Q4 2022 One Group Hospitality Inc Earnings Call

Speaker 1: I we cance it the.

Speaker 1: The.

Speaker 2: Good day and welcome to the One Group Fourth Quarter 2022 Earnings Conference Call.

Speaker 2: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker 2: To ask a question, you may press star then 1 on a touchstone phone. To answer a question, press star then 2.

Speaker 2: Please note this event is being recorded.

Speaker 2: I would now like to turn the conference over.

Speaker 2: to Manny Hilario, the CEO .

Speaker 2: Elario, the CEO . Please.

Speaker 2: Manny, go ahead.

Speaker 3: Thank you, operator, and hello everyone. Before we begin our former remarks, let me remind you that part of our discussion today will include forward-looking statements.

Speaker 3: These four-looking statements are not guaranteed the future performance and you should not place undue lines on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to different materially from what we expect.

Speaker 3: Please also note that these forward-looking statements reflect our opinion only as the date of the call.

Speaker 3: We undertake no obligation to revise or publicly release any revisions of these four looking statements.

Speaker 3: in light of new information or future events.

Speaker 3: We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions.

Speaker 3: During today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance.

Speaker 3: However, the presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAP. The reconciliation of these measures, such as adjusted EBITDA, adjusted net income, restaurant operating profit, comparable sales, and total food and beverage sales at Oendon Managed and Licensed Units to GAAP measures , along with the discussion of why we consider these measures useful.

Speaker 3: We see our earnings release issued today. With that, I'd like to turn the call over to Manny Hilario. Manny?

Speaker 4: Thank you, Tyler, and hello, everyone. We sincerely appreciate you joining us today and for your interest in the one group.

Speaker 4: Let me begin by thanking all of our team members for their hard work providing world class operations across all of our restaurants.

Speaker 4: Our team members helped to bring our mission to life every day, which is to be the best restaurant in every market that we operate.

Speaker 4: by delivering exceptional and unforgettable guest experiences to every guest every time.

Speaker 4: It is because of our teams that we have been able to strengthen our leadership position in vibe dining. Both high end and upscale casual.

Speaker 4: and that we can have great confidence moving forward.

Speaker 4: 2022 was undoubtedly a good year for the one group.

Speaker 4: We increased revenue 14.2% to $316.6 million, which included a 10.8% increase in comparable store sales.

Speaker 4: Our focus on diversifying our customer base to include more social occasions has paid off as demonstrated by our ability to own the holidays and date nights.

Speaker 4: For the fourth quarter, while we were negatively impacted by the weather and subsequent travel delays in December , we're overall very pleased with our holiday performance resulting in $13 million in adjusted EVDA for the quarter driven by store-level margins of almost 19 percent. For more information, visit www.fema.gov

Speaker 4: In addition, we are starting to see the return of the business clientele as people are returning to work offices in the urban areas where our restaurants are located, and there has been an increase in demand for our corporate and offsite events.

Speaker 4: Additionally, we are noticing more convention activity, especially in cities like Orlando, Scottsdale, and Las Vegas, and we have deployed our sales force to aggressively pursue these opportunities.

Speaker 4: Maybe most importantly, in 2022, we built an incredible pipeline of development that we expect will deliver double digit revenue and adjust to EBITDA growth going forward.

Speaker 4: This past year we saw that pipeline begin to materialize as we opened two company-owned SDKs in San Francisco and Dallas and one managed SDK in Stratford, our third in London, and a virtual leaf kitchen located in Austin, Texas.

Speaker 4: Since opening, our two new company-owned SDKs,

Speaker 4: San Francisco and Dallas have averaged approximately $350,000 in sales per week.

Speaker 4: This is significantly above our SDK investment model of roughly $154,000 per week.

Speaker 4: On the average, we expect to have less than a one-year payback for these locations.

Speaker 4: We have continued this momentum into 2023 with the opening of a new design corner grill in Columbus, Ohio and the Eastern Town Center in January .

Speaker 4: This is the first new corner grill we have opened since acquiring the brand and it is a big step in what we expect will be a large expansion for corner grill.

Speaker 4: This restaurant has opened averaging approximately 150,000 per week, again, facing ahead of our investment model.

Speaker 4: despite opening in what is typically our slowest part of the year.

Speaker 4: Additionally, we recently opened a new rooftop at the SDK in Scottsdale, Arizona, ahead of the Super Bowl, which was held in Phoenix last month.

