Q4 2023 Texas Roadhouse Inc Earnings Call

Operator: Good evening, and welcome to the Texas Roadhouse 4th Quarter Earnings Conference Call. Today's call is being recorded. All participants are now in a listen-only mode.

Good evening and welcome to the Texas Roadhouse fourth quarter earnings Conference call. Today's call is being recorded all participants are now in a listen only mode. After the Speakers' remarks, there will be a question and answer session at that time, if you'd like to ask a question. Please press Star then the number one on your telephone keypad.

Operator: After the speaker's remarks, there will be a question and answer session. At that time, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. Should anyone need assistance at any time during the conference, please press star zero, and an operator will assist.

Should anyone need assistance at any time during the conference. Please press star Zero and an operator will assist you I would now like to introduce Michael Balan head of Investor Relations for Texas Roadhouse, you May begin your conference.

Michael Balin: I would now like to introduce Michael Balin, Head of Investor Relations for Texas Roadhouse. You may begin your presentation. Thank you, Rob, and good evening.

Yeah.

Michael Balan: Thank you Rob and good evening by now you should have access to our earnings release for the fourth quarter ended December 26, 2023. It may also be found on our website at Texas Roadhouse Dot com in the investors section I would like to remind everyone that part of our discussion today will include.

Michael Balin: By now, you should have access to our earnings release for the fourth quarter and for December 26, 2023. It may also be found on our website at texasroadhouse.com in the investor section. I would like to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and therefore undue reliance should not be placed on them. We refer all of you to our earnings release and our recent filings with the SEC. These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. In addition, we may refer to non-GAAP measures if applicable; reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release.

Michael Balan: Forward looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them.

Michael Balan: We refer all of you to our earnings release and our recent filings with the SEC. These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward looking statements.

Michael Balan: Additionally, we may refer to non-GAAP measures if applicable reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release on.

Michael Balin: On the call with me today is Jerry Morgan, Chief Executive Officer of Texas Roadhouse, and Chris Monroe, our Chief Financial Officer. Following the prepared remarks, we will be available to answer your questions. In order to accommodate everyone that would like to ask a question, we kindly ask analysts to please limit themselves to one question. Now, I would like to turn the call over to Jerry.

Michael Balan: On the call with me today is Gerry Morgan, Chief Executive Officer of Texas, Roadhouse, and Chris Munroe, Our Chief Financial Officer.

Speaker Change: Following the prepared remarks, we will be available to answer your questions.

Speaker Change: In order to accommodate everyone that would like to ask a question. We kindly ask analysts to please limit yourself to one question now I would like to turn the call over to Jerry.

Jerry Morgan: Thanks, Michael, and good evening, everyone. 2023 was another great year for Texas Roadhouse. We generated over $4.6 billion in revenue and increased average unit volumes to over 7.6 million at Texas Roadhouse. And for the full year, comp sales grew over 10%, with more than half of that increase coming from higher guest traffic. Along with this top-line growth, we also reported double-digit increases in restaurant margin dollars, income from operations, and earnings per share for full year 2023. Our results clearly reflect the commitment our managing partners have to taking care of their guests and their communities. There are no better examples of this passion than our Veterans Day celebration and our national fundraiser to benefit Tinnitus Research. On Veterans Day, we honored nearly 700,000 veterans by providing a free meal or voucher for a future meal.

Gerry Morgan: Thanks, Michael and good evening, everyone 2023 was another great year for Texas Roadhouse, we generated over $4 $6 billion in revenue and increased average unit volumes to over seven 6 million at Texas Roadhouse and for the full year comp sales grew over 10.

Jerry: With more than half of that increase coming from higher guest traffic.

Jerry: Along with this top line growth. We also reported double digit increases in restaurant margin dollars income from operations and earnings per share for full year 2023.

Jerry: Our results clearly reflect the commitment our managing partners have and taking care of their guests and their communities. There are no better examples of this passion then our veterans day celebration and our national fundraiser to benefit Tinnitus research on veterans day, we honored near.

Jerry: Only 700000 veterans by providing a free meal or voucher for a future meal and just over a week ago, we raised over $925000 for the American Tinnitus Association in honor of our late founder Kent Taylor.

Jerry Morgan: And just over a week ago, we raised over $925,000 for the American Tinnitus Association in honor of our late founder, Kent Taylor. These are just two of the many ways our operators give back to their local communities. 2023 was a record year for system-wide new store openings. For the full year, we opened 30 company restaurants across all brands. And our franchise partners opened 15 restaurants, including our first two franchised Jaggers. For 2024, we continue to expect to open approximately 30 company-owned restaurants across the three brands. Our expectation is that this year's openings will be more evenly distributed throughout the year as compared to last year, when 50% of our openings occurred in the last four months. Additionally, we expect our franchise partners will open as many as 14 international and domestic locations, including Four Jaguars.

Jerry: These are just two of the many ways our operators give back to their local communities.

Jerry: 2023 was a record year for system wide new store openings for the full year, we opened 30 company restaurants across all brands and our franchise partners opened 15 restaurants, including our first two franchised jaggers for 2024, we continue to expect.

Jerry: To open approximately 30 company owned restaurants across the three brands.

Jerry: Our expectation is that this year's openings will be more evenly distributed throughout the year as compared to last year, when 50% of our openings occurred in the last four months. Additionally, we expect our franchise partners will open as many as 14 international.

Jerry: Domestic locations, including four jaggers.

Jerry Morgan: In 2024, we will also maintain our emphasis on operational efficiencies and improving the guest and employee experience by focusing on technology investment. Based on positive feedback from our operators, we are accelerating the number of digital kitchen conversions to be completed this year. We now expect to convert approximately 200 existing Texas Roadhouses to digital kitchens in 2024. And we have also standardized this equipment for new openings at all three brands.

Jerry: In 2024, we will also maintain our emphasis on operational efficiencies and improving the guest and employee experience by focusing on technology investments based on positive feedback from our operators. We are accelerating the number of digital kitchen conversions to be completed this year.

Jerry: We now expect to convert approximately 200 exists existing Texas Roadhouse is to a digital kitchen in 2024, and we have also standardized this equipment for new openings at all three brands.

Jerry Morgan: We are also focused on increasing guest awareness of our digital platform, which is the most efficient way for our guests to put their names on the wait list, to dine in our restaurants, and to place their to-go orders. In closing, we are extremely excited about the direction of our business and our three brands. There are so many things to be proud of, but at the same time, we still have many opportunities to continue building our business going forward. Now, Chris will provide some thoughts. Thanks, Jerry. 2023 was certainly an impressive year.

Jerry: We are also focused on increasing guest awareness of our digital platform, which is the most efficient way for our guests to put their names on the waitlist to dine in our restaurants and to place their to go orders.

Jerry: In closing we are extremely excited about the direction of our business and our three brands. There are so many things to be proud of but at the same time, we still have many opportunities to continue building our business going forward now Chris will provide some thoughts.

Chris Munroe: Thanks, Jerry 2023 was certainly an impressive year, our restaurants are the busiest they've ever been but our operators are focused on serving even more guests on every shift.

Chris Monroe: Our restaurants are the busiest they've ever been, but our operators are focused on serving even more guests on every shift. Of course, we expect to continue to face inflationary pressures in 2024, albeit at a lower rate than we have experienced in the last several years. Cattle supply will continue to be a challenge in 2024.

Chris Munroe: Of course, we expect to continue to face inflationary pressures in 2024, albeit at a lower rate than we have experienced the last several years.

Chris Munroe: Cattle supply will continue to be a challenge in 2024. However, we now expect the majority of the financial impact of this tightening supply to be in the back half of 2024.

Chris Monroe: However, we now expect the majority of the financial impact of this tightening supply to be in the back half of 2024. As such, we are updating our full-year 2024 commodity inflation guidance to approximately 5% from between 5% and 6%. On the labor side, our guidance for wage and other labor inflation remains unchanged at between 4 and 5 percent.

As such we are updating our full year 2020 for commodity inflation guidance to approximately 5% from between five 6%.

Chris Munroe: On the labor side, our guidance for wage and other labor inflation remains unchanged at between four and 5%.

Chris Munroe: To help offset the impact of inflationary pressures, we will be implementing a 2.2% menu price increase at the beginning of our second quarter.

Chris Monroe: To help offset the impact of inflationary pressures, we will be implementing a 2.2% menu price increase at the beginning of our second quarter. As we typically do, we partnered with our operators to determine the appropriate amount of prices for each of our restaurants. This process includes looking at traffic trends, state mandated wage increases, and local labor trends, as well as comparing our prices to those of other restaurants in their specific communities. This level of detail and operator involvement provides us with the confidence that we are taking the right level of pricing without sacrificing our value proposition. As Jerry mentioned, we opened 30 company-owned restaurants in 2023, which included 22 Texas Roadhouses, 5 Bubba's 33's, and 3 Jagger's. While sales volumes at new Texas Roadhouse restaurants increased. So did the average investment cost in 2023. Part of this was the inflationary pressure on building costs that the industry faced in 2023.

Chris Munroe: As we typically do we partnered with our operators to determine the appropriate amount of pricing for each of our restaurants.

Chris Munroe: This process includes looking at traffic trends state mandated wage increases.

Chris Munroe: And local labor trends as well as comparing our prices to those of other restaurants and their specific community.

Chris Munroe: This level of detail and operator involvement provides us with the confidence that we are taking the right level of pricing without sacrificing our value proposition.

Chris Munroe: As Jerry mentioned, we opened 30 company owned restaurants in 2023, which included 22, Texas Roadhouse is.

Chris Munroe: Five Bubbas 30, threes and three jaggers.

Chris Munroe: While sales volumes at new Texas Roadhouse restaurants increased.

Chris Munroe: So did the average investment cost in 2023.

Chris Munroe: Part of this was the inflationary pressure on building costs that the industry faced in 2023.

Chris Monroe: But it was also due to our strategic investment in building a larger prototype to be able to serve even more guests. The addition of dedicated to-go areas and more back-of-house space needed to serve higher guest volumes has increased the size of the current prototype by approximately 10% from our pre-COVID prototype. Returns on investment for our portfolio of new restaurants continue to exceed both our cost of capital and our targeted mid-teen IRR. Before we fully shift our attention to 2024, it's important to recognize the financial accomplishments we had in 2023. We ended the year with $104 million in cash and generated $565 million in cash flow from operations.

Chris Munroe: But it was also due to our strategic investment in building a larger prototype to be able to serve even more guests.

Chris Munroe: The addition of dedicated to go areas and more back of house space needed to serve higher guest volumes has increased the size of the current prototype by approximately 10% from our pre Covid prototype.

Chris Munroe: The returns on investment for our portfolio of new restaurants continue to exceed both our cost of capital and our targeted mid teen IRR.

Chris Munroe: Before we fully shift our attention to 2024, it's important to recognize the financial accomplishments we had in 2023.

Chris Munroe: We ended the year with $104 million in cash and generated $565 million of cash flow from operations.

Chris Monroe: With this cash flow, we self-funded $347 million of capital expenditures, as well as the $39 million acquisition of eight franchise restaurants. We also returned over $147 million to our shareholders in the form of dividends, completed $50 million of share repurchases, and repaid the final $50 million of bank debt that we borrowed at the onset of COVID. In 2024 and beyond, we will continue to make meaningful capital investments in existing restaurants, as well as new restaurant development. At this time, our capital expenditure guidance for 2024 remains unchanged at between $340 and $350 million. As always, investments will be evaluated to ensure we continue to put our capital to work where we create the greatest shareholder value. Overall, our shareholders were rewarded in fiscal year 2023 with EPS growth of 14.3% and a dividend yield of 2.1%. This total return of 16.4% is consistent with our average return over the past 10 years.

Chris Munroe: With this cash flow, we self funded $347 million of capital expenditures as well as the $39 million acquisition of eight franchise restaurants.

Chris Munroe: We also returned over $147 million to our shareholders in the form of dividends.

Chris Munroe: Completed $50 million of share repurchases and repaid the final $50 million of bank debt, we borrowed at the onset of Covid.

In 2024, and beyond we will continue to make meaningful capital investments in existing restaurants, as well as new restaurant development.

Chris Munroe: At this time, our capital expenditure guidance for 2024 remains unchanged at between 340 and $350 million.

Chris Munroe: As always investments will be evaluated to ensure we continue to put our capital to work, where we create the greatest shareholder value.

Chris Munroe: Overall, our shareholders were rewarded in fiscal year 2023, with EPS growth of 14, 3% and a dividend yield of two 1%.

