Q4 2020 Kura Sushi USA Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, and thank you for standing by.
Welcome to the current Sushi USA incorporated physical Fourthquarter 2020 earnings conference call.
At this time, all participants have been placed and they listen only mode and the lines will be open for your questions. Following the presentation.
Please note that this conference is being recorded today November 16th 2020.
Oh and the call today, and we have of Jimmy Jimmy Uber, President and Chief Executive Officer.
Coaches Shinohara Chief Financial Officer.
And Benjamin important Investor Relations director.
And now I would like to turn the conference over to Mister <unk>.
Thank you operator, good afternoon, everyone and thank you all for joining I know everyone should have access to our fiscal fourth quarter Twenty-twenty earnings release. It can be found the W. W. W. Dot kirstie, she dot com and the Investor Relations section a copy of of of Yearnings voices also been included and and they gave us.
Admitted to the I C C.
Where we begin our formal remarks I need to remind everyone that part of our discussion today will include forward looking statements as defined under the private Securities litigation of form Act of Nike Nightspot East.
These forward looking statements are not guarantee of future performance and therefore, you should up it under the line.
These statements are all of the subject of numerous risks and uncertainty that could cause the actual results of different materially expect.
We were for all of you to where the reason I C. C files for a more detailed discussion of of the risks second impact arkie tropical or soaps and financial condition.
Also during today's call and we will discuss certain non-GAAP measures, which we believe the knees for the value of their wallets.
And the presentation of the additional information should not be considered and isolation north of substitute for results of prepared in accordance of the gap and the reconciliation the comparable got measures are available at our and it's release, but that out of the way I'd like to turn the call over the journey.
Thank you ma'am the current you'll you'll be one four of joining the other day.
I hope every long interesting shade on the healthy.
They call and that's the best quotas unused cold or the discussion today the the main before.
The day and I'll come Denise so that the east.
Oh, you do have the see the question about the other for school without find out the results maybe it would be happy to answer and threatening to on the day.
And the menu on the use of equity and you remember Oh sort of guidelines you meet the much secret to Monday pretty sharp it down and the industrial and beige.
And he made the difficult conditions the growth all of a lot of Islam.
And white.
From the start of the pandemic primary concern, hoping the safety old level of guest and.
Going in the house and the little town.
Well the team already quiddity, and I'll I'll eat eat eat quickly and the if he she and pretty Disney Multi-national wintertime and let the right.
And conditions along the beach.
And the process of of the opening all the luck in day to me and the bite and all of Blah blah and he's got a but for now and we were able to open the 23 out of 20.
25, but that's the wrong.
Cheaply minded up all the Saddam of being hump out and buy Buddy of Colby C D Street.
Which is the deep Reds the date, the easiest quota of the sales.
You might the do you remember that type.
Sonya, which contains and equity Hucklebone line Islam base.
And yes on the issues on the street and all indoor range beginning on July of fucked onto.
And I'm pretty close the gift.
And he fixed her unlucky and fixed she loves the force quote huh.
Oh, California still off all the the ecologically to go and the outdoor seating the time the species and Peel the streaks on one of the next you sat on contest and September.
Outside of the kind of for Ya most of them all of its not operating the 250 per cent of the teaching, which you must be the ladies of force Gordon.
And we have been very excited to see the demand put on the wall.
Yes, well, let the for each 80, the dining experience of the media.
Open to all of the dining room.
And takes up the sofa.
So when he's kind of improvement and September we said anytime of the Blue correct stadiums and.
The seating tripathi, including the 75 per cent.
The is that about <unk> two four comes and picks up let me that the the <unk> 60% of of.
Comfortable and September let me that the the Saudi 80 per cent.
October comps improve and up to the need like the the 24 per cent. We do we think that you've indicated all of the recovery. The current expect and and did he Jones and you said the Oakland the indoor dining rooms, and the who correct experience.
We still honestly I just don't put all of these.
All of this and the new that's what I'm opening equal to the New Jersey.
And I will take the institute of the end of the quarter, we have stayed with leather.
The leads the 50% to 60% of blah blah pundit ecosystem, a U V. He's kind of of New Jersey and for 25 per cent the teaching jealousy of limitation.
And that noted of.
Significant part of the level of consumer offer you is a lot of <unk> provided yes.
And some other type of sense that he could I experience and all the dining room.
The the use of of combat the bold and compare that it's a lot of one of them on the auditing screen and the extent of standard.
Oh, let me some of the stone and I'll be could've gone and you let the machine.
And you can imagine if the experience is almost impossible to Liberty gate and sort of due to the current bill you free exchange.
Most of the significant the hit the liens have eaten, California due to the system wide the bump on Columbia All day.
The Council decided the at the end of the signature element of the correct studies.
And I play lots of it on.
Of how today about the frequencies kept the.
And I'll come down there to provide.
Mitigates the loss of Easter of sales.
And the neighborhood you right the <unk> Oh, that's the.
The implementation cause it out and he set you up and could see somebody and then to all the cable service, including the immediate the outdoor seating and many of our high school and that experience and.
And the system wide and all of the out of online all of that and the day of your body of sounds good on the top.
