Q2 2020 One Group Hospitality Inc Earnings Call

[music].

Greetings and welcome to the one group second quarter 2020, <unk> earnings Conference call.

Hi, all participants are in listen only mode.

Brief question answer session will follow the formal presentation.

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As a reminder, this conference is being recorded.

My pleasure to introduce your host CFO Tyler Laurie. Thank you you may begin.

Thank you operator and good afternoon.

Before we begin our formal remarks remind you the part of our discussion today will include forward looking statements.

These forward looking statements are not guarantees of future performance and you should not place undue reliance on them.

These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

Please also note that these forward looking statements reflect our opinions only as a date of this call.

We undertake no obligation to revise or publicly release any revisions to these forward looking statement.

New information or future events.

We refer you to our recent Sixtyv filings for more detailed discussion of the risk that could impact or future operating results and financial condition.

During our call we will refer to certain non-GAAP financial measures, which we believe can be useful in evaluating our performance.

The presentation of these measures are other information should not be considered an isolation or as a substitute for results prepared in accordance with gap and reconciliations to other GAAP measures reconciliations of these measures such as adjusted EBITDA and total food and beverage, they're all that I wouldn't been managing license you had to GAAP measures along with a discussion of why we consider.

These measures useful please see our earnings release issued earlier today.

That I'd like to turn the call over to many hilarious Manny.

Thank you Tyler and Hello, everyone. We appreciate your continued interest in the one group.

During today's call I'd like to share a brief overview of the second quarter update you on our current trends and ongoing recovery.

And sure our confidence in the future of our brands.

Hello will then walk you through the second quarter financials.

First and foremost the health safety and well being of all of our employees and gas is our number one priority is judged by our actions within our restaurants.

We are not only strictly falling all guidelines from the CDC federal and local authorities, but we have also created a very detailed employee many <unk> specific to each location and value as we walk who gets back to our dining rooms.

This was critically important as we are now open hole in person buying.

30 for about 36, domestic STK, and Kona grill restaurants, and not delighted to be providing guests with unique side dining experience that they have been a waiting for.

We plan to resume in person dining SDK, Miami, and we opened STK someone as soon as conditions permit.

Internationally, we also resumed and pushing dining at 68 SDK restaurants.

As you know from our previous conference call covert 19 required us to tick immediate actions, including very difficult decisions to reduce our workforce significantly.

However, because the overwhelming majority of our dining rooms have not we open we are extremely proud to announce that we were able to bring almost 3000 teammates back to work.

This is an incredible turn around for us despite the very challenging environments and we thank our teammates for their dedication and eagerness to return to doing what they do best serving our guests.

We are encouraged by the continued sequential improvement in our comparable sales results.

Which includes our curbside delivery business.

Trends strengthen month over month during the second quarter into July.

Building core competencies in curbside delivery that did not previously exists preserve the opportunity to continue reaching guest in markets throughout the country and it's contributing meaningfully to our comparable store sales.

And thanks to a recent upgrading our tech capabilities. Our delivery model is now state of the art with offerings available to nine separate delivery service providers.

Excluding Las Vegas, New York, Miami comparable sales decreased 17% in July at our mainline domestic execute locations.

In terms of Las Vegas, our SDK blend flagship July comparable sales decreased 34%, despite being limited to 50% capacity.

Which left much of our customer demand and fulfilled.

New York in Miami is still our most challenged STK markets because of local mandates housing is not to have access to approximately 80% of us seating capacity.

Markets together generated a 54% decrease in July comparable sales.

Excluding the impact of the capacity, we're particularly pleased I mean for assets to have guests continue to embrace the five dining and how we have achieved some of the highest guest satisfaction scores and social media in the last couple months.

The Carnival brand has rebounded extremely well, which we can attribute partly to that brand suburban footprint.

Coupled with all the initiatives that we have implemented new menus aggressive in sustaining marketing activities, including our some real fun promotion.

And better overall restaurant level execution.

In July Kona grills comparable sales decreased 16% year over year, and it's tracking towards normalization.

An important factor as we quickly approach the holiday season.

Notably despite declining comparable sales you were still able to achieve positive restaurant level margins in this very challenging operating environment.

This would not have been possible without the relentless work and commitment of our teammates.