Chris Munroe: This total return of 16, 4% is consistent with our average return over the past 10 years.

Michael Balin: With a disciplined approach to capital allocation and the excellent results we expect our operators to continue generating, we are confident that we can continue to reward our investors with strong returns for years to come. And now Michael will walk us through the quarter results and provide additional 2024 guidance. Thanks, Chris.

Chris Munroe: With a disciplined approach to capital allocation and the excellent results. We expect our operators to continue generating we are confident that we can continue to reward our investors with strong returns for years to come.

Chris Munroe: And now Michael will walk us through the quarter results and provide additional 2020 for guidance.

Michael Balan: Thanks, Chris for the fourth quarter of 2023, we reported revenue growth of 15, 3% driven by a nine 3% increase in average unit volume and six 1% store week growth.

Michael Balin: For the fourth quarter of 2023, we reported revenue growth of 15.3%, driven by a 9.3% increase in average unit volume and 6.1% store week growth. We also reported a restaurant margin dollar increase of 21.4% to $177 million and a diluted earnings per share increase of 21.3% to $1.08. Average weekly sales in the fourth quarter were over $141,000, with To Go representing approximately $18,000, or 12.6% of these total weekly sales. At this time, To Go has already become, on average, a $1 million business per restaurant with additional room for growth. Comparable sales increased 9.9% in the fourth quarter, driven by 5.1% traffic growth and a 4.8% increase in average checks.

Michael Balan: We also reported a restaurant margin dollar increase of 21, 4% to $177 million.

Michael Balan: Diluted earnings per share increase of 21, 3% to $1 eight.

Michael Balan: Average weekly sales in the fourth quarter were over $141000 with to go representing approximately $18000 or 12, 6% of these total weekly sales at this time to go has already become on average a $1 billion business.

Michael Balan: <unk> per restaurant with additional room for growth.

Michael Balan: Comparable sales increased nine 9% in the fourth quarter, driven by five 1% traffic growth and a four 8% increase in average check.

Michael Balin: By month, comparable sales grew 9.2% in both October and November and 11.1% in December. And while weather has negatively impacted our year-to-date 2024 sales, comparable sales are still up 6.8%, including 3% traffic growth for the first 50 days of the year, with our restaurants averaging sales of approximately $155,000 per week during that time frame. In the fourth quarter, restaurant margin dollars per store week increased to over $21,600, and restaurant margin as a percentage of total sales increased 75 basis points year over year to 15.3 percent. Food and beverage costs as a percentage of total sales were 34.2% for the fourth quarter.

Michael Balan: By month comparable sales grew nine 2% in both October and November and 11, 1% in December.

Michael Balan: And while weather has negatively impacted our year to date 2020 for sales comparable sales are still up six 8%, including 3% traffic growth for the first 15 days of the year with our restaurants, averaging sales of approximately 155000.

Michael Balan: <unk> per week during that timeframe.

Michael Balan: In the fourth quarter restaurant margin dollars per store week increased to over $21600.

Michael Balan: And restaurant margin as a percentage of total sales increased 75 basis points year over year to 15, 3%.

Michael Balan: Food and beverage costs as a percentage of total sales were 34, 2% for the fourth quarter. The 88 basis points year over year improvement was driven by the benefit of a four 8% check increase offsetting the three 2% commodity inflation for the quarter.

Michael Balin: The 88 basis point year-over-year improvement was driven by the benefit of a 4.8% check increase, offsetting the 3.2% commodity inflation for the quarter. Commodity inflation for full year 2023 was 5.6%, which was the midpoint of our guidance. Labor, as a percentage of total sales, decreased 28 basis points to 33.1% as compared to the fourth quarter of 2022.

Michael Balan: <unk>.

Michael Balan: Commodity inflation for full year 2023 was five 6%, which was the midpoint of our guidance.

Michael Balan: Labor as a percentage of total sales decreased 28 basis points to 33, 1% as compared to the fourth quarter of 2020 to.

Michael Balin: Labor dollars per store week increased 7.9% due to wage and other labor inflation of 5.5% and growth in hours of 2.4%. For the full year, wage and other labor inflation came in at 6.6%, which was the midpoint of our 2023 guidance. As Chris mentioned, we continue to expect wage and other labor inflation of between 4% and 5% in 2024. Included within this guidance is approximately $3 million of additional labor expense in the second half of 2024 from enhancements to our equity compensation program, including a move from quarterly to annual grants. Other operating costs were 15.8% of sales, which was 49 basis points higher than the fourth quarter of 2022. Also included in the year-over-year change is an approximately 40 basis point negative impact from adjustments to our quarterly reserve for general liability insurance. These adjustments include $3.7 million of additional expenses this year and a $0.9 million credit last year.

Michael Balan: Labor dollars per store week increased seven 9% due to wage and other labor inflation of five 5% and growth in hours of two 4%.

Michael Balan: For the full year wage and other labor inflation came in at six 6%, which was the midpoint of our 2023 guidance.

Michael Balan: As Chris mentioned, we continue to expect wage and other labor inflation of between four and 5% in 2024 included within this guidance is approximately $3 million of additional labor expense in the second half of 2024 from enhancements.

Michael Balan: Two our equity compensation program, including a move from quarterly to annual grants.

Michael Balan: Other operating costs were 15, 8% of sales, which was 49 basis points higher than the fourth quarter of 2022.

Michael Balan: Included in the year over year change isn't an approximately 40 basis point negative impact from adjustments to our quarterly reserve for general liability insurance.

Michael Balan: These adjustments include $3 $7 million of.

Michael Balan: <unk> expense this year and a 0.9 million credit last year.

Michael Balin: Moving below restaurant margin, G&A dollars grew 23.3% year over year and came in at 4.3% of revenue for the fourth quarter. The primary driver of the year-over-year increase was higher cash and equity compensation. For 2024, the equity grant enhancement will also add approximately $3.5 million of G&A expense in the second half of the year. Our effective tax rate for the quarter was 10.9%. Our full-year 2023 income tax rate of 12.5% was below our guidance due to a lower than anticipated state tax rate.

Michael Balan: Moving below restaurant margin G&A dollars grew 23, 3% year over year and came in at four 3% of revenue for the fourth quarter. The primary driver of the year over year increase was higher cash and equity compensation for 2024.

Michael Balan: The equity grant enhancement will also add approximately $3 $5 million of G&A expense in the second half of the year.

Michael Balan: Our effective tax rate for the quarter was 10, 9% our full year 2023 income tax rate of 12, 5% was below our guidance due to a lower than anticipated state tax rate.

Michael Balin: And we are updating our expectation for the full-year 2024 income tax rate to approximately 14%. Finally, as we reminded everyone last quarter, 2024 is a 53-week year for us. As such, the fourth quarter will have 14 weeks versus our normal 13 weeks.

Michael Balan: And we are updating our expectation for the full year 2024 income tax rate to approximately 14%.

Michael Balan: Finally, as we reminded everyone last quarter 2024 is a 53 week year for us as such the fourth quarter will have 14 weeks versus our normal 13 weeks, we estimate that the additional week could benefit full year 2024 earnings per share growth by approximately 4%.

Jerry Morgan: We estimate that the additional week could benefit full year 2024 earnings per share growth by approximately 4%. Now, I will turn the call back over to Jerry for his final comment. Thanks, Michael. There's no question 2023 was another legendary year for Texas Roadhouse, and we are looking forward to building on our momentum into 2024.

Michael Balan: Now I will turn the call back over to Jerry for final comments. Thanks, Michael There is no question 2023 was another legendary year for Texas Roadhouse, and we are looking forward to building on our momentum into 2024.

Jerry Morgan: As always, we will be focused on driving sales, controlling costs, taking care of our people, and maximizing shareholder value. We are also looking forward to our upcoming Managing Partner Conference in Austin, Texas, where we will be celebrating all of our amazing partners. Additionally, we will be naming our annual Managing Partner of the Year for Texas Roadhouse and our second ever Bubba's 33 Managing Partner of the Year. I'm very proud of our accomplishments and even more excited for our future. It's a great time to be a roadie at Texas Roadhouse.

Jerry: As always we will be focused on driving sales controlling costs, taking care of our people and maximizing shareholder value. We are also looking forward to our upcoming managing partner conference in Austin, Texas, where we will be celebrating all of our amazing partners.

Jerry: Additionally, we will be naming our annual managing partner of the year for Texas Roadhouse, and our second ever Bubbas 33, managing partner of the year I am very proud of our accomplishments and even more excited for our future. It is a great time to be eroding at Texas Roadhouse that can.

Operator: That concludes our prepared remarks. Operator, please open the line for questions. At this time, I would like to remind everyone that in order to ask a question, press the star, then the number 1 on your telephone keypad.

Jerry: <unk> our prepared remarks, operator, please open the line for questions.

Jerry: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Jeffrey Bernstein: Your first question comes from the line of Jeffrey Bernstein from Barclays. Your line is open. Great. Thank you very much. Two questions.

Jerry: First question comes from the line of Jeffrey Bernstein from Barclays. Your line is open.

Jerry: Yeah.

Jeffrey Bernstein: Great. Thank you very much.

Michael Balin: The first one, just thinking about the 2024 restaurant margin. Pretty impressive you nailed the cost outlook in 2023 in terms of the ranges you provided for COGS and labor. If you were to do the same in 2024 and... the inflation guidance you expect at this point. But if you came in within those ranges, can you talk about the potential restaurant margin? Transcribed by https://otter.ai. Yeah, hi, Jeff. It'

Two questions. The first one just thinking about the 2020 for restaurant margins.

Jeffrey Bernstein: Pretty impressive you nailed the cost outlook in 2023 in terms of the ranges you provided for Cogs and labor.

Jeffrey Bernstein: If you were to do the same in 'twenty 'twenty four and obviously you gave us the inflation guidance you expect at this point, but if it came in within those ranges could you talk about the potential restaurant margin.

Jeffrey Bernstein: Expansion outcomes or maybe the range of outcomes you could see or what you think would be the greatest unknowns in terms of that restaurant margin and then I had one follow up.

Jeffrey Bernstein: Yeah, Hi, Jeff It's Michael Thanks for the question.

Michael Balin: Thanks for the question. You know, there's a couple things you may need to determine on your own. And that really, you know, relates to the top line growth, how much traffic you want to assume, what pricing we may take, you know, in the fourth quarter. But assuming modest traffic growth, modest additional pricing, and kind of hitting the midpoint of our range, I do think you have the opportunity to see restaurant margin expansion. And, really, you know, the other operating is probably the biggest area for that expansion. You may also get some, you know, you know, labor; you probably would get some expansion earlier in the year. And then some of those enhancements that we've talked about may flatten that out.

Michael Balan: A couple of things that you may need to determine on your own and that really relates to the top line growth how much traffic you want to assume what pricing, we may take the fourth quarter, but assuming modest traffic growth modest additional pricing.

Michael Balan: And kind of hitting the midpoint of our range.

Michael Balan: I do think you have opportunity to seed restaurant margin.

Michael Balan: Expansion and really the other operating is probably the biggest area of for that expansion.

Michael Balan: You May also.

Michael Balan: Get some.

Michael Balan: Labor you probably will get some expansion earlier in the year.

Michael Balan: And then some of those enhancements and we've talked about may flatten that out and then youre commodities for probably with the stair step up in the commodity inflation.

Michael Balin: And then your commodities were probably, with the stair step up in commodity inflation, you're going to see leverage earlier in the year. And again, that's just with the guidance that we've, you know, given how it probably would play out. So it sounds like both labor and commodities could be more favorable in the first half, less so in the back half. Yes, I would agree with that, you know, as far as how we contemplate inflation playing out. Gotcha.

Michael Balan: Youre going to see leverage earlier in the year and again Thats just with the guidance that we have.

Given how it probably would play out.

Michael Balan: Yeah.

Speaker Change: Understood. So it sounds like both labor and.

Speaker Change: Commodities could be more favorable in the first half less so in the back half.

Speaker Change: Yes, I would agree with that as far as how we contemplate.

Speaker Change: The inflation playing out.

Michael Balin: And then just to clarify on the comp strength through the fourth quarter, pretty stable in October, November accelerated nicely in December. Is there any change in consumer behavior you're seeing, whether traffic or makeshift, how the consumer is spending, even going into the first 50 days? Thank you. Hey Jeff, it's Michael.

Speaker Change: Got you and then just to clarify on that.

Speaker Change: Comp strength through the fourth quarter pretty stable in October November accelerated nicely in December.