And the result of of focus on of print of premium.
Primitive dining and good with and grabbed one of the implementation.
We were able to grow of off put them and see the mix 217% for Q4.
This compare the two hour of history.
Of putting B C and the mix of around the one per cent of the fence.
I recently by the end of the fourth quarter and you had the pendants and I'm in California is outdoor dining the spaces.
Why do we are able to the true some of the most of the sales of you can imagine yeah. He got to bring and good luck of the critical that experience two of them a gift in California, and it's not.
Of the beach.
And the implementation of F O.
Gotcha, Okay. The other day in ink and a lot of grabbed the help of lifting lots of company and eat the in oldest.
And he began to see the hook per month benefit of the <unk>. You said she was beginning of the in September.
All of September and October and he's out while also bowling the bodies I need reputation of the dining room restrictions you set them, California counties.
And put them by the comfort zone between our past the quota and the hour cut into Florida.
The the down a lot of like 24th for about <unk> on the free open dining room of.
Today, the have 18 desk and all that off of.
East of the bank.
Right and I'd like to fall comfortable and me that'd be 73 per cent.
The scene, Kansas, and the company and put them and I believe and cause all of new please kind of yeah.
It's kind of our comps all the near the 53 per cent and the October <unk> over and then I think 44 per cent.
Notably we've achieved close to the 30 per cent glanced out of the system the lines or anything and <unk> September in spite of August he's pretty kind of being I'll still don't get the marks.
He just stood on the results continue the into October, which so far the system and why the living of <unk> of 20 per cent of September.
We are continuing the can see months of the improvement in a lot of plenty of for them you see the status of business then.
Right and I lost you for good I'll have the service on the $35000.
We were able to take <unk> good of a sales $284000 of September.
And getting a lot of total of putting the C. Three.
$350000, that's the month.
October.
Well, let me see the status of continue the to grill is of wouldn't be seen as soon as of $405000.
$123000 overreach of welcome good at the House.
These Audi of these out something very encouraging and the via exploiting working with other attorneys to expand our instead of of putting the mitigate the margin brushed off and on the other part the fees.
The the current bill the learning to install of titled the four online all of the link to the square on the pending results.
Expand the the system wide.
The the square maybe it will be able to offer online all of the range to do all of a homepage of of mobile or the link to the other waking.
Waking up and.
And the eventually throw the.
The concept of the service on the table side of the payment for all of that I needed and the guest.
Of of Hood of could I experience of the room that the right about all of our industry of getting print Kobe do you need the economics and operating all of this and I'm gonna get out of the piece of the being of change.
However.
The at a good of lots of the amount of four could of fishy went.
And the dining room is that available on.
The the continue to look for ways to give you a lot of great great to get the experience eastside of both of these limitations.
<unk>.
The the steps we've taken out the the onset of Covid ink.
Including the detention of the store manager on the clinic out of kitchen and stuff.
The real will punish some of the two lump of operational free free and the efficiently and.
And do the dining restrictions are listed on the seating capacity mutations early next.
These are the rest of all of our different and capacity.
The main goal continue the to the the health and safety or both of <unk> on the on the team member.
Two five the put him on the sofa environment and the keep of Unluckiest peace of mind the help.
Pay per click that taken several steps for each of of all of difference, including the puck and that'll put I'll take the equipment to full of our team members.
And has the putting the processes.
So it's kind of just something of this.
To be doing and be repeatedly and bush and the.
<unk> members of his chicks right up to the but I like the the start of each sixth.
As of the inmates on the on and off the cold.
The convenience implement of customer survey of part of our two o'clock process focusing on of Colby and 1950 procedure.
To date.
The earliest one has been overwhelming be made of the policy Dave.
Let's quickly and discuss all of development and <unk>.
So the typically and the to the end of the fourth quarter, we opened up for the the New Jersey different in September and.
Of all clear tons of Sunday and the last name.
D C. This and I'm in November.
The current does he have force to us on the construction, including one and that May end up opening and <unk>, yeah excuse of entering too.
Holding on to the expect the to maintain almost take you to go over the over 20 per cent do you need to <unk> hold on tightly appeared at the beach.
And he's kind of 2099 719, but.
And you can imagine and the kind of environment, Yeah, a number of old fucked us out of the level of comfort of that's good all the all of the day of our branch.
And come with all of the degree to T I.
The the rest of the <unk>. Unfortunately, I have <unk> challenging time is the chest that a person that can sustain our company and our gross put on.
I'll go with the end of of the quota.
We had the nine medium and Donald the interest on Hunt and the note of it.
We have also increased alrighty loading time of credit to $35 million. If you don't put up the Japan and.
And believe the extent extension of all of the pay per view video of the flow of money, Yeah, two and five a year.
With the ex tons of all of our money butterball, our checks out of personal provides a free at the wrong way not just the full of a couple of things of the company to the the pandemic.
The for continuing to to the ex cute all of those problems.
And is that of a proud of the top of that it's Tammy just for the 30th 2021 and you'll have a tech the beat on the link down already boardwalk.
