Q1 2025 Kura Sushi USA Inc Earnings Call
of the opening has given us that much more confidence in pursuing smaller, high potential market.
And with that much more confidence and possibly smaller high potential market.
Bones the potential, long-term impact on growing our overall rights-based potential.
The ones that.
Longtime impact ongoing or otherwise quite substantial.
Opening in smaller DMS will allow us to better manage concerts, heroines, rather than fulfilling existing markets, while maintaining historical
Opening the in smaller DNA.
After deducting these concentrators.
That's all the time and feeding existing the market well maintain maintains and she taught you touched on Thestreet com.
Alagor is to return to a 50-50 pipeline strip between new and existing markets, over the coming years, to Mullan's comp's waterfall, and the opening up of smaller DMAs. To make it meaningfully easier to fit the new market position of the 50-50 equation.
Our goal is to be down to about 50 50.
Street between new and existing markets, although the economy, yes, two months worth of phone and <unk>.
[noise] openings off of a smaller base we.
We can make it meaningfully easier Phoenix New market also holds a 50 50 degrees.
We're moving to new initiatives.
Maybe moving to New Jersey.
I'm pleased to share that a new reservation and service heating system is progressing at a scheduled with our first in this run test expected in February .
Printed tissue.
And you know there's a big one.
The system is probably good thing scheduled.
Is that a lot faster in Islam.
Expected in February.
This will be a very significant improvement to the guest experience, and we currently do not do not offer reservations.
He's going to be a very significant improvement to the guest experience.
Did he do not talk to enough to offset these ratios.
Today, you can remotely chip in to the front with this, but cannot choose a specific time to buy.
Today, you have to come to market are you modeling that chicken will fluctuate.
It cannot be too specific.
The reservation system is coupled with a state-in-fixating system, and we believe the implementation of these systems will eliminate the need for a dedicated hospital position, as well as all the shoulder period itself. [inaudible]
So based on 15 is coupled with just thinking sort of teaching system and we believe the implementation of these systems.
And maybe if I need to pull up dedicated plasterboard Sean.
Oh, the stock sort of our people safe.
Arishomari in conjunction with the new exhibition and the self-setting system.
Additionally, in conjunction with our music, it's based on the stadium seating system.
I'm very happy to share for the first time that we are nearing the lower out of updated tableside ordering panels along with a lead designed push button Mr Fresh 3.0 which is much easier to use.
I'm very happy for the fast times that we are nearing the launch of.
David: David it's called Automd.
Analyst.
Speaker Change: I don't believe Felipe designed to support an Mr fish coupons, dental which is much easier to use.
Speaker Change: Towers can spend up to three minutes explaining how to use existing Mr. Fleshton's to first time guest, and so this is an opportunity for labor tailwind, as well as an improvement to the guest experience.
Speaker Change: Oh.
Speaker Change: I'll spend uptick three needs expanding how do you use existing and still feel strongly too fast on gift and so he said some opportunity for him being a tailwind also.
Speaker Change: And put them into people forget the experience.
Speaker Change: The misoffice 3.0 is complete and we expected to be in US rollout in February as well [inaudible]
Speaker Change: Let me start with coupons data is complete.
Speaker Change: We expect to begin U S rollout in February after that.
Speaker Change: In terms of promotions and marketing, our policy becomes in Q1 when supported by its successful one-piece and the Pygming IP Collaboration Campaign.
Speaker Change: In terms of a promo on the marketing.
Speaker Change: Although political comps due to long one supported by the successful lumpy pigmy <unk> equal operation campaigns.
Speaker Change: This is the timing of the license of promotional schedule. We do not have any IV collaborations planned for the fiscal season of the quarter, but we are extremely excited for the collaborations we have increased from the back half of the fiscal year.
It's just a timing of special sauce promotional schedule that we do not have any I did kilometers songs from the fourth of fiscal second quarter.
Speaker Change: What city, many exciting exciting collaborations be heavily based on the backhaul, but he's got it yeah.