Speaker Change: Is there any change in consumer behavior, you're seeing where the traffic or mix shift how the consumer spending even going into the first 50 days of.

This year I'm, just wondering whether you get the sense, there's any change in behavior with obviously a lot of people anticipating a potential slowdown or whatnot, but I'm just wondering what you're seeing across your portfolio of brands in terms of consumer spending patterns and behavior. Thank you.

Michael Balin: Again, I'd say we are very excited about what we're seeing at all of our brands. Consumer behavior does not seem to have changed in the fourth quarter or really changed much in the first 50 days of the year. A lot of that can be seen by the traffic growth that we have seen. However, we continue to see some negative mix in the alcohol category. I think that's more of an industry trend than anything directly related to Texas Roadhouse. Other than that, I think we continue to see guests trading into us from fast casual or other casual diners. Some of those are probably going more towards the value side of our menu, the six ounce sirloin and the other lower priced items. Maybe they're getting a soft beverage instead of an alcoholic beverage, but we feel very happy with the consumer right now. Fantastic

Speaker Change: Yeah, Hey, Jeff It's Michael again, I would say we are very excited about what we're seeing.

Michael Balan: And all of our brands the consumer behavior does not seem to have changed in the fourth quarter.

Michael Balan: It really changed much.

Michael Balan: The first 50 days of the year.

Michael Balan: All of that can be seen by the traffic growth that we put up I mean, we continue to see.

Michael Balan: Some negative mix in the alcohol category I think thats more of an industry behavior.

Michael Balan: Then anything directly related to the Texas roadhouse, but other than that I think we continue to see gas trading into us from fast casual or other casual diners. Some of those are probably going more towards the value side of our menu that six ounce sirloin.

Michael Balan: And the other.

Michael Balan: Lower priced items, and maybe they're not they're getting a soft beverage instead of an alcoholic beverage, but we feel very happy with the consumer right now.

Michael Balan: Okay.

Speaker Change: Fantastic. Thank you very much.

Peter Saleh: Your next question comes from the line of Peter Saleh from BTIG. Your line is open. Great, thanks for taking the question. I didn't want to come back to the conversation around commodities.

Speaker Change: Your next question comes from the lineup Peter Saleh from <unk>. Your line is open.

Peter Saleh: Great. Thanks for taking the question I didn't want to come back to the conversation around the commodities.

Peter Saleh: You you've reduced your outlook or at least the inflation outlook just slightly I assume you guys are mostly contracted on the first half of the year. So you've got some good visibility can you just elaborate a little bit on really what youre seeing there and what really caused you to kind of take that down, albeit modestly.

Michael Balin: Noted. Please see the complete disclaimer at https://sites.google.com or at www.google.com/policies/terms_of_use.asp?ie=UTF-8. Yeah, hey, Peter, it's Michael. It really had to do with, you're right, the first half of the year, what we were seeing, you know, in the first quarter, and some of the expectation of what will continue the next several months. And we do think that tightening really starts to have a bigger financial impact on the industry in the back half of the year. So the change was largely because of, you know, the beef outlook in the earlier months. You are correct, we have a good amount of our beef and our commodities locked in for the first quarter. It becomes a smaller percentage as we move further out, for competitive reasons. I'm probably not going to get into much more detail as to what percent locked.

Peter Saleh: Yeah, Hey, Peter it's Michael.

Michael Balan: Really it had to do with you are right. The first half of the year, what we what we were seeing.

Michael Balan: In the first quarter and some of the expectation.

Michael Balan: What we will continue the next several months and we do them think that tightening really start to have a bigger financial impact on the industry in the back half of the year or so.

Michael Balan: The change was largely because of the beef outlook in the earlier months you are correct we have a.

Michael Balan: Certainly in the first quarter and a good amount of our beef and our commodities locked it becomes a smaller percentage as we move further out for competitive reasons, probably not going to get into much more detail as to what percent.

Chris Monroe: But, again, you know, our beef experts are picking and choosing their moments as to when to lock in and when it's better to be on a formula basis. And Peter, this is Chris. I'll just add that I talked last quarter about the other part of our basket is helping to offset beef inflation. That's continuing.

Michael Balan: <unk>, but but again, our beef exports are picking and choosing their moments Astra window locked in and when it's better to be on a formula basis and Peter This is Chris I'll, just add I talked last quarter about the other part of our basket is helping to offset the beef inflation. That's continuing so we're certainly seeing that.

Chris Monroe: So we're certainly seeing that. But everything Michael just told you about our situation with beef is continuing. Thank you. And then just on the CapEx, I know $340 to $350 million. I recognize that is obviously much higher than it was several years ago. Can you just help us out in terms of, you know... What's really changed over the past couple years?

But everything Michael just told you about the our situation with beef is continuing.

Speaker Change: Great. Thank you and then just on the Capex I know $3 40 to $3 50 million I recognize that is obviously much higher than it was several years ago can you just help us out in terms of what what's really changed over the past couple of years I know you said, you're the restaurants are.

Peter Saleh: I know you said the restaurants are a little bit larger, so that's adding some more to the expense. Are you also doing any bump-outs this year or any other renovations that we should be aware of that are kind of driving that number that high? Yeah, hey Peter, it's Michael.

Speaker Change: A little bit larger so that's adding.

Speaker Change: Some more to the expense are you also doing any bump outs this year or any other renovations that we should be aware of that are kind of driving that number that high.

Speaker Change: Yeah, Hey, Peter It's Michael I mean, we certainly will be doing bump outs like we have done in past years and other remodels those higher numbers really a reflection of the inflation that's.

Michael Balin: I mean, we certainly, you know, we'll be doing bump outs like, you know, we have done in past years and other remodels. Those higher numbers are really a reflection of, you know, the inflation that, you know, that equipment and, you know, labor have seen to get work done over the last several years. You know, coupled with, we're now an older base of restaurants than we were before, and we're busier than we've ever been. So we have equipment that needs, you know, to be replaced. And, you know, getting work done, whether it be building a new restaurant or bumping out an existing restaurant costs more than it did in the past. So that's really what has driven those costs higher.

Michael Balan: That equipment.

Michael Balan: Labor has seemed to get work done over the last several years.

Michael Balan: Coupled with where we're at.

Michael Balan: Now on older.

Michael Balan: Our base of restaurants than we than we were before and we're busier than we've ever been so we have equipment that needs to be replaced.

And.

Michael Balan: Getting work done whether it be building, a new restaurant or.

Michael Balan: Bumping out an existing restaurant cost more than than it did in the past. So that's really what has.

Michael Balan: Driven those costs higher yes, the only thing I would add to that again, it's Chris the only thing I would add to that is our investment and some technology like.

David E. Tarantino: Yeah, and the only thing I would add to that, again, is Chris. The only thing I would add to that is our investment in some technology, like Jerry was talking about the 200 restaurants. We're going to put digital kitchens in, so that'll add as well. But those are all, you know, investments we feel really good about paying off in the future. Thank you very much. Your next question comes from a line by David Tarantino from Baird. Your line is open. Hi, good afternoon.

Speaker Change: Jerry was talking about the 200 restaurants, we're going to put digital kitchen, and so that that will add as well, but those are all investments we feel really good about paying off in the future.

Speaker Change: Thank you very much.

Speaker Change: Your next question comes from the line of David Tarantino from Baird. Your line is open.

David E. Tarantino: Hi, good afternoon.

Jerry Morgan: I have a couple of questions about pricing, philosophy, and the Margin Outlook. First, you know, with the price increase you're planning in March, does look like total price, taking this year's... pretty closely matched up with inflation. You know, I think in the past... perhaps on.

David E. Tarantino: A couple of questions about the pricing.

David E. Tarantino: <unk> philosophy, and the margin outlook. So I guess first with the price increase you're planning and March.

David E. Tarantino: Does look like the total pricing that you're taking this year is going to be pretty closely matched up with inflation and you know I think in the past.

David E. Tarantino: Our philosophy has been to perhaps under price versus inflation, so do I have that right.

Michael Balin: So, you know, do I have that right? A change in your philosophy on how you're managing margins. Well, I think, you know, we have always taken a conservative approach and how we look at it throughout the country in maintaining value in our menu.

David E. Tarantino: And then if so is this a change in your philosophy on how you are managing margins.

David E. Tarantino: And going forward.

David E. Tarantino: Star.

Star: Well I think you know we have always taken a conservative approach in how we look at it throughout the country and maintaining value in our menu. So when we're not when we gathered with our operators really talk over about mandated wage increases and different things that will affect their business, we still want to have a competitive mindset.

Jerry Morgan: So when we gather with our operators and really talk about mandated wage increases and different things that will affect their business, we still want to have a competitive mindset as we go into keeping our value built into our menu and making sure that we're also keeping value for our consumers in place. Michael can talk a little bit about the numbers from that. Yeah, I think, David, what I would mention is, you know, it definitely is not a change in our philosophy. We've always said, you know, we want to be pricing for the structural component of inflation, which is largely wage inflation.

As we go into keeping our value built into our menu and making sure that we're also keeping value for our consumer in place Michael can talk to a little bit on the numbers from that.

Michael Balan: I think David what I would mention is.

Michael Balan: It definitely has not changed in our philosophy, we've always said, we want to be pricing for the structural component of inflation, which is largely.

Michael Balin: That doesn't mean that we're always pricing for all of it as soon as we feel it. So some of the pricing that we are taking now is to offset wage pressures that we have felt over the last several years and, you know, as we continue to manage that labor line, both through productivity efforts and the reality of the higher wage rates that we're paying. So definitely not a change in philosophy, still going from a bottom-up approach of talking to each operator and making sure they are absolutely in alignment with what we're doing. And then on the commodity outlook, stepping up in the second half. Does that sort of give a.. bill it into next year?

Michael Balan: Wage inflation, but that doesn't mean that we're always pricing for all of it as soon as we're feeling it. So some of the pricing that we're taking now is to offset wage pressures that we have felt over the last several years as we continue to manage that that labor line, both through our productivity efforts, but the reality.

Michael Balan: The higher wage rates that we're paying so definitely not a change in philosophy still going from a bottom up bottom up approach of talking to each operator, and making sure. They are.

Speaker Change: Absolutely in alignment with what we're doing.

Speaker Change: Great.

Speaker Change: Helpful explanation.

Speaker Change: On the commodity outlook stepping up in the second half is that.

Speaker Change: Does that sort of give us.

Speaker Change: Some visibility into next year and that maybe the cost or whatever commodity costs are accelerating I assume it's Steve.

Michael Balin: The Bulletproof Executive 2013, We have a carryover impact from that next year. Hey, David, it's Michael. I would say it's a little early for us to give you any thoughts on what this could mean for 2025. But, you know, the industry reports out there, obviously, you're calling for tighter supply into 24. And, as yet, not hearing, you know, much relief coming in the future, but it's a little early for us to be able to give you any true thoughts about 2025.

Speaker Change: Could you kind of have a carryover impact from that as you look into next year I'm, just trying to understand how to think about that.

Speaker Change: Hey, David It's Michael I would say, it's a little early for us to give you any thoughts on what this could mean for for 2025.

Michael Balan: The industry reports out there, obviously, you're calling for tighter supply into 'twenty, four and as of yet not hearing.

Michael Balan: Much relief coming in the future, but a little early for us to be able to give you any thoughts.

Michael Balan: <unk> talked about 2025.

David E. Tarantino: Thank you. Your next question comes from the line of Dennis Geiger from UBS. Your line is open.

Speaker Change: Great. Thank you.

Speaker Change: Your next question comes from the line of Dennis Geiger from UBS. Your line is open.

Dennis Geiger: Great I appreciate it and wondering if you could talk a little bit more.

Dennis Geiger: Great. Appreciate it. Wondering if you could talk a little bit more about the labor situation as it relates to labor relative to traffic for 24. Does that look more like the historical relationship?

Dennis Geiger: <unk> sort of thinking about the labor.

Dennis Geiger: Situation as it relates to labor relative to traffic for 24 does that look more like the historical relationship might you look better than.

Chris Monroe: Might you look better than the historical relationship? Maybe if you could just kind of touch on what that looks like and perhaps how digital kitchens and tech more broadly may be able to help out from that perspective. Hey, Dennis, it's Chris.

Dennis Geiger: And then the historical relationship maybe if you could just kind of touch on on what that looks like and perhaps how digital kitchens and tech more broadly maybe able to help out from that perspective.