And all the ways. We appreciate the support the other could of the Palm and does he have confidence in a lot of the time success of our business.
Oh of fourth quarter of we could eat expenditure of of approximately $850000 a week wasn't breathing and I like spectation and the.
<unk> ex fixed all equally chest Monday, the TV approximate 38 $200000 for a piece of code of 21272 and you want.
A lot of expected the queue unbounded in the <unk> of a bandaid the expectations for subsequent cool of times would you want and and get you could just out of here.
About the handle aesop's payment on the hospital part of the quarter.
That's pretty due to the ongoing to shop and peak three of them by Kobe. The 19, maybe not the issue and find out the other day now for keeps cutting you of 2021, Okay. This time.
And clothing I'll do that the <unk> all of the I'll. Let you member was the pirates earphones and studying and I'm against you're wanting the disk challenging the time.
And you stood on the pent up the demand on the 14th.
And that sort of switching.
We are excited about the wrong time is the most opportunity of a business and.
And if you do you mean prudent on the B navigate the sort of these changing environment.
This concludes all of a pretty bad enough yeah now heartbeat the answer any questions you have.
And you might not do any of the <unk> in the system and you may answer any Japanese before my response is translated into English. Please bear with US All day. Please open the line for questions.
Ladies and gentlemen, and we will now have our question and answer session.
And if you would like to ask a question. Please press star one and your telephone keypad.
The confirmation code will indicate that your line is and the question queue.
For the participants using speaker of equipment, it may be necessary free to pick up your handset before pressing the sarkies.
One moment, please while we know of hold for questions.
Okay.
And the first question comes from James Rutherford with Stevens incorporated. Please proceed with your question.
Hey, Thank you for taking the questions a few from me I wanted to start on Texas, where I think he said the cop was negative 24 per cent and October just to clarify was that achieved without being able to run the primary belt and also what off premise mix that you see and Texas during October.
Compared to kind of the 17 per cent level of for the company wide.
Sure. Thank you Jim of fall you'll pass the question. Please I don't need the answer each of my knees.
But the and all fixed up and all of you know that the company to your boss Anthony calling to just get a hold of on I'll put that motivated the loss of <unk> of stuff for the experience will take a couple of to note of it but it's one of the coconut it down.
Yes as of October and <unk>, we've been able to offer the full current experienced including our primary fault and Texas, which is certainly a driver for are improving comps and got market.
Mhm and I'll put any seasonal me cause it just get them I'll put it all of my coupons and that he didn't end up all kinds of that kind of getting a <unk> would you mind that if it a few on the inside of like indoor dining of that and all kinds of hygiene pet that'll do it then 10 o'clock and visit with some of the number to call and the anti they give me do and then I'll cut out of state at the what the first thing what price day, and I'll pick it up and all the.
And the amount of put that and I'll do that the no kicks us and I'll put him and his leg adult <unk> by the end of the I'll I'll go ahead and put it do that and that'll put out there at the thought that and I'll spell that.
Could I didn't then thinking of coming up and it's a total of the price ticket.
And in terms of the Texas off premises mix. So are 17 per cent mixture of Q4 has <unk>.
Decreased as what you've entered Q1, and we've been able to reopen and some of our dining rooms, and increase seating capacity and other markets and so across our system, we're seeing of lower off premises mix and Q1 of being said the absolute dollar value is increasing it's just the mix. It is coming down so Texas is and.
Install of got the same pattern, where the mixture of slower than it was and Q4.
None of them I think that's all I can think of <unk>. So let me see a moment of <unk> and I'll east and the phone all day on the security and eat I needed and it'll take us and I'll go to the <unk>. The name of your <unk>, <unk> and I'll schedule Tuesday and.
And get tunnel and <unk>.
<unk> need and they got the <unk> you just pick it up and he'd come at the most.
We're experiencing great momentum and Texas and we're excited to continue to deliver of great just experience through our conveyor belts and the unique sushi Sweet we're excited to continue to build out our off premises business and that market and we thank the between the two will be able to maintain the strong comps we've been seeing so far and this quarter.
Excellent that's very helpful. And then to look at that off premise sales mix them at 17% of free pandemic of sales levels very impressive I mean, just what were the main pieces that drove that improvement. It was it primarily the addition of delivery the cause I don't think that online ordering.
And has been launched system wide yet so he just unpack the components of that nice step up and off premise. Please.
Yes, My mother on the email will have to have <unk> and I'm gonna have a huddle simple and all and so that's.
Could you hold on the total amount of <unk> and I'll visit <unk> coupon and also part of it and and he could call you and put them at the end of to get that reported that will get the links.
So we we begin a lot of different off premises effort stirred and two four and we began to see the full impact of that.
Starting and Q1 and that that's really been driving the increased and off premise of sales.
What is the amount of that on the way.
I'm, sorry go ahead, and how about that and I'm not the day. It's all on a few of them thought of all of them for the different the name of putting a lot with all of the Hubble of that and make it up a total on all if I'll put that on the list, but it came up and I didn't know you hopefully.
And then the.
Throwing dollar amounts is.
