Q3 2020 Ruth's Hospitality Group Inc Earnings Call
Good morning, ladies and gentlemen, thank you for standing by welcome to todays Ruths Hospitality group third quarter 2020 earnings Conference call.
At this time all participants are in a listen only mode. Following the Companys formal remarks, we will conduct a question and answer session and instructions will be provided at that time for you to queue up for questions.
As a reminder, today's call is being recorded I would now like to turn the conference over to Mr. Ernie Hawk Chief Financial Officer. Please go ahead Sir.
Thank you Melissa.
Good morning, everyone. Joining me on the call today, it's Cheryl Henry our President Chief Executive Officer.
Before we begin I'd like to remind you that part of our discussion today will include forward looking statements. These statements are not guarantees of our future performance and therefore undue reliance should not be placed upon them we.
We would also encourage you to refer to the Investor Relations section of our website at <unk> Dot com as well as the Fccs web site at <unk> Dot Gov for copies of today's earnings press release, and our recent filings with the FCC for a more detailed discussion of the risks that could impact our future operating and financial results.
For those of you interested in our 10-Q filing we expect this document can be filed next week.
During this call we will refer to adjusted earnings per share.
Non-GAAP measurement was calculated by excluding certain items. We believe that this measure represents a useful internal measure of performance you can find a reconciliation of adjusted earnings per share in our press release for today's call I.
I would now like to turn the call over to the company's Chief Executive Officer, Cheryl Henry.
Thank you Arnie good morning, and thank you for joining us for our third quarter 2020 earnings call. We appreciate your time today and hope that everyone is staying safe and healthy.
In March of this year, we set the following principles in place to guide us through the challenges of COVID-19.
One further solidify our strong financial condition.
Two.
Take a strategic long term approach towards managing and improving our business and above all three managing the health and safety of our guest and team member.
Today I'm pleased to say we are successfully executing against all of these principles and I believe they are reflected in our sales and margin performance during the third quarter.
Our teams have remained resilient agile and dedicated to providing the legendary service Ruth's Chris is known for all while keeping our guest health and safety Paramount.
They have operated at a complex ever changing environment that requires them to serve our guests in a variety of different mode. Some part of changing by the day and they have been very successful.
So our comparable sales during the third quarter decreased by 37%. It's important to note that the cost base includes over 20 restaurants that were limited to outdoor dining and five restaurants that remain temporarily closed <unk>.
A more accurate number and our view is a decrease of 21.6% which reflects restaurant with dining rooms that are okay.
In all cases facing capacity restriction of 50% or more.
This improved sales performance when combined with our increased operating efficiencies helped generate positive cash flow for the quarter.
I'd now like to share with you some of the reasons behind the strong outperformance that we've seen.
First we benefited from a well diversified portfolio of restaurants, nearly 60% of our restaurant portfolio is in suburban or mid sized market and less than 15% of our restaurants are in urban metropolitan areas that are generally seeing softer demand.
The sales performance of the New York area is a great example of the disparity between these market types.
During September sales in our Manhattan restaurant were down 77%.
While the sales at our West Chester, New York restaurant, which isn't a hotels were up year over year.
We have often stated that one of the strength of the resource model is that it works in a variety of market tight and that has proven to be beneficial here in the third quarter.
Another strength of the Ruth's Chris model is our broad mix of guest appeal and our ability to evolve our business to changing customer needs.
It's strictly our sales mix has been distributed relatively equally between special occasion.
Just because and goodness gas.
The Cobas pandemic has impacted our private dining demand, but are we anywhere program.
Overcame nearly 90% of that sales decline during the third quarter due to the extended takeout and delivery initiatives, we put in place earlier this year.
We're also seeing a rise in demand from our non business customers.
Reservations for celebrate Tory birthday anniversary and just because occasions are up double digit year over year, what signals to us that while Americans may not be eating out is frequently when they do eat out they're choosing high quality restaurants that they trust like roof.
Our franchise partners are also seeing similar results comparable sales for franchise operated restaurants were down 11.8%.
