Q3 2020 Chefs' Warehouse Inc Earnings Call
[music].
Greetings and welcome to the chefs warehouse third quarter 2020 earnings conference call.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Alex Aldous General Counsel Corporate Secretary and Chief Government Relations Officer. Please go ahead, Sir thanks.
Thank you operator, good morning, everyone with me on today's call are Chris Pappas, founder, Chairman and CEO and Jim Leddy, our CFO by now you should have access to our third quarter 2020 earnings press release. It can also be found at www dot chefs warehouse dot com under the Investor Relations section.
Throughout this conference call, we will be presenting non-GAAP financial measures, including among others historical and estimated EBITDA and adjusted EBITDA as well as both historical and estimated adjusted net income and adjusted earnings per share. These measurements are not calculated in accordance with GAAP and may be calculated differently similarly titled non-GAAP.
Financial measures used by other companies.
Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in todays press release.
Before we begin our formal remarks I need to remind everyone that part of our discussion today will include forward looking statements, including statements regarding our estimated financial performance.
Such forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them. These.
These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect some.
Some of these risks are mentioned in todays release.
Others are discussed in our annual report on form 10-K in quarterly reports on form 10-Q, which are available on the FCC website.
Today, we are going to provide a business update and go over our third quarter results. In detail. Then we will open up the call for questions with that I will turn the call over to Chris Pappas, Chris. Thank.
Thank you Alex and thank you all for joining our third quarter 2020 earnings call.
While early third quarter business trends showed slight improvement sequentially as compared to late second quarter, we experienced more measurable increases in active customer count and revenue during the second half of the quarter.
Despite continued significant restrictions on indoor dining capacity in our largest markets September September sales averaged approximately.
69% of the same period in fiscal 2019.
And we saw a multiple days or greater than 80% of prior year sales during the month.
Customer openings across markets continued during the quarter as restrictions he and we continue to add new customers across segments, including independent restaurants, cafes country clubs retail and hospitality.
And this section of the earnings announcement, I, usually compared to sales and gross margin results for the current quarter to the prior year quarter based upon the tumultuous time, we are and I felt there would be more appropriate to provide commentary on how we compared versus our sequential quarter Jim.
Jim will provide the comparisons to prior year in his comments later on.
During the quarter net sales were 26.7% higher versus the second quarter of 2020.
Specialty sales were up 63.5% organically over the second quarter, which was driven by an increase in unique customers of approximately 52.6%.
Higher placement of approximately 67.4% an increase in specialty cases of 58.1%.
Organic pounds and so the way were approximately 9.7% higher than in the second quarter of 2020.
Gross profit margins increased approximately 210 basis points compared to the second quarter gross.
Gross margins specialty category increased 420 basis points as compared to the second quarter of 2020, while gross margin in the center of the plate category decreased 52 basis points.
Now to move on to an update on recent business activity.
Sales in October are trending at approximately 71% of prior year hence.
Pent up demand for dining at restaurants was evident in certain Midwest in southern markets as capacity percentages were gradually increase this trend gives us confidence that business will continue to improve over time as indoor dining availability grows in our larger urban markets such as the northeast mid Atlantic in California.
Throughout the last six months in addition to supporting customer openings transitions and reinvention.
Our teams have opened thousands of new customer accounts targeted growth in suburban markets grown our Allen brothers direct to consumer business and that quickly adeptly adjusted our product lines to meet the changing needs of our chef partners.
Menus are adapting to evolving cost structures and guest experiences and restaurants and other segments of the hospitality industry.
One example is evident in the move towards grab and go for breakfast and lunch, while maintaining the highest quality ingredients and service, that's allowing our sales team to bring the full force of their coronary expertise and creativity.
Helped drive evolving trends in foodservice.
I would also like to welcome Harris seafood to the chefs warehouse family of companies. This acquisition supports our growth and first seafood in the southeast and complements our continuing category expansion across Florida.
In terms of technology and operation, we completed the consolidation of our Texas operation into our Dallas hub and we have continued to invest in new technology application and upgrading and deploring our existing platforms throughout this period of volatility and uncertainty.