Speaker 4: This is the fourth significant domestic SDK rooftop in our portfolio, and features both the patio and fireplace along with a great view of the canal.

Speaker 4: The vast size and open floor plan make the space extremely versatile and capable of being transformed to accommodate a wide array of events.

Speaker 4: We are encouraged by the incredible start for this new rooftop.

Speaker 4: Lastly, we have recently opened two additional reef kitchen locations in Austin.

Speaker 4: bringing to a total of three vessels as we evaluate future expansion.

Speaker 4: As we look forward to the rest of 2023, we have an incredible pipeline of high quality real estate. Before we move forward, I want to say that we are going to lose finite Rule No. 1 as

Speaker 4: the best in the history of the company.

Speaker 4: Despite a challenging construction environment, 2023 will be an extremely busy year as our intention is to open 8 to 12 new venues.

Speaker 4: For the remainder of the year, we plan to open 2-4 additional corner grills in the following cities. Riverton, Utah, Phoenix, Arizona, Henderson, Nevada, and Tiger, Oregon. And 3-5 new company-owned SDKs in the following cities.

Speaker 4: North Carolina, Boston, Massachusetts, Washington, D.C., Aventura, Florida, and Philadelphia, Pennsylvania. Finally, we plan to open one managed or licensed SDK. When factoring in our 2022 and 2023 openings along with our immediate pipeline thereafter, including asset-by-development, we anticipate a significant increase in run rate revenues and run rate adjusted EPDOT.

Speaker 4: F&D venue per year. This will be a blend of owned units and managed and licensed units, which requires lower capital investment and produces high margin royalty, management and incentive fee streams.

Speaker 4: To conclude, I'm pleased with our 2022 results, despite a very challenging restaurant environment, and our team is doing a fantastic job.

Speaker 4: Now, I'll turn the call back to Tyler.

Speaker 3: Thank you, Manny. Let me start by discussing our fourth quarter financials in greater detail. Total gap revenues were $88.3 million, increasing 5% from $84.1 million for the same quarter last year.

Speaker 3: Included in our total revenues is our own restaurant net revenues of $83.9 million, which increased 5.6% from $79.4 million for the same quarter last year.

Speaker 3: The increase in revenue is primarily attributable to the opening of SDK San Francisco in August of 2022 and SDK Dallas that opened in November of 2022.

Speaker 3: Domestic consolidated comparable sales decreased 3.1% for the quarter compared to 2021.

Speaker 3: For SDK, comparable sales were flat versus 2021, and Conan Grill comparable sales decreased 7.6% versus 2021.

Speaker 3: As a reminder, we are lacking incredibly strong comparable sales in 2021 relative to 2020 and 2019. Compared to 2019, our pre-pandemic base year, domestic consolidated comparable sales increased 46.2%. To Save our guest we advance from moments to months to help fill the hallways which helped us Barnes & Calus system change available to those

Speaker 3: SDK comparable sales increased 62.6% and Cone and Girl comparable sales increased 27.7% which shows that our differentiated bi-diaming experience continues to resonate with our guests.

Speaker 3: Management license and incentive revenues were $4.4 million, decreasing 4.5% from $4.6 million in the fourth quarter of 2021.

Speaker 3: This decrease is primarily the result of decreased revenue in our existing managed property in London, England, partially offset by the opening of SDK's graphic in November of 2022. Owned restaurant cost of sales as a percentage of owned restaurant net revenue decreased 190 basis points to 24% in the fourth quarter of 2022.

Speaker 3: compared to 25.9% in the prior year, primarily due to menu mix management and price increases partially offset by increased commodity prices.

Speaker 3: Owned restaurant operating expenses as a percentage of owned restaurant net revenue.

Speaker 3: increased 340 basis points to 57.1% in the fourth quarter of 2022, from 53.7% in the fourth quarter of 2021.

Speaker 3: primarily due to consolidated average wage increases and higher operating expenses.

Speaker 3: both driven by inflation consistent with the industry. This was partially offset by a low single-digit price increase in August of 2022 and a mid-single-digit price increase in November of 2022.

Speaker 3: We believe that we have additional pricing power for both brands as we compare our prices to those of our competitors.

Speaker 3: Restaurant operating profit decreased 150 basis points to 18.9% for the fourth quarter of 2022.

Speaker 3: compared to 20.4% in the fourth quarter of 2021. Restaurant operating profit at SDK decreased approximately 220 basis points, but was still a robust 22.6%, and Cone and Gruell operating profit decreased 180 basis points and was 13.1% in the quarter.