Third quarter after being down 64% in Q2 more impressively comparable sales at our open Asian franchise locations were up 6.6% in the third quarter year over year.
In addition to the sequential top line improvement our restaurant, operator, operator had risen to the challenge and further improved upon our already strong restaurant operating margin.
He will share more details with you in a few minutes.
But at a high level the 47 restaurants that have opened dining room during the third quarter.
On average generated a profit margin of more than 300 basis points higher than last year.
These same restaurant also produced over 95% of the restaurant operating profit that they generated in last years third quarter.
While it is uncertain, whether this will be applicable on an annual basis due to geographic mix and seasonality of these restaurants. It is worth noting that strong performance by our operator.
I'd now like to spend just a few minutes on our balance sheet.
At the end of the third quarter, we had 103.1 million in cash and a net debt of just 32 million, which is down from a net debt position of over 58 million at year end.
In October we paid down an additional 20 million on our revolving line of credit and secured an extension to our credit facility through February 2023, with this amendment to our credit facility has now returned to the size. It was at the beginning yeah.
I am confident that we now have a solid cobot playbook sales and profits are moving in the right direction and we are controlling what we can control.
Dining room restrictions by state or local governments are not in our control as you know, but our teams are ready in response to it and we'll continue to adopt as they deliver great experiences to our guests.
Safely.
To that point.
The whole Ruth's, Chris team, including our franchise partners have been tireless in their efforts and their dedication to operational excellence and innovation has been outstanding Iman.
I am incredibly proud to work alongside each and every one of them during this difficult time.
With that I would like to turn the call over to our industry view, our third quarter results in more detail.
Thank you Cheryl.
For the third quarter ended September 27, 2020 reported a net loss of $5.3 million or 15 cents per diluted share the.
The net loss in the third quarter of 2020 included $1.2 million and severance payments $310000 and losses related to lease modification, a 3.3 million dollar impairment loss related to inventory and long lived assets.
And $217000 income tax expense related to the impact of discrete income tax income tax items.
Excluding these adjustments our non-GAAP diluted loss per common share was a loss of four cents.
Total revenues for the quarter were $63.4 million, which compares to $103 million in 2019.
Company owned restaurant sales for the third quarter were $58.6 million, which compares to $97.2 million in 2019.
The decrease in sales was due to both the local and state in dining room restrictions as well as restaurant closures, which were a result of COVID-19.
Sheryl noted our comparable restaurant sales improved considerably as the quarter progressed by month comparable restaurant sales decreased 43% in July.
38% in August and decreased by 28% in September.
Comparable sales thus far in the fourth quarter to date have held steady and are down 26%.
Franchise income in the quarter was down 11% year over year, reflecting the impact of COVID-19 on our franchisee sales.
Domestic franchise comparable sales were down 8.2% year over year.
Most of this franchise territory is in markets that have fewer dining restrictions during the quarter or benefited from increased demand due to staycations at nearby Beach for mountain attraction.
Total international franchise comparable sales were down 28%.
Turning to our expenses food and beverage costs as a percentage of restaurant sales were down 250 basis points year over year to 27.1%, which can be attributed to our new more focused menu as well as beef deflation of 12%.
Restaurant operating expenses were down 31.9% largely due to the lower year over year sales levels, we experienced.
As we reopened our dining rooms, we continue to see the results of being sharply focused on regaining our sales leverage.
The margins in our restaurants that have opened dining rooms in the quarter were up year over year. Despite the decline in sales.
We have seen significant margin improvements in food.
Labor and also in our direct operating costs as we continue to grow our sales we realized that some of these efficiency gains may slow.
But we believe we have identified permanent food and labor efficiencies from these efforts that will be beneficial during his sales recovery.
We've also taken a strategic approach to manage our real estate cost.
Our restaurant level operating margin in the third quarter was down over 400 basis points year over year.
By far the biggest margin pressure was due to sales deleveraging of our occupancy expenses. This.
This is why we have been systematically reviewing our real estate portfolio negotiating revise rent terms and where necessary permanently closing a location.
