Q1 2022 Good Times Restaurants Inc Earnings Call
Speaker 1: 2021 first quarter earnings call. By now everyone should have access to the company's earnings release, which is available in the investor section of the company's website. As a reminder, a part of today's discussion will include forward-looking statements within the meaning of federal securities laws. These four word-looking statements are not guarantees of future performance and therefore you should not put unde reliance on them.
First quarter earnings call.
By now everyone should have access to the company's earnings release, which is available in the investors section of the company's website as.
As a reminder, a part of today's discussion will include forward looking statements within the meaning of federal Securities laws.
These forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them.
Speaker 1: These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore investors should not place undue reliance on them. And the company undertakes new obligations to update these statements to reflect the events or circumstances that might arise after this call.
These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore investors should not place undue reliance on them and the company undertakes no obligation to update these statements to reflect the events or.
Answers that might arise after this call.
Speaker 1: The company refers you to their recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions, including the risks related to the COVID-19 pandemic.
The company refers you to their recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions, including the risks related to the COVID-19 pandemic.
Speaker 1: Lastly, during today's call, the company will discuss non- GAAP measures , which they believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAP and reconciliation to comparable GAAP measures available in our earnings release.
Lastly, during today's call the company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and reconciliation to.
Comparable GAAP measures available in our earnings release.
Speaker 1: And now I would like to turn the call over to Ryan Zink. Please go ahead, sir.
And now I would like to turn the call over to Ryan Zink. Please go ahead Sir.
Speaker 2: Thank you, Chris. And thank you all for joining us on the call today. I think I'm in good company and wishing goodbye to calendar 2020. That said, despite the existential fear that grit us about 10 months ago, I'm both proud and humbled by our team's ability to overcome the adversity of the calendar year 2020, to learn, adapt, and operate our businesses properly under the demands of our new reality.
Thank you, Chris and thank you all for joining us on the call today.
I'm in good company and wishing goodbye to calendar 2020.
That said, despite the existential fear that gripped us about 10 months ago I'm, both proud and humbled by our team's ability to overcome the adversity of the calendar year 2020 to learn adapt and operate our business as profitably under the demands of our new reality.
Speaker 2: During our first fiscal quarter, we continued our trend of growing sales significantly at good times and preserving sales at bad datties at greater rates than our competitors as measured by NAPTRAC as well as laying the groundwork for the future of both of our brands.
During our first fiscal quarter, we continued our trend of growing sales significantly at good times and preserving sales at bad Daddy's at greater rates than our competitors.
Measured by Knapp track as well as laying the groundwork for the future of both of our brands.
Speaker 2: We experienced the closure of our Colorado dining rooms beginning in mid-November at Bad Daddies, and those dining rooms remained closed through the end of the quarter and into early January .
We experienced the closure of our Colorado dining rooms, beginning in mid November at Bad Daddy's and those dining rooms remain closed through the end of the quarter and into early January .
Speaker 2: We have prepared for that in September and October by investing in wind breaks and additional heaters for our outdoor patios. And in some cases, separate tents with dedicated heating and lighting to expand our ability to serve our customers. Making the bet that indoor dining would be severely capacity restricted or even entirely closed off.
We are prepared for that in September and October by investing in wind breaks and additional heaters for our outdoor patios and in some cases separate tenants with dedicated heating and lighting to expand our ability to serve our customers, making the bet that indoor dining would be severely capacity restricted or even entirely closed off.
Speaker 2: That preparedness enabled us to preserve nearly 90% of prior year same source sales for the concept despite dining room closures in almost a third of our bad daddies.
That preparedness enabled us to preserve nearly 90% of prior year same store sales for the concept despite dining room closures in almost a third of our bad Daddy's.
Speaker 2: We also saw the closure of dining rooms bolster traffic a good times. As customers shifted from casual dining options to fast casual and QSR, and in particular with a preference for drive-through, which is our niche at good times.
We also saw the closure of dining rooms bolster traffic at good times as customers shifted some casual dining options to fast casual and <unk> and in particular with a preference for drive throughs, which is our niche at good times.