Speaker Change: In place of I.P. collaboration for the 5th and 2nd quarter.
Speaker Change: In place of IV kilometers sum for a peaceful coco.
Speaker Change: We are doubling down on the through the forecast marketing efforts we have discussed in the last one this course.
Speaker Change: We are doubling down on through the forecast the marketing efforts, we have discussed on the call.
Speaker Change: Our history is often an excellent start, and we are very encouraged to see that.
Speaker Change: Oh, he's funny year is off to an excellent start.
Speaker Change: Really encouraging to see.
Speaker Change: Avocomps, probably time to put it in a territory.
Speaker Change: Our comps or are you content to put into the territory.
Speaker Change: Our new openings are exceeding expectations and have us even more excited about Kura's ultimate opportunity in the U.S.
Speaker Change: Our new openings are exceeding expectations.
Speaker Change: Even more excited about cool out of any opportunity for U S.
Speaker Change: I got to TV the margins, have hit them all the time high, or fiscal first quarter, times to company wide efforts to control cost.
Speaker Change: I know strategic advantage over shipped an all time high for our fiscal fourth quarter.
Speaker Change: Company wide efforts to control the cost.
Speaker Change: Technological initiatives are progressing smoothly, and we expect to share the results of our first step-sides in this round test during our next annual score.
Speaker Change: Technological initiatives are progressing smoothly.
Speaker Change: We expect to see that the default of our fossil so far the initial test.
Speaker Change: We're waiting on our next earnings call.
Speaker Change: I would like to reiterate my thanks to the entire regime, both at restaurants and our support center, for the amazing work said done, imprisoning the artist's fire on all she ended.
Oh directly eat today for my thanks to the entire cold chain of alcohol.
And also about center core amazing guac sit down and put us in the us.
Speaker Change: Sure enough.
Speaker Change: The speed and completeness of every-every-and-efforts has been nothing short of remarkable. Thank you.
Speaker Change: The speed and the comprehensiveness.
Speaker Change: If all of them.
Speaker Change: Nothing's Hilltop would you Michael Thank you.
Jay: This, our alternative, to you, to discuss our financial results, and the liquidity.
Jay: I'll turn it over to Jay could you scuffle I know somebody that's got a great team.
Speaker Change: Thanks, Jimmy.
Jay: Thanks, Jimmy.
Speaker Change: For the first quarter, total sales were $64.5 million as compared to $51.5 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was positive 1.8 percent with regional comps of positive 7.8 percent in our West Coast market and negative 2.3 percent in our Southwest market.
Speaker Change: For the first quarter total sales were $64 $5 million as compared to $51.5 million in the prior year period.
Speaker Change: Comparable restaurant sales performance compared to the prior year period was positive one 8% with regional comps are positive seven 8% and our west coast markets and negative two 3% and our southwest market.
Speaker Change: Turning now to KAS
Speaker Change: Turning now to costs.
Speaker Change: Food and beverage costs as a percentage of sales were 29% compared to 29.8% in the prior year quarter, largely due to pricing and supply chain initiatives.
Food and beverage costs as a percentage of sales were 29% compared to 29, 8% in the prior year quarter, largely due to pricing and supply chain initiatives.
Speaker Change: Labor and Related Costs as a percentage of sales were 32.9% compared to 31.9% in the prior year or quarter. This increase was largely due to wage increases and restaurant openings in the higher labor cost market.
Speaker Change: Labor and related costs as a percentage of sales were 32, 9% compared to 31, 9% in the prior year quarter.
Speaker Change: This increase was largely due to wage increases and restaurant openings and higher labor cost markets.
Speaker Change: Occupancy and related expenses as percentage of sales were 7.4 percent compared to the prior year quarters, 7.6 percent.
Speaker Change: Occupancy and related expenses as a percentage of sales were seven 4% compared to the prior year quarter's seven 6%.
Speaker Change: Depreciation and amortization expenses as the percentage of sales remains flat here every year at 4.8 percent.