From a marketing standpoint, we are leveraging STK friends and benefits database of over 1.5 million subscribers to deploy multiple email marketing campaigns and have leverage our social media presence across key platforms with targeted social media advertising creatives.

We're also utilizing Kona grills carnivore loyalty program of over 300000 subscribers to deploy multiple email marketing campaigns.

Our SDK meet market an E commerce platform that we watched April is also doing very well representing an additive layer to our business that we will continue to leverage even after the pandemic subsides.

SDK meet market allows guests to purchase a wide array of signature choice Prime and why do stakeouts for home delivery nationwide.

The average stick isn't that 25 to $30 range and delivery costs are very reasonable for two and three day delivery. So that the guess benefits from great value and great convenience.

So to conclude our team has strictly proven how strong when resilience. They are through these trying times and also how welcoming they are to our guests who have already returned to our restaurants for a great meal out.

Thank you all for standing by Us and for the impersonal takeout delivery and STK meat market orders.

Now I'll turn the call back over to Tyler.

Thank you Manny.

I would like to begin by addressing our current cash and liquidity before reviewing the second quarter financials in greater detail.

First as of June Thirtyth, we had $23.5 million in cash and cash equivalent and as of August 12, our cash balance has not materially changed.

In addition, and due to our improving sales performance in recent months, we're currently generating positive cash flow.

Turning now to our quarterly financials for the second quarter ended June Thirtyth 2020, total GAAP revenues were $16.7 million, representing a 29.4% decrease from $23.6 million for the comparable quarter last year.

Included in our total revenues for the second quarter of 2020 is our owned restaurant net revenue of $16.5 million, which decreased approximately 21.1 per cent compared to $20.9 million and the second quarter 29 pm.

The decrease was due to the temporary closures and limited operations of our restaurants due to covert 19.

Partially offset by approximately $12.4 million and sales contributions from Kona Grill, which we acquired in October 2019.

Domestic consolidated comparable sales decreased 66.7% and STK comparable sales decreased 81.4% and a kona grill comparable sales decreased 52.8%.

However, it is important note sales sequentially improved throughout the quarter at both SDK and Kona Grill as we discussed in our press release.

In July consolidated comparable sales decreased 25% wallet SDK comparable sales decreased 36% and encoder girl comparable sales decreased 16%.

While there is obviously volatility in certain markets due to re closings or underlying trend pointing toward the building recovery.

Management licensing and then a few revenue decreased to $135000 in the second quarter of 2020 from $2.7 million in the prior year second quarter.

This decrease is primarily result of temporary closures due to covert 19 measures.

We should see more normal performance in this line item in future quarters as our key properties that drive. This line are now in operation I.

STK, Los Vegas, SDK, London, SDK, Toronto Radio, London, and radio Milan.

Owned restaurant cost of sales as a percentage of own restaurant net revenues decreased 110 basis points, the 25.3% in the second quarter 2020, compared to 26.4% comparable quarter last year.

The year over year decrease was primarily due to supply chain synergies and redevelop venues.

Owned restaurant operating expenses as a percentage of own restaurant net revenue increased approximately 770 basis point is 72.8% in the second quarter of 2020 compared to 65.1% the second quarter 2019.

The increase was driven by the comparable sales decreases due to covert 19, coupled with less substantial decreases in fixed costs.

We are actively managing operating costs and negotiating with landlords on rent concession due to the impact of coven 19 on a restaurant sales.

Restaurant operating profit for the quarter was $317000 an accomplishment we are proud of considering the tremendous headwinds we're up against.

On a total reported basis general and administrative expenses, including stock based compensation for the quarter of 2020 was $2.4 million compared to $2.7 million in the prior year.

To put that number perspective, our DNA cost per venue, where about half what they were last year.

As a percentage of total revenue general and administrative expenses increased 310 basis points to 14.6% of total revenues.

The increase is due to lower sales related to covert 19, partially offset by measures we implemented to reduce our costs, including significant reductions in employee reduction of third party professional services.

When adjusting for stock based compensation adjusted general and administrative expenses were $2 million in the second quarter.

As a percentage of revenues adjusted general and administrative expenses increased 220 basis points to 11.7% of total revenues.

We incurred approximately $695000 of direct costs related to covert 19 during the second quarter.

Included in this line item are primarily payment to employees were paid time off during restaurant closures inventory wave and P.P.E. costs associated with keeping our employees and guess Dave.