Speaker 2: We continue to recognize that we need to react to changes caused by the COVID-19 pandemic, but we're also preparing ourselves for a post-pandemic, post-vaccine business environment.
We continue to recognize that we need to react to changes caused by the COVID-19 pandemic, but we're also preparing ourselves for a post pandemic post vaccine business environment.
Speaker 2: While we believe many guests who have so far avoided restaurant dining are anxious to enjoy a full service restaurant experience, we also recognize that we must continue to stay flexible to meet our guest needs as we move into the post pandemic world.
While we believe many guests who have so far avoided restaurant dining are anxious to enjoying a full service restaurant experience. We also recognize that we must continue to stay flexible to meet our guests' needs as we move into the post pandemic world.
Speaker 2: We've watched as consumers have become more comfortable with QR code menus, delivery, and carry out. And more than anything, digital interactions with brands. They value the convenience associated with digital ordering, self payment, and the ability to interact with restaurants in multiple different channels and formats. To support that convenience factor, we're developing mobile apps for both of our brands.
We've watched as consumers have become more comfortable with QR code menus delivery and carryout and more than anything.
Digital interactions with brands the value of the convenience associated with digital ordering self payment and the ability to interact with restaurants and multiple different channels and formats.
To support that convenience factor, we're developing mobile apps for both of our brands.
Speaker 2: through which we expect to offer order and payment capabilities as well as direct integration into our restaurant systems.
Through which we expect.
<unk> order and payment capabilities as well as direct integration into our restaurant systems.
This should reduce the friction of ordering associated with placing orders and provide a new order. It means a good times for our current digital ordering is limited to delivery service Aggregators.
Speaker 2: and that we hope will significantly improve on the currently self-optimized user experience that we have with our mobile web interface at Bad Daddy.
And that we hope will significantly improve on the currently sub optimized user experience that we have with our mobile web interface at bad Daddy's.
Speaker 2: During our December earnings call, we discussed our new virtual brand, Bad Monos Chicken. And I am pleased to share that we have rolled that out to 24 of our bad daddy's restaurants.
During our December earnings call, we discussed our new virtual brand bad modest chicken and I am pleased to share that we have rolled that out to 24 of our bad Daddy's restaurants well.
Speaker 2: Well, not yet a major part of our business, it did contribute approximately 2% of incremental sales in December to those restaurants where we had rolled it out. And it was particularly well timed in Colorado where we experienced dining room closures.
While not yet a major part of our business. It did contribute approximately 2% of incremental sales in December to those restaurants, where we had rolled it out and it was particularly well timed in Colorado, where we experienced dining room closures.
Speaker 2: Bad Mom also provides us a platform to experiment with products, pricing and promotion. And the concept aligns with Bad Daddy's brand's culinary focus using fresh chicken wings and tenders and with our heart of pals employees hand-bredding those tenders and making sauces from scratch.
Bad Mom is also provides us the platform to experiment with product pricing and promotion and the concept of lines with bad Daddy's.
Bad Daddy's brands culinary focus using fresh chicken wings, and tenders and with our heart of house employees, Handbreadth, those tenders and making sources from scratch.
We recognize that labor pressures will continue to be a challenge for the industry.
Speaker 2: We recognize that labor pressures will continue to be a challenge for the industry. With a happy presence in Colorado, which is a high wage market, we have gained experience in operating with higher wage rates.
With a heavy presence in Colorado, which is a high wage market, we have gained experience and operating with higher wage rates.
Speaker 2: Our expectation is that longer term, the federal minimum wage will increase, and we're working on initiatives to prepare for that change should have come to pass. At bad datties, we've been shifting our pricing approach, having rolled out all the cart side pricing in Colorado, and a smaller five ounce caddy option system wide, both of which expand upon our concept unique ability to allow each guest to customize their meal exactly to their needs.
Our expectation is that longer term the federal minimum wage will increase and were working on initiatives to prepare for that change should it come to pass.
Bad Daddy's, we've been shifting our pricing approach, having rolled out all occurred side pricing in Colorado, and the smaller five ounce caveat <unk> systemwide.