Speaker Change: Depreciation and amortization expenses as a percentage of sales remained flat year over year at four 8%.
Speaker Change: Other costs as a percentage of sale for a flat year over a year at 14.5% [inaudible]
Other costs as a percentage of sales were flat year over year at 14, and a half or so.
Speaker Change: General and administrative expenses as percentage of sales decreased to 13.5% as compared to 16.7% in the prior year quarter due to significant leveraging of corporate costs against a growing unit base.
Speaker Change: General and administrative expenses as a percentage of sales decreased to 13, 5% as compared to 16, 7% in the prior year quarter due to significant leveraging corporate costs I guess, a growing unit base.
Speaker Change: Operating Laws was 1.5 million dollars compared to an operating loss of 2.8 million dollars in the prior year quarter due to previously mentioned DNA leverage.
Speaker Change: Operating loss was $1 5 million compared to an operating loss of $2 $8 million in the prior year quarter due.
Speaker Change: Due to the previously mentioned G&A leverage.
Speaker Change: income tax expense was $39,000 compared to $38,000 on the prior year quarter.
Speaker Change: Income tax expense was $39000 compared to $38000 on the prior year quarter.
Speaker Change: Net loss was $1 million, or a loss of $0.8 per share, compared to a net loss of $2 million $1 million.
Speaker Change: Net loss was $1 million or a loss of eight cents per share compared to a net loss of $2 million.
Speaker Change: for a lot of 18 cents for share in the prior year quarter. [inaudible]
Speaker Change: There are lots of 18 cents per share in the prior year quarter.
Speaker Change: Restaurant-level operating profit as percentage of sales was 18.2% compared to 19.5% and the prior year quarter largely due to higher labor and related costs.
Speaker Change: Restaurant level operating profit as a percentage of sales was 18, 2% compared to 19, 5% in the prior year quarter, largely due to higher labor related costs.
Speaker Change: Adjusted EBITDA was $3.6 million, compared to $1.8 million on the prior year quarter, largely due to greater GNA leverage.
Adjusted EBITDA was $3 $6 million compared to $1 $8 million on the prior year quarter, largely due to greater G&A leverage.
Speaker Change: Turning now to our cash and liquidity. At the end of the fiscal first quarter, we had $107.7 million dollars in cash and cash equivalents and no debt.
Speaker Change: Turning now to our cash and liquidity at the end of the fiscal first quarter, we had $107 $7 million in cash and cash equivalents and no debt.
Speaker Change: This increase in our cash balance is due to the follow-on offering that we closed in November .
This increase in our cash balances due to the follow on offering that we closed in November.
Speaker Change: And lastly, I'd like to reiterate our guidance for fiscal year 2025.
Speaker Change: And lastly, I'd like to reiterate our guidance for fiscal year 2025.
Speaker Change: We expect total sales to be between $275 and $279 million.
Speaker Change: We expect total sales to be between 275 $279 million.
Speaker Change: We expect to open 14 units, maintaining an annual unit growth rate above 20%, so the average net-capable expenditures for units of approximately $2.5 million.
We expect to open 14 units, maintaining an annual unit growth rate above 20% with average net capital expenditures of approximately $2 $5 million.
Speaker Change: And lastly, we expect general administrative expenses as a percentage of sales to be approximately 13.5%.
Speaker Change: And lastly, we expect general and administrative expenses as a percentage of sales to be approximately 13, 5%.
Speaker Change: And with that, I'll turn it back over to Jimmy.
And with that I'll turn it back over to Jay.
Speaker Change: Can't Jeff, this concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please welcome the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English. Thank you.
This concludes our prepared remarks, we are now happy to answer any questions you have hopefully it though please open the line for questions.
Sean: As a reminder, during the John this is Sean.
Sean: So in Japanese before Mike gets once he's confident he couldn't English.
Sean: Yeah.
Sean: Thank you.
Sean: Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. And the confirmation time will indicate your lives in the question.
Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Sean: You can press start. You can remove the question.
Sean: You May press star two if he would like to remove your question from the queue.