During the quarter, we completed the integration of our Philadelphia operation onto our ERP platform and operations scanning system and Thats commenced our west Coast implementation project with an expected go lives in the first half of 2021.
In addition, we executed several enhancements to our digital platforms, including a design fresh of our chefs warehouse website with new customer focused content as well as internally focus improvements to drive both sales growth and operational efficiency.
Before I turn it over to Jim I would like to pay tribute to Peter Pappas mine in Johns to your father passed in early October at the age of 92.
Peter founded the veterans butter in a company in 1956, the foodservice business that would form the foundation of the chefs warehouse Peters.
Peters combination of integrity compassion and dedication to quality in service of the underlying themes that define the culture of our company as it has grown and evolved over 35 years.
We will miss him yet we will look to honor him as our team members continue to provide the highest quality food products and service to our customers that embody the chefs warehouse unique specialty food service model.
With that I'll turn it over to Jim to discuss more detailed financial information for the quarter.
And an update on our liquidity Jim.
Thank you, Chris and good morning, everyone.
In this quarter's results you'll find some reclassifications within our income statement that in response to an FCC comment letter. These reclassifications have been included in all periods presented in our current press release, and 10-Q and will be and will be reflected prospectively in our future filings.
We have reclassified our food processing costs previously included in operating expenses to cost of sales and have split our historical presentation of operating expenses between selling general and administration at administrative expenses and other operating expenses. These reclassifications have no impact on the company's name.
Net income cash flows for EBITDA.
Ill now provide a comparison of our current quarter operating results versus the prior year quarter and provide an update on our balance sheet and liquidity.
Our net sales for the quarter ended September 25, 2020 decreased approximately 36% to $25 million to $254 million from $396.8 million in the third quarter of 2019 the.
The decrease in net sales was the result of a decline in organic sales of approximately 44.9% as well as the contribution of sales from acquisitions, which added approximately 8.9% to sales growth for the quarter.
Net inflation was 2.1% in the third quarter, consisting of 1.6% inflation in our specialty category and inflation of 2.7% and our center of the plate category versus the prior year quarter.
Gross profit decreased 37.6% to 60.6 million for the third quarter of 2020 versus $97.2 million for the third quarter of 2019 gross.
Gross profit margins decreased approximately 63 basis points to 23.9%.
Changes in product mix product mix due to both customer mix and menu adjustment during the Cobi period was the primary driver of slightly lower gross profit margin versus the prior year quarter.
The primary driver of net specialty inflation was above average price increases in chocolate and chocolate and cheese categories, partially offset by deflation in the dairy and specialty pasty, Kevin pastry categories.
Inflation in the center of the plate category was driven by higher pricing across most beef categories as well as product mix change product mix changes attributed to growth in our direct to consumer business as well as other premium cut sales in our Allen Brothers Division.
Total operating expense decreased approximately 16.2% to $72.6 million for the third quarter of 2020 from $86.6 million for the third quarter of 2019.
Lower cost associated with compensation and benefits as well as general administration related costs were the primary driver of the decrease in operating expense in the quarter on an adjusted basis operating expenses decreased 13.4% year over year, excluding the impact of acquisitions adjusted operating expenses decreased approximately.
Currently 27.5% versus the prior year quarter as.
As a percentage of net sales adjusted operating expenses were 25.8% for the third quarter of 2020 compared to 19.1% for the third quarter of 2019 as.
As mentioned earlier sales volumes increased sequentially from August into September.
As such September operating expense on an adjusted basis represented approximately 24.6% of net sales for the month.
Operating loss for the third quarter of 2020 was 11.9 million compared to operating income of $10.6 million for the third quarter of 2019 the.
The decrease in operating income was primarily driven by lower gross profit offset in part by lower operating expense.
Income tax benefit was $5.2 million for the third quarter of 2020 compared to expense of $1.7 million for the third quarter of 2019.
Our GAAP net loss was $11.4 million or 31 cents loss per diluted share for the 33rd quarter of 2020 compared to net income of $4.4 million or 15 cents profit per diluted share for the third quarter of 2019.