Of which expand upon our concepts unique ability to allow each guest to customize their meal exactly to their needs.
Speaker 2: We expect to soon begin experimenting in a limited number of restaurants with technology-assisted table service using a technology partner to enable customers to place orders and pay from their own mobile device.
We expect to soon begin experimenting in a limited number of restaurants with technology assistant table service using a technology partner to enable customers to place orders and pay from their own mobile device.
Speaker 2: Our vision for this model should prove successful is to retain a high-touch, full-service experience but eliminate time-consuming elements of the process. Again, we're looking at this not just through a lens of improving front-of-house productivity, but also putting more control of the experience directly in the hands of our guest.
Our vision for this model should prove successful is to retain a high touch full service experience, but eliminate time consuming elements of the process.
Again, we're looking at this not just through a lens of improving front of house productivity, but also putting more control of the experience directly in the hands of our guest.
Speaker 2: Also, as discussed during last quarter's call, we continue to expect to open two restaurants this fiscal year, one during our third quarter and one during our fourth quarter.
Also as discussed during last quarter's call. We continue to expect to open two restaurants. This fiscal year, one during our third quarter and one during our fourth quarter.
Let's review this quarter's results.
Speaker 2: As we review, keep in mind that during fiscal 2020, the fiscal calendar had an extra week in the quarter that occurs approximately once every five years.
As we review keep in mind that during fiscal 2020, the fiscal calendar had an extra week in the quarter that occurs approximately once every five years.
Speaker 2: At Bad Daddy's, restaurant sales during the quarter were 18.7 million dollars, compared to $22.8 million during last year's first quarter. We had approximately 27 fewer store weeks this quarter versus the same quarter last year. Reflecting one fewer week in the fiscal calendar, partially offset by a greater number of restaurants open for the full quarter.
At Bad Daddy's restaurant sales during the quarter were $18 7 million compared to $22 8 million during last year's first quarter.
We had approximately 27 fewer store weeks this quarter versus the same quarter last year, reflecting one fewer week in the fiscal calendar, partially offset by a greater number of restaurants opened for the full quarter.
Speaker 2: The decline in sales was also affected by reduced traffic to come from closed and reduced capacity dining rooms associated with the COVID-19 pandemic, as well as changes in consumers' general holiday shopping behavior. Same-source sales declined 11.8% during the quarter, with 33 bad daddies in the comp base at the end of the quarter.
The decline in sales was also affected by reduced traffic accompanying closed and reduced capacity dining rooms associated with the COVID-19 pandemic as well as changes in consumers general holiday shopping behavior.
Same store sales declined 11, 8% during the quarter with 33 bad Daddy's in the comp base at the end of the quarter.
Speaker 2: Cost of sales at bad debt is 28.7% for the quarter. A 150 basis point decreased from last year's quarter. The result of higher average menu pricing associated with a greater share of sales to our third party delivery services, partially offset by increased packaging costs, reduced waste associated with many optimization and generally favorable commodity pricing.
Cost of sales at bad Daddy's were 28, 7% for the quarter.
A 150 basis point decrease from last year's quarter. The result of higher average menu pricing associated with a greater share of sales through our third party delivery services, partially offset by increased packaging cost.
Reduced waste associated with menu optimization, and generally favorable commodity pricing.
Note that prior year cost of sales for bad Daddy's have had the cost of packaging reclassified from other operating expenses, which conforms with the current year presentation.
Speaker 2: Note that prior year cost of sales for bad daddies has had the cost of packaging reclassified from other operating expenses, which conforms with the current year presentation.
Speaker 2: We made this classification adjustment at bad daddies, reflecting our beliefs that the increased carry out and delivery sales we've seen as a structural change. And these sales no longer are merely incidental to our business.
We made this classification adjustment at bad Daddy's, reflecting our belief that the increased carryout and delivery sales, we've seen as a structural change in the sales no longer are merely incidental to our business.
Speaker 2: Babdanny's labor cost decreased by approximately 600 basis points compared to the prior year quarter to 33.5%. This year over year decrease is primarily due to reduced front of house staffing levels, accompanying limited occupancy dining rooms, improved back of house productivity, and the reduction of management staffing from an average of five managers per restaurant to four managers per restaurant, as well as a reduced number of managers in training.