Interest expense net interest income was $1.2 million in the second quarter of 2020 compared to $218000 and the same quarter of the prior year.

Income tax benefit was $3.2 million for the second quarter of 20 Twain compared to 15000 dollar for the second quarter 2019.

Net loss attributable to the one group hospitality Inc. was $2.9 million or 10 cents net loss per share compared to $322000. The second quarter of 29 gene or one cents net loss per share.

Adjusted EBITDA attributable to the one group hospitality Inc. for the second quarter was negative $824000.

Compared to the prior year adjusted EBITDA of $2.1 million.

We have included as we have in the past a reconciliation of adjusted EBITDA to GAAP net income from continuing operation and GAAP revenue to total food and beverage sales, but owned and managed property in the table mid second quarter earnings release.

As a reminder, due to these unprecedented marking to conditions, we cannot reasonably estimate what our business will return fully to normal operation and therefore suspended all financial guidance for 2020 back in March we do however, intend to provide further business update as warranted by this evolving situation.

I'll now turn the call back over to Manny.

Thank you Tyler let me conclude by expressing again, how appreciative, we are to our team for their dedication and resourcefulness.

And the opening of restaurants, while showcasing our takeout delivery and ecommerce capabilities.

And to our valued guess who have enjoyed ask you can't going to grow at a restaurants.

And in their home during these past few weeks, we look forward to serving you in person again.

I think we have made clear how we tend to get to these unusual in difficult times and will ultimately be stronger for it.

Above all we are grateful to all our teammates who bring our mission to life every day.

To operate the best restaurant in every market that we operate in.

Delivering exceptional unforgettable guest experiences to every guest every time.

Thank you all for joining us on the crop today salary <unk> are happy to answer any questions that you may have operator.

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Our first question has come from the line of Nicole Miller with Piper Sandler. Please proceed with your question.

Thank you good afternoon, and thanks to the update I want to ask first about comp for the July trend is that opened and closed units.

And and if it is how duty open.

<unk>, maybe they're not in there, but I just I just wanted to find what that July comp is and if there's any difference to understand.

Yes, so the technical so the crops. We reported include all restaurants. So it doesn't include any not open operations and I think we only have two in the U.S. laying on any how that will be.

Now before we open there now.

Okay. So there's not a big distinction <unk> do you see any any other underlying trend with those that have been open a little bit longer or you know anything of that nature.

Yeah, I mean, I think the restaurants that we have open and we are.

Have you know availability of dining room, and can actually be closer to full capacity, a we're back to normalized levels and those restaurants, so anywhere where we haven't been limited by.

Local mandates I think we're doing very very well, but.

Just in general I don't want that to be confused with the general environment I think the German government, it's extremely complicated and challenging right now, but I just think that he has done an exceptional job or going out and Oh, we if you go retooling our marketing because the marketing in this environment is different now there's no business there's no real.

Terrorism business that we'd have to be shifts or shift our marketing resources and our programs towards more social occasions date night workdays and such type of occasion. So it's it's so the business in those markets. What we've been open for a while now with the dining rooms, and what we have capacity is we're seeing.

Really good business, but that's because a marketing has shifted and I also believe that there's a lot less competitors who are.

Competing in the market right now so I think we're taking advantage of that I think we mentioned on a press release.

For instance, our Las Vegas, Rashes, which is our flagship STK. The biggest challenge there as we can't get people into Dork is we'll limit this to.

50%.

Of seats, there, so frankly I'm very disappointed that sometimes we have to turn away as many as 100 to 200 people at night, just because we don't have enough seats, even with 90 minute turn so I think that really speaks well for the strength of the Brian I think once we open.

You know the STK at the Cosmopolitan I think we we are just drawing disproportionately to pretty much everybody in the biggest market. So we're we're super excited about that and again as we get more seats into some of these properties I think that we will oh do very very well.

Not that makes you point to grow I think I didn't really prominent going to grow, but I think kona grill, particularly with the new menus that we have put in place and the emphasis on summer a fine and really going after the the patio as a great summer occasion, and trying to provide a customers.

A great you know get away from.

The pandemic I think those the promotions that we work very very well and the clinical I think Tyler mentioned in his comments that were down 16 in July and we're not only just sequentially getting better by month, we're actually getting better by week. So we can see this even better and better weeks coming out of the kind of world Brian.