Speaker 3: On a total reported basis, general and administrative expenses were $8.5 million compared to $8.3 million in the prior year.

Speaker 3: The increase was attributable to additional investments ahead of growth, increased accounting and legal fees, and increased stock-based compensation expense, partially offset by a decrease in performance-based variable compensation expense.

Speaker 3: In addition, the company experienced increased travel expenses due to rising hotel and airfare costs. When adjusting for stock-based compensation, adjusted general and administrative expenses were $7.3 million in the fourth quarter of 2022 and $7.5 million in the same quarter last year. Season trajectory some new

Speaker 3: Pre-opening expenses were $1.7 million compared to $0.2 million in the prior year.

Speaker 3: This increase was primarily related to payroll, training, and cash and non-cash preopening rent for SDK Dallas, which opened in November 2022, Coner Grill Columbus, which opened in January of 2023, and other venues that are currently under construction. Interest expense was $0.7 million in the fourth quarter of 2022.

Speaker 3: Compared to 0.5 million in the fourth quarter of 2021.

Speaker 3: The increase was primarily driven by increases in benchmark rates year over year.

Speaker 3: Income tax expense was $0.2 million in the fourth quarter of 2022, compared to an income tax benefit of $0.6 million for the fourth quarter of 2021.

Speaker 3: Our 2022 annualized effective tax rate was 6.2%. Net income attributable to the one group hospitality was $5.1 million or $0.15 net income per share, compared to a net income of $5.8 million in the fourth quarter of 2021 for $0.17 net income per share.

Speaker 3: When adjusting for non-recurring expenses or gains, adjusted net income of $6.5 million or $0.19 adjusted net income per share, compared to an adjusted net income of $8.3 million in the fourth quarter of 2021 or $0.24 adjusted net income per share. The EVA-DAF for the fourth quarter attributable to the

Speaker 3: quarter of 2022, we repurchase approximately 0.6 million shares of our comments stock.

Speaker 3: We purchased an additional 118,000 shares during the first two months of 2023.

Speaker 3: We will continue to use discretion in determining the conditions under which shares may be purchased from time to time, if at all. Now, I'd like to provide some forward-looking commentary regarding our business. This commentary is subject to risks and uncertainties associated with forward-looking statements as discussed in our SEC filings. We, as always, remind our investors the actual numbers and timing of new restaurant openings for any given period is subject to a number of factors outside the company's control, including weather conditions and factors under the control of landlords, contractors, licensees, and regulatory and licensing authorities. Based on the information available now and the expectation does it today, we will continue to use

Speaker 3: to $54 million, which represents an approximate 21 to 30% increase compared to 2022. So far, we've seen a decrease in the number of preopening expenses between $5.5 and $6.5 million.

Speaker 3: capital expenditures consisting of approximately 2% of company-owned revenue and approximately $3 to $3.5 million per new company-owned venue, net of allowances received from landlords. And finally, we plan to open 8 to 12 new venues in 2023, including one managed or licensed SDK restaurant. I will now turn the call back to Manny. Thank you, Tyler, and thank you all for your time today.

Speaker 4: Let me conclude by saying that we are proud of our performance in 2022 and we are truly excited for 2023. We are in the early stages of our long-term growth strategy as we continue to build a portfolio of high-volume, high-margin brands with compelling returns for our shareholders.

Speaker 4: Above all, I'm grateful to all our teammates who bring our mission to life every day to be the best restaurant in every market where we operate.

Speaker 4: I also would like to thank our customers that visit and continue to return to our restaurants so that they can enjoy the highly differentiated, vibe-none experiences that have been craving. We appreciate everyone joining us on the Club today. Valor and I are happy to answer any questions that you may have. Operator. We will now begin the question and answer session to ask a question you may press star than one on your touchstone phone. If you are using a speaker phone please pick up your handset before pressing the keys.

Speaker 2: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Speaker 2: At this time, we will pause momentarily to assemble our roster. Our first question is coming from Mark Smith from Lake Street, Lake Street Capital. Mark, please go ahead.

Speaker 5: Hi guys, thanks for taking questions here. First one for me is, what have you guys seen in the development pipeline for new restaurants in regards to what the locations look like, maybe TI dollars. And then if you can talk about any headwinds permitting construction, any headwinds that you're seeing out there aren't getting open. Yeah. So Marc, I've been looking at our surface wall and other aspects of new suburban money

Speaker 4: In terms of what we're seeing is at least for us we continue to see very good deals from a TI perspective, so I think that Those funds are still available. I still think that developers Are looking for high volume.