Bad Daddy's labor costs decreased by approximately 600 basis points compared to the prior year quarter to 33 33, 5%.
This year over year decrease is primarily due to reduced front of house staffing levels accompanying limited occupancy of dining rooms.
Groove back of house productivity and the reduction of management staffing from an average of five managers per restaurant to four managers per restaurant.
As well as a reduced number of managers in training.
Speaker 2: In prior years, the cost of restaurant managers in training for existing restaurants was treated as a general administrative expense, where it is now treated as a part of restaurant costs. We made this change as these costs are directly attributable to restaurant staffing. Prior to your amounts have also been reclassified to conform to this year's presentation.
In prior years, the cost of restaurant managers in training for existing restaurants was treated as a general and administrative expense where it is now treated as a part of restaurant costs.
We made this change as these costs are directly attributable to restaurant staffing.
Prior year amounts have also been reclassified to conform to this year's presentation.
Speaker 2: Overall, restaurant level operating profit, a non-gap measure for bad daddies, was approximately $3.0 million for the quarter, or 15.8% of sales compared also to $3.0 million, or 13.1% sales last year. This is due to improvements in cost of sales and labor, partially offset by sales delivery to fixed costs, including rent, as well as increased delivery commissions, accompanying a higher mix of delivery sales.
Overall restaurant level operating profit a non-GAAP measure for bad Daddy's was approximately $3 $1 million for the quarter or 15, 8% of sales compared also to three zero million dollars or.
Were 13, 1% of sales last year.
This is due to improvements in cost of sales and labor, partially offset by sales deleverage of fixed costs, including rent.
Well as increased delivery commissions accompanying a higher mix of delivery sales.
Speaker 2: Restraught sales at good times were $8.4 million, an increase of $0.6 million, driven by the strong 22.1% positive same-source sales during the quarter, offset by the reduced number of operating weeks during the quarter, and the closure of one good times near the beginning of December .
Restaurant sales at good times were $8 4 million, an increase of <unk> 6 million driven by the strong 22, 1% positive same store sales during the quarter offset by the reduced number of operating weeks during the quarter and the closure of one good times near the beginning of December .
Food and packaging costs for good times were 29, 6% for the quarter, a decrease of 140 basis points compared to last year.
Speaker 2: Food and packaging costs for good times were 29.6% for the quarter. A decrease of 140 basis points compared to last year.
Speaker 2: Good times have relatively similar blended commodity costs to the prior year, offset by higher menu pricing and improvements in product waste.
Good times had relatively similar blended commodity cost to the prior year offset by higher menu pricing and improvements in product waste.
Speaker 2: Total labor costs for good times decreased to 31.2% from 38.3% for the quarter last year. This is the result of leveraging increased sales, our focus on staffing for volume, and our speed of execution focus, which has improved labor productivity.
Total labor costs for good times decreased to 31, 2% from 38, 3% for the quarter last year.
This is the result of leveraging increased sales our focus on staffing for volume and our speed of execution focus which has improved labor productivity.
Speaker 2: Good times, restaurant-level operating profit increased by $1.7 million for the quarter. As a percent of sales, the restaurant-level operating and profit increased by 930 basis points versus last year to 20.6%. Again, do primarily to higher sales and the leveraging of fixed costs. Accompanyed by lower cost of sales, lower cost of labor, the partially offset by higher costs associated with delivery commissions.
Good times restaurant level operating profit increased by $1 7 million for the quarter.
As a percent of sales the restaurant level operating profit increased by 930 basis points versus last year to 26% again, due primarily to higher sales and the leveraging of fixed costs accompanied by lower cost of sales lower cost of labor, partially offset by higher costs associated.
With delivery commissions.
Speaker 2: General and administrative expenses were $2.1 million during the quarter or 8.0% as a percent of total revenues. This represents an increase of $0.1 million versus the prior year quarter, and a 130 basis point decrease rather than increase as a percent of sales.