Dennis Geiger: Hey, Dennis it's Chris I'll start I mean, I think we were really encouraged in the fourth quarter, our labor hours grew less than 50% of traffic growth and that was it.

Chris Monroe: Yeah, I'll start. I think we were really encouraged in the fourth quarter; our labor hours grew less than 50% of traffic growth. And that was, you know, it's been, that's been difficult to achieve since since the pandemic.

Speaker Change: Ben that's been difficult to achieve since since the pandemic and so.

Jerry Morgan: And so there's a focus by our operators on that line item. And the fact that we have employees, you know, staying with us, our turnover is at or better than it was pre-COVID. And all of those things, you know, provide some encouragement on that particular line item. But But Again, to have achieved it in the fourth quarter, we're projecting that we can do it again in the first quarter.

There is a focus by our operators on that line item and the fact that we have employees.

Speaker Change: Staying with us our turnover is at or better than it was pre.

Speaker Change: Pre COVID-19 and all of those things.

Speaker Change: Provide some encouragement on that particular line item, but again to have achieved that in the fourth quarter. We're projecting that we can do it again in the first quarter.

Jerry Morgan: And so I think all that's very positive. And I'll speak to the digital kitchen, Jerry. You know, we've opened all of our new stores this year with a digital kitchen, we converted 20, and we've really been talking strategically about how to get the whole roadhouse concept on that digital kitchen format because of the many benefits that we see, not only for the excitement in the kitchen itself, but even the ability to track our cook times and so many features that we believe will enhance our experience for our employees in So, the digital kitchen is a huge commitment.

Speaker Change: And so I think all of that's very positive.

Speaker Change: And I'll speak to the digital kitchen as Gerry.

Speaker Change: We've opened we can all of our new stores opened with the digital kitchen. This year, we converted 20, and we've really been talking strategically about how to get the whole roadhouse concept on that digital kitchen format because of the many benefits that that we see not only for the commotion in the kitchen itself, but.

Speaker Change: The ability to track our Cook times and so many features that we believe will enhance our experience for our employees in the back of the house and it will impact in a positive manner.

Speaker Change: Cook times for our front of the house table turn so the digital kitchen is a huge commitment the feedback from our operators has been incredible and the demand and desire is there. So we did and the number is a pretty big number for us, but we've got a great game plan and I think strategically we're going to execute at a high level to do that all of jaggers in Bubbas aura.

Jerry Morgan: The feedback from our operators has been incredible, and the demand and desire are there. And, you know, the number is a pretty big number for us, but we've got a great game plan, and I think, strategically, we're going to execute at a high level to do that. All of Jagger's and Bubba's already on the digital kitchen format.

On the digital kitchen format format.

Sara Harkavy Senatore: Great, thanks guys, and congratulations again on the results. Thank you so much. Your next question comes from a line from Sara Senatore from Bank of America. Your line is open. Great. Thank you.

Speaker Change: Great. Thanks, guys and congrats again on the results.

Speaker Change: Thank you so much.

Speaker Change: Your next question comes from the line of Sara Senatore from Bank of America. Your line is open.

Sara Harkavy Senatore: Thank you.

Sara Harkavy Senatore: Two clarifications. The first is on the labor a point you made.

Michael Balin: The first is on the labor point, you know, you made the point that you grow hours less than traffic. I guess I was under the impression that maybe, as we think about fiscal 23, you were kind of getting to full staffing over the course of the year across most of the restaurants. And so while your wage inflation maybe was highest in the first half, you know, maybe your hours were not.

Sara Harkavy Senatore: The point that you grow hours last week, and then traffic I guess I was under the impression that maybe as we think about fiscal 'twenty three.

Sara Harkavy Senatore: You were kind of getting to full staffing over the course of the year across most of the restaurants. So while your wage inflation, maybe with highest in the first half and maybe your hours or not and so I was just curious if that.

Michael Balin: And so I was just curious if there is sort of an opportunity in the second half of this year to maybe have more labor leverage from that perspective, even if wage inflation is perhaps more moderate, and whether the, you know, the technology may also contribute to that. So that was the first clarification, just sort of the staffing approach through 2023. Yeah, hey Sara, it's Michael.

Sara Harkavy Senatore: If there is sort of an opportunity in the second half of this year can maybe have more lay.

Sara Harkavy Senatore: Labor leverage from that perspective, even if wage inflation is perhaps more moderate.

Sara Harkavy Senatore: The technology May also contribute to that so that that was the first clarification just staffing a pressure through 2023.

Sara Harkavy Senatore: Yeah, Hi, Sarah it's Michael Yeah, I do think what Chris talked about.

Michael Balin: Yeah, I do think what Chris talked about, you know, that those labor hours growing at less than traffic is something that could certainly continue, you know, into, you know, into Q2 and into Q3 and, you know, into the fourth quarter, as well. Our operators are focused on that productivity, people are staying around longer. So that is certainly an expectation or something that we are, you know, going to be working on all year long, getting that better productivity in labor hours. Great Okay, thank you.

Michael Balan: That those labor hours growing at less than traffic or something.

Michael Balan: That could certainly continue.

Michael Balan: It into <unk>.

Michael Balan: Into Q2 and into Q3.

Michael Balan: Into the fourth quarter as well.

Michael Balan: Our operators are focused on that productivity people are staying around longer so that is certainly in there.

Michael Balan: Expectations or something that we are going to be working on.

Michael Balan: All year long and getting that better productivity.

Michael Balan: The labor hours.

Michael Balan: Great. Okay. Thank you and then the other question was about your mix has been very consistent you have there just modestly negative and even though we seem to be keep hearing that the industry is getting more focused on value. So are you seeing anything that would suggest that you know your relative value proposition of that gap is narrowing our or.

Jerry Morgan: And then the question was about, you know, your mix has been very consistent, you know, it's just modestly negative, even though, you know, we seem to keep hearing that the industry is getting more focused on value. So are you seeing anything that would suggest that, you know, your relative value proposition is the gap narrowing or, or, you know, people are making different decisions just because it doesn't appear to be showing up in your comps at all? Curious about your thoughts on that. Yeah, I think just like to your point, it's not showing up glaringly for us either.

Michael Balan: People are making different decisions just because it doesn't appear to be showing up in your ear comps at all but curious on your thoughts on that.

Michael Balan: Yes, I think just like to your point, it's not showing up glaringly for us either I think our value has always been built into the menu and the consumer feels very good about our offerings and from that standpoint, whether it would be our steak or chicken or all of our offerings. Our country dinner. So we feel very good about where we're placed but we don't.

David Palmer: I think our value has always been built into the menu, and the consumer feels very good about our offerings. And, from that standpoint, whether it be our steak or our chicken, or all of our offerings, our country dinner. So, you know, we feel very good about where we're placed, but we don't see anything to indicate that there's a lot of movement within that menu pricing. Thank you. Your next question comes from the line of David Palmer from Evercore ISI. Your line is open. Thank you and have an amazing quarter. Thank you so much. I wanted to ask you something about KDS.

Michael Balan: Don't see anything to indicate that there is a lot of movement within that menu pricing.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of David Palmer from Evercore ISI. Your line is open.

David Palmer: Thank you.

David Palmer: Amazing quarter to date comps are really amazing. Thank you so much.

David Palmer: I wanted to ask you about Katy Katy, Yes, you just comment a little bit about some of the things that it does for you and the good news I guess is that you're not you don't have to be pioneers on <unk> you've seen it in some of your brands already.

Jerry Morgan: You just commented a little bit about some of the things that it does for you. The good news, I guess, is that you don't have to be pioneers on KDS. You've seen it in some of your brands already. You know, can you maybe give us a sense of what it can do to the metrics that the Wall Street nerds would be following, you know, comps, margins, things like that? Maybe even this is something that will help you with that labor leverage where you might be able to add less hours. The table turns, and you make the shift work better. I don't know, but are there any metrics that you could share about what it does for you?

David Palmer: Can you maybe give us a sense of what it can do to the metrics that that the wall Street nerds would be following comps margins things like that maybe even this is something that will help you on that labor leverage and where you might be able to add less hours because of table turns and you make the shift work better I don't know.

David Palmer: But is there any metrics that you could share what it does for you.

Speaker Change: Well, David Thanks for I think fitness Jerry I.

Jerry Morgan: Well, David, thanks for your, Jerry and I think that the benefit for us is really about the efficiency of the overall kitchen. And the way that the digital kitchen organizes through the screens versus through the tick, tick tickets creates a lot less chaos, I guess you could say. There's no doubt we can track our cook times. There are some real positives from that side of it, as we've already seen. And again, we're only 40 or 50 in, but we are very committed. Every, every indicator that we have, and Michael will talk to your Wall Street nerd thing. But I will just talk to you as a kitchen guy. What I see in those kitchens is communication, consistency, and just organizing it so people don't stress out when they have a whole bunch of tickets in front of them, and all of that.

Speaker Change: Benefit for US is really about the efficiency of the overall kitchen and the way that the digital kitchen organizers through the screens versus through the Tic Tac tickets creates a lot less chaos I guess you could say there is no doubt we can track our Cook times are some real positives from that side of it as we've already seen and again.

Speaker Change: We're only 40 or 50, and but we are very committed and every every indicator that we have in and Michael will talk to your Wall Street Nerd thing, but I will just talk to you as a kitchen guy.

Speaker Change: I see in those kitchens is communication a consistency.

Speaker Change: It just organize it so people don't stress out when you've got a whole bunch of tickets in front of you and all of that and we can clearly monitor how long our Cook times are so that will be a big win for us going forward and then I think Michael has a couple of comments.

Michael Balin: And we can clearly monitor how long our cook times are, so that will be a big win for us going forward. And then Michael has a couple of comments.

Michael Balin: Yeah, thanks, Jerry. Yeah, I do think again that a calmer kitchen does lead to a happier roadie who is less likely to seek other employment. So maybe your turnover, you know, improves because of that, and you're getting you keep that efficient, productive employee for longer. But as far as what it may do to the front of the house, I think we have found that the digital kitchen does time the food out a little bit better. So maybe those salads get get out, you know, as an appetizer to the guests a little bit quicker.

Michael Balan: Thanks, Jerry Yes, I do think again that calmer kitchen does lead to a happier roadie, who has been less likely to seek other employment. So maybe your turnover.

Michael Balan: Improves because of that and you're getting you're keeping that efficient productive employee for a longer.

Michael Balan: But as far as what it may do to the front of the house.

Thank you we have found that the digital kitchen does time, the food out a little bit better so maybe those salads get out.

Michael Balan: An appetizer to the guests a little bit quicker.

Michael Balin: And, you know, the entrees are getting out there a little bit quicker. So you couple that benefit with our, you know, roadhouse pay or pay at the table system, which is speeding up the check and change portion of the dining experience. And you know, then maybe you, at the guest's discretion, you have shortened the table turn time, which allows you to quote a shorter wait time to that next guest.

Michael Balan: The entrees are getting out there a little bit quicker if you couple that benefit with our.

Michael Balan: Roadhouse pay or pay at the table system, which is speeding up the check and change portion of the.

Michael Balan: The dining experience and then maybe you're at the guests discretion you have shortened the table turn time, and which allows you to quote a shorter lead time to that next gas. So by the end of the night, maybe somebody who was previously being told they can be sat at a 30 is now being told <unk>.

Jerry Morgan: So by the end of the night, maybe somebody who was previously being told they could be sat at 830 is now being told, you know, 810 or 815. And that may make all the difference in their willingness to stay and, and us getting another table turned out of out, you know, in the restaurant. Is this something that you'll ramp up? I know you'll wait.

Michael Balan: Generate 15 and that May make all the difference and their willingness to stay in and you'll us getting another table turn out of.

Michael Balan: In the restaurant.

Michael Balan: And is this something that you'll ramp the deployment of I know you wait for it to be pulled but I would imagine at this point that it's being pulled heavily I mean, how fast can you roll. These out can this be done by the end of 2025 for example.

Jerry Morgan: Thank you. Thank you. Please see the complete disclaimer at https://sites.google.com or at https://www.google.com/policies.

Michael Balan: Sense of that.

Operator: Well, I think we're going to try to get through this year and see how these 200 go. And then, obviously, the intention is to get the whole concept done. I think it might take a little longer than that, but we want to do it strategically and we want to execute at a high level for our partners. So we'll be as fast as we possibly can because we're committed to it and believe in it, but I don't want to put a date on it yet. Thank you very much.

Speaker Change: Well I think we're going to try to get through this year and see how these 200 go and then obviously the intention is to get the whole concept done I think it might take a little longer than that but we want to do it strategically and we want to execute at a high level for our partner so.