Speaker 4: Type of operation so I think that's still a very favorable market in terms of construction I would say probably the I mean it's definitely challenging as we said in our prepared statement but if I had to narrow down to one area, that's probably the the one that you have to be very thoughtful about right now is just equipment purchasing and making sure that

Speaker 4: You do that on time because there's challenges in getting some of the equipment. But we've been able to deal with some of that. We've actually aggregated some of our and pre-purchased some of our equipment for future stores, just in anticipation of some of the hard times to get that equipment.

Speaker 5: So I would say that's probably our biggest headwind relative to development. Okay. And then as we look at kind of restaurant level margins for 2023, you gave some good guidance here. What are the main kind of pressure points if you were to kind of rank them that you see kind of putting any pressure on margin in 2023?

Speaker 4: So, I probably answered a question from a perspective of…

risk of the margin is really inflation levels. I think what we're seeing right now, you know, still price increases over a year, but they certainly have, you know, been less than historically in the last 12 months. So really that is the pressure point on the margin is always going to be.

what happens with inflation. I think labor, which frankly has been the biggest pressure point for us, I think that has stabilized. I think that with some of the, for instance, Amazon not increasing their labor pool are actually diminishing their labor pool.

actually has been helpful. It's taken a lot of pressure off talented individuals coming out of the industry. So really labor is the big unknown, so I think there's a lot more labor out there right now and that's good for us. And as we said previously, our restaurants continue to be fully staffed, which we think is a long-term competitive advantage for us.

Perfect. And then the last one for me, just as we think about new restaurants, maybe if we look at Kona and STK separately, the average weekly sales at the new Kona that you open look really solid. But can you talk about as you open these new units, do you expect kind of pressure on these restaurant margins to pressure?

restaurants for us. So I don't expect any pressure point coming out of SDK at all. I think the margins will be very solid from the get-go in SDK. Konigro, we did open Columbus. Columbus is frankly done exceptional considering that we opened in the slow month of the year.

which was January and I think we're super encouraged with the velocity of guests there. And so I think my overall answer would be that, you know, I don't expect pressure from new stores and I think that our guidance for the year.

reflects our view on the new stores.

Excellent. Thank you, guys. Thanks, Mark.

Our next question comes from Tyler Prowse from Stevens.

Tyler, please go ahead.

Hey guys, congrats on the quarter and thanks so much for taking my question here. So the strength of the consumer has been a large point of discussion industry-wide during this earnings season and we really appreciate your focus on providing an affordable luxury through compelling entry-level price points and allowing some consumers to trade up if they please.

But I was going to see if you could talk more about what you're seeing for consumers, your two concepts, and are you seeing any notable call-outs such as trade down, VIX management, or maybe variants of trends by region or day part?

Yeah, so thanks, Tyler, and a very good question. I would say probably the only noticeable factor I probably see today, different from maybe six months ago, is perhaps the build of the business Monday through Sunday. I do think that

The weekends are super robust, so Friday, Saturday business, lots of appetite, and particularly because we have focused on social occasions, including date nights. We see a tremendous amount of demand for our product.

through Wednesday. I do think that there, I think that if there's a place where the consumer might be making more decisions about going out or not is on those days of the week. However, as you pointed out there, I think that our Happy Hour program, particularly with the $3, $6, $9 price points.

It's super compelling. We still see tremendous strength on those days and happy hours so people are coming out for that. And as you know, we go out of our way to convert that into the dinner business. And then the only other thing I would say about the consumer, I do think that brunch is one thing I would say about that beers of Grants. And how we tier our Call. That what one equation not the other. Even excited from that conversation. Turning this edX to like price to order to spend on first coming right towards the station.

which is a day part that we focus on, is clearly becoming very important on Sundays. And particularly for us, brunch is a very good price point, particularly for SDK brands. So we do see a lot of excitement about the brunch day part.

on the SDK brand. But overall, from in-store behavior of customers doing less when they're in the restaurants, we do not see that at the SDK brand and Kona Grill. We don't see that either. We do actually see more people trading up to Surf and Turfs at the Kona brand, which is actually...

a higher price point. We believe that they're doing that because the product is very good. I think that's where managing perhaps the consumer behavior by having this great p-mix. That's what we've seen. We've seen basically a little bit more...

velocity of visits towards the weekend. But other than that, it's really all about managing a great product and a great experience in a restaurant.