In this regard we permanently closed four company owned locations during the third quarter.
Since the start of the pandemic, we have permanently closed nine locations and there's only one additional location that we're currently evaluating for permanent closure.
Many of these restaurants were in locations that were near the end of their lease life or face challenging economics in a postcode world or both.
These restaurants had an average age of over 20 years, and while profitable underperformed the system contributed less than 2% of the company's EBITDA in 2019.
Regarding the resumption of new unit development, our New Bank Amendment now lets us earn growth capex going forward, even when our leverage ratio was over 2.5 times.
Well, we are pleased with the speech or there's still too much uncertainty in the regulatory environment to say when we would be able to resume real real estate growth.
As we look at our restaurant portfolio today 72 company managed restaurants are open and five restaurants remain temporarily closed over.
Over 91% of our open restaurants have opened dining rooms with capacity restrictions.
Restaurants are opening our operating with outdoor dining and one restaurant is operating takeout and delivery on me.
The operating status of our restaurants remains dynamic and subject to state and local regulatory changes.
As we head into our busiest quarter the year, we recognize that the capacity restrictions may limit our ability to satisfy the seasonal demand we typically face late in the quarter.
Despite these challenges our operating teams are actively developing plans to maximize our revenue performance during these periods.
The income tax rate in the third quarter of 2020 was 19.5% versus 8.5% in 2019 the.
The increase in our tax rate was due to the expectation that the company will have a pre tax loss in 2020 versus pretax income in 2019.
As a result, our income tax credits increased our tax rate because they add to the tax benefit when we had pre tax income. These tax credits will reduce our tax rate.
At the end of the third quarter, the company's cash balance was $103.1 million.
Included approximately $6 million in deferred rent on the second and third quarters.
As a reminder, due to the continued uncertainty surrounding the duration of the impact of COVID-19, we're not providing any additional guidance at this time.
Now before we go to Q would I like to turn the call back to show for a few summary remarks. Thanks, Arnie just a few quick take away.
First we've right sized our real estate real estate portfolio and believe we are now managing a great collection of restaurants, given our current circumstances and future opportunities second.
Second at the restaurant level, we've made operational changes that had been proved margin without sacrificing the ruth's Chris experience customers have grown to love as you've heard today performance. It's picking up guest occasions are increasing and we know we can effectively and efficiently operate our restaurant portfolio and that's a very.
<unk> co. good scenarios.
And third we further strengthened our balance sheet, which has significant liquidity yet modest net debt. This will help us as we play defense. She cases continue to arrive or play off that meaning investors should the current environment improve in the coming months.
All in all we have made the right strategic moves for our stakeholders and are cautiously optimistic as we look to navigate the next few quarters.
As I said, we're controlling what is controllable in a challenging environment and with that well open up the line for questions.
Thank you at this time I'll be conducting a question and answer session if.
If youd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question can you.
You May press star two if he'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Our first question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question.
Thank you and good morning I.
Hi, My question just on the monthly sales cadence and I guess in a cold the world. It seems to be all about dollars coming in the door rather than you are on your comp trends at least in my opinion, but I guess looking at average weekly sales is it right that you exited the period already in the low Sixtys range on the company side or perhaps you could even provide monthly ADW EPS superior.
And then can you give us a sense of where a W. S is trended here in October as it got a little better or is it similar to September.
Sure, Brian or our average weekly sales in September were just north of $77000.
And that's an improvement from we were in the in the Fiftys. If you remember back in like kind of June July. So as you think about the cadence it's been a tremendous a trend.
So far you know April we feel that were taken delivery only we only doing about 20000 [laughter]. So today in October were over $80000.
You know, it's the seasonality of our business that you're seeing so I think the good news is you know we're watching this very carefully the average weekly sales are continuing to grow.
We are continuing to kind of set new highs for individual restaurant that we're watching this.
Typically as we get towards the end of the quarter, because we have some really big numbers, where we have to compare again, so everything seems to be moving in the right direction.