Speaker Change: We will be as fast as we possibly can because we're committed to it and believe in it but I don't want to put a date on it yet.

Speaker Change: Thank you very much.

Jeff Farmer: Thank you. Your next question comes from a line of Jeff Farmer from Gordon-Haskett. Your line is open.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Jeff Farmer from Gordon Haskett. Your line is open. Thank you.

Jeff Farmer: Thank you. Just some quick modeling follow-ups. Assuming the 2.2% menu pricing takes place in March, what would Q1 and Q2 menu prices be? Sure. Hey Jeff, it's Michael.

Jeff Farmer: Just some quick modeling follow ups.

Jeff Farmer: Assuming the two 2% and the new pricing takes place in March what would Q1 and Q2 menu pricing be.

Jeff Farmer: Sure Hey, Jeff, It's Michael again that that pricing will go into effect, our first day of our second quarter. So.

Michael Balin: And again, that pricing will go into effect on the first day of our second quarter. So for the first quarter, you won't get any benefit from it, but we'll have between 4.8% and 4.9% pricing in Q1. And we'll have basically the same thing in Q2 and Q3, about 4.8% to 4.9% for both those quarters. And obviously, if we didn't do anything, you know, in the back half of the year in the fourth quarter, we would only have 2.2% in Q4, but we'll reevaluate what's appropriate as we get later into the year of what we may want to add on to that. Thank you. And now the weather impact on the quarter to date, same for sales in Q1. Did you share that?

For the first quarter, you won't get any benefit from it but we will have between four eight and four 9% pricing in Q1, and we'll have basically the same thing in Q2 and Q3 by four 8% to four 9% for both those quarters and obviously, if we didn't do anything.

Jeff Farmer: In the back half of the year in the fourth quarter, we would only have the two 2% in Q4, but we'll reevaluate what's appropriate.

Jeff Farmer: As we get later into the year of what we may want to add onto that.

Speaker Change: Thank you and then now weather impact on the quarter to date same store sales in the Q1 did you share that.

Chris Monroe: Yeah, that's Chris, Jeff. You know, January we had, and we talked about that in the prepared remarks, but January had two really tough weeks, and it impacted the guest counts by about two and a half percent. And so, if you take that, extrapolate it into the first 50 days, we were down about one percent. So, the three percent growth that Michael shared with you, if you take that weather out, would have been four. So, there was a lot to be proud of in those first 50 days, and our operators, you know, they slogged through those two very difficult weeks and took care of the customers that were able to show up and serve them well. But it was a great first 50 days in spite of those two weeks. It definitely was.

Speaker Change: Yes.

Chris Jeff: It's Chris Jeff.

Chris: January we had and.

Chris: We talked about that in the prepared remarks, but January had too.

Chris: Really tough weeks.

Chris: And it impacted.

Chris: Guest counts by about 2.5%.

Chris: And so if you take that.

Strap-laid it into the first 50 days, we were down about 1%. So the 3% growth that Michael shared with you. If you take that weather out would have been four.

So there was a lot to be proud of in those first 50 days and our operators.

Chris: They slogged through those two those two very difficult weeks.

Chris: And took care of the customers that we're able to show up in.

Chris: And serve them well, but it was a great first 50 days in spite of those two weeks.

Jeff Farmer: And just last one for me, the Q4 check, I think you shared, was 4.8 percent, but just a quick breakdown of pricing and mix for the Q4. Hey, Jeff, we had 5.5% pricing in Q4, so therefore, we had about 70 basis points of negative mix, giving us that check up to 4.8. Thank you. Pass it on.

Chris: Well, it's definitely and just last one from me Q4, Chuck I think you shared was four 8%, but just some quick.

Speaker Change: Breakdown of pricing and mix for Q4.

Speaker Change: Yes.

Chuck: Jeff we haven't five 5% pricing in Q4. So therefore, we added about 70 basis points of negative mix, giving us that checkup for eight alright. Thank you pass it on.

Lauren Silberman: Your next question comes from the line of Lauren Silberman from Deutsche Bank. Your line is open. Hi, thanks, and congratulations on the results.

Chuck: Your next question comes from the line of Lauren Silberman from Deutsche Bank. Your line is open.

Lauren Silberman: Hi, Thanks, and congrats on the results I wanted to ask.

Michael Balin: I wanted to ask, first, on the other op-ed. It's been growing steadily, even if you exclude some of the one-time items that you've talked about. Can you just..., help us understand how to think about OPEX growth or on the other OPEX side in 24 hours? Hey, Lauren, it's Michael.

Lauren Silberman: On the other opex, it's been growing pretty steadily even if you switch.

Lauren Silberman: Some of the onetime items that you talked about can you.

Lauren Silberman: Help us understand how to think about opex growth or on the other opex side in 'twenty four.

Lauren Silberman: Yeah, Hey, Lauren it's Michael Thanks for the question you are right that those even though we did get some <unk> been getting some leverage overall on that line. It is the underlying pressure has remained and.

Michael Balin: Thanks for the question. You are right that even though we did get some, you know, been getting some leverage, you know, overall on that line, it is the underlying pressure, you know, has remained. And, you know, there are a lot of inflationary items in there, a lot of services in there, you know, but your repair and maintenance cost is a big one, on top of the general liability, insurance costs, you know, even absent some of the reserve adjustments we've had. So moving into 2024, I do think that on dollars per store week, you will continue to see an increase, but, you know, it should not be at the rate that we have seen probably, you probably start a little bit higher in Q1, but mid single-digit growth in those dollars per store week and then maybe coming down a little bit from that, as you move, you know, through the year. That's obviously without knowing what other kinds of reserve adjustments Great, very helpful.

Michael Balan: There are a lot of inflationary items and there are a lot of services in there.

Michael Balan: But your repair and maintenance costs as well as a big one on top of the general liability.

Michael Balan: Insurance costs.

Michael Balan: Even absent some of the reserve adjustments we've had so moving into 2024 I do think on a dollars per store week, you will continue to see an increase but it should not be at the rate that you that we have seen probably you probably start.

Michael Balan: Little bit higher in Q1, but but mid single digit.

Michael Balan: Growth in those dollars per store week in and then maybe coming down a little bit from that as you move through the year, that's obviously without knowing what other kinds of.

Michael Balan: Reserve adjustments, we may have or not have but.

Michael Balan: What we know right now that would be my expectation.

Michael Balan: Great.

Michael Balan: Paul.

Chris Monroe: On the to-go side, you saw sales, www.thevenusproject.com Yeah, I'll start off. I just really believe that it's our ability to execute full dining rooms and continue to keep the level of service through our to-go experience. So I think as our operators have gotten used to that volume at the high level that we are at, it has allowed us to continue to take more orders and be more available to our guests. Yeah, this is Chris. I'll just add on. I mean, I know you watch us every quarter, but you saw that, you know, it sort of spiked during the pandemic, then it began to come down over time, and now it is kind of coming back up again.

Paul: On the to go side, you saw sales per week accelerate it looks like throughout the year in terms of growth can you provide a little bit more color on what you're seeing on that side.

Paul: And why are you seeing I guess positive growth at least over the last three quarters now.

Speaker Change: Yeah I'll start off.

Speaker Change: Just really believed that it is our ability to execute full dining rooms and continue to keep the level of service through our to go experience. So I think as our operators have gotten used to that volume at the high level that we are at it has allowed us to continue to take more orders and be more available to our guests.

Speaker Change: Yes. This is Chris I'll, just add on I mean, and I know you watch us every quarter, but you saw that.

Chris: Sort of spiked during the pandemic than it began to come down over time and now it is kind of coming back up again. So this is just to Jerry's point, our folks know how to execute it and its definitely a popular thing for our guests. So we're looking forward to continuing to.

Chris Monroe: So this is just to Jerry's point; our folks know how to do it, and it's definitely a popular thing for our guests. So we're looking forward to continuing to see that, you know, do well over time. Great, and this last one from me, can you just clarify, I appreciate the color and all the quarter to date, what you're running in terms of comps as the weather passes? The Bulletproof Executive 2022. All rights reserved.

Chris: To see that do well over time.

Speaker Change: Great and just last one from me can you clarify and I. Appreciate it appreciate the color and all the quarter to date, what youre running in terms of comp.

Speaker Change: The weather.

Speaker Change: Just to clarify.

Speaker Change: Yes, Sir I wanted to Michael.

Lauren Silberman: Sir Lorna, it's Michael. You know, within that 50 days, I guess I can tell you our January comp was 4.2%. And then the last, you know, three weeks, plus a day, was a little over 10%. I appreciate all the color.

Speaker Change: So within that 50 days I guess I can tell you our our January comp was.

Speaker Change: Four 2% and then the last.

Speaker Change: Three weeks.

Speaker Change: Plus a day was.

Speaker Change: A little over 10%.

Speaker Change: I appreciate all the color.

Andy Barish: Your next question comes from the line of Andy Barish from Jeffreys. Your line is open. Hey, guys. Most of my stuff has been asked for. It could be quantified in the four Q sort of the holiday benefit of the Christmas shift and, The Lenten season is upon us and started a week earlier for 1Q. Any commentary around that for the rest of the quarter or is it kind of minor? Hey, Andy. How are you doing, bud?

Speaker Change: Your next question comes from the line of Andy Barish from Jefferies. Your line is open.

Andy Barish: Hey, guys.

Andy Barish: Most of my stuff has been asked.

Andy Barish: It could be quantifying the <unk> sort of a holiday benefit Chris may shift and then.

Andy Barish: The Lenten season is upon us instead of a week earlier or <unk>.

Andy Barish: Any commentary around that for the rest of the quarter or is it or is it kind of minor.

Speaker Change: Hey, Andy how are you doing bud listen.

Jerry Morgan: Listen, I can, you know, the first quarter, obviously, we just had Valentine's Day yesterday, which gives us a great indication that we're off and running strong and solid. So that's hard to, you know, all the other things that you asked about. I do know we have some promotional stuff going on at Jaggers, but I think right now, without the weather, the momentum is very solid into the first quarter. Yeah, and Andy, it's Michael.

Speaker Change: No.

Andy Barish: First quarter, obviously, we just had Valentine's day yesterday, which gives us a great indication that we're often Ryan saw strong and solid so thats hard to all the other things that you asked about I do it no. We have some promotional stuff going on at Jaggers, but I think right now without the weather the momentum is very solid into the first quarter.

Andy Barish: Yes, and Andy It's Michael I don't know if I have any numbers at my fingertips our.

Michael Balin: I don't know if I have any numbers at my fingertips regarding the, you know, benefits around the holidays, but we definitely saw some benefits in that timeframe, but I'm not going to be able to put a number on that right now. But again, the numbers we've been putting up, you know, go beyond just a couple days. With a calendar shift, we saw strain for quite a while. understood. And then just circling back on the CapEx with, you know, with the 200 digital kitchen conversions coming in but total CapEx staying the same, what's the offset there? Were there some idiosyncratic things that kind of hit last year, or how should we think about that?

Andy Barish: Regarding the benefits around the holidays, we definitely.

Michael Balan: Saw some benefit.

Michael Balan: In that timeframe, but they're not going to be able to put a number on that right now but again.

Michael Balan: The numbers, we've been putting up Youll go beyond just a couple of days with the calendar shift we saw stream for quite a while.

Michael Balan: Understood.

Michael Balan: Then.

Michael Balan: Just circling back on the Capex with.

Michael Balan: With the 200 digital kitchen conversions coming in but total capex stayed the same.

Michael Balan: Whats the offset there where there is some.

Michael Balan: Idiosyncratic things that kind of hit last year or how should we think about that.

Andy Barish: Staying flat, although clearly spending some more capital on the KBS. Yeah, Andy, without getting too much into the details, it's fair to say that our initial estimate that we put out there gave us some room, you know, some wiggle room for other projects and things to come in. And, you know, the acceleration of digital kitchens has filled some of that space. So, again, you know, we left ourselves some room for that. So, it was not that we did this and had to replace it with, you know, take something else out. Yeah, and I'll just, Andy, as Chris, I'll just add to that. I mean, it costs about $45,000 a store to put the KDS in.

Michael Balan: Flat although.

Michael Balan: <unk> spending some more capital.

Michael Balan: <unk>.

Michael Balan: On the KBS.

Speaker Change: Yeah, Andy without getting too much into the details it's fair to say that our initial.

Andy Barish: We estimate that we put out there you gave us some room.