Wonderful, I appreciate that. I've got one follow-up just kind of shifting gears here. Could you remind us how you're currently contracted on commodities, you know, specifically beef, and kind of how those contracts are shaping up in 2023?

Yeah, good question. So on beef we don't have contracted quantities, but we do have pricing arrangements with our vendors. And for us that seems to be relatively stable, actually very stable out for the next 90 to 180 days. The other one that we actually actively lock into seafood and we've been able to stuff to keepdeafens. honourable.

lock at very good seafood pricing, so seafood particularly shrimp and lobster and the frozen products. So I would say overall the stuff that we actually work in and we lock pricing or quantities I think we're doing a very, we're actually pretty good favorable or equal to last year's prices. So in top Residence

Awesome. And just one final question here. I know you kind of touched on price a little bit during the call, but what was the price that you ran for the fourth quarter? For effective? Yes.

Yeah, from a consolidated perspective, it's right around 6%, and that's pretty consistent across each brand.

Okay, great. I appreciate your time today.

Okay, great. I appreciate your time today. Thanks.

We have a question from Mick Sarian from Wedbush Securities. Mick, please go ahead.

Thank you. Can we just hone in on the corner brand and you know the negative 7% comp and...

I guess what's driving that first of all is it just tough compares. Particularly when you think about the pricing that's in there, so negative double-digit presumably transactions and then maybe just how things have trended thus far in Q1 given the industry strengths.

For going to grow I am very encouraged with the start of the year as a matter of fact for quarter date corner grill is relatively flat year-over-year and on the same store sales, and then we have some strong performance from The new unit at 115 I think 115 thousand a week for for corner grill is actually very good result for the industry So as I look at gonna grill for the rest of 20 23 particularly the quality of the new sites coming out I'm looking for a fantastic year for corner grill this year and as well as if I look at the margin in the fourth Florida we're up in the mid double digits. I think we're 13 1

for the quarter on the margin. So I think that, you know, the concern coming from the third quarter was the margin. And I think that the team has done an exceptional job of working on that margin. And obviously the pricing also helps. So I'm super, super excited about 2023 for Conaguail.

Okay, and then I was going to ask about sort of the trajectory of the margin that Kona, I guess the overall guidance implies some expansion in the Kona restaurant level margins. Maybe just walk us through in terms of the kind of inflation you expect at both brands in 23 and the kind of...

in particular in the current environment, but Tyler and I are thinking somewhere between two to four points in inflation for the year, so much more moderate than that, and you're accurate that our guidance for the year implies that, you know, we've made progress, and as our four-quarter number shows,

We have made progress on the margin at Kuna Grill, and a lot of it is permanent adjustments that we made to the business model. Also keep in mind that the new restaurants and the new restaurant design, if you haven't been to the new one yet, is designed to be labor and margin friendly. We've shrunk.

the sushi bar in Konigro, which is a heavy labor user. So I think as the mix of the new design restaurants come into play, I think you will see the brand really coming to some very nice margins. I think the new prototype is in the 70% level margin.

So yeah, I mean that's kind of the path that we now have for corner grill is continue working sales and the volumes in the new stores should be additive to the AV for the brand and I think that the the Margin will improve for the brand

of the path that we now have for corner grill is continue working sales and the volumes in the new stores should be additive to the AV for the brand and I think that the margin will improve for the brand. Great, thank you very much.

Thanks Nick. Our next question comes from JP Wolin from Roth MKM. Please go ahead. Great. Good evening guys and thanks for taking the questions.

Maybe if we could just start with kind of the development pipeline at Kona. I just want to make sure I'm understanding correctly. The idea is something in the range of two to four units for 2023. And I was just hoping maybe you could expand on that a little bit. If I recall, I think we had

three units pushed from last year into this year and so maybe we're kind of expecting to have had a few more coming in 2023 so Anything you can maybe call out there and just confirm that two to four is the right number

Yeah, I mean so we have opened Columbus and so now left in the pipeline at least that we're already working on is Riverton is pretty much almost built. Then we have Phoenix Desert, which is almost also built. And then we have Anderson in Nevada, which is

As we've discussed in the past we are very sensitive to our neighborhood when we open these restaurants. So Riverton, we're just waiting a couple more weeks here to get to a place where I feel comfortable with the surrounding market and we will open that here and then Desert Ridge won't be that much after that. So our commitments three to five on Kona Grill, you are correct. We did push the openings into the beginning of this year. So we're going to get through those relatively quick here at the beginning of the year and then we will start working on the remaining pipeline towards the end of 2023.