And I think we find it encouraging so it's been a good trend on average weekly sales and wouldn't know Brian just as you think about from month to month, and obviously those restaurants cutting in and out and jurisdictions change regulations that the average weekly sales number would include the restaurants that also are just operating in an external dining room standpoint as well.
Numbers.
Yeah that makes sense, sorry, I Miss misquoted the number there I was looking at the 58, six but that was sales not average weekly sales. So yeah, you're clearly in the eighties.
In recent weeks. So okay. That's helpful. And then I guess on outdoor dining kids could you help frame how many units have expanded outdoor seating pursue perhaps what percent of sales that it contributed and how do you think that will play out through the winter months are there opportunities to maybe add in certain southern states that might offset losing.
Some seats in the northern states.
Brian Let me say that generally now I'll give it to Arnie you know we are we are fortunate we have a fairly large goods in California, Florida, Texas and that stay warm and some people that live there probably argue it's not that warm in the winter months, but you know I think as we look at what is the possibility around 30% I think of our of our systems for Pat capabilities through.
The winter months, you know I think obviously the biggest driver for US is when our dining rooms at the end when capacity gets up to that at least 50%.
Capacity. So yes, the opportunities are there and I'll I'll give credit to our team. They have done a fantastic job I'll tell that story in our woodland Hills location. They had over 100 people on the book a one nine were found out that they needed to close and then set of clothing. They went out and got it hasn't made the beautiful looking better I'm outside in cash.
All their reservation show no true credit to the team to be able to do that but again I think you know the opportunity certainly is when the data rooms are open but the teams are prepared in the event that right now.
Hi.
And Brian I think Florida could do better and this winter I mean, obviously, it's not real pleasant sitting outside right now, but there are still people to choose to do it and we're just kind of coming into the really nice outdoor dining weather in Florida, So that could help and you.
You know, California has probably been the most tricky one that kind of pivots back and forth and every week you have to be you know kind of prepared to change I think what has been really impressive is how nimble are operators have been and been able to pivot to cheryls point in some cases in a day like okay. We're getting some different carriers and tables outside someone go get it.
Let's put down outdoor carpeting, let's put string lights up whats decorate the tables and you see pictures of like Wow that looks really nice and you're sitting in a parking lot behind them all.
No [laughter] so no.
So you know I think Charles point is that all of you know we gotta playbook now we now know.
Like what Cove, it kind of looks like so far and we know what to do when this we go in one direction or when we go in another direction and how to manage it and how to manage our cash.
And now it's just about okay lets get our businesses to being as strong as healthy as they can be so we can have a good 2021.
Yep, Yep, and sorry, if I missed this but really the mix of dine in versus off premise you talked about off premise being an important sort of offsets to the lost business customer to an extent because we could you provide some color on what you're seeing off premise sales mix versus dine in.
So if you recall, Brian it was when we were hoping and it was really a to go only we were running between 20 and 25% of prior year sales. If we open restaurants, we see we're keeping about how hot so.
I still think it's a viable option for some people resist but I'm also seeing I guess on the flipside, it's great to see that people trust us and they want to come back and have the experience in our restaurants and I know our teams are thrilled to feed us, though it's still certainly something we said the program as we have the we have the technology to do it.
We are certainly looking to see how we can leverage that especially going into Q4 with the holiday season.
Yep Yep, all right well, that's great to hear congrats on the recovery and I'll pass it along.
Thanks, Brian.
Thank you. Our next question comes from the line of Andy Barish with Jefferies. Please proceed with your question.
Hey, good morning.
Just wondering.
If you could kind of call out a few of the.
Sort of permanent margin.
Finds that Youve located here with the streamline menu and and you know other procedural changes.
Yeah, let me start and I'll try to take more detail you know as we looked at the opportunity, especially with the first phase of this went in and we looked at kind of how were structured in the restaurants and there is some opportunities and really the management of the restaurants as well as some of the hours towards different levels of.