Sean: of participants using speaker equipment and may be necessary to pick up your handset before
Sean: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: And our first question comes from the line of Jeremy Hamblin with Craig Hall. Please
Speaker Change: And our first question comes from the line of Jeremy Hamblin with Craig Hallum. Please proceed.
Jeremy Hamblin: Thanks and congratulations on the strong results. I want to do just dive into what you've seen in terms of trends here. It looks like you've got, you know, mid-single digit improvement on your comps in both of your key markets. And wanted to just get a sense for, you know, what, what was driving that appears as though your mix was a little bit better in the quarter. I think menu pricing was not significantly different from...
Jeremy Hamblin: Hi, Thanks, and congratulations on the strong results I wanted to do just dive into what you've seen in terms of trends here.
Jeremy Hamblin: It looks like you've got you know mid single digit improvement on your comps.
Jeremy Hamblin: In both of your key markets and wanted to just get a sense for you know what what was driving that it appears as though your mix was a little bit better in the quarter I think menu pricing was was not significantly different from.
Jeremy Hamblin: from your last quarter. So I wanted to just see if you could provide a little bit of color of that and then maybe a little bit of color on the cadence throughout Q1.
Jeremy Hamblin: From your your last quarter. So wanted to just see if you could provide a little bit of color of that and then maybe a little bit of color on the cadence throughout Q1.
Jeremy Hamblin: Sure, thank you for your first question, Jeremy, but please allow me to answer your question in Japanese, Spanish, Canton, Exxon, Translate.
Jeremy Hamblin: Sure. Thank.
Thank you for your last question Jeremy Please I don't eat the answer you are crisp and Japanese Spanish content company.
Jeremy Hamblin: First, regarding the improvement from Q4 to Q1, as I discussed with Prepare and Remax, I believe the major contributors were the IP collaborations with One Piece and Pikmin. Additionally, concerning the improvement in price and mix, for the first time in Q1, we focused on udon with a combo called the 'Udon Perfect Pair.' This plan was to increase sales of udon without reducing the number of sushi plates, which contributed to the improvement in price and mix.
Jeremy Hamblin: I know Q1, though on a Q on Q on Q4.
Jeremy Hamblin: They just get them all.
Jeremy Hamblin: I don't I'm prepared remarks I'm on it.
Jeremy Hamblin: Okay. So no lumpy so on a peak would be no holding all else equal I don't kill step Elena I thought no crack underneath us and Okay. Then you can say about what anybody Q under how do you make it isn't it.
Jeremy Hamblin: I'll start with on the public scoping out the Campbell.
Jeremy Hamblin: Put it all on.
Jeremy Hamblin: So I don't know how long he hasn't yet and we don't know.
And I'll say, just a little you'll kick off and then put it on our platform.
Speaker Change: In Peru, <unk> cooking and eating out.
Jeremy Hamblin: But a couple might be on this one.
Speaker Change: In terms of the improvements that we saw in Q1 over Q4, certainly one of the major tailwinds that we had were the successes of the IP collaborations we had with one piece in Pickman. Those were very successful campaigns. In terms of price mix, as you mentioned, price was largely, you know, effective pricing is largely flat quarter of a quarter. And so we did see meaningful improvement in mix. We've been talking about having more food focused marketing efforts. And this would be an example of one of the fruits of those labors. We've been really talking up the quality of our udon, the way that we make it from scratch every morning. And we had a follow up campaign called the perfect pair, which was a condo of an udon bull and a yacht.
Speaker Change: In terms of do.
Speaker Change: The improvement that we saw in Q1 over Q4.
Speaker Change: What are the major tailwind we had with the successes of the IP collaboration we had with one piece in picking up those were very successful campaigns in terms of price mix as you'd mentioned price was largely it.
Speaker Change: Pricing is largely flat quarter over quarter, and so we did see meaningful improvement in mix, we've been talking about having more food focused marketing efforts and this would be an example of what are the fruits of those labors, we've been really talking up the quality of our eat on the way that we make it from scratch every morning, and we had a follow up campaign.