General and administrative expenses were $2 1 million during the quarter or 8.0% as a percent of total revenues.
This represents an increase of zero point $1 million versus the prior year quarter, and a 130 basis point decrease.
Rather than increase as a percent of sales.
G&A expenses increased versus the prior year due to a onetime executive bonus. The addition of finance and technology leaders to the senior leadership team increased professional fees and excess medical claims costs associated with the company's partially self funded health care plan.
Speaker 2: GNA expenses increased versus the prior year due to a one-time executive bonus, the addition of finance and technology leaders to the senior leadership team, increased professional fees, and excess medical claims costs associated with the company's partially self-funded healthcare plan. These costs then were partially offset by lower multi-unit supervision costs, did greater spans of control at bad datties.
These costs were partially offset by lower multiunit supervision costs due to greater spans of control at bad Daddy's.
Speaker 2: and reduce costs associated with companies annual GM conference.
And reduced costs associated with the company's annual GM conference.
Speaker 2: Our net income to common shareholders for the quarter was $0.8 million versus a loss to common shareholders of $0.8 million in first quarter last year.
Our net income to common shareholders for the quarter was <unk> 8 million versus a loss to common shareholders of <unk> 8 million in first quarter last year.
Speaker 2: Despite significantly lower sales at Bad Daddy's, incremental sales at Good Times, improvements in operating efficiencies at both brands, and minimal pre-opening expenses during the current year quarter allowed us to deliver significantly better bottom line results.
Despite significantly lower sales at bad Daddy's incremental sales at good times improve.
Improvements in operating efficiencies at both brands and minimal Preopening expenses during the current year quarter allowed us to deliver significantly better bottom line results.
Speaker 2: Adjusted EBITDA for the quarter, a non-gap measure, was $1.8 million compared to $1.5 million for the first quarter of 2020.
Adjusted EBITDA for the quarter, a non-GAAP measure was $1 8 million compared to $1 5 million for the first quarter of two.
<unk> 2020.
Speaker 2: We finished the quarter with $10 million in cash, approximately $4 million outstanding on our credit facility with Cadence Bank, and $11.7 million in Outstanding Paycheck Protection Program loans.
We finished the quarter with $10 million in cash approximately $4 million outstanding on our credit facility with cadence bank and $11 7 million in outstanding Paycheck protection program loans.
Speaker 2: Note that during the quarter, we began paying our broad line food suppliers on discounted payment terms of approximately three days versus approximately 21 days previously, which we estimate reduces our outstanding accounts payable balance on an ongoing basis by between 1.3 and 1.5 million dollars.
Note that during the quarter, we began paying our broad line food suppliers on discounted payment terms of approximately three days versus approximately 21 days previously which.
Which we estimate reduces our outstanding accounts payable balance on an ongoing basis by between one three and $1 $5 million.
Subsequent to the end of the year or rather the end of the quarter, we amended our cadence of credit facility, which provides a new maturity date of January 31, 2023 and <unk>.
Speaker 2: Subsequent to the end of the year, rather the end of the quarter, we amended our cadence credit facility, which provides a new maturity date of January 31st, 2023, and will ultimately reduce the commitment to $8 million by July 1st.
Will ultimately reduce the commitment to $8 million by July one.
Speaker 2: providing us with financial flexibility, but while better aligning with our new point of view around appropriate leverage.
Providing us with financial flexibility, but while better aligning with our new point of view around appropriate leverage.
Speaker 2: At the current time, we expect to finance future development primarily from cash flow generated by the business. We believe that even as we expect to open two new Bad Daddy's restaurants this year, we can continue to strengthen our balance sheet by further reducing leverage.
At the current time, we expect to finance future development, primarily from cash flow generated by the business and we began to believe that even as we expect to open two new bad Daddy's restaurants. This year, we can continue to strengthen our balance sheet by further reducing leverage.
Due to the.
Speaker 2: Due to the continued uncertainty associated with the COVID-19 pandemic, as well as some indications that regulatory wage changes may take place even during our fiscal year, we did not provide guidance for the balance of the year. In our press release, we reported same-source sales increase of 24 percent for good times and same-source sales decline of 8 percent for bad daddies during the month of January .