Crop and so forth and that's where you see the streamlining of the menu I would say that's it and I'll, let arnie give some more in the numbers, but there is a very delicate balance rossum lessen so as we think about on how we're tracking the impact on the gas whether it's the number of items on the menu or how they feel about the service we are tracking that.
On a regular basis, ensuring that we are not impacting this experience overall and you know what we've seen we put a few more menu items back on for kind of the input of our guests and we've been able to hold some of those efficiencies we found in labor as well as then some of the remaining streamlined menu items.
So Andy I think Sheryl will really hit the main themes I think labor's probably just everyone wants to know how whereas the stickiness.
And I think labor is probably the stickiest. If you will you know that the team has gone through and completely looked at you know the wolf of people, how we do back of the house work, there's been changes in the front of the house as well in terms of how we use our our management teams and.
And I think those those have the potential to sick now at some point you know when fills levels get higher you're going to need more held back in the kitchen and your you know you you probably won't be able to centralize some of the functions that we've done that maybe don't need to be done today in a restaurant.
So I think at some point they'll come back but that's.
You know, we're going back to a point, where our restaurant level margins were healthy. So I think we're comfortable with that but we know we have this is a tool to help us manage as we go through you know whatever the length of recovery looks like.
Thanks, and then if you're willing to share just in terms of the portfolio pruning.
You know.
It kind of on a normalized basis, you know how would maybe looking at 19, how would you know restaurant level margins benefited do you know what those stores had been closed.
You know Andy I I don't have that number in front of me to give you an exact but it does also provide you you're absolutely right. It will provide a tailwind for us.
In terms of that they tend to be kind of underperforming that some of the restaurants had decent sales, but they had just some challenging cost some economics and with Covance coming in play.
They just.
Couldn't really see a price on a recovery scenario for years and years to come.
So.
That's the color <unk>, we can go do that work and perhaps chat about with you a little bit more but I don't have the exact number of a tailwind for 2019, if we just took those out.
No problem and then just finally on.
On you don't want to be caught just if you have an outlook for Fourq you and then looking back that Threeq you have the 250 basis points.
You know up cost of goods decline.
How much of that do you think was the 12% be production.
Sure.
So I guess, we'll start off with.
Yeah, the outlook for the quarter fourth quarter, I think we expect some modest deflation nowhere near the level of deflation.
That we saw in the third quarter, So I'd, probably say, yes you.
You know kind of mid single digits is probably if we have is like you know hold their finger up in the air and gas on this the big uncertainty is around retail demand. There has been really strong retail demand for proteins, particularly beef and that will you know how that plays out in the fourth quarter.
Is the big unknown as we look at the restaurant level margin I think you nailed upon one of the things that was really kind of an eye opener, our food costs as a percentage of C. I think is a low as I've ever seen it since I've been here and that's nearly 10 years.
And about half of it is probably the decline is probably due to beef. So you know we were down 12% last year I believe in the third quarter were up 18, 19% and that was a record high. So we're still kind of if you look at kind of the last five years, we're probably still in the upper.
For half of the band of where beef is that were still relatively elevated point, but we are benefiting from but comp from last year.
Thank you very much.
Sandy.
Thank you. Our next question comes from the line of James Ratherford with Stephens Inc. Please proceed with your question.
Hey, guys. Thanks for taking the questions actually Sean on for James Just one quick one we've been talking a lot about the heightened independent closure rate throughout this pandemic we're.
Hi, I'm wondering what your view is on how much this might be in fact near the fine dining segment.
Where we think you know, perhaps there could be a higher closure rate just given the difficulty of shifting that occasion to golf for us [laughter].
Thanks, Sean and I, you know I see for US I think Arnie wait it out we are we've done the work around our portfolio based on the attributes that I mentioned you know we don't believe for US we'll see more closures from here will continue to review and I think as we all are.
We're seeing over the last couple of weeks, there kind of more volatility that Tom I think you know in this space itself it.
You know it's early I think there are a lot of estimates out there outside of each week I read a different number of what's going to happen with any industry. It's unfortunate that this is taking place and I. You know I think it's early I think there is more high that's needed here to understand exactly what the landscape looks like in fine dining, but I can say on a positive.
