorate and better leverage our brand expanded to reach and continue to build even stronger connections with our customers across the country.
Number two invest in our people.
Really couldn't have survived the last few months without the dedication sacrifice and results of our people both inside and outside of our shops.
But beyond this crisis, our people are our most important asset and we must and will invest in them too sure that ensure that we're putting the best most talented team safely on the field.
Number three prioritize cash.
As Steve discussed at length cash and cash flow are the lifeblood of any company.
We have done an incredible job reacting to the crisis and we will continue to do what's necessary to return to positive cash flow generation.
We are on the right trajectory and as we execute against that goal, we will look to prudently invest future free capital into areas that will help us growth going forward.
And number four execute and then grow and thus our last priority is execution and setting the table for growth, we need to enter and exit the third quarter with the same resolved as west showed during the second quarter.
Excellence in execution has always been a premium in the restaurant business.
We keep up this focus as we operate or shops everyday to the higher standards, while doing the same in every other aspect of our business, we need to execute and adapt and then execute and adapt again.
As the economy continues to strengthen and as the restrictions on our dining facilities lesson.
I will return our focus to driving long term growth and value for all of our stakeholders.
I look forward to the journey and appreciate all of your support for Potbelly.
With that I'll now turn the call back over to the operator, so we can address your questions operator.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys to.
To withdraw your question. Please press Star then to.
At this time, we will pause momentarily to assemble our roster.
The first question is from the coal Miller with Piper Sandler. Please go ahead.
Great Good afternoon, and thanks for the update.
I wanted to ask first about the transition because you know that in of itself isn't necessarily unusual by it.
Transitioning into virtual World certainly.
So how are you going to get out and I know the team and and know the store base and then the second part of that would be.
What did you learn when you've studied the brand in thinking about the core legacy.
Probably more narrow.
Positioning versus where it is today and when you think not a year out, but really long term into the future how narrow versus bride do you see the potbelly does this mean.
Hi, Nicole Thanks for the question and.
Your so right. This is a time, where I think any transition as.
It is.
Something that really is kind of unprecedented I will tell you that the virtual workforce has has really cracked the code on how we stay connected.
And so with not only the senior leadership team, but with others deeper in the organization. It has been a very busy couple of weeks for me in terms of those connections we've had our face to face meetings.
And I as I mentioned in my opening comments I've already had my first of many shop days, our work to full day and one of our shops right alongside one of our training managers, who did a marvelous job disposing me to loading physicians and and the other positions in the restaurant I got to interact with our customers and experience that that world and transition to.
<unk>.
Okay and the.
All of the safety enhancements that we've made in our shops and I think we've done a nice job with us.
In terms of getting out.
Travel restrictions continued to be lifted and and eased a little bit so.
Fortunately, we have shops in a number of locations we have as Steve mentioned during the call. The different shop types will be a priority of mine is I spend more time in the field not only in the shops, but with the team.
Spending time in the shop, so I think that I.
I think the given where we are the transition has gone quite well and everyone's been very supportive.
Business is still about our our shops and where our customers are interacting with us in terms of the legacy of the brand I.
I think that I've mentioned the brand the number of times in my comments and there are genuine strengths here and you always start in the restaurant space with the food and the way. This concept I think was developed is still where we turn to our core strengths.
We have the best toasted sandwiches in the business and I will tell you after spending a lot of time meeting Potbelly I was a fantastic consumer before but it's a daily occurrence forming today, we have healthy options and I don't believe we have a soft spot in the menu.
So it's about enhancing that making our menu maybe a little more approachable, but also using the leverage of the food itself. The experience is something as I've studied some of the research. That's been done that is the leverage point for us and I want to make sure that we don't let go of that going forward.
And then I've mentioned that already as well, but our people or a big part of the legacy of the brand we get that feedback even if you look at some of the social media commentary about customers interactions with potbelly Theres a lot of people syntricity to that the engagement that our employees have with our customers and how we move people through the line engaging process all.
Paul can can work really well.
In terms of.
Your final part of your question about the breadth of the brand appeal going forward.
Actually I think that there are some things that are in place and some strategies that we will evaluate over the next quarter that that could open up that Brett for us a little bit menu appeal that I mentioned already the different shop types that we have so in terms of the demand space that that potbelly can play in I think there's a ton of potential for that.
As we strengthened our unit level financials, I think we've got a very attractive investment model that we can look towards and tailor that accordingly, and then just as importantly, Steve talked a lot about some of the numbers were seeing in the digital appeal and the off premise appeal that are potbelly brand has and I saw that in spades Ana and.