Speaker Change: In called the perfect hair, which was the combo of <unk>.
Speaker Change: Don.
Speaker Change: Yeah.
Speaker Change: Sushi Roll. And that led to significant improvements in mix attack and inside menu attachment without any reductions to the purpose and take consumption. And so this is some of the best mix we've seen in recent memory. Really pleased to see it.
Speaker Change: Official.
And that led to significant improvements in mix it inside menu attachment without any reductions that purpose and take consumption and so this is some of the best mix. We've seen in recent memory really pleased to see it.
Speaker Change: Also, regarding the cadence within the quarter, this is the same as the data for the entire industry, but for us, November is also...
Speaker Change: Ethanol cortina kind of cadence or just get them all in there.
Speaker Change: That he didn't they know and understand well anyway.
Speaker Change: And I feel like I've got to do that pretty well at all any more margin you put up in a whole lot of unknowns.
Speaker Change: Just like in the industry, we also experienced that November was much better than September and October .
Speaker Change: All of them are indefinitely.
Speaker Change: Wanted to kick off.
Speaker Change: And then in terms of the monthly cadence that we saw, we thought largely the same as the rest of the industry. November was the strongest.
Speaker Change: And then in terms of the monthly cadence that we saw we saw largely the same as the rest of the industry and November was the strongest month for us.
Speaker Change: Got it. And then just, you noted a little bit of change here in your collaboration kind of packages you're thinking about fiscal 25. You're lapping kind of Snoopy peanuts from last year in December and January timeframe and you really don't have that same kind of collaboration going on right now. As you noted, you've focused on kind of food marketing and I think you've got some, you know, some premium items coming here in the next couple of weeks, but just wanted to get a sense for how consumers were responding to that. And then just kind of a tangent related question, whether or not kind of the shift in calendar this year is having kind of any impact on words.
Speaker Change: Got it and then.
Speaker Change: And just you noted a little bit of of change here in your collaboration kind of packages, you're thinking about fiscal 'twenty five you're lapping you know kind of Snoopy peanuts from last year in December and January timeframe, and you really don't have that.
Speaker Change: Same kind of collaboration going on right now as you noted you've focused on kind of food marketing and I think you've got some you know some premium items coming here in the next couple of weeks, but just wanted to get a sense for how consumers were responding to that and then I'm just kind of a tangent related question.
Speaker Change: Whether or not the kind of the shift in calendar. This year is having kind of any impact on our results.
Speaker Change: Um, sure, let me, I'll speak to the uh...
Speaker Change: Sure.
Speaker Change: Well, let me I'll speak to the.
Speaker Change: for this question.
Speaker Change: First question.
Speaker Change: In terms of the IP collaborations, it's certainly true that Q2 is a more difficult comparison than Q1. To your point, we are laughing peanuts, which is one of the most successful campaigns we've had. And we are not running an IP collaboration Q2.
Speaker Change: And in terms of the IP collaborations.
Speaker Change: It's certainly true that Q2 is a more difficult comparison in Q1 to your point, we are lapping peanuts, which is one of the most successful campaigns we've had and.
Speaker Change: We're not running a Nike collaboration in Q2.
This is it.
Speaker Change: And so it is going to be a more difficult comp from that perspective than Q1. Knowing that our focus is going to be on cost control and delivering profitability regardless of that headwind. And so that's really what we're focused on in terms of Q2 specifically but looking to the whole year and to future years. This is I would characterize Q2 is really just a sort of pick up growing pain as we pivot to our new strategy. A big part of why we don't have a collaboration in Q2 is
Speaker Change: And so it's gonna be a more difficult comp from that perspective in Q1, knowing that our focus is going to be on cost control and deliberate profitability, regardless of that headwind and so that's really what we're focused on in terms of Q2, specifically, but looking to the full year and for future years. This is up I would characterize Q2, it's really just.
Speaker Change: Sort of pick up growing pain, as we pivot to our new strategy a big part of why we don't have a collaboration in Q2 is.