Now when we see the demand we have seen when we are allowed to reopen our dining room, even went to 50% restriction would tell us there is a it's not consumer demand that is kind of limiting that for the industry and it's really what's allowed as we go forward and so I would say, yes, we feel very.
Are out there they are looking for that occasion, they want to feel safe. They want to go somewhere trapped and I you know I think for US we're in a good spot and the consumer mindset around experience they can get.
Great Awesome. Thank you.
Thank you.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Our next question comes from the line of Todd Brooks with CL King and Associates. Please proceed with your question.
Hey, good morning, and thanks for the question I was wondering if you could just help us understand how your Q4 typically typically progress isn't I'm.
I'm curious as we get to especially the ended the quarter or how.
How these capacity limits that you're operating under might kick in and then how we need to think about that over a year over year basis.
And then the typical one third one third one third mix, how does that change as we get deeper in the quarter and just any potential.
A positive offsets from what you're expecting maybe you had to reset anywhere across the holiday season. This year. Thanks, Let me take your second question and then I'll hop sorry from more of a week by week or carrier by carrier sales. I think you know you kind of nailed it certainly fourth quarter is our highest traditionally a private.
Finding focused corridor, we are obviously aware of that I think as we go into the quarter thinking about what the offerings might be and again it still sounds it is out of Arkansas from a standpoint of how much the dining room away. We will have open but this is where we are now you mentioned you know the teams are staying agile and have their plans ready to stand.
<unk> around things like how do we do you know off site catering and delivery for folks and larger bundled meals for you know families that might want to have the data for for again for SEC.
If they don't feel comfortable doing that in a restaurant. So those are all initiatives that are underway. We're putting a are we have a we have a great database of loyal guests over years until we happing into that during the holiday season to make sure people understand the different ways. They can experience with credit but certainly.
As you look at where that comps start to get fairly significant attention to lease in December.
Anything to add.
Yeah.
Yeah, Todd just to I guess, maybe put a couple numbers behind it I know Bryan asked about where we are an average weekly sales and so if you think about it we've kind of spent the third quarter transitioning from like 60 to $80000 I think as we look at the year over year.
Or the trend for year over year, you know our average weekly sales from here on out go anywhere from $100000 to like the last two weeks of the year. Your 150 to $200000 as what you did last year and average weekly sales. So yes, you know I think.
That's the big question for US is there's really busy weekend. The teams are doing I think tremendous job, they're they're they're being smart about understanding how should I use my private dining room I may not see a big company holiday Party this year, but can I use it for.
Different occasions can Asia for our card can I use it during the day and they I think they have the flexibility to kind of help push back against it but it's a pretty big when you think about those last.
I don't know what other people have talked about it too you know you look at December there is some really big average weekly sales.
And we're anxiously looking every week or how are people doing how are the answering up who setting new records for us.
Average weekly sales and we continue to see people doing that and so I think it's encouraging so but it. It is sobering when you think about where average weekly sales are and what kind of comp is for last year and how the only other thing I would add is we've seen a willingness when they get to dine at earlier and later times during the day.
So I think coming into this really on significant weeks, that's an opportunity on you mentioned you know dining during the day. So that's something historically, we we've done on a limited basis that can be an opportunity for us going into those those heavy heavy volume weeks of the past.
That's very helpful. Then just my final question you talked about.
Occasion based interest because that.
Kind of tracking up double digit year over year right now as far as occasions, but can you can you talk about just business demand in general I think on the last call you talked about at least some.
Some inquiries about possible events, but it may have been longer tailed maybe into 21, but now that where's. The world sits covered lives now can we just talk about the demand from your business customers. Thank you.
Yeah, I think we kind of sit where we gave was just there certainly increase and again. This is something that really regulated to an extent on the local level and so you know, there's often times are getting increasing though and the local government.