Thanks for the clarity there. If we could kind of turn a little bit to STK, I just want to talk for a second. I think earlier last year we kind of talked a little bit about holiday event business and kind of what that could mean for Q4.

any changes to your thoughts or your plans for 2023 and targets there? Yes, so I think as we've discussed previously, the business continues to build so we do have

positive momentum in that business. I think the fourth quarter, the books were really good for those type of events. I would say that, and although I'm not a weather guy and I don't talk about weather a lot, we did have some harsh weather in December too, which I think kind of...

I put a little bit of a damper, perhaps, on some of the event business and the stuff going on in the quarter. But I would say, overall, I would say that it was a very promising and actually very positive business there. And I think coming into this year, 2023, we've already seen the convention business really spark up, particularly, I think, as we said in our prepared comments, Orlando, Vegas. Vegas has been very strong on the

So I think that our outlook for that business is very favorable this year. Although from an SDK perspective, also as I discussed there, really owning holidays and owning date night has become a very strong part of that brand particularly in the...

in the city, so I'm very excited about that. But anyhow, I was strong enough to look for business by Intel this year. Great, thanks. And if I could just sneak one last one in there, just to call out the strength you're seeing at the new openings, Dallas and San Francisco. Is there anything you can share just about...

you know, what you're learning there, what you're taking away, and kind of why things are going so great there would just be great to know as you think about the upcoming opening. I mean, so I'd like to, first of all, give credit to the brand.

on those openings. So when we're coming out to opening those restaurants, I think people know the brand really well because we have grown quite a bit. So I think just the brand awareness and...

and the way that we go about defining our geography. Dallas is a very complimentary, very great city for stake. We're really picking some great cities in terms of development for SDKs. I think the combination of that cities.

and geography and quality of real estate as well as the brand being there. And then the last thing I would say on the success of the openings is our focus on marketing has always been digital. And we have in my opinion really become an incredible digital city.

So we are able to create a lot of excitement and a lot of, through social, a lot of excitement about these openings. So I think the combination of those things has really led to these great opening revenues. Again, I think as we mentioned in our prepared statements, we only...

expect 150 to 160 to get to those 50% type of returns. These kind of volumes are paid back on these restaurants that are less than one year, so it's a very good problem to have for Tyler here that we can pay him back in that short period. So again, it's those three components and we'll...

continue opening them in big cities and great pieces of real estate. And the brand still does very well, so I expect that we will have a very good development year in 2023.

Great. Thank you for your time. Best of luck. Thank you, sir. We have a question from Roger Lipton from Lipton Financial. Roger, go ahead. Yes. Thanks very much for taking my question. Just, Manny, can you just give us a little more feedback in terms of the SDK?

Then we also have Aventura in Florida and Philadelphia. Those will be all company owned. They're all A real estate so we're super excited about all those locations. When might they open?

Charlotte is very close and Boston will be two to three months after we finish Charlotte and then you could plan the other ones to come about a month to six weeks thereafter each other. So that's kind of our...

of how we look at timing of openings for those. And what's your net investment cash out on this?

we look at timing of openings for those. And what's your net investment cash out on this current crop of stores?

Yeah, so we typically net anticipate new SDK units to be about 3.8 million roughly.

Yeah, so we typically net anticipate new SDK units to be about 3.8 million, roughly. We're excluding pre-opening files.

Have your rents escalated in this inflationary environment? I would say that the answer is, at least for us, this is not a really market read, I think for us, particularly because of the high demand for.

SDK and even in Kona Grills, I think that we've been able to get some very competitive rates on rent. So my answer actually is I think our rents are very good relative to what historical levels has been in some of the cities that we're going into. So the answer is no, I have not seen any impact on rent rates because of inflation.

I want to close the call here by thanking our incredible team, which do an incredible job every day living our mission of operating great restaurants and focusing on exceptional and unforgettable guest experiences to every guest every time. So thank you for that and then.

I also want to thank everyone for having an interest in our company and being on the call today. And I'm sure I'll run into all of you in our restaurants in the next couple weeks. Thank you, everyone, for being on the call. The conference has now concluded. Thank you so much for attending today's presentation.