That's certainly being driven by Grub hub and so so we we show that rolling and talk to some white was the the right and your force.
If I if I could just add on that all of it.
And so you mentioned that we don't have online order and yet I'm extremely excited and proud to announce that actually if you go to our website you can order online now we we started working with square for a couple of different when it started working with square to get a pilot bear one of the most interesting things that we've learned as a result of grub hub of implementation was it the vast majority of our guests that were.
Ordering some grub hub, we're actually ordering for pick up as opposed to delivery, which is completely not working you'd expected and so once the these results became a pair of to US where you decided the partner was square as well because they're fees for pick up or <unk>.
Much much more competitive and grub hub.
And.
The cause of.
Because of the the square implementation of we'd actually being able to offer online ordering on our website and our waitlist app is actually undergoing and update right now it's I believe it's being actively reviewed by.
The Android and the Iowa's App's force that will allow people to check into the waitlist step and then directly order from for the App and so if if you're at Irvine and your which is one of the test stores and you said you'd like a two hour waiting period.
Got the button right there to say Hey, why don't you order to go into debt and you're going to have to wait two hours and so extremely excited about that.
Excellent. Thank you Jimmy Thanks, Ben.
Thank you James.
Thank you.
Our next question comes from Peter Cellar with B T. I G. Please proceed with your question.
<unk>.
Great. Thank you.
I believe you guys aren't any of three of restaurants that open so far and 2021 and and there's four more on the.
The construction of and can you just talk to us about the for and are in the construction of what the cadences of those opening this throughout this year.
Most of the on I'll call Ya Gimme, one simple and all and okay, and it's not just get the mall and what's it I'll call you to stay with the with them 222 and said he pulled out the I'd open up the that the help much at all I just get it done won't put them within the context on a piece of the upon that the.
<unk> and I'll put it all city and I'll just need <unk> for a couple of the the open it up I don't feel money and I'll set them up and what what did you need help with the day, So no kids and <unk> and you'll hate it and I can't let the link.
So given that we already have vs. Four units under construction and looking at our historical Buildout times, we'd expect opening timings of between Q2 and Q3 for the range of for the for stores.
That being said, but customer and depend debit <unk>, we might have unexpected delays with city and inspections permitting et cetera, and so there are externalities, but as long as we don't taste of those we expect Q2 and Q3 openings.
The most of the and I'll put it that the name of them want us to lots of and I'm Gonna, Let you know and all not not the book a lot and the ball and yet the one on all the <unk> <unk> and I'll put of off the so the 200 of them up and left and I'll send that was supposed to the the Muslim.
And is Jimmy mentioned and is prepared remarks, we weavers we continue to.
Old I'm, sorry, let me rephrase, we we may decide to push back one of these four units into physical twenty-two depending on the <unk> circumstance pandemic.
Understood, Okay, and I'm very helpful and can I ask about the the third party of delivery I know your partner with the with Grub hub.
Or are you are you guys and conversations to add the other delivery partners to expand the off premise business and.
According to gossip and let's go to the the rest of the day and you know how do you see and I'm One day caught up and you want that you know on the on line will that take them of politicos at all of them I'm also thinking and you'd think with the date and go ahead and the whole.
No that'll take what about you might and you want you finished them off and talk about illness.
So <unk>.
So as the overall context for our ultimate strategy, we'd like to move all of this and house to mitigate third party fees and that's been one of the main reasons, we've decided to start working the square.
That's the way I think I've only landed on the update the.
Most of it up with and will come and I didn't know the amount of of what else like with the other can they come up.
And then we're we're we're very excited for what the the App upgrades will mean for off premises business I I'd just add onto that square actually has the partnership with the sore dash and postdates, we have the option to turn all of that functionality at any point, where we're just we're waiting on this because again the goal of square is to throw our pick.
The business and not have margin pressures, but if we decide the offer any delivery for squares. The right decision the that'd be very easy to implement.
Understood, Okay that right now.
And the partnership with crab for.
For delivery every day are you doing the liberty with them or is this primarily pick up and what is the what is the price structure of you adjusted the price is if it is delivery for it should be higher on on on the Grub hub site.
Mhm, but the the on all of it so it will be a couple of <unk> and I'll need the anybody you'll wholesale the nipple, then and you pick up and the whole got ticket and that's a good day, if anybody milk escalate and it typically what type of my son of <unk> <unk> Ah the appointment of student you and I spoke with a lot of the squeal of a couple of the day and take it up but at the day and all that kind of pick up the stuff at the table.
And so we would perhaps have you actually <unk>, we're offering delivery and pick up the fee structure for delivery and pick up of different but what was very interesting about the.
The the the the first month of of square or I'm, sorry of of Grub hub recently found that the the majority of sales are coming in to pick up and that's why we moved the square or that's why we were rolling in square. So that we can capture and continue to grow these off from the sales with fewer margin pressures, while also reduced and searching for desperate or making online orders.
Oh and.
Very much sorry.
Sorry, and I I I I skipped one thing.
<unk>, so the pricing structure because of the grubhub fees, our drop of menu is more expensive than are in the restaurant menu, but because of the fee structure and with square, we're able to offer of the same and sore prices and so if you're ordering of pick up order of take out of order for square, there's zero changed and they're zero difference and fee is if you.