On a non-GAAP basis, we had negative adjusted EBITDA of $4.9 million for the third quarter of 2020 compared to positive adjusted EBITDA of $21.6 million for the prior year third quarter, adjusted net loss was $13.7 million or.
38 cents loss per diluted share for the third quarter of 2020 compared to adjusted net income of $6.8 million or 23 cents profit per diluted share for the prior quarter prior year third quarter.
Turning to the balance sheet and an update on our liquidity as of October 20, Threerd 2020, we had total liquidity of 237.3 million comprised of $193 million in cash and $44.3 million of availability under our ABL facility as.
As of October 20, Threerd net debt inclusive of all cash and cash equivalents was approximately $209.1 million.
At this time due to the continued uncertainty regarding both the pace of broader economic recovery and the lifting of in room dining restrictions across our key markets, we will not be providing guidance for 2020, we hope to provide more color as we gain more clarity on the length of economic downturn and the pace of reopenings. Thank.
Thank you and at this point, we will open it up to questions operator.
Thank you we will now be conducting a question and answer session. We would like to ask a question. Please press star one on your telephone keypad.
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For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while the call for your questions.
Our first question is coming from the line of Peter Salah of BTI Jade. Please proceed with your questions.
All right. Thank you first Chris I, just want to say I'm, sorry to hear about your loss.
Yeah, I I just wanted to ask.
Hey about the the sales forgotten it was encouraging to see that the September sales numbers were approaching you know call. It 70% October a little bit above that can you give us a sense of.
What level you need to get to.
You get to profitability or where you're profitable in October or.
Oh, just shy of that that level.
Yes, I'll, let Jim take the first part of that and then I'll find on the Ross, Yes. So in terms of where we're operating right now it's really month by month very close to breakeven.
The cadence through the month was similar to Q2.
With September being.
You know very close to breakeven, maybe a little bit of profitability.
On an adjusted EBITDA basis. So we're at a level now where you know based on accruals were on the either side of of of breakeven.
From a medium to longer term perspective, we've said that our stated goal is to get to 75% to 80% of either.
Either 2019 pro forma for the acquisitions or the.
The midpoint of our implied guidance, which are similar levels, our implied guidance for 2020.
And the way that we.
So view the world right now we believe that.
While the near term with the colder weather.
And.
The activity around co bid.
May provide.
A more conservative view to the next you know.
Three to six months, we believe that as we approach the second half of 2021 and into 2022, we'll be able to build towards those levels and and get back to it's really about a two year look right now 2022, being the focus yeah and really to add to Jim's comments.
You know the choice right now if you have a strong balance sheet, which we do.
It's how.
How much do you want to.
Double down on 22, and 23 I mean, we see we see this things such as the weather got better or Susan building. The the pent up demand was unbelievable we're watching.
The demand in parts like Florida and Texas.
Where things are a little more normalize as far as our restaurants.
You know, we see a tremendous green shoots so.
You know my decision really was to start to invest you know keep investing in IP and digital.
Keep investing in talent, we've had that we have been adding talent that normally is not available to us in the marketplace.
And really starting to get businesses.
Primed to really be the beneficiary when the.
When the uptick starts to happen so as painful as it is for US now we think there is just tremendous opportunity through M&A really smart M&A.
Not everybody I think we'll get through this unfortunate time. So we think you know using our balance sheet, using our our breadth and depth size and ability to to do bolt ins.
Intelligently I think that that is the right strategy really going into 21 to 22.
Great very helpful.
Hi, given us a little bit of color or.
Commentary around what you're seeing.
New York City, and maybe even San Francisco as you know some parts.
In New York, our reopen for indoor gardening, I guess at the end of September.
Have you seen trends or profit and that market as indoor dining reopened.
Yeah, we'd that we definitely saw upticks as a as New York Open you know, we're looking forward to New York going to a 50%. We we think that 50% is a is a huge number it allows a lot of restaurants to reopen many customers still are waiting.
So, but we did see a nice uptick.
We really see uptick in what we were seeing a really uptick in California. Unfortunately, the the fires.
I'd have dampened things down Unfortunately.
Some of our best performing areas work in California.