The the design is set up to handle that off premise business at the shop level too so.
I won't stray too far from the core essence of the brand that's what makes brand this brand special.
I think the breadth of appeal is is is pretty broad and it's exciting for the growth for sure.
Thank you for taking the time to unpack that under for second and final question from me. This afternoon.
It was really interesting kind of the way you closed out the commentary and I think this is an exciting brand and need to be tempted to try a lot of thing because.
That's what restaurant turnarounds can be about but it sounds like maybe you're thinking more of our stage gate process. So that you can control and I understand what is working and what's not working how do you expect to you basically execute to turnaround and prioritize one thing over another.
Well I think that one of the one of the important things to think about in terms of prioritization of course is to get our strategy set really well first and we have some near term challenges that we have to continue to work on and we've outlined a lot of those looking back to Q2, we're still looking forward to Q3 and the remainder of this year.
We're confident in the future, but we don't want to lose sight of what is super critical at this point in time Thats why outline those near term.
Focus areas for us right now but.
I would I would tell you this generally as sort of a generally governing principle for me is that.
The things that we do include in our core strategies, our objectives and our tactics are going to be insight driven we need to understand exactly where the strengths are that we can leverage and outcome focused.
Because turning those insights into true outcomes and growth outcomes is what benefits us the most so.
Theres not a lot of value and just throwing things against the wall, we'll see what sticks I do think we have some some very good insights that weve. The brand has on the should often I think we're going to desire a lot more data makes a big big difference in these decisions, we're making them, we're going to going to figure out how to unpack that even better in the future.
Asked of luck in thanks very much.
Thank you Nicole.
Your next question is from Matt Curtis with William Blair. Please go ahead.
Yes, thanks for taking my question.
I guess on the renegotiated leases could you share any detail on what the level of savings you're expecting we get from that we'll be going forward.
Perhaps on an annualized basis.
Yes, sure second I can give you.
Couple of thoughts right. So.
Let's talk about the closures for a second.
In our last time, we talked we removed we were contemplating up to 100 closures and as you know.
We announced where were now.
Pulling that number back to closer to 50 and largely due to the fact that we've got.
Business that is responding.
And we've also had some.
Productive conversations with landlords, where we've had some shops.
Were unprofitable, but based on.
A new new lease structure those shops are profitable to operate and then come off the closely. So that's all good news, yes. So we expect to say I'll give some sort of rough numbers here.
Got abatements, it got deferrals and when we've got.
Closure closures.
We've got already.
At least $1.6 million abatements that we've been able to to work through.
We expect.
Right now at least 3 million in deferrals.
That we've worked through.
And then on the closure side.
If you take the shop performance.
From 2019.
And and apply that we would expect to save call between three and a half of $4 million on EBITDA aside for the closures.
Okay.
And then for the up to 50 closures, you're looking at when you're looking at those locations.
Sounds obviously looked a lot of them are still unprofitable are expected to be once we kind of get through the current situation.
But are there any other commonalities.
Between those 50, the you can share with us either in terms of where they may be located or anything else.
Yes, we.
We don't really have a pattern not by design. It's just that the shops tend to perform differently based on different conditions. Now there are some things there's some summer market related for sure, but some are very micro related to the actual block that these things are on or their distance from public transportation or otherwise so we don't.
We don't have sort of a focus as it relates to any particular market or any particular real estate type that we're working on its a pretty broad.
Pre broad group of.
Targeted closures.
Okay understood and then finally I guess.
Just given the the plateauing I guess, who could say that you're seeing in the Sun belt.
Could you perhaps share what your trends have been like in the month of July your comp trends and.
Yes, I think in sort of a rough rough look our our key seven.
Numbers so far.
I have been roughly similar to the way that we ended P. six.
And I think what's what's interesting to note is we've got different.
Different performing shops end markets based on.
Hi, good resurgence or the co bid.
Doling, if you will so I mentioned Chicago as an example by Chicago.
To finished the quarter.
This was not performing all that well when you blend across the three months, but getting stronger and stronger and stronger as the periods went on.
In July we saw the deficit cut in half.
So that was a strong performance out of out of Chicago, That's our biggest market and we have 200, sorry, 114 shops in Chicago. So thats good news for us whether helps a little bit we've got a lot of audio dining and.
Shops are still.
Between 25, and 50% dine in capacity and many of these market. So.
That makes a difference for us as well.