Andy Barish: Some some wiggle room for other projects and things to come in there and the acceleration of the digital kitchens filled some of that space. So.

Andy Barish: Again.

Speaker Change: We left ourselves some room for for that so it was not that we did this and had to replace it with it take something else out, yes, I'll, just and as Chris I'll just add into that I mean, it's about $45000 of store to put the <unk> and so you are talking about roughly $9 million and on that big of a budget.

Chris Monroe: And so, you're talking about roughly $9 million. And on that big of a budget, you know, we can find a way to get it in there. Great. I appreciate the detail.

Chris: We can find we can find a way to get it in there.

Chris: Yeah.

Speaker Change: Great appreciate the detail. Thank you.

Andy Barish: Thank you. Thank you. Our next question comes from a line from Crystal Co. in Stiefel.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Chris O'connell from Stifel. Your line is open.

Crystal Co.: Your line is open. Hey, thanks. Good afternoon, guys. Jerry, are you seeing any signs that a number of your restaurants may be getting closer to capacity during peak hours? I was wondering if you're seeing a need for additional bump-outs or maybe any other approach that could increase sales head... Yeah, Chris, thanks for that. I think the bump-outs and we're doing cooler expansions, which really, that's part of what the costs are, is giving these folks that are really serving a lot of guests more storage in the back to be able to get more food in their building.

Chris O'connell: Hey, Thanks, good afternoon guys.

Chris O'connell: Jerry are you seeing any signs that are growing.

Chris O'connell: A number of your restaurants, maybe getting closer to capacity during peak hours.

Chris O'connell: I'm, just wondering if youre seeing a need for additional bump outs or maybe any other approach that could increase sales headroom.

Jerry: Yes, Chris Thanks for the I think the bump outs and we're doing cooler expansion, which really that's part of what the costs are as giving these folks that are really serving a lot of guests is really more storage in the back to be able to get more food and theyre building. The other the upside to even at our elevated average.

Jerry Morgan: The other upside to even at our elevated average unit volume of over seven and a half million, you know, we've got a large group of restaurants that are doing significantly more than that. And so, as I've said in the past, they're the ones leading the way that shows us that even our average unit volumes can increase year after year if we continue to execute and do the things that our operators need to be able to get more people through their buildings. And there's definitely a demand for them there. We just got to continue to execute more people and more product, and we'll be just fine. And Chris, this is Michael.

Jerry: Unit volume it at over $7 5 million.

Jerry: Got a large group of restaurants that are doing significantly more than that and so as I've said in the past they are the ones, leading the way that show us that even our average unit volumes can increase year. After year. If we continue to execute and do the things that our operators need to be able to get more people through their building and there is definitely a.

Jerry: Demand there, we just got to continue to execute more people more product in and we will be just fine and Chris. This is Michael I, just want to add on to what Gerry said, which which I think is quite impressive those highest volume restaurants are the ones that are above average are well above average continued to comp you'll add oriented.

Chris Monroe: I just want to add to what Jerry said, which I think is quite impressive. Those highest volume restaurants, you know, ones that are above average or well above average, continue to comp, you know, at or at least at the average, if not better than average, you know, and that certainly happened throughout 2023. So, we haven't seen those busiest restaurants come up against a wall as far as growth is concerned.

Michael Balan: At least at the average if not better than average.

Michael Balan: And that certainly happened throughout 2023, so we haven't seen those busiest restaurants.

Michael Balan: Come up against.

Michael Balin: So, that gives us quite a bit of confidence in even the room that our average stores have for future growth. And then, can you provide some additional color around... What unit economics you're targeting at Jaggers? And then maybe how many development commits that you have right now for Jack. Yeah, go ahead, Michael. Yeah. Chris, this is Michael again.

Michael Balan: Wall as far as growth so that gives us quite a bit of confidence for even our the room than our average stores have for future growth.

Speaker Change: That's impressive.

Speaker Change: Could you provide some additional color around unit.

Speaker Change: Unit economics, Youre targeting a jaggers and then maybe how many development commitments.

Speaker Change: That you have right now for jaggers.

Speaker Change: Yes go ahead, Michael this.

Speaker Change: This is Michael again, I would say, it's a little early for us to get into specifics on on returns clearly we have a couple of franchisees already who have opened stores and we'll be opening more stores. So.

Michael Balin: I would say it's a little early for us to get into specifics on returns. Clearly, we have a couple of franchisees already who have opened stores and will be opening more stores. So I don't want to put words in their mouths, but I would say they are pleased with what they are seeing, and there are continued conversations with future partners as well. So I'm not going to get into returns, either on the company side or the franchise side, but we are very pleased with what we are seeing and what we believe Jaguars can do going forward. Great. Thanks, guys. Thank you. Thanks, Chris. Your next question comes from the line of Andrew Strelzik from BMO. Your line is open. Hey, good afternoon. Thanks for taking the questions. I was hoping you could start, maybe by giving some color on Bubba's.

Michael Balan: I don't want to put words in their mouth, but I would say they are pleased with what they are seeing and there are continued conversations with future partners as well so not going to get into returns either on the company side or the franchise side, but we are very pleased with.

Michael Balan: What we are seeing and what we believe <unk> can do going forward.

Speaker Change: Great. Thanks, guys.

Speaker Change: Thank you thanks, Chris.

Speaker Change: Your next question comes from the line of Andrew <unk> from BMO. Your line is open.

Andrew: Hey, good afternoon, thanks for taking the questions.

Andrew: I was hoping you could start maybe by giving some color on Bob was I know you've done a lot of work on the brand over the last two years or so so where are you seeing progress or other areas that you'd be more work opportunities thoughts around where bubbles is today it would be great.

Andrew Strelzik: I know you've done a lot of work on the brand over the last two years or so. So, where are you seeing progress? Other areas that need more work, opportunities, thoughts around where Bubba's is today would be great. Yeah, thank you, Andrew. I feel really good about Bubba's.

Bob: Yes. Thank you Andrew are I feel really good about bubbles, we've put a lot of investment in the last couple of years not only on the on the people getting the right people the leaders.

Jerry Morgan: We've put a lot of investment in the last couple of years, not only in the people, getting the right people, the leaders, the support all the way around it. We've done some really solid structural parts of the building to keep the cost down, and we see our sales growing. So all of the indicators are that people are loving the food, the burgers, and the pizzas, and the energy that we have with our rock and roll. But I think the biggest thing is about leadership, having consistency, and the ability to execute, and people identifying who Bubba's 33 is.

Andrew: To support all the way around it we've done some.

Bob: What I think a really solid structural parts of the building to keep the cost down.

We see our sales growing so all of the indicators are that people are loving the food with the burgers and the pizza and the energy that we have with our rock 'n' roll in.

Bob: But I think the biggest thing is about having leadership, having consistency and our ability to execute and people identifying who bubbas 33 years. So all indicators are very positive and we're very happy with the continued progress of bubbles is making.

Jerry Morgan: So all the indicators are very positive, and we're very happy with the continued progress that Bubba's is making. That's great to hear. And then just following up on some of the commodity inflation or food inflation outlook, you noted the kind of more modest increases in the first half of the year and then a step up in the back half. Can you be a little more specific, you know, kind of either front half, back half or by quarter, kind of how you're expecting that to progress? Yeah, I mean, Andrew, it's Michael. I'd say, you know, Q1 is definitely kind of our expectation to be at the low point where you maybe are in the 2 to 3% inflation range, and then it grows from there. You know, and I don't necessarily have a view on the Q2, 3, and 4, that's dramatically different from each other.

Speaker Change: That's great to hear and then just following up on some of the.

Speaker Change: Commodity inflation food inflation outlook.

Speaker Change: Outlook, you noted the kind of more modest increases in the first half of the year and then a step up in the back half can you be a little more specific kind of either front half back half or by quarter kind of how youre expecting it to progress.

Speaker Change: Yes.

Speaker Change: Andrew It's Michael I'd say Q1 is definitely kind of our expectation to be at the low point, where you. Maybe you are in the 2% to 3% inflation range and then it grows from there.

Speaker Change: And I don't know necessarily.

Okay.

Michael Balan: Q2, three and four that's dramatically different than each other it is a stair step up certainly from probably Q2 into the back half, but that Q1 is really the.

Michael Balin: It is a stair step up, certainly from probably Q2 into the back half, but that Q1 is really the one that stands out as being a little bit lower. Okay, maybe I could just squeeze one more question on buybacks and your appetite there, you noted, you know, paying off the last bit of the debt there. You know, I know the CapEx is going to be up, but I'm just curious about your appetite for share repurchases at this point for 24. Yeah, Andrew, it's Chris.

Michael Balan: The one that stands out as being a little bit lower.

Speaker Change: Okay, and maybe if I could just squeeze one more.

Speaker Change: Question on buybacks and your appetite there you noted.

Speaker Change: Paying off the last bit of the debt there.

Speaker Change: No no. The capex is going to be up but I'm just curious your appetite for share repurchases at this point for 2004.

Speaker Change: Yes, Andrew it's Chris look our operating cash flow and our balance sheet, our major advantages for us and so we are going to continue to take this balanced approach over the long haul like we have.

Chris Monroe: Look, our operating cash flow and our balance sheet are major advantages for us, and so we are going to continue to take this balanced approach over the long haul as we have. And you saw the increase in the dividend that our board approved with Jerry and that we're happy to have that out there. And we'll look at we'll look at sharing purchases. Obviously, the first place we go is to think about, you know, bringing in the dilution.

Chris: You saw the increase to the dividend that our board approved with Jerry and that we're happy to have that out there and.

Chris: And we'll look at we'll look at share repurchases. Obviously, the first place. We go is to think about bringing in the dilution but.

Chris Monroe: But as we have opportunities to continue to invest, and, you know, we'll look at that first, but then if there is cash left over, we're going to be looking at continuing the share repurchase program. Great. Thank you very much.

As we have opportunities to continue to invest in.

Chris: We will look at that first but then if there is cash left over we're going to be we're going to be looking at continuing the share repurchase program.

Speaker Change: Great. Thank you very much.

Gregory Frankfurt: Your next question comes from the line of Gregory Frankfurt from Guggenheim Securities. Hey, thanks for the question. I had two quick ones.

Speaker Change: Your next question comes from the line of Gregory Frankfurt from Guggenheim Securities. Your line is open.

Gregory Frankfurt: Hey, Thanks for the question.

Jerry Morgan: The first is just, I know you answered the question on capacity earlier, but I'm curious about your appetite to maybe accelerate unit growth beyond the kind of five to six percent range. I mean, you guys are running really healthy traffic, and I'm wondering if you, what would it take to maybe accelerate that pace of unit growth a little bit? Well, thank you. It's important for us to keep a rhythm of how many openings we can do a year and be balanced in our approach, and we have to do it right. We have to get every store open with incredible energy. It takes a lot of folks inside.

Gregory Frankfurt: Two quick ones.

Gregory Frankfurt: The first is just I know you answered the question on capacity earlier.

Gregory Frankfurt: I'm curious your appetite to maybe accelerate unit growth beyond that kind of 5% to 6% range.

Gregory Frankfurt: He is running really healthy traffic and I'm wondering if what would it take to maybe expand that pace of vehicles a little bit.

Speaker Change: Well thank you.

It's important for us to keep a cadence of how many openings that we can do a year end and be balanced in our approach and we have to do it right. We have to get every store opened with incredible energy. It takes a lot of folks inside so we like our number of what we're doing for roadhouse and the other two brands. So youll, probably see us stay very close to that if we get an opportunity.

Jerry Morgan: So we like our numbers of what we're doing for Roadhouse and the other two brands, so you'll probably see us stay very close to that. If we get an opportunity to increase a couple here and there, we might take that opportunity, but I don't think we're going to change our overall strategic goal or game plan for growth. I may have missed it earlier, but any thoughts on where the turnover environment looks like?

Speaker Change: <unk> to increase a couple of here and there we might take that opportunity, but I don't think we're going to change our overall strategic goal our game plan on growth.

Speaker Change: Got it and then just maybe.

Speaker Change: Mr earlier, but any thoughts on where the turnover environment looks like or.

Speaker Change: Quit rates or what that might be doing to your training and ability to train workers and any thoughts on the labor market that would be helpful.

Jerry Morgan: Thank you. Yeah, thank you. Um, you know, we feel really good. We put a lot of work into it in the last couple of years. And, you know, we look at it at three to three levels, our managing partners, our managers in our, our roadies.

Speaker Change: Yes. Thank you.