Got into the restaurant yourself the order it.
Understood. Thank you.
Thank you Peter.
Thank you.
Our next question comes from Jeremy Handlin with Craig Hallum. Please proceed with your question.
Okay. Thanks for taking my questions guys Uhm I actually wanted to follow up on the the online ordering and just to understand a couple of things. The first the in terms of the timing of potentially rolling out square to the to the broader set of of stores what is the timing and look like on the.
That that's part one and then part two is what type of of tickets are you getting what's the average order size that you're seeing how does the compared to your.
Typical ticket you know when you're getting a digital order and you know for pickup and delivery.
Mhm lots of and all of those are those are the thought I needed. If the immigrant that you can pull Austin with it so the email on <unk> on a case of of the genetic mono says you've you've been a tiny with the you know and all of it says that you must think of the <unk> to get up and then my mother and Dad did a lot and what's up with the mall and it and I'll implement this all types of one of one of the appointment.
So we're actively rolling it's out to more and more stores and we just out of the <unk> Ah.
<unk> test for today.
We're a little bit hesitant and give a firm date for the rollout, but we do hope to have this rolled out within the the end of the calendar year, given how quickly we were able to roll up prop hub of I think that's the completely realistic goal.
Oh, that's the law and I'll take the <unk> the put onto the the more call ahead and you guys are the <unk> normally and want to political did you say nine okay, uhm and what's up again and all the can you sit and watch the state that the winner.
So we haven't of disclosed any information about tickets sizes, yet and so we prefer not to disclose ticket size information at this point.
<unk> I dunno, if anybody they are and it's about two women regarding delivered to the <unk> companies just first of all <unk>.
Oh you're on.
I'm, sorry, I I I I misspoke earlier, so our our ticket average is pretty much our mapping on the double our indoor receipts and I I I think people are just ordering for couples or you know of families. So instead of you know the 18 to 20 dollar average ticket, we're getting double that and our average party size.
And about I think 2.2 people and so it's it's pretty much exactly the same.
As indoor dining.
Okay. So I I think we can interpret that as if you are able to get pick up you know through square and.
Is it fair to assume that those those tickets to come in because of the size of them. You know. It's it's is that is that likely to be margin neutral you know vs. You're kind of pre pandemic levels or is that still gonna be slightly dilutive vs pre pandemic level.
Level.
Did the I'm, sorry give me the.
And let me make sure I'll be the <unk> and the phone that you work with some of <unk> well. It didn't work and then there's also the most.
Well first and you know the 30th two okay and my dog.
<unk>.
Getting the <unk> Mmm Dingle.
And took the okay.
The old address.
Oh, yeah, and it cost a lot and all of the anybody team and help with Eddie Murphy upload and download the Colgate at the little knock on the day about the room and goodbye and he's on all of I'm, hoping you what kind of more than any of it and a study and Ah maintain mono mud you want me and take to get the ultimate none of them actually do any of them I check the sauce.
And so for for square and particular, we're we're very excited about what it's gonna mean for our business with not just for the customer experience before of margins as well up until now most of our pickup orders that of <unk> or or pick up orders that and not been coming and for grubhub of it been.
Processed by our servers Manning telephones with the square order, we expect the need for that to be much much lower and so we'll be able to reassign those servers and have a more more efficient staffing process and so that'll actually help our margins and from a labour perspective in terms of I I I know for.
And some of our peers the packaging has had an impact on margins but.
With all kinds of the sales we don't have any disposed disposed place unlike with the conveyor belts and so they all set each other and <unk>. So we expect no margin difference between the square order and and indoor or.
That's a great opportunity.
Oh, Okay I wanted to come to another point that I want and make sure that I heard the details correct. So in terms of your present cash burn rate I think of what you said, it's for queue, where al Q want it's running in the $800000 per week range, right and and we're almost at the end of.
Q1, but that you expect that to fall a little bit as we move forward is there any additional color that you might be able to provide on that or just clarify the cash burn Rachel <unk>.
Yeah, I'm happy to do that by the the <unk> and I'll have that book and you kind of see just get the mall and all.
The only horrible Arnold queue to equal and I'll put on the deal and I didn't know uhm, if that's the Monday, the the physical bout you're supposed to come off and on the <unk>. According to cost of <unk> and all you have a particular you've been a whole day with of simple.
So the the first thing we will make clear is that the $800000 per week burn rate is limited to Q1, and we don't expect that to go forward past 2223, Q4, we expect of for your bird right to the materially lower than the 800000 and we're seeing for Q1.
Some of the <unk> the hundred at the and would you like <unk> on of so most of the topic cause I only have a budget and you on the day that sounds <unk> and so that's what I'm they've been and then I'll just the ball and that <unk> <unk>, what's the <unk> and <unk>.
<unk> and all the telephone obsessed with just the and the Catholic clinical of <unk>, what are the and all the kids equal Monday, the had an equal it's kind of an update and you'll go plug the book your stomach.