[noise] [noise] call you are back lives.

Thank you my phone, it's kind of all afternoon I will just sincerely apologize I was just trying to clarify what the comp question. There was something about two markets and a dragging comps of down 50, So if I'm headed in the drunk wrong direction. We can just we can just move away from it but I guess I wanted under underscore you know.

It seems like this is clearly a phenomena recovery and maybe the underlying trend without that drag is even better. So I I was just trying to hide in that direction and if that makes sense, yeah, absolutely and I think to your point there Nicole I think the two markets that we called out primarily is Miami, New York and in those markets.

We haven't been able to open the dining room, so we're using outdoor.

If you want even calling that cafes on the street side, but yeah. Those markets. A you know even though we don't have access to the dining room, we still doing reasonably well relative number of seed so.

Lets say that you know, we're very I'm very pleased with the progress that we've made in our markets relative to recovering sales.

And then just talk about for last question, who is coming back the type of customer because traditionally I would think you have like a local frequent use or do you have an aspiration on gas that come to celebrate and then maybe a corporate users. So so who's coming back first.

You know I think just our observation is we're seeing a lot of and.

I would say the.

Without having specific age groups in mind, but kind of the 35 ish demographic.

And as I mentioned earlier, we're seeing a lot of base nights is becoming is a big oh occasion coming out as well as birthday. So lot of birthday celebration. So so many social occasions and and a suburban.

What French is going to grow we're just seeing a lot of people just coming out to have fun. It's it's become a pretty apparent that there's a subgroup of the the population who are just feels like it then you know walk control for long time, so you're seeing just people wanting to get out to the patios and just have.

Turning a I know a good experience there and as you may recall, we we are reviving the Kona Grill and bar program and and Paddy program was more active music lots of more emphasis on a great cocktail program. So you're seeing a lot of people, who just want to go out and have fun who've been tracking.

Their houses for quite a long time so.

In terms of the business side, we haven't seen I mean that business is not there.

Obviously, there's not a convention business anymore. So you're just basically seeing the majority of the business being a social occasion business.

And then just a last really quick one topic is about food and beverage trends as you execute this recovery and how that compares to prior food and under a beverage trends.

Does it wave I mean every other.

Yes, that's a great question, so with the bars being close now we did shift up programs like happy hour to be into dining room. So we have not seen a change in the mix of alcohol to food. So that's held up very well and the dining rooms.

Thanks, Manny appreciate it.

Thanks, Michael.

Thank you. Our next question has come from the line of Ryan Meyers with Lake Street. Please proceed with your question.

Hey, guys. Thanks for taking my question first one for me. It can you give us a little more detailing how it takeout and delivery business is going and then maybe what percentage of revenue that was during the quarter.

Yes so.

So what as we talked about in the Q1 call we were building sequentially.

Business and take on delivery I think you know, where we where we've ended up now.

You know after having the dining rooms open is we've got about 14% of revenue of our total revenue now being taken delivery and I would say from a dollar perspective from a fixed dollar perspective, if you.

As you talked about the end of Q1, and then beginning of Q2, Oh, we have consistently grown the fixed dollar amount of taken delivery and I think you'll just have a added color and that is I think from where we were I think were around 5% about total business was taken delivery before we got into that go with period I think.

Coming out of it.

Stellar said there were around 14%. So we we have increased that business substantially and I think the team has done a very good job was as we open the dining around.

The that layer business, we have continued to a heavily marketed and go after it and I think into long term. Our goal is to continue growing that business significantly. So we are actually really emphasizing internally. The objective that we have to become very dominant on that and if you look at <unk>.

The programs we've done.

They're working with we've adapted some of our menus, particularly at STK. They have more transportable and items that work in a takeout environment. So we do have resources allocated to it and we plan to continue growing and elevating that business.

Well, that's a that's going to here and then can you give us a little bit more detail on how the weekly sales actually track multi quarter, maybe kind of what they were in the first week of the quarter compared to the last if you guys want to give any more detail on that.

Yeah, I think I can I want to answer to Nicole's question. There <unk> sequences is better so as we get later into the month of July the trends continue to improve again and again I believe that's because of our just relentless approach to digital marketing I think that's another area that we've.