Speaker Change: We feel really good we put a lot of work into it in the last couple of years and we look at it $3 three level as our managing partners our managers in our in our Roadies and all three of those indicators are that turnover is coming down which also means that we're getting more reps.

Jerry Morgan: And all three of those indicators are that turnover is coming down, which also means that we're getting more reps and running these shifts that are at a higher volume. So all of those indicators are pretty solid. There are folks, applicant flow has been pretty solid for us.

Speaker Change: And running these shifts that are at a higher volume. So all of those indicators are pretty solid there are folks applicant flow has been pretty solid for us.

Jerry Morgan: From that standpoint, the work and the effort that we put in has really benefited. And I think we're creating an environment where our employees want to work and be a part of something that's really special. So I believe it's a very positive environment out there.

So from that standpoint that work and the effort that we put in has really benefited and I think we're creating an environment, where our employees want to work and be a part of something that's really special so I believe it's a very positive environment out there and we are benefit the longer our folks can stay around and we keep routing nation happy they're going to keep taking care.

Jerry Morgan: And we are benefiting. The longer our folks can stay around and we keep roadie nation happy, they're going to keep taking care of us. Winners win.

Speaker Change: Of us winners win yeah.

Chris Monroe: Yeah. Thank you, guys. Our next question comes from a line called Brian Vaccaro from Raymond James. Your line is open. Hi, thanks, and good evening.

Speaker Change: Thank you guys.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Brian Vaccaro from Raymond James Your line is open.

Brian Vaccaro: Hi, Thanks, and good evening, just circling back on the topic of table turns and eroding pay et cetera and.

Brian Vaccaro: I'm just circling back on the topic of table turns and roadie pay, et cetera, and I guess tying it into comps a little bit. Obviously, your comps have been impressive for a long time now, but I'm curious as you dig into your comps a little bit, are you seeing outsized growth or even maybe a little bit of an acceleration in peak demand periods that you might be able to tie back to table turns? Or more broadly, are there any other daypart or regional differences in your recent trends that might be worth highlighting? Yeah, hey, Brian, it's Michael.

Brian Vaccaro: And I guess tied it into comps a little bit obviously your comps have been impressive for a long time now, but I'm curious as you dig into your comps a little bit are you seeing outsized gross or even maybe a little bit of an acceleration in peak demand periods that you might be able to tie back to table turns or more broadly are there any other day part.

Brian Vaccaro: Or regional differences in your recent trends that might be worth highlighting.

Brian Vaccaro: Yeah, Hey, Brian It's Michael good to hear from you.

Michael Balin: Good to hear from you. You know, some of that is a little difficult to parse out. But I can tell you, geographically, we are seeing, you know, similar results across the country. By the age of our restaurants, we're seeing similar results. You know, and then as far as the day part, we are seeing a little bit more strength, you know, earlier in the day and into the power, you know, what we call the power hours at six to eight o'clock timeframe.

Michael Balan: Some of that is.

Michael Balan: A little difficult to parse out, but I can tell you.

Michael Balan: Geographically, we are seeing similar results across the country by age of our restaurants, we're seeing similar results.

Michael Balan: And then as far as the day part we are seeing a little bit more strength.

Michael Balan: Earlier in the day and into the power.

Michael Balan: What we call the power hours at six to eight o'clock timeframe, so whether that's coming from.

Michael Balin: So whether that's coming from, you know, the technology investments, hard to tell you, but we're certainly doing everything we can to give that guest a good experience, give them the opportunity to get in and get out at their pace. And I think that's what we'll continue to focus on going forward. All right, that's helpful.

Michael Balan: The technology investments hard to tell you, but we're certainly doing everything we can.

Michael Balan: To give that guest a good experience.

Michael Balan: Give them the opportunity to get in and get out.

Michael Balan: At their pace and I think that's what we'll continue to focus on going forward.

Speaker Change: Alright Thats helpful. Thank you.

Brian Vaccaro: Thank you. Your next question comes from Brian Harper from Morgan Stanley. Yeah, thanks. Maybe just one for me. Michael or Chris, do you have any view on, kind of, V&A this year either in terms of growth terms or percent of sales as you think about leverage? Hey, Brian, it's Michael.

Speaker Change: Your next question comes from the line of Brian Harper from Morgan Stanley. Your line is open.

Brian Harper: Yeah. Thanks, maybe just one for me.

Brian Harper: Michael or Chris what do you have any view on kind of G&A.

Brian Harper: G&A this year either.

Brian Harper: Growth terms or percent of sales as you think about leverage there.

Brian Harper: Hey, Brian It's Michael Yes.

Michael Balin: Yeah, you know, GNA as a growth company, we're going to continue to invest in our people and our systems. I think our philosophy remains the same that we would like to see those GNA dollars grow at less than revenue growth and, you know, continue to see if we can get some leverage there. But, you know, we were at 4.3% of revenue in 23. That's come down significantly from where we are. So we'll see what happens in 24.

Michael Balan: As a as a growth company, we're going to continue to invest in our people in our systems.

Speaker Change: Our philosophy remains the same that we would like to see those G&A dollars grow.

Speaker Change: Less than revenue growth and you'll continue to see if we can get some leverage there, but we were at four four.

Speaker Change: <unk> call at four 3% of revenue in 'twenty three that's come down significantly from where we are so we'll see what happens in 'twenty four I can tell you.

Michael Balin: I can tell you that, you know, in Q1, I think we have the most opportunity to not see a lot of increase. But then after that, you will start to see some increase. Again, being a 53-week year, you could see us having the need to accrue for additional bonus compensation. And again, you would then lap that into 25.

Speaker Change: That.

You probably.

Speaker Change: See you.

Speaker Change: In Q1, I think we have the most opportunity to to not see a lot of increase but then after that.

Speaker Change: We'll start to see some increase again being a 53 week year.

Speaker Change: You could see us having the need to accrue for additional bonus compensation and then give you within lap that into 'twenty five.

Michael Balin: And, you know, we talked a little bit about some of the equity compensation enhancements that we've made. And that'll impact the second half of the year. So I think you'll continue to see those GNA dollars grow. And, you know, maybe it's not a year where we get a lot of leverage.

Speaker Change: And we talked a little bit a bit about some of the.

Speaker Change: Equity compensation enhancements that we've made and that will impact the second half of the year. So I think youll continue to see those G&A dollars.

Speaker Change: Grow and.

Speaker Change: Maybe it's not a year, where we get a lot of leverage some of that will depend.

Michael Balin: Some of that will, you know, depend upon what the top line ends up doing. But, you know, yeah, definitely, investments to be made in the business. Thank you. Your next question comes from a line called Jim Sanderson from North Coast Research. Your line is open.

Speaker Change: And upon what the topline ends up doing.

Speaker Change: But yeah definitely investments to be made in the business.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Jim Sanderson from Northcoast Research. Your line is open.

James Jon Sanderson: Hey, thanks for the question. And congratulations on a great quarter. I wanted to go back to the mix issue.

James Jon Sanderson: Hey, Thanks for the question and congratulations on a great quarter I wanted to go back to the mix issue. It seems to me thats improving not as negative as it has been do you expect that to pretty much iron itself out so to speak and is there an opportunity to actually see that become an upsell opportunity to make that positive as we go into the back half of the year.

Michael Balin: It seems to me that it's improving, not as negative as it has been. Do you expect that to pretty much iron itself out, so to speak? And is there an opportunity to actually see that become an upsell opportunity to make that positive as we go into the back half? Hey, Jim, it's Michael. I mean, you are correct that Q4 with the 70 basis points was a little bit less than what we had been seeing the last couple of quarters. You know, there were a few things in there that benefited us in the fourth quarter around the holiday time. You know, maybe an increase in bread sales and the such that can offset some of, you know, some other areas. It'll be something we'll be watching here into 2024 to see whether that trend continues. You know, entrees, again, if we continue to see people trading into us and growing our traffic, but maybe they're hitting the value side, you could have a little bit of a negative mix there. And that alcohol is a little bit of a question mark. I'll be honest with you.

Hey, Jim It's Michael I mean, you are correct Q4, with a 70 basis points was a little bit less than what we had been seen in the last couple of quarters. There were a few few things in there that benefited us in the fourth quarter around the holiday time.

James Jon Sanderson: You see it maybe an increase in and bread sales and the such that can offset some of some other areas.

James Jon Sanderson: It'll be something we'll be watching here in into the into 2024 or whether that trend continues.

James Jon Sanderson: Our entrees again, if we continue to see people trading into us in growing our traffic, but maybe they are hitting the value side, you could have a little bit of negative mix there.

James Jon Sanderson: Alcohol is a little bit of a question Mark I'll be honest with you.

Michael Balin: You know, will that flatten out, or just kind of the societal trends right now of, I think, a little bit less alcohol sales, you know, may stay with us? That's just one we'll have to wait and see what happens. Okay, so probably a little bit of a headwind going forward, just not as bad.

James Jon Sanderson: Will will that flatten out or just kind of the societal trends right now of I think a little bit less alcohol sales.

May may stay with us that just we'll have to wait and see what happens on.

Speaker Change: Okay, so probably a little bit of Uh huh.

Speaker Change: Headwind going forward just noticed that there is that the right way to look at it.

Michael Balin: Is that the right way to put it? It's a hard one to fully answer, but I think in the economic consumer environment we're in, it would not surprise me for it to be a little bit of a headwind, but again, it's one that until you really see what's going on, it's hard to fully predict. I understand. Thank you. Your next question comes from the line of Rahul Krotthapalli from J.P. Morgan. Your line is open.

Is it hard its hard one to fully answer, but I think in the.

Speaker Change: The economics.

Speaker Change: Consumer environment, we're in it would not surprise me to for it.

Speaker Change: To be a little bit of a headwind, but again.

Speaker Change: It's one that until you really see what's going on and it's hard to fully predict.

Speaker Change: Alright understood. Thank you.

Speaker Change: Your next question comes from the line of Rahul crowded poly from Jpmorgan. Your line is open.

Rahul Krotthapalli: Thanks for taking my question, guys. I just wanted to follow up and expand a bit more on Babas. Can you discuss the store margin growth year on year and help us get some confidence in the longer term store margin profiles for this concept? Is there a potential for this to be at or above Roadhouse? Can we expect an inflection at some point? Are there any structural costs, like prime costs, for this concept lower versus Roadhouse as we go forward? And I have a follow-up. Hey, this is Michael.

Thanks for taking my question guys I just wanted to follow up on expand a bit more on bus can you discuss the store margin growth year on year and help us get some confidence in the longer term store margin profiles for this concept.

Rahul: Is there a potential for this to be add thought about roadhouse can we expect an inflection at some point.

Speaker Change: Are there any structural costs like prime costs had this concept lower what does that sort of what how is as we go forward and I have a follow up.

Speaker Change: Yeah, Hi, this is Michael I can answer some of that but I'm, probably not going to give you all the information that you're maybe looking for I can tell you we feel very good that bubbles can generate those.

Michael Balin: I can answer some of that, but I'm probably not going to give you all the information that you're maybe looking for. I can tell you that we feel very good that Bubba's can generate those mid-team returns that we're looking for. We believe Bubba's can generate a very strong restaurant margin. Your point: can they be in line with Roadhouse if they were doing similar sales volumes? Yeah, absolutely that is possible.

Michael Balan: Mid teen returns that we're looking for we believe Bob was can can generate a very strong restaurant margin youre point of can they be in line with roadhouse. If they were doing similar sales volumes, yeah, absolutely that is possible, but the reality is.

Michael Balin: But the reality is, Roadhouse performs at a higher level than Bubba's and at a higher level than most restaurant concepts, so that is going to benefit Roadhouse from a margin perspective. But the menu items that we have at Bubba's would lend themselves to a very strong margin as compared to Roadhouse on similar volumes. I think that's about as far as we're probably going to go on that one right now. That's helpful, Mike. Thanks for that. And on the follow up, I know you guys talked about having a total of 900 stores, TAM, for the company as a whole, and I think Roadhouse was targeted at 700 to 800 over time.

Michael Balan: Roadhouse.

Michael Balan: Performs at a higher level than Bob is in a higher level than most restaurant concepts. So that that is going to benefit roadhouse from a margin perspective.

Michael Balan: But the the menu items that we have at Baba's would lend itself to a very strong margin as compared to roadhouse on on <unk>.

Michael Balan: Similar volumes I think thats about as far as we're probably going to go on that one right now.