<unk> uncertainty associated with the COVID-19, pandemic as well as some indications that regulatory wage changes may take place even during our fiscal year, we did not provide guidance for the balance of the year in.
In our press release, we reported same store sales increase of $24.
24% for good times and same store sales decline of 8% for bad Daddy's during the month of January .
Speaker 2: We expect as restrictions ease, same-source sales will sequentially improve at bad daddies and will moderate at good times.
We expect as restrictions ease and same store sales will sequentially improve at bad Daddy's and will moderate at good times.
Speaker 2: We also expect some margin compression as additional front-of-house staff are added back in Colorado as dining rooms open and as capacity restrictions across the country are relaxed, as we upgrade our off-premises packaging at Bad Daddy's, and as we anticipate some commodity pressures later in the year.
We also expect some margin compression as additional front of house staffer added back in Colorado as dining rooms open and as capacity restrictions across the country are relaxed.
As we upgrade our off premises packaging at bad Daddy's.
And as we anticipate some commodity pressures later in the year.
Speaker 2: In summary, we're pleased with this quarter's result. It has set us up well for the balance of the year.
In summary, we're pleased with this quarter's result.
It has set us up well for the balance of the year.
With that Chris we will open the call for questions.
Speaker 2: With that, Chris, we will open the call for questions.
Speaker 1: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If you need assistance, please signal for a conference specialist by pressing the star key followed by zero. If you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Thank you.
We will now begin the question and answer session.
I ask a question you May press Star then one on your Touchtone phone.
If you are using a speaker phone please pick up your handset before pressing the keys.
If you need assistance. Please signal for a conference specialist by pressing the Starkey followed by zero.
If you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
Our first question comes from Roger Lipton with Lipton financial. Please go ahead Sir.
Speaker 1: Our first question comes from Roger Lipton with Lipton Financial. Please go ahead, sir.
Speaker 3: Yeah. Good afternoon. Nice to talk to you guys. Impressive management of the problem, especially the lower payroll costs and cost of goods at Bad Daddy's. Could you talk a little bit about the – at Bad Daddy's, off-premise versus in-store?
Yes, good afternoon.
Nice to talk to you guys.
Good and impressive impressive.
Management of the problem, especially the lower payroll cost.
And late in cost of goods at Bad Daddy's could you talk a little bit about the at bad Daddy's.
Off premise versus in store.
Speaker 3: You know, maybe reflecting back on what it used to be and what it's been running lately.
You know maybe.
<unk> been back in what it used to be and what it's been running lately.
Speaker 3: and all our premise and sort of including delivery, the delivery component.
And.
Premise.
Including delivery the delivery component.
Speaker 4: Yeah, certainly so I'll probably speak it's best spoken of in terms of mix and I would say before the pandemic.
Yes, certainly so.
I'll, probably speak it's best spoken up in terms of mix and I would say before the pandemic.
Speaker 4: Our total off premise was roughly in the 12 to 15% of total sales. Now, and certainly back in March, April and May, when most of our dining rooms were closed, that number went to 100%. And I would say more recently though what we have seen.
Our total off premise was roughly in the 12% to 15% of total sales now and certainly back in March April and May when most of our dining rooms were closed.
Number went to 100%.
And I would say more more recently, though what we have seen.
Speaker 4: with all of the dining rooms open is that we're still running approximately 35% to 40% total off-premise, off-premises of percent of total sales. And of that, roughly, just shy of...
With with all of the dining rooms open.
Is that were still running approximately 35% to 40%.
Total off premise.
<unk> as a percent of total sales.
And of that roughly just just shy of I'd say, 40% of that number then is delivery.
Speaker 4: I'd say 40% of that number then is delivery.
Okay.
And.
How do you do delivery third party.
Yes, so we have a couple of ways for our customers to two.
Speaker 4: Yeah, so we have a couple of ways for our customers to to to access delivery. One is we do use the aggregators. So we have partnerships with DoorDash, Grubhub, Postmates and soon to be Uber Eats. And that is one mechanism for our customers to access it. We also allow delivery through our website.