How certain restrictions around party side and so we are hearing to all of those restrictions for the safety of our gap outlet CB increase in there I think what's been interesting is seeing I'm seeing a pick up in kind of the social celebration I mean people looking again to common and celebrate their birthdays and.
Some of it might be just because as we're seeing people looking to get out, but I think you know I think the business side and that certainly rounds.
Meetings, and so forth is not quite we haven't seen a real pickup in that and that type of business I get some good jurisdictional sell on some markets are allowing it and others that you can't do a price either per se.
Todd I think as I reflect upon this question and your last one too I think it too.
I think what I would note is it really the green shoots of demand if you will.
Represents kind of reflects the regulatory environment in the markets that there.
So you know we're based in Florida, We live in Florida, There's I think.
Of greater acceptance of.
Living publicly and in Florida with Covance then there may be for example in the North East Hmm.
That being said our approach to safety and I think this is an important one as I reflect upon your question on average weekly sales in Florida, even though we have the ability to go to 100%. We are still doing social distancing in our restaurants, and we are being very thoughtful and thorough and how we think about.
Potentially relaxing this to manage the demand we see.
Today, you know as Sheryl said upfront our first priority is health and safety. It this isn't about maximizing a dollar for Q4, it's about keeping our team safekeeping or customer safe and also you know balancing that with the need to generate cash flow. So.
Really good question. Thanks.
Thanks, Todd Thank you. Thanks.
Thanks.
Thank you. Our next question comes from the line of Josh along with Piper Sandler. Please proceed with your question.
Great. Thanks for taking the question I wanted to see if we might be able to just talk about the learnings of the last couple of quarters I mean, weve pivoted. There you guys a bit you and your teams have pivoted the business.
Yeah, I wouldn't say air quotes effortlessly right I'm sure. It's been a lot of work behind the scenes, but what have you learned about the brand the consumer that you'd maybe didnt know beforehand and Charles can appreciate that the growth environment is a little bit murky now just in terms of getting something that stability, but obviously, there's a lot of runway in front of the brand. So how are you.
What did you learn through the pandemic that maybe alters or improves revolves how route can grow as a brand going forward, whether that's more off premise maybe that leveraging the digital database just curious as we think out further down the road or further out in the future.
Thanks, that's great I'll try to I think there were three not so much I get them. All first let me say that I think that there were really two big take away pardon me and this isn't just continuing to see its one is I knew how great. Our team was we have a tenured team in the field of leadership, it's truly impressive in the industry the strength of that one.
You are dealing with an ongoing crisis [laughter] you know I don't think the underestimate it they have they the way they've stepped up and again pivot into your point, sometimes daily and back and forth and understanding their business and just the the tenure and experience with this team is then outstanding and really the foundation of why we've been successful at.
Then on and that's why I far off here and the same on our franchise side and I haven't had a real opportunity to talk about what they have done in jeopardy of the franchisees and their dedication to their brands and then we see their sales. They are taking advantage of every opportunity while keeping their guests and team members they and their just truly impressive the second one I would say.
Mentioned the strength of this brand. So you know I've been here for 13 or 14 years. This brand has been around M&A for 55 years.
And that has become one of yeah. The loyalty that gets passed to Ruth's, Chris the people that come in and said you know I celebrated my birthday here for the last 20 years I'm not going to stop I mean, it's just it's a true testament to what has been built over that time and so we just see the loyalty and the dedication of the guest facing to the brand.
It's been outstanding Yes, I think that's something we can leverage going forward I think Oh I understand what the team is capable of and understanding just how resilient. The brand is and how people view. It certainly has an opportunity and you're right. It's a little early to be specifically, giving numbers around timing and development that do we see.
So based on what we've learned.
I understand the strength of the team and the strength of the brand and our guess is that there's an opportunity.
To grow that's grandnephew Gerry yes, yes, I do and again too early to say exactly how were Atlanta, which opportunities specifically, we'll take advantage of the opportunities in front of us.
Great. Thank you.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Henry for any final comments.
Thank you all so much for joining us on the call today, and we look forward to speaking with you again soon.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.