I really gone heavy on hand, a and we just keep.

We have you on that and so we were very pleased.

We're just the quality and and the magnitude of what we've been able to do that market program.

That's one of the reasons, we highlighted some of that the stuff during our prepared comments.

That's helpful. And then last one for me did you guys have any sort of difficulties getting your in place to come back.

I mean, I think Oh, just like everyone else is reported in industry, Yeah, I mean that the initial Porsche was.

You know challenging just because you know we weren't competing with.

The 600 dollar unemployment bonus. So there was a lot of employees are getting compensated for that and not as interesting coming back. So we did go through a time period, where we you know how to deal with that but I think as we've gotten a further Alex was being open I think we recalls.

Everyone that needed to be recall back to the restaurants.

And and we're now hiring again, so up so I think yeah. We was it was challenging initially but as we've gone out now and begun hiring you also figuring out, but there's a pretty large very qualified labor pool now so as we continued growing and expanding the business I think were starting to see very high quality candidates.

They're not looking for companies that from out of this stable and are interested in joining their team. So as a matter of fact, I would say that we've seen a little bit of.

Improvement now in hiring and <unk>, we've seen some incredibly high quality.

Candidates, just because there's still a lot of Russians.

Yes, I have not reopened.

Great. Thanks, guys.

Thank you. Our next question has come from the line of Dave Canada can in wealth management. Please proceed with your questions.

Hi, Manny congratulations incredible job controlling the things that you have control over very impressed.

So first question is on royalties well you know we were negative EBITDA by less than a million dollars. Whats you know is impressive but we didn't have any royalty income for the quarter or very little can you tell me if that's now that restauranteur reopening.

When you expect that to start coming back and sort of an expectation.

How it will ramp between now and the ended the year.

Yes. Thanks, Thanks for that question obviously.

That's a that's a very a big insight from our income statement, which is.

The management business and license business.

It was the later part of the business coming online. So you will see those numbers dramatically increase going forward, obviously with Vegas being up that's going to make an immediate different so night on line item and Londoner has now reopened and so we're starting to see and <unk> and the properties.

In in Milan, and et cetera. So you will see a dramatic increase in that line item and a third quarter.

So the fact that it was a small amount in the quarter or in the second quarter. It was just a factor that the majority of those businesses did not come online until either the tail end of June or the beginning of July, but they're not on and as we have it I'm not press releases a lot of our I'm a big.

License managements properties are back on line for Us now.

Okay.

So if I you know is it safe for me the model I Dunno, let's say 30, 40% of where we were a year ago in terms of royalties.

Set a big enough cushion.

I mean, you know what that's right and we didn't provide guidance on the end to end of quarter, but if you go back to a you know the comments, but they didn't vegas, there should be indicative of some of the things that how you should think about.

Evaluating that part of the business going forward.

Yeah, Okay and then.

So exiting the quarter and then going into July STK comp was down could you just reiterate that number I think it was I read 30 something percent and then Colin I was.

What like negative 18 is that correct and then can you tell me <unk> <unk>, what kind of trends you're seeing into August.

Yeah, I'm, sorry, so just reiterating that number so in.

In June.

STK was 59.9 and clinical was 21.9 and then in July July was minus 35 for SDK and then minus 16 for for Kona Grill.

And as I mentioned on my comments the trend is that by weak as we've gotten out into the quarter. The later weeks have gotten better. So we've seen a sequential improvement in the weeks August I still little early to really comment on that but oh.

But you know the trend from July was very encouraging towards the last couple of weeks of the Uh Huh.

Yeah, that's definitely impressive and you said that some of the corner stores are operating in markets, where you you have 100% capacity is that correct.

Oh, we have a couple of I mean, we have a couple restaurants that have large footprint like Georgia is one of the places where we have what we're able to operate at a a little bit bigger quest and other places.

Texas and everywhere, so pretty limited I remember, we're pretty much limited to 50% if I could just kind of an average number across the system.

I would say, 50% across everywhere, except New York in Miami wherever only allowed to do outside dining outdoor dining and also a new Jersey were only allowed to do outside outdoor dining, although we're not able to use our patio and new Jersey, that's covered but those those purchases.

So pretty limited on what you can use and then California, San Diego can also on the Hughes outdoor dining right now.