Speaker Change: That's helpful. Mike Thanks put that on the follow up I know you guys talked about having a total of 900 start time for the company as a whole and I think like Roadhouse was targeted at 700 to 800 or time I know you guys discussed a lot of new digital get sounds like new store formats and whatnot I'm just.

Rahul Krotthapalli: I know you guys discussed a lot of new things, like the digital kitchens and new store formats and whatnot. I'm just curious if there is an updated thought on this number and how you're looking at this going down the line. Yeah, thank you. We believe that it's a great goal for us. We adjusted that, I believe, just a little over a year ago, after a lot of research and just thinking about our business going forward. So there's no adjustment to that number.

Speaker Change: Curious if that is an updated thought on this number on Javier looking at does going down the line.

Javier: Yes. Thank you we believe that's a great target for US we adjusted that I believe just a little over a year ago.

Javier: After a lot of research and just thinking about our business going forward. So there is no adjustment to that number now we're still focused on being responsible to all of our partners out there, but we believe we can get to that number.

Jerry Morgan: Now, we're still focused on being responsible for all of our partners out there, but we believe we can get to that number. Perfect. Thanks, guys.

Speaker Change: Perfect. Thanks, guys.

Jon Tower: Thank you. Your next question comes from a line John Tower from Citigroup. Your line is open.

Thank you.

Speaker Change: Your next question comes from the line of Jon Tower from Citigroup. Your line is open.

Michael Balin: Great, thanks for hanging in there. Just real quick, first on the GNA side, the grant changes that you're talking about in the second half of 24, I'm assuming those are not one-time in nature and something that'll carry forward into 25, so just wanted to first confirm that. It's Michael.

Jon Tower: Great Thanks for taken and hanging in there.

Jon Tower: Just real quick first on the G&A side, the grant changes that Youre talking about the second half of 'twenty four I'm, assuming those are not onetime in nature and something that'll carry forward in the 25. So just wanted to first confirm that.

Jon Tower: Right.

Michael Balin: On the GNA side, those are a little bit more one-time in nature. It's really an acceleration of the grant. So, you know, we will still be expensing grants that we've been given quarterly over the last several years, and we will now be pulling back on and granting all at one time some grants that would have been happening over the next several quarters. So you'll feel that one time in Q3, Q4, and then some into the beginning of next year. The majority of it will then, you know, not have an impact on us after that. But how about the labor line that you had mentioned earlier? The labor line is not as much one-time in nature.

Jon Tower: It's Michael on the G&A side, those are a little bit more.

One time in nature.

Jon Tower: Really an acceleration.

Jon Tower: All of the grants so we will still be expensing grants that we've been given quarterly over the last several years and we will now be pulling up.

Jon Tower: <unk> granting all at one time, some grants that would've been happening over the next several quarters. So we will feel that one time in.

Jon Tower: In Q3, Q4, and then some into the beginning of next year the majority of it.

Jon Tower: He will then.

Jon Tower: Not having an impact on us after that.

Speaker Change: How about the labor line that you had mentioned earlier as well.

Speaker Change: The labor line. It is more of is not as much onetime in nature, while you do have that.

Michael Balin: While you do have that acceleration going on, the other enhancements of us increasing the amount of grants to some store-level employees are part of it, but also including additional manager levels in the granting of equity compensation. So that is one that will stay with us going forward. And then just curious, you know, your business is obviously in very strong demand from a traffic standpoint. And I know you've had some success earlier in terms of expanding some of the early dine options during the weekdays. COVID added about an extra hour or so to that during the weekdays, if I'm not mistaken.

Speaker Change: Acceleration going going on the other enhancements of us.

Speaker Change: Increasing the amount of grants to some store level employees as part of it but also including additional manager levels in the in the granting of equity compensation. So that is one that will stay with us going forward.

Speaker Change: Great. Thanks, and then just curious.

Your business is obviously got very strong demand from a traffic standpoint, and I know you've had some success earlier.

Speaker Change: In terms of expanding some of the early dine options during the weekdays I think.

Speaker Change: Since COVID-19 added about extra hour or so to that during the week days, if I'm not mistaken.

Jerry Morgan: So, curious, do you feel like there's more opportunity, perhaps, to extend that further? I think it's mostly 3 p.m. to 6 now. Could you push it further to 2.30 or 2 o'clock, or is that just something that's kind of not contemplated today to meet that demand? Yeah, thanks, John. I think it really is open until 530 or six o'clock. So if they open at 230-245, but most of the stores are opening at three o'clock. So as soon as they open, that early dinner kicks in, I think that's where we'll stay for now. I don't see us getting any earlier than that, but there might be a few out there.

Speaker Change: Curious do you feel like there's more opportunity perhaps extend that further I think it's mostly three P. M to six now.

Speaker Change: Could you push it further to $2 30, or two o'clock or is that just something that kind of not contemplated today to meet that demand.

Speaker Change: Yeah. Thanks, Jon I think it really is open to.

Speaker Change: 530, or six o'clock. So if they opened at $232 45, but most of the stores are opening at three o'clock. So as soon as they open that early dine kicks in I think thats, where it will stay for now I don't see us getting any earlier than that but.

Jerry Morgan: Thanks for your time. Thank you. Your next question comes from the line of Jake Bartlett from Truist Securities. Your line is open. Great, thanks for taking the question. You know, mine is about development.

Speaker Change: Might be a few out there.

Speaker Change: Great. Thanks for the time.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Jake Bartlett from <unk> Securities. Your line is open.

Jake Rowland Bartlett: Great. Thanks for taking the question minus about development and first maybe a clarification.

Jake Rowland Bartlett: First, maybe a clarification. You said today that you expect to open, or you continue to expect to open, 30 company-owned stores across the three brands. My reading of the last earnings call is that it was 30 with Texas Roadhouse and Bubba's, but then three Jagger's.

Jake Rowland Bartlett: You said today that you expect to open or you continue to expect to open 30 company owned stores across three brands My reading of the last earnings call was that it was 30 with <unk>.

Speaker Change: Sure. It has some bumps, but then three jaggers, but just to confirm is there any change in the <unk>.

Jerry Morgan: But just to confirm, is there any change in the company-owned development outlook for 24? Jake, I don't think there's any change at this time. We're definitely, after the massive amount of openings we had in the last four months of 2024, trying to strategically spread that out a little bit. But as of right now, we are focused on that number between the three. Yeah, and I would just take this, Michael. You know, it does say approximately 30.

Speaker Change: Company owned development outlook in 'twenty four.

Speaker Change: Jake I don't think Theres any change at this time, we are definitely after the massive amount of openings. We had in the last four months of 2024, we are trying to strategically spread that out a little bit but as of right. Now we are focused on that number between the three.

And I would just Jacobs Michael It does take approximately 30, so we just put all of those.

Michael Balin: So, you know, we just put all of those, you know, you know, into there, the Jaggers timing, you know, you know, whether we get three open, we will see, and you know, those could be later in the year, but we just felt it was cleaner to give you all that number, you know, all in one. Got it. And you also mentioned that you expect the cadence to be more balanced over the year. Maybe if you could dig into that a little bit, maybe comments on the development environment, the headwinds we've been hearing about and seeing for, you know, three or four years now. Are you starting to see signs that that's easing, and that's what gives you more confidence in a kind of evenly spaced development in 24?

Speaker Change: Into there.

Speaker Change: Jaggers timing.

Speaker Change: <unk>.

Speaker Change: We have to reopen we will see in those could be later in the year, but we just felt it.

Speaker Change: It was cleaner to give you all that number all in one.

Speaker Change: Got it and.

Speaker Change: And he also mentioned that you expect the cadence to be more balanced over the over the year, maybe if you can dig into that a little bit maybe comments on the development environment. The headwinds we've been hearing about seeing for.

Speaker Change: Three or four years now and is that are you starting to see signs that that's easing that's what gives you more confidence.

Speaker Change: Evenly space development in 'twenty four.

Michael Balin: Yeah, Jake, it's Chris, and I think we are seeing that smoothing out a little bit, and Jerry oversees our development team himself, and so that's something he may want to speak to, but I will say that a lot of the jurisdictional issues, the permitting issues, things that you've been hearing from us and others are largely behind us. There are still, you know, occasional problems in the supply chain, but for the most part, we're getting work done, although at a higher cost, and so that's definitely, you know, seems to be with us as we go. But we do feel good about the way that we've got this, what we're calling this cadence that we've built, and we feel very good about that as it's flowing through. I don't know if you had anything you wanted to add, Jerry.

Jacobs: Yes Jacobs Chris.

Chris: I think we are seeing that smoothing out a little bit and Jerry oversees our development teams himself and so that's something he may want to speak to but I will say that.

Chris: A lot of the jurisdictional issues the permitting issues things that you've been hearing from us and others are largely behind us there.

Chris: There are still occasional problems in the supply chain, but for them for the most part we're getting work done although at a higher cost and so that's definitely seems to be with us as we go but we do feel good about the way that we've got this.

Speaker Change: We're calling this cadence that we built and we feel very good about that as it's as it's flowing through I don't know if you have any thing you wanted to address yes. Thanks, Chris Yes, yes, its a matter of a lot of work been put into this timeline and building into that what the times that it takes to get all of these set up and then we can make the decision. So I think theres been a lot of work and effort it's look.

Chris Monroe: Yeah, thanks, Chris. Just a matter of a lot of work being put into this timeline and building in the times that it takes to get all of this set up, and then we can make the decision. So I think there's been a lot of work and effort. It's looking really good right now for 24 and 25, and we really want to keep that pace going forward. It takes a lot of pressure off of our crew to make the most of the openings in the first three quarters versus jamming everything into the fourth quarter.

Speaker Change: And really good right now for $24 25, and we really want to keep that cadence going forward. It. It takes a lot of pressure off of our crew to get the most of the openings in the first three quarters versus jamming everything into the fourth quarter. So we've been working really hard on that and then we're going to keep try to keep that cadence going forward.

Jerry Morgan: So we've been working really hard on that, and we're going to try to keep that cadence going forward. Great, and then last kind of nitpicky modeling question. If I look back at the extra operating week in 19, the fourth quarter of 19, it was about a 60 basis points benefit to restaurant margins. Is that where we're getting, you know, the 4% impact for the year when math could tell you 2% for an extra week? But is that about right, 60 basis points boost in restaurant margins, and that's really where the outsized earnings from that week come from?

Speaker Change #100: Great and then lastly, what kind of nitpicky modeling question, if I look back at the extra operating week in 2019 in the fourth quarter of 19. It was about a 60 basis points benefit to restaurant margins.

Speaker Change #100: Is that where we're getting the 4% impact for the year when math, we could tell you at 2% for an extra week, but is it is that about right 60 basis points boost in the restaurant margins and Thats really where the outsized earnings from that when it comes from.

Hey, Jake it's Michael I don't have the numbers right in front of me.

For this call, but certainly you are getting margin expansion.

Michael Balan: As part of the reason why Youre getting 4%.

Speaker Change #101: Estimated a 4% benefit for.

Michael Balan: Approximately 2% increase in store weeks, so that's probably as much as I can give you.

Jake Rowland Bartlett: I mean, it's Jake, it's Michael. I don't have the numbers right in front of me for this call, but certainly you are getting margin expansion that, you know, as part of the reason why you're getting 4%, you know, an estimated 4% benefit for, you know, approximately 2% increase in store week. So, that's probably as much as I can, you know, give you on that. Some of the benefit does come, you know, outside of restaurant margin as well, but there is a benefit, you know; there surely is a benefit in there from that high volume extra week.

Michael Balan: On that some of the benefit does come outside of restaurant margin as well, but there is a benefit.

Michael Balan: Surely as a benefit in there.

Michael Balan: From that high volume extra week.

Speaker Change #102: Great I appreciate it thank you.

Speaker Change #102: Okay.

Speaker Change #102: This concludes our question and answer session for today I would like to turn the call back to Gerry Morgan.

Gerry Morgan: Thank you and all for being on our call Tonight, and two routing nation <unk> to an incredible year. Thank each and every one of you let's go.

Speaker Change #103: This concludes today's conference call. Thank you for attending you may now disconnect.

Michael Balin: I appreciate it. This concludes our question and answer session for today. I would like to turn the call back to Jerry.

Speaker Change #103: Okay.

Speaker Change #103: [music].

Speaker Change #103: Yeah.

Speaker Change #103: [music].

Jerry Morgan: Thank you all for being on our call tonight. And to Rhody Nation, yeehaw to an incredible year. Thank each and every one of you. Let's go! This concludes today's conference call. Thank you for attending. You may now disconnect.

Operator: .. .. .. .. ....