Sorry to come back, but that definitely was a a unfortunate head to a real uptick that we were seeing until the fire said so getting through the buyers again I think the the the warmer climates.
Are definitely going to do better.
Our customers have pivoted, it's unbelievable I would say you know you walk through New York right now a lot of it looks like you are even more of a European city with what they have graded outside I think they can push it you know with the the outdoor heaters and the ability to keep people comfortable I think thats really going to help and hopefully we get some luck with the weather.
I have been pleasantly surprised in a in cities that have opened up indoors I.
I know, there's some spikes going on right now, which kind of we expected but.
We did notice that there was a eight a.
Certain part of the population that was very comfortable and restaurants were filling up and that was really encouraging indoors. So I think it's going to be a you know an up and down you know next few months, but.
I'm encouraged with what I saw.
All right. Thank you very much.
Thank you.
Thank you. Our next question is come from the line of Alex Slagle with Jefferies. Please proceed with your question.
Thank you.
My condolences.
Had a question maybe on the holidays coming up and he can provide some context on how to think about these high volume. Several weeks later in the fourth quarter and maybe how significant the large party in banquet holiday business is for your customers and how to think about managing inventory and that kind of environment.
Yeah, well I'm inventory I think again I think the the worst is over I think we went through the.
The difficulty of a you know when March when averaging close down and you know we've been fighting getting through a lot of that inventory, especially the perishable stuff. Obviously, we went through in the first few months, but.
What we're hearing and what we're seeing is the encouraging part is that there are lots of parties booking they're not the big ones I think it's going to be more of a season of small gatherings.
And.
I'm excited to hear that you know when you watch the news and you hear about a you know spikes you're like Oh, My God, no one's going to want to do anything but.
We are seeing more.
More and more small gatherings with our customers, we're seeing a lot of off premise catering.
We're seeing people job you know people again.
Im doing this so over 35 years their social animals. They do want to get together right now they are trying to get together safely. So.
A lot of our larger units are able to accommodate them what their party rooms spreading people out so I.
I think it's going to be a season I.
I think it's going to be a longer season.
I think it's not going to be the typical holiday season, I, just I think it's going to be an ongoing I know for me, even though you know friends and in our company people get together differently and I think thats going to continue throughout the winter, where you see parties of 10 or 20 or 30 dips.
Depending on you know what city. It is I think it's going to be a a continual.
You know a long season of small gatherings.
That makes sense and then if there's any silver linings in this crisis and then you mentioned you're picking up some strong talent on the sales side or anything else you'd highlight or maybe break through described discussions with new customers that you previously couldn't get Tim.
Sure. So I think just like you know restaurant had the trend was already starting for more pick up you know take out off premise catering.
I think I think the I think coal that has kind of compressed.
What might have taken five years into a few months. So obviously take out will be tremendous.
This winter.
And I think the the trends that the industry was consolidating I think that will really.
The consolidated over the next.
I would say two three years versus seven to 10, we did a small acquisition you know into the in Florida.
We think that that trend will continue we think there will be many opportunities to get talent and you know our specialty is really you know supplying.
Either.
Wealthy suburban areas that have lots of restaurants lots of catering obviously the cities.
I think the cities will take longer to come back at the same time, I think that we'll be able to fill a lot of the vacuum of less volume.
With these tuck in acquisitions, so I think that will be accelerated throughout a 21 and 22, Hey, Alex I would just add that I think we've been really pleased with the level of new account openings that we've seen over the last six months I think as we mentioned in our prepared remarks.
Thousands of new account openings and that obviously the level of demand is not there, but as we build the business back, especially in the second half of 21.
We feel that that sets us up for a.
For good growth, yeah, and what's really driving the new account openings is that our ability to continue to service customers.
The way they need I think a lot of our competitors, especially smaller competitors did not have the ability to keep the trucks on the road.
And service to customers the way they do they needed. It you know not just once a week, but multiple times a week. So I think our ability to to put enough product on the truck combining all the categories that we've been adding has really been the.
Given this that tailwind to penetrate and grab market share with all these new new customers coming on board.
That's great. Thank you.
Thank you.
Thank you. Our next question is coming from the line of Nicole Miller with Piper Jaffray. Please proceed with your question.