To access delivery one is we do use the aggregators. So we have partnerships with door dash Grubhub <unk> and <unk>.
And.
That is one mechanism for our customers to access we also allow delivery through our website and we then but we don't service that internally.
Speaker 4: and we then, but we don't service that internally. It's a little more economical for us and the customer if they do it through our website, and then through our partnership with Olo and their Rails product, we're able to source delivery drivers through those same providers.
It's low more economical for us and the customer if they do it through our website and then through through our partnership with <unk>.
And the rails product, we're able to source delivery drivers through those same providers.
Speaker 4: Right. And I think it may reference to the margins being affected by the third party guys. Your margins are lower on that. Yeah, I do. Certainly, I mean, if you look at other restaurants operating costs, as a percentage sales, those are both higher than the prior year. And a good chunk of that increases a percentage sales is directly attributable to the delivery service fees.
Alright.
And I think you've made reference to the margins being affair.
Affected by the third party guys. Your net margins are lower on that yes.
Certainly I mean, if you look at other restaurant operating costs as a percent of sales those are both higher than the prior year and a good chunk of that increase as a percent of sales is directly attributable to the delivery service fees.
Speaker 3: And lastly on this subject, is that extra cost decreasing?
And lastly on this subject is that is that.
Extra costs.
Decreasing.
Speaker 4: as these guys compete with each other to get your business? So what we're, I would say, you know, we spent even before the pandemic, we spent a lot of time working with them to negotiate.
As these guys compete with each other to get you get your business.
So what we are.
I would say.
We spent even before the pandemic, we spent a lot of time working with them to.
Negotiate.
Speaker 4: commission rates that could work with our economic model. I would say that competition hasn't really driven.
Commission rates that could work with our economic model I would say that competition hasn't really driven.
Speaker 4: improvements in the rates as much as regulation has and we've seen in a couple of jurisdictions where we do business where rates have been capped at a ceiling of 15% that I would say is you know less than 20% of our stores but but I I somewhat envision that that that will
Improvements in the rates as much as regulation has and we've seen in a couple of jurisdictions, where we do business where rates have been capped at a ceiling of 15%.
That I would say as is.
Less than 20% of our stores.
But I somewhat envision that that will we will see more of that throughout throughout our markets and potentially throughout the rest of the country.
Speaker 4: we will see more of that throughout our markets and potentially throughout the rest of the country.
Speaker 3: Yeah, I think so too. All right, I'll drop off for a second. I'll come back if you know, give somebody else a chance here. Thank you. All right. Thanks, Roger.
Yes, I think so too alright, I'll drop off for a second I'll come back.
Ill give somebody else a chance here. Thank you alright, thanks Roger.
Okay.
Speaker 1: Again, if you do have a question, please press a star then one on your touch tone phone.
Again, if you do have a question. Please press Star then one on your Touchtone phone.
Yes.
Speaker 1: At this time we are showing no further questions in the queue and I would like to turn the call over to Ryan again for any closing remarks.
At this time, we're showing no further questions in the queue and I would like to turn the call over to Ryan again for any closing remarks.
Thanks again, Chris.
Speaker 4: We started this quarter with strength, even despite continued challenges in the operating environment. Our team continues to put forth great effort to anticipate changes, proactively adapt the business to demands from our customers as well as regulators.
Started this quarter with strength, even despite continued challenges in the operating environment. Our team continues to put forth great effort to anticipate changes proactively adapt the business to demands from our customers as well as regulators.
Speaker 4: And each and every day I continue to be more impressed by what our team is able to accomplish. And I want to take this time to thank them all for their tireless efforts to improve our business. It's very much appreciated. And with that, we will conclude today's call. I thank you all for joining us today.
And each and every day I continue to be more impressed by what our team is able to accomplish and I want to take this time to thank them all for their tireless efforts to improve our business.
Very much appreciated.
And with that we will conclude today's call. Thank you all for joining us today.
Speaker 1: Conference is now concluded. Thank you for attending today's presentation and you may now disconnect.
Conference.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.