So for the for the budgeting for the $800000 and Q1 $450 works, but the on Capex $300000 on G&A and $50000 on restaurant level contribution given that we already have a free Unix open and Ah for under construction of the Capex expenditures are gonna be frontloaded for the fiscal year and so.
And you expect the Capex bucket to have the most of material change as we proceed for the fiscal year.
Okay and most of them.
I'll go ahead and <unk>.
<unk>, Okay and.
Topic of the day adult my pleasure take any and all you'd like the other day I need to keep the equal okay. What's the day, so get them that the getting with the <unk> and all about too long and you'll have it will just the plug it into the to go up and I'm Gonna put and humbling double the day, you know the day, but I'll I'll just like the Steelers.
And so what's the the study decreases and Capex spending throughout the year, we expect our pull your current rate average for for Capex to come in and half of the western half of the burn rate, we saw for Capex and Q1.
Okay. That's that's very helpful with and then just the taking that one step further as we get you know into calendar of 2021, and and and hopefully you know the vaccine information you know presents hopefully.
A little bit of of light at the end of the tunnel one on the top line results and and maybe having fewer restrictions do you have a sense now with you know with the square relationship and and you know the the way that your business is is running today and.
What types of sales volumes do you need to get to that would make your cash burn rate relatively neutral do you need to be at.
You know 70 per cent of pre pandemic, you know sales, 80% or do you can you give us a sense of of where you need to recover to to get them and right down to flattish again, assuming the you know the capex is a little bit lower than what you just had for Q1.
Oh and <unk> well that then that's it under the that can help with both of them with and then it got the bunker.
It kind of look I spun nonetheless.
Then time, and that's about and you'll get the.
Oh the than the rest of the button and I'm just get the mall on all can you hold of of that but on the fifth of <unk> isn't all day and and go figure of <unk>, that's it under that and if that's the bone and I'll have enough to put up the in that day about so I think that'd be cool those as capable uhm you the not so I'll take the total you a total of about the size of neat and I'll put that through them anymore. So I can tell you that the line.
Alright, and you said some contact for answer we'd like to just just note that we are high growth concepts and that.
As our restaurant level of operations improve and no longer or the.
The longer.
Are are are decreasing or I'm, sorry are no longer part of the weekly burn rate that we would go on the reinvest those savings we wanted to reinvest into Capex and continue on the unit growth.
Mmm none of the.
And it and I'll need the buttons and I'll kick on the on the faith already know about a total touch with just your bunk and up and update on all the tests, you and I'll put it to another day, we'll do that and let her know up more on all the talk about him just got the uhm the bill to get one of the other night, though and also the home of them discuss your phone line of.
And so given that we want to maintain of 20 per cent unit growth taker, we think it would be difficult to achieve of neutral burn rate without bringing without our business recovery to of pretty much 100 per cent of free pandemic levels.
Okay, Great. That's that's helpful color and thanks for taking the questions and and good luck.
Thank you did and.
Thanks.
Thank you.
And as a reminder to our audience if you'd like to ask the question. Please press star one and your telephone keypad.
Our next question comes from Andrew strove like with BMO capital markets. Please proceed with your question.
Alright, and thanks for taking the question My first one I was just hoping you could give a little more color on the Fort Lee store and kind of of what's driving the really strong sales performance of relative to the capacity is there anything that you can kind of learn from that and and adapt to either you. The the the the.
The legacy stores or or kind of site selection of as we go forward you.
Mmm mother on <unk> for the you know and I'll hold on you cause it's the what about the mall on <unk> and that's all that and up to the ultimate is the most of the what can the link to spell of a bookcase on the Monday and it'll get off on on hold and I'll have them kind of on the Huskies pull it up to the quality to call and all will get the cultural and what was the 19th I don't want the month.
For at least performance has he been actually surprised us it's been a very pleasant surprise, we think the biggest factor for Fort Lee success is it's location, it's and an excellent location and New Jersey, and the proximity to New York and the George Washington Bridge, where you imagine it gives us access to multiple.
Traffic markets.
And that's all I spoke with Vicki jeopardy, honestly with any of fishing all of them on the low or not by the <unk> and then just Goodnight all day. So the typical of down the deal to walk in and get something like all happy and can you. Please hold the same off.
And then and another thing that we've been thinking about it and said well, there's a ton of of sushi demand and that area. There isn't a lot of revolving sushi I. So I think we filled and.
We're addressing the demand that has not been addressed up until this point.
Okay, Great day, that's Super helpful. And then kind of shifting gears, a little bit to the off premise business, you know, where where you've seen the diet and business rebuild maybe the most of it and and you're you're layering and the off premise on top of that especially with the sales dollars incur.
Creasing How're Ya Friday, the operational components of that and do you think that in particular with you know some of the market places the that you're working with now do you find that those customers are more of new customers or do you think that this is kind of just the transition of of of the order of from from one channel to the other.
Mhm and I'll I'll go to tell them the hate that day.
Alright, I'll go by the two side of the openings on the mood of Gotcha.
HM well first and your cost of about I don't think of what might be looking at <unk> and I'll I'll go ahead and stuff and.