Thank you and good morning, Chris I'm, very very very sorry for your life.
Thank you for thank you.
Just two questions from me. This morning, when you think about the improvement.
Sequentially from this quarter.
Last quarter and I like that comparison by the way or even in October to September.
Could you just rank where the improvement or the thought that's coming from and I tend to say hey, more capacity on the town center opened but there's probably more behind the momentum I'm thinking about you know just in general coming back online maybe there's more pounds obviously.
Obviously capacity.
Maybe there's other items could you just rank where the improvement is coming from.
Sure.
Yeah, you know again, we saw our unbelievable.
You know demand in the outskirts of a lot of our major cities. So.
You know that continued.
Even after summer.
Which shows that you know many people are hunkered down they did not go back to you know to their to their city apart.
Apartments.
But they continue to go out in their neighborhood. They continue to take out the continued to.
I think there wasn't a golf course that didnt have a record year this year.
You know they were golf courses have a big catering facilities, so they're able to space people out great outdoor dining, which I think continues so.
That really continue to accelerate.
As the city's started to open you know I think everybody really forgets how how decimated our you know our major cities were.
Even going to 25%.
Is a big uptick so where we see cities going to 50%, where we saw Florida.
Remove restrictions, obviously, there's tremendous upticks.
In those markets and we think that will continue throughout.
Throughout the winter again, I think the warmest states.
I'm going to have a better winter season.
And I think that as we get through and who knows where the balancing act goes.
With the city's fit.
50%, giving us, giving our customers 50% allows.
Many many many hundreds maybe thousands of customers, who still have not opened waiting for that 50%.
To open up and that's really the uptick that we're looking for but we did get part of that going into September and October.
Okay excellent and then.
It's been Fastlane, Alaska months I've received a lot of inbound commentary from a lot of our peers and partners in New York, saying, Hey, I phone chefs warehouse.
I'm very pleased to find you any good experience so how big.
We see Hum.
And that's a real opportunity.
Yes, I mean the.
We are investing in it right now obviously its a completely different model the big upticks come when the weather gets cold and people would rather get delivery. So I.
I think it's a wait and see we do have more more of a digital team right now that is focused.
To try to accelerate that business again in the <unk> in the winter months, but really the the big uptick we saw was with our online premium.
The team So Allen brothers.
Really continued to accelerate and is having a phenomenal year with their online ability to send you know mostly at San Jose is Fedex and new Pos.
And we expect that really to continue throughout the rest of the year as people fill up their freezes again, [laughter] and they really really the discovery that you can buy you know such a great high quality steak house type of stake in seafood.
I think that that trend will continue and we're looking to add on to that.
Great. Thanks again.
Thank you Paul.
Yeah.
Thank you. Our next question is come from the line of Kelly Bania of BMO capital markets. Please proceed with your questions.
Hi, good morning, and.
Just wondering.
Express my condolences for it.
And your family Chris.
Thank you Kelly good had a great life.
Yeah.
Yep.
So I guess I was wondering if you could just talk a little bit more about.
About the talent investments, you're making I assume it's in the sales force, but would just love to hear more about where are you, making those is that part of the comment about the acquisition is there other investments and just generally talk about the.
The size of the sales force now and how how you're working to kind of motivate them in this environment just any color on on those topics would be helpful.
Sure well, it's very important topic, obviously, keeping everybody motivated in an environment like this is of the utmost importance.
We continue to add talent to support our new businesses. So obviously.
Obviously, we're in a unprecedented times, but you know looking looking at the pent up demand looking where the business was going to change anyway.
Becoming a complete chefs warehouse you know I call it like the four legs of the stool.
We had just started to invest in produce we were accelerating into seafood and more into the.
Specialty proteins with our state cutting operations.
And we see just a tremendous opportunity over the next few years to dominate more in those in those categories, so adding more talent.
Doing small acquisitions like we did in Florida, adding adding talent and sales, especially as you know Florida comes back.
He is really going to accelerate our growth into 22, and and 23. So we see we continue to see opportunities throughout the country.