So I would say that where 50% or more limited on capacity right now based on the overall portfolio.

HM Okay. So July we were at negative 35, P.S.T.K. brand and then negative 16.

Corner, so whats what is the breakeven on a cash flow basis in terms of comp how should we look at that.

Well I mean, the way that the way I think about that as for the quarter. We were only we were below a million dollars and in EBITDA negative in were significantly above that level and it's in revenues now so I think that.

You know without providing guidance on the number I think we've assumed to assume that it just looking at the same store sales number were significantly above breakeven and I think that I mentioned on his comments that were.

Generating positive cash flow right now.

Okay, that's great congratulations.

Thank you.

Good.

Thank you. Our next question some from the line of sensor Grimes with twin lease management. Please proceed with your questions.

Hi, guys two questions. Please first.

On the.

Can you kind of characterize.

Danger of your.

Vendor and landlord.

Relief packages, if you will others are they still going on do we do they do they roll off at a certain point and you know any other color you can provide there and then.

In terms of the.

STK portfolio.

Specific to.

Tourist markets is this an opportunity to are you, giving any thought too.

Restructuring the.

Portfolio at all and third new openings. Please thanks.

Down do you want to comment on the the first question Yeah. So I would tell you from a vendor perspective. We are you know we've worked with all of our vendors.

We're have maintained very very good relationships and frankly, you know just judging by the it'd be balance you're going to kind of can you know I think see we're pretty much current with ER with everybody. There. So and then from a landlord perspective, we continue to work with our landlords Jay will take each one of them on a case by case basis.

Have a very very good relationships with them and I think.

You know we will continue to work with as as we see you know our capacity restrictions going forward, we'll continue to work with them on on what we believe is available.

Yeah, I think there's part of the question was the the tourism related and our thoughts on that for STK. I mean, we're delighted with Vegas. So I mean, we expect that to continue.

You know progress and Super positive, particularly I think there's a lot of people coming to Vegas, albeit there driving versus flying so it's a little bit of a different mix of.

Customers, you're seeing there, but I think that that will continue to really blow up a Orlando has been open up for a while obviously the park has been opened and Oh, we were again.

That property is doing very.

Very well right now so we don't have any real.

Interest there and then obviously New York is really the only big question. We have just because we haven't been able to be opened a the a the dining room, but I can tell you that.

We sold out our Guy you know what you call. The outdoor dining now that we have there which is I call. It a pin city outside of the restaurants, but we sold that out pretty much every Friday Saturday and sometimes even Sunday. So the demand has been really high for the New York properties of though I'm not really sure what's gonna have.

And once the dining rooms come back there. So we'll have to play that out but if the other sites is an indication is that a you know I think we'll still be okay novel cities Miami, We did open up the dining room for couple of weeks and frankly, we were blown away and we're very pleased with the performance that we're getting out of there for the weeks that we were open unfortunate.

We because of the incidence of coal, but in the markets, we have to shut down the dining room again, and and I think the market permits only for outdoor dining which is not exactly plus 110 degree weather, but oh, but other than that I think that's our view on those terrorism.

Occasions is that we don't have any reason to believe that.

There's anything other than to operate them once the dining rooms come back. So that's kind of our position right. Now obviously once we have more information, we'll take a look at it again.

Okay I noticed a reference in the up in the Q2.

To a new restaurants in the state of Washington or is that.

Yeah. So we so we have two restaurants one of them is very close to opening that Scottsdale, Arizona I think we're filing in final stages of getting that property online I think the decision to that market has been that we're going to let the mark to get a little cooler, it's still kind of very hot.

Months right now so one of my thinking a little cooler in terms of the weather in the market and then Bellevue, Washington is the only other restaurants.

That where we're contemplating from an SDK and we're thinking probably be into the year unless something dramatically changes in.

And into Washington market, but it's a fantastic piece of real estate, it's in Bellevue.

And Ah, where we're super excited about the long term potential of that property and then in terms of SMB Oh, we have a bunch of partners who want to open all we're trying to do is keep them at at Bay, because we don't want them to be over bullish about what's going on there, but there will be additional SMB opportunities that we will.

Well be bringing online and for those were just looking for some of the whole talk capacity just come up with cats, and but there won't be development and two for sure for the rest of this year.

Then, we'll see though how the SMB business.

Stuck shaping up.