Aw I'm of to go and look at the time, you got the people and that that sound of or don't Wanna and just get the mall and I'll go ahead and put up of Hopewell to the <unk> can you don't put the sounds and stuff do you and kind of thought using alcohol and hold on blah blah blah kind of slipped and I've gone out the two of <unk> get out of the night and I'd have to get the help of the opening of my finger and I'll go with the came back on and the Kansas definitely note of optimism.
In terms of the operational implementation of it was it was actually quite simple we haven't really run into a lot of difficulties. There in terms of the R or desk mix for the off premises orders of obviously, we imagine of a huge portion of the our our existing fans, but being on the grub hub marketplace I'm sure.
Has open up the possibility for new guys to come in Grub hub is pretty tight lips with its data and so we can't really actually confirm the number of new guessed that are coming in true drop of vs existing guess, but listening to the the store managers that they're they're saying that the grub hub marketplace lifting is bringing new gas.
That's great to hear and and then my last question is.
If you could just kind of discuss the the the dynamics of you know reaching out to your customer base and creating the aware and it says the stores are opening and is the capacity limitations eased and the markets and you talked about and you'll go into 75 per cent of the Texas for example, and how how are you finding the receptivity around that how can.
Quickly the what what did you see capacity limitations change does does the the demand change as well and just have you kind of of evolved and all your your tactics around communicating with the customers. Thank you.
Mhm and that.
<unk>, what kind of all of the like the cost of the room.
And my two <unk> send and local <unk> associate the from us.
Okay can I have to kind of.
Sort of great interest on this <unk> some of the <unk> the dictator got put their of does that'll kind of easy bolt.
Nobody Lucky Souk and didn't need you can watch it at about it and the cable bill.
Okay, what kind of of the on all hidden type of seating the <unk> you'd have to set up the the what you mean, what about it the other day on all and I want to it so much on the I'm not getting the new part of the time Uh Huh.
Most of it will help out the still had to quit book what day honestly, just about what I put up to make an equal the other that'll be the call you and case of thought it must of none of the and all of our most of the the phone call me up and <unk> and I'll pull that kind of thing about status of the most of them. All the time of that I need need of Columbia, that's kind of total it'll be the way that the <unk> <unk> does that besides tightening of the marketing when I put the what are the the living and I'll just put the day go ahead and pull it up and I thought you know that and uncle day.
<unk> the the customer of spots in terms of our marketing efforts I think has been incredible they've been extremely receptive. So after we have reopened and Indore dining room, we were usually hidden capacity and that market within a matter of days when we reopen the conveyor belts and Texas.
And we were able to make that announcement and that was that was big news for everybody and we saw of traffic levels of immediately right.
The one of the the the really great things of that we're experiencing now and this is just adding onto what Jimmy said, but Ah rewards programs I mean, even more useful as of today. We have over 70000 members and these are all people that are quite dedicated and the activation rates with these for board members is much much higher than the end of.
The three average so we've been really successfully able to leverage this existing database and terms of effectively reaching out our guests, which I think is one of the big drivers for how quickly we've been able to pack of of restaurants. Once we had our capacity of restrictions looked at.
And various markets.
Yeah, the other thing that I did and.
And it it seemed to have new news. So obviously, you know reopening of dining rooms news being able to reopen the conveyor belts is news and so does the off premise of stuff is also an opportunity for new news, especially once we have the integration into a wait list up.
Finalized.
That'll be another advertising of course for us. So we're we're constantly working on.
Creating new ways to engage with guests and keeping them excited about our business.
Great. Thank you very much.
And you want to do.
Thank you.
And the next question comes from George Kelly with Roth Capital Partners. Please proceed with your question.
Hi, everybody and thanks for taking my questions.
So the first thing I was hoping that we could go back to the Fort Lee opening and.
And so I guess my question is about.
You mentioned a couple of times now.
Location has exceeded your expectations.
And with it being your first northeast.
Location.
Just wondering why that is what's your finding is the branch.
Already well known better and better known and then you would of thought before opening and I guess the second part of that question is does it gives you confidence to open additional restaurants and the northeast.
Uh-huh, but this has been the second of done all of this on what kind of thought somebody and muscle uhm the email on and off the table do you need from the northeast Bunnell book came out on all of what about and all and identify societal and just about my type of that and hiking.
The answer to your second question. The question first yes, we are extremely encouraged by the results we've seen in Fort Lee and we're actively scouting new sites and the northeast and some of them are already and our pipeline.
Okay. So the it under the you that you thought what about and I'll put him on the on the hypothetical and the could I get and it's still talk with a month and a couple of a whole month and we can <unk> <unk>.
Lots of <unk> simple, so it'll come out of the typical U and yet.
<unk>.
And the the reason the we chose the specific location and the New Jersey, and New York City market.
The Fort Lee market satisfied a lot of our existing site selection criteria and so.
It it indicated that it would be highly successful and it has been highly successful.
Georgia, if I can get into your question about brand recognition I would <unk> my assumption would be that our brand recognition and the northeast is extremely minimal given the.
We are real horror market for it and.