Speaker Change: It's simply the timing of different licensures. There wasn't one that we felt really checked all of our boxes. You're sort of the same thinking as how we pruned our L.O.Y.'s weight going into fiscal 25 and so.
Speaker Change: It's simply the timing of different licenses there wasn't one that we felt really checked all of our boxes.
Speaker Change: So are you sort of the same thinking is how we pruned our L O wise.
Speaker Change: Going into fiscal 'twenty, five and so.
Speaker Change: Well, we won't have collaboration for Q2.
Speaker Change: Well.
Speaker Change: We won't have a collaboration for Q2.
Speaker Change: Seeing the results in future quarters and just how strong the IPs are, I think everybody will really be quite pleased with what we have in the store.
Speaker Change: Seeing the results in future quarters, and just how strong is the Ips are I think everybody will really be quite pleased with what we have in the store.
Speaker Change: Got it. And then, and then just the question on the, you know, the impact, there's a shift in the kind of the timing of the holidays this year in December into January and wanted to get a sense for whether or not that's, you know, having any impact, good or bad. [inaudible]
Speaker Change: Got it and then and then just a question on the you know the impact there's a shift in the kind of the timing of the holidays. This year in December into January and wanted to get a sense for whether or not that's having any impact good or bad you know on what you would expect.
Speaker Change: You know, I'm what you would expect.
Speaker Change: I heard the voices of various people.
Speaker Change: And those.
Okay.
Speaker Change: Oh.
Speaker Change: It's Ben Kana Answer, right? First of all, regarding the design market, I think this applies to the entire industry, but due to things like Thanksgiving being the final scene and shifting, you have to look at December and January together over these two months.
But can I answer that.
Speaker Change: Whether or not you get that money got stuck with them.
Speaker Change: And if anything but that's the one that's getting up Buddy.
Speaker Change: I'll start at the beginning of the Hiseq and so.
Okay, I'll take that can't get caught up in a sandbox anybody when he got gets I'll take that.
Speaker Change: Even on a continental concrete, it's eight England, you sort out the window.
Speaker Change: This is probably due to the calendar, and I think it's the same for all the prints.
Speaker Change: I assume this is the case for pretty much everybody else in the industry, but just looking at the calendar shift, the fact that Thanksgiving came so late into November , we're looking at December and January really as a combined month, sort of the long lines is how you treat March and April as a combined month, just given the calendar shifts that are so typical of those months.
Speaker Change: I assume this is the case for pretty much everybody else in the industry, but just looking at the calendar shift in fact Thanksgiving came so late in November we're looking at December and January really is a combined sort of along the lines as how are you.
Speaker Change: You treat March and April as a combined months just given the calendar shifts that are cyclical in those months.
Speaker Change: Got it. Thanks for taking the questions and best wishes in 2025.
Speaker Change: Got it.
Speaker Change: Thanks for taking the questions and our best wishes in 2025.
Speaker Change: Thank you, Jeremy. Thank you, James.
Jeremy Hamblin: It's Jeremy again.
Speaker Change: Okay.
Speaker Change: And the next question comes from Lohana, Jeffrey Bernstein with Parklase. Please be sure.
Speaker Change: And the next question comes from the lineup Jeffrey Bernstein with Barclays. Please proceed.
Jeffrey Bernstein: Great. Thank you very much. A couple of questions. The first one just following up from a comp perspective, you know, I think one quarter ago, you had guided to, you know, loosely positive comps for fiscal 25, but you noted that you were still kind of in recovery mode, so it was difficult to forecast.
Jeffrey Bernstein: Great. Thank you very much.
Jeffrey Bernstein: Couple of questions. The first one just following up from a from a comp perspective.
Jeffrey Bernstein: I think one quarter ago, you had guided to.
Speaker Change: Loosely positive comps for fiscal 'twenty five, but you noted that you were still kind of in recovery mode. So it was difficult to forecast.