You know, we're not bashful, if we think there's talent, we will acquire it and if we can get the right acquisitions, obviously using our balance sheet you know it's very intelligently.
Well I think that the opportunity has never been greater to really have other companies that we always wanted to join shop.
Joining us so I think were stronger together coming through this you know we're all going to have excess capacity. So you know my wish list as they continue to do fold ins and really smart.
Acquisitions of talent and businesses that make a lot of sense, combining with chef warehouse and.
Really having that uptick coming into 22 and 23.
Thank you. Our next question is coming from the line of Todd Brooks with CL King and Associates. Please proceed with your question.
Hey, good morning, guys and Crystex won't pass my condolences, along as well for your that's possible.
Okay.
Few questions. This morning.
One I was wondering if you could talk about the specialty distribution industry in general and I know he's made a great comment about everybody has excess capacity and.
Ah Theres a lot of instances were companies will be stronger together, but as you look at.
The industry and.
Kind of some of the players they can't deliver the service levels. What are you thinking of as far as survivor bias that will benefit shaft and.
22, and 23 do you expect to see a decent number of competitive closures do you expect it to more be competitive impairments that turned some of the competitors into more zombie type distributors going forward.
Yeah, I mean, I think the reality of what has happened is I mean, it's unprecedented you know.
Yeah, I think I don't think there was a business that that said you wake up one day and you know all 40 50000 active customers.
Close though.
Yes.
I can't imagine being a a small business right now without the ability to you know to access capital.
And you know.
How did you get through this I mean, even if you do get through it your severely wounded I think the reality is that.
They have to merge.
You know the the pain is you know it's not over.
Even if you are doing okay, you know coming out of this I think the demands of the customer have changed just like.
Takeout is I don't think you take out is going to go away I mean, it will subside, but the trend was already there just like gluten free was growing and just like you know more beacon options.
Growing.
I think the the trend to consolidate.
Consolidate was already there so labor was going up.
Cost of operating insurance.
Was already a burden for small business so.
I think that.
What was going to happen maybe over seven to 10 years is gonna get can dance I think it makes a lot more sense for people to combined.
And you know go after their overhead there fixed overhead and for US. Its you know boxes on the truck right. So the more boxes, we can unload at a customer.
We make more money.
And you know now that co that has kind of changed.
The forecast, especially for the next year.
But we can deliver you know more expensive boxes, and I think thats why you see us going into more specialty produce and specialty seafood and and proteins those boxes really help cut into the overhead and.
Especially as the volume you know, even if with the upticks that we see when the volume upticks, it's not rocket science, we make more money and I think that I think that trend will continue for us and I think we will be one of the benefactors vendors, we will benefit from this over the next 234 and especially.
Five years as we start to combine our logistics our ability to have one computer screens ability to have just in time.
Merging of merchandise you know, which we can start to leverage you know having less trucks more products on the trucks.
The salespeople become more consultants have been talking about that for a while I don't see salespeople going away I see salespeople, becoming more so.
Salt Vince.
And more of the order being more online you know I think that digital revolution is really going to start to.
Give us the ability to leverage our infrastructure and free up our sales staff, you know, especially ours, which is highly trained a lot of them have a chef background and I think it's going to give us the ability to get more market share.
That's great and then my final question.
You talked about the unprecedented nature of what the.
The industry is going through and I know early on.
And the pandemic when you took a first cotton what.
Store closures might be within.
The customer base for schuff, you've kind of talked about maybe a mid teens level, which.
[noise] was normal closures, plus maybe an incremental five to 700 basis points, but now that.
The delays have occurred in reopening dining rooms trust you have updated thoughts that you can share with us on.
What you're expecting for door closures within.
Your customer base may be what you, what you've seen and what you're anticipating.
Yeah, I think we said that a normal attrition was anywhere from 7% to 14% and we expected that to at least be double.
Unfortunately, I think cash projections were pretty accurate.
So I think that that's probably you know what we're going to see.
On the flip side, we're already starting to see the green shoots so.
It's a it's a kind of a tale of two cities you know its terrific to see people, who invested so much of their life and money you know give the keys back I think thats going to be the very unfortunate part of this but I think what I've been saying Todd is that.