Any fresh thinking on expanding Dakota level, given how well you guys are operating the brand.

That's a great question, we don't have an internal plan for that but you very wisely already stepping to the fact that there's been interests are there different people who have asked a there's a lot of as you can imagine vacancies in some malls, a again will be very will be very thoughtful about it and oh, but right now our number.

One goal is to get Kona grill to flat same store sales year over year, a and then again were will navigate through the third fourth quarter and as I said on non.

Prepared comments, so we look forward to see how the holiday season shapes up so oh, that's going to be kind of our next big milestone is really have a very strong holiday season with all brands.

Then we'll figure out what the growth comes after that but there's a lot of the man I mean, theres believe it or not.

There's now you know places that are in good real estate that landlords are starting to get concerned about they're going to be empty and oh, they're asking and ER and our answer to them as I give us a little time to see what happens and we'll get back to you.

Your vision that brand to always be owned and operated.

You know that's a very good strategic question at this point, yes, that's a again I'm I've has requests because already on the managements.

Business and on the license business I've had some of our partners asking about potentially for.

You know smaller hotels is smaller venues so.

So a you know again, we'll consider that and then we'll put that into our.

Feature growth plan, but but again right now as I mentioned earlier and we want to be thoughtful about this Friday wanting to get all our restaurants backup to positive same store sales, which I believe was though the team that we have it's an achievable goal in near future and then once we get those pieces all back together with you're going to talk about.

Kind of how to evolve strategy to grow.

Great. Thank you very much.

Thank you Sir thank you.

Thank you. Our next question has come from a lot of Mitchell sacks of Grand Slam asset management. Please proceed with your question.

Hey, guys great job.

Navigating the tough environment, Mike My question has to do with competition in the marketplace can you just kinda talk about what you're seeing from competitors in terms of closures and do you see opportunity there or is there.

Or is it your deal more neutral for you.

[noise] I mean, I think though you know first of all I'm going to go on record by saying that you know our historical philosophy on competition. It's been that's a strong restaurant industry is good for all parties and frankly, I'm a true believers that having great co tenants ER business.

It is in restaurants.

Is very good for the overall industry, so I I want to start with that view.

Unfortunately, right now we are seeing that in some areas not everybody's coming up I mean, we we can walk down by some of our restaurants and we can point out to people who are just not going to come back in the near future. So so the competitive environment has definitely changed that you know there's less players right now.

Who are competing and I do think that I've also notice a trend where a lot of because people will have three open axtel trying to play some of the previous playbook relative to what they used to do they're trying to do the same thing again after the opening but unfortunately.

As I mentioned.

My answer to that coal you have just to be very nimble right. Now you have to think about.

For the next occasions got me from so so competition or is there something from have not adopted as fast as a as a as we probably have to certain degree and I think there's still some competitors largest watching and waiting for better datacom and they're kind of I'm not getting.

To the game, which it's OK answer as well, but it's an opportunity for us because we believe that.

By having a healthy core of restaurants for now I'll get to some of these long term advantage of capturing market share and as I said on my I'm not prepared comments as well is our social media scores have just jump dramatically, meaning that gas that now are going out to really appreciate the experience at.

And so we're seeing on you know I think I'm very pleased with.

Our progress of both marketing, a and as well as executing at the restaurant level. So I think that's frankly separating us a little bit from the pack being able to deliver great experiences everytime guests come to a restaurant. So I think that's it's an experienced game I know people always ask about the future of five dining and I think frankly, the people who come.

I'll now really want to have fun and one of different experience. If you just want to eat everybody learned in March and April. They can just gets pretty much anything it's your house or through the delivery services. So I think differentiation and execution now I really the key the players in the Russian space.

Yeah, it's a different different competitors.

Round right now it's different.

Thanks.

Thanks Mitch.

Oh no further questions at this time I'll now turn call back order management for any closing remarks.

Thank you know a as always we appreciate everyone's interest.

And the one group and I look forward to running into all of you in our restaurants and above all of them I just want to thank all our one group teammates who frankly have blown away you know every expectation that you, possibly could have so it's incredible team.

Running at a very high level and I appreciate.

The contributions of every single one of them. So until until next time. Thank you had one take care.

This does conclude todays conference you may disconnect. Your lines at this time. Thank you for your participation and have a great anything.