Speaker Change: It seems like you have some better visibility now. I'm just trying to clarify. It sounds like you're saying for fiscal 2Q, it's possible that the comp reverts to perhaps a modest negative with the collaboration mismatch but your focus is on protecting profitability and then you'd expect with the stronger collabs in the back half. You'd return to positive comps in the second half of fiscal 25. Is that fair assessment of your outlook for the next few quarters in terms of how the comp plays out?
Speaker Change: It seems like you have some better visibility now I'm just trying to clarify it sounds like you're saying for fiscal two Q4.
Speaker Change: I'll split out the comp reverts to perhaps a modest negative with the collaboration mismatch, but your focus is on protecting profitability and then you'd expect with the stronger clubs in the back half you'd return to positive comps in the second half of fiscal 'twenty five is that does that.
Fair assessment of your outlook for the next few quarters in terms of how the how the comp plays out.
Speaker Change: First of all, we are very satisfied with the positive turnaround in Q1, particularly due to the power of IP collaborations. However, as we have been discussing, for Q2, there are no IP collaborations, whereas last year we had a very strong collaboration with Peanuts. Therefore, we expect that the results for Q2 in terms of POMP will be weaker than in Q1.
Speaker Change: So I don't know what about if you lumped it all together.
Speaker Change: I caught up with him it's got out there, particularly when you think gosh you got to go through in a month or is it understandable okay got it.
Speaker Change: When I say lots of accused any godzilla affordable enough of that April of Indian law, and if people could see like peanuts in a collaboration with the hold up on a Y O Y to Keith and he can give off a few long anymore on a pump when your costs go up you'll like it took us a long I guess it was similar.
Jeffrey Bernstein: First of all, please do up to this point.
Okay cool.
Jeffrey Bernstein: Hi, Jeffrey.
Speaker Change: Uh huh.
Speaker Change: Thanks for the question in terms of IP collaborations. Our Q1 performance was certainly buoyed by the success of one piece and pigment, which we were very pleased with our to your point Q2, you're lapping peanuts without an ikea collaboration and so thinking about the comp relative to Q1 it is a.
It's certainly more difficult.
Speaker Change: However, we have always included this in our plans, so we are focusing on food-focused promotions and other cost controls to ensure we can secure sales during this period. Although it is tough regarding the content, we are very satisfied with the overall corporate performance as of the quarter-to-date.
Speaker Change: Hello.
Speaker Change: Okay got it.
Speaker Change: My goal that you're getting on a.
Speaker Change: A study.
Speaker Change: So they do you have any political walk ethanol on a put almost on its own.
Speaker Change: On the wholesale front sort of a whole it's got to get them off of me and our company got that keeps you just get them all out and all.
Speaker Change: I'll put it on a whole month, it's been what you might call. It after the Dayton, because if he doesn't want to list them off.
Speaker Change: Like, and the guidance that we gave at the beginning of the year contemplated this, this is not a surprise to us. And so it was always our plan to focus on operations and driving profitability in Q2. And it's the reason that when we talked about cons, we always talked about it in the full year context, but that gap is really where the major opportunity lies, both in terms of the easier comparisons, the implementation of our new technologies and the IP collaborations that we have in store. [inaudible]
Speaker Change: And then the guidance that we gave at the beginning of the year contemplated. This this is not a surprise to us and so it was always our plan to focus on operations and driving profitability in Q2, and it's the reason that when we talk about comps, we always talked about it in a full year context. The back half is really where the major opportunity lies both in term.
Speaker Change: The easier comparisons the implementation of our new technologies and the IP collaborations that we Havent store.
Speaker Change: Jeff, Jeff, it's Jeff, when it adds, the thing that's in the past was that
Speaker Change: Got it very helpful. Jeff It's Jeff.
Speaker Change: Thanks.
Speaker Change: In the past was that.
Speaker Change: We have a Q1 compliment. We get sequentially better throughout the year. I don't think we anticipated a 1.8% cost for Q1. So, you know, that may not necessarily be the case, but like Jimmy and Ben just talked about for the year we do anticipate that our comp will be a positive number for the full year.