Similarly, our suburban shops continue to outperform the rest of our restaurant real estate pipes.
And even accelerating in through July.
Our suburban shops are continuing to strengthen kind of week over week, even even amongst the challenges that we're seeing in some co. Good.
You know some cobot resurgent placed markets and then also drive throughs right. So I drive throughs.
In the quarter warrant positive topping for the year, but coming out of that the P. seven period, I believe it or not our drive to shops are positive pumping so.
Again, the story is not just at the high level. The story kind of is one level deeper as you look at market real estate types.
Okay. Thanks, very much and good luck going forward.
Thank you.
Thanks, Mike.
We have time for one more question and that question will come from Gregory Francfort with Bank of America. Please go ahead.
Hey.
Thanks, Thanks for taking my question.
I see it too thats all right, but the first was on the family bundle that you rolled out and I'm curious how that done and.
It seems little really good value the consumer and.
I guess as its as you've rolled it out what's been the balance between food costs and sales in terms of kind of managing that whats into consumer reception. Thanks.
Okay.
Great question, Yeah, we've been excited about the family Neil.
Option that we've offered and it's provided us with.
Relevancy in a day part, where we're potbelly traditionally hadn't had relevancy and puts us I think in good company with with folks like.
Pizza and wings, those things that are kind of family oriented shareable products.
Are the fact that are our sandwiches or toasted I think creates that relevancy for the dinner day part as I think a lot of folks look for.
Hot items for dinner.
We we've seen and continue to see the of performance be incremental costs, even with the discount. So thats helpful and it has a great deal I mean it it is among the best we'll see out there in the marketplace, where we're excited to continue it.
As it is it does remain.
As it does remain incremental for us I think it is not performing at it at its peak. It you know how to kind of build and than it has plateaued a bit but we continue to energize it with new new offerings.
We are introduced.
More Kid version for families with smaller children.
We have a slightly bigger version with more sandwiches included so it's a platform for us that we'll continue to to.
Worked with insofar as we can see it continued to drive business for us in the day part in an incremental way, but let's not let.
The ultimate focus which isn't a week, we know our biggest day part as lunch.
And that's the part of the business, where I think a lot of our turnaround will be built not necessarily on alternate day parts at this point.
Got it got and then need to add to the Oh, sorry, Greg If you don't mind. The other thing I'd add to the family meal deals is it's a good example of how we can expand the appeal.
Finally across those dayparts, but that's a that's an option that that seems to play pretty well in our off premise business in the digital business.
And.
And we're seeing that consumers are enjoying the opportunity to stay in their car pickup curbside and and if there have been doing a home meal replacement for the whole family. This is working it's another way for that that brand to work harder for them outside of our core day part.
But that that that's helpful perspective and.
If I could ask one last one.
Dick bunch of restaurant companies or I, just wanted to key questions for investors is as you get out too I know its next year the year. After you get a full sales recovery.
Where margins will go and I don't know if thats.
You guys are cutting menu items at this point in time or or anything like that but I guess, if you get back to fully you vs.
Do you think margins I mean, given some of the work you've done the rent side.
Maybe versus some of the.
Headwinds and tailwinds of of the different channels for off premise.
Where do you think margins would shake out on kind of a 100% or you'd be recovery at this point in time, if you can even say.
Yes, it's hard to give you a number right now because it's hard to say when we're going to hit that level, but I can't say, though is.
Harking back to the earlier comments around cost management, and and focus on cash and we we really.
Worked hard to get our expenses in our cost to a point, where we felt that they are.
Working for us.
And we are much leaner much more fish I think than than we were in the past and we don't necessarily expected to build cost back into the business.
At any great rate now, Bob and I have to work hard on what the strategy looks like and if there are places, where we might add cost and.
That provide us with a great return, we'll we'll certainly we'll certainly consider that so we expect going forward as sales continue to recover and we we manage our costs kind of closer to the level that we got right now.
That we would expect we expect see margin expansion I mean, thats ultimately, where we expect us to go.
Thank you thought you agree Greg.
Good good weather right on the upside should help us yes.
Okay. Thank you both.
This concludes our question and answer session I would like to turn the conference back over to Bob right for any closing remarks.
Well. Thank you again, everyone for your time today and your continued support as we've discussed today, we have a once in a lifetime opportunity here to leverage a strong brand founded on the basis of quality and freshness.
The tools to be successful into returned to growth I look forward to updating all in our progress.
Until then have a great evening and stay safe.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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