Restaurant tours people in hospitality. This is what they do you know, they're they're not going to go you know become investment bankers tomorrow or.
You know leap or New Zealand, they're going to come back into the industry and we're starting to hear of customers signing new leases were starting to hear customers.
You know old brands, you know, we're a big operators are calling me and saying what do I think Chris.
Should I just take the leap now sign the lease the you know the build out its already it's already a restaurant for the build out is going to be less that could be opened by you know mid 21 under the under 21 going into 22. So I think capital is key I think we are going to get another stimulus. Unfortunately, it didn't happen.
So I think thats really going to be the case I mean I'm almost positive I think everybody is that there will be one is just when.
And I think that we start all over again, you're going to see a lot of new restaurants or you know after this is done.
They might be changing but you know I'm seeing what you know where the weather is just the atmosphere I think is better in Texas, and Florida, and even parts of California that didn't have all the unfortunate fires.
That pent up demand I find it fascinating how how much business. Some of these customers are doing.
That's great. Thanks, Chris.
Thank you. Our last question is of the confidence come from Ben Klieve from National Securities Corporation. Please proceed with your questions.
All right. Thanks for taking my questions and first of all I'll reiterate everybody's condolences here. It's it's never easy So wish you your brother unless your family.
You know well during during that time for you all on they do.
Got a kind of a two part question regarding restaurant capacity. So so first to what degree do you see your customers taking advantage of being able to reopen the eyes with what low capacity restrictions lets say, 25%.
And then for those customers that are open to what degree do you believe that they are getting filled at whatever.
You know that capacity is.
Again, I think its you know it's not a it's not a brush stroke kind of answer.
I think it goes by territory.
25% really is more of a warm up you know.
Yeah. The worst thing is to have a dark restaurant I mean, you know you got it you got to get your staff back and I think Thats why are you know the restaurant.
Organization that is talking to the you know.
The White house, and and people were trying to get them to understand it's not you just flip the switch on and you open you know it's not like you know reopening maybe an office and you put the lights on and everybody goes back to the Das. It says it's kind of like pre season for us.
Yes, you know professional sports team.
You need pre season, you practice, you got to get your players back end. The coaches. So 20, you know just just still growing 25% was a major major step in the right direction for our operators to start to get back to you know operating they're getting back on the court as we say in basketball.
So a 50% is a magic number 50% allow.
Allows them to start to do multiple seatings I mean, even 25% we saw customers start to do some serious business you know.
Because customers I think are the pent up demand people are more forgiving, they're more understanding I found myself going out sometimes at six o'clock, they can't get to see today.
So you got to six o'clock eight o'clock 10 o'clock sitting in a lot of and a lot of cities and I think that you know as they go when we see when they go to 50, we really see that big jump.
In volume and I think it's going to be you know kind of sloppy for the next few months I think you'll see up and down.
Hopefully that you know these municipalities and mayors.
I understand that you know shutting down is not a good idea you know maybe push it back to 25% but.
But don't go don't go shutdown, that's that's a real real real.
Punch in the face of poor operators, so, allowing them just to continue to keep staff on and management and.
You know get back the 50 again when they think the levels are good I think is a real key to the recovery.
Got it perfect and you actually answered my next question. So thanks for taking my questions and I'll get back in queue here [noise].
Thank you thanks Ben.
Thank you there are no further questions at this time I will now hand, the call back over to management for any closing remarks.
Sure well, we thank everybody for joining us on this call and thank you for the condolences.
For our mining John's dad, it was unbelievable human being and so proud to have pulled in my dad is blessed with many many years and so without a sacrifice and a few hundred thousand dollars seed money to allow us to start this company we wouldn't be here. So thank you again and.
So I want to thank our team it's been obviously, a very challenging environment and we've.
We've had herculean efforts and you know are our people are on the front line every day, they're putting it out there and having to show up for work and we just can't be more bless then that I can't imagine, having a better more dedicated team and we thank them for their efforts and.
We really look forward to.
Slowly getting back to some sort of normality and so you know.
Better days in 21, and obviously 22. So thank you and look forward to a are you joining us on our next call.
Thank you.
This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
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