In California, and Texas, and I really think the current experience is what is drawn. This this huge traffic whenever we enter of new market or advertising strategy is to air promotional videos showing off the full sushi sweet and.
Just exactly how much fun of restaurants are and that's.
And that's strategies and very successful force in the past and I believe it's been successful with for me as well and so it's extremely encouraging that we've been able to enter a new market and do so well for US immediately just on the strength of our offerings as opposed to.
Customer existing customer goodwill.
Okay, Okay, great and the next question for me.
Back to Capex and new store development of.
How long does it usually take what's.
And what's the the direct question is.
2021.
Are you still going forward full steam ahead, with your 2022 and and beyond kind of development pipeline.
And and is that a lot of the Capex budget you talked about.
Oh my.
<unk> and I'll put the order of what an email and how did you go and <unk> and all that and I'll go ahead and put that out on me the oldest and hold tight and they'll put in all on on the the Daniel of what could I get the old mean of that and not the I'm watching lots of and all and you'll think he or you know that on the topic of spend though and comfortable just need cable and that's all that I and also now and what about the good that day, and we'll email <unk> and I'll need to put that on a plenty of authenticate got the you know.
On off and I needed, some and easy table and I'll talk to the Donald and Walter official you can eat and I'll call back Tomorrow.
Ah. So are are revolver is $35 billion as of November we've drawn down 3 million, bringing it to $32 million.
But with with that capital access and looking at our ongoing performance we have.
And we have a very solid runway for fiscal 21, and 22 to maintain the the 20 per cent you'd of growth CAGR. Obviously will continue to make you know watch our performance and make sure that we're managing our our balance sheet, but at this point, we we're we're quite of it.
At this point, yes.
And we are and that's all.
20 per cent growth that's okay, let's see if that sort of thing of for that and a discussion of about <unk> and what time do you need me to set up the money to hit and if the discussion of that <unk> pundant equal and you'll get a little note of the dining room of looks came off and none of them about you go ahead, and and and also with Donald and how do you and your Tonight that and also and any or what <unk>, what about the about I'm unable to both of you have to do and send that to see the second I'm all set of you're gonna think of it.
<unk> and on top of that anything's and all on the wall of Salt and they'll get all of the state of the place none of the <unk> the bold enough to that and I thought the simple on of based on the about that today. If you didn't get the put up the the <unk> you think of that you didn't call me tomorrow.
So while we have the $32 million revolve right now and our capital position as strong. We're we're actively building and going through every possible scenario for how the pandemic is gonna shake out and this was an ongoing discussion among the U S. A <unk> board of directors and.
Our last decision in terms of the capital raised was the increase the size of a revolver, but we're every option is on the table and we want to make sure that and we are quite by preparing for this now to be ready to make the best possible decision at the best when the timing is appropriate.
And.
So yes, we're very excited.
Okay, Great and then the last question for me.
So since I guess this summer I've seen some real modest pricing changes.
Across you're not and every restaurant.
Quite a few.
And so I'm, just wondering if you're feeling like pricing and.
And this is all for and store.
A good level now or or should we continue to expect to sort of modest annual pricing and sushi pricing increases.
Sure My the on all sort of <unk>.
Not not on a per I slipped and on the picks up the <unk> I lost eight and on the 10th of goes at the mall and just get them all caught him at the mall. Meanwhile, me take all of that that they can just book I'll tell me and I'll need to I left and I get at the mall and.
And even thought of and then up on the high getting done all day at all all of your day of the quote of on all of the cost of the other stuff to keep me and also the of that the hold that the the mother's pulling up tunnel and good your system of small both of them of funny kind of put it out on the phone on the day that what I'm Gonna put ice of the appointment that day and he doesn't it and that the <unk> and he didn't do it as much of it and I'll Covid <unk>. So I hope that the the medium, Illinois and all thanks for the.
The day so much.
Our our price and strategy is extremely important to our our business mission, we think of huge part of our consumer appeal is.
Is there a competitive price point and the accessibility to a huge market and so we're always extremely cautious of pricing historically, the only price and we've taken and just been to coincide with the minimum wage increases and we've taken very small increases just to offset that labour pressure. So we typically take and what 510 25 cents.
In terms of the summer you'd like you're referring to our Texas markets, while there haven't been.
Statutory minimum wages and minimum wage increases and Texas since we've entered that market the competitive hiring rates have increased to effectively.
Effectively increasing the amount of money the minimum wage necessary to maintain our workforce, which is why we decided to take the first pricing we in Texas and going forward. We we plan to do the exact same strategy where.
We have our pricing coincide with minimum wage increases and it will be they will continue to be extremely modest and design only to offset the increase the minimum wage we're not planning on taking any.
Pricing is the way to grow our margins.
Okay, great. Thank you.
Thank you <unk>.
Thank you.
And no further questions at this time and I'd like to turn the floor back over the Jimmy Uber for any closing remarks.
Thank you very much more of the time of the <unk> to see the make up the next the Onyx call. Thank you very much.
Ladies and gentlemen, this concludes today's webcast and May now disconnect. Your lines at this time. Thank you for your participation and have a great day.