Speaker Change: We have our Q1 confident will get.
Speaker Change: Sequentially better throughout the year I don't think we anticipated at one 8% comp for Q1, so that may not necessarily be the case, but like Jimmy and Ben just talked about for the year, we do anticipate that our comp will be a positive number for the full year.
Speaker Change: understead.
Speaker Change: Understood.
Speaker Change: and then just following up from the course side of things, you know, again you focused on profitability in the short term. But inflation, can you update us on the food and labor inflation that you saw in the first quarter and what your outlook is for the...
Speaker Change: And then just following up from a cost side of things.
Speaker Change: You know again, you're focused on profitability in the short term.
Speaker Change: But inflation can you update us on the food and labor inflation that you saw in the first quarter and what your outlook is for the <unk>.
Speaker Change: Second quarter in the full year, just wondering whether you're able to leverage those line-edems as we think about the full year.
Speaker Change: Second quarter and the full year I'm, just wondering whether you were able to leverage those line items as we think about the full year.
Speaker Change: First, regarding labor, in Q1 it increased, but the reason for this is wage inflation. We had predicted mid-single digits, but it actually ended up being high single digits, which is the cause. However, to conclude, the labor cost for Q2 is expected to be the same or better compared to the same quarter of the previous year. From Q2 onwards, we are confident that the figures will be better than the previous year, and we are confident that we can improve in the second half. That's all regarding labor.
Speaker Change: Sure.
Speaker Change: They've already hit it with some fast.
Speaker Change: Yeah, I know nobody cockpit, it's getting them all on a Q1 you're talking about.
Speaker Change: Looks like at all according to Kosovo.
Speaker Change: You guys are still out there working with them.
Speaker Change: Let me talking ridiculous.
Speaker Change: You hit it all you can coordinate the kind of thing you can say about heightened with Ethernet Simona equals Ivano Gagnon Hello.
Speaker Change: They don't let us do it isn't it because I know that you thought I guess than any of US a lot more on our lending pool that took it up again not to look at it Bob I don't usually heat excuse me Glen talked about in the Dania any money on healing could you guys give up on that.
Speaker Change: But I think they get it they didn't want.
Speaker Change: Got it.
Speaker Change: You know what's going on on the business.
Speaker Change: So, to sort of start with the conclusion, our expectations for labor for tutu are to be largely in line with the prior years of percentage of sales and for Q3 and Q4 for the fiscal 25 to be superior to fiscal 24's percentage of labor of sales, I'm sorry labor as a percentage of sales. And so for the full year we expect labor leverage as well. If you look at our historical earnings calls, you can see that our general experience has been that we speak we've seen labor inflation of mid single digits, low single digits. The most recent quarter we actually experienced high single digits. And so that was a little bit unexpected, but the operational implementations, the streamlining that we've put in place, we've already seen very meaningful improvements in sales per man hours. And these sorts of labor initiatives, the upside is really.
Speaker Change: So just sort of start with the conclusion or expectations for.
Speaker Change: Labor for Q2 were to be largely in line with the prior year's percentage of sales and for Q3 and Q4 for the fiscal 'twenty five to be superior to a fiscal 'twenty force percentages of a wafer of sales right I'm, sorry, labor as a percentage of sales and so for the full year, we expect the labor leverage as well if you look at our historical earnings calls you can see.
Speaker Change: Our general experience has been that.
Speaker Change: We've seen labor inflation of mid single digits low single digits.
Speaker Change: The most recent quarter, we actually experienced high single digits, and so that was a little bit unexpected but the.
Speaker Change: The.
Speaker Change: Operational implementations the streamlining that we've put in place we've already seen very meaningful improvements in sales per man hours and these works of waiver.
Speaker Change: Initiatives your upside is really.
Speaker Change: It tracks along with our seasonality, tracks along with General Sales, Sales and Labor leverage. And so the opportunity presented by the operational streamlining, as well as the additional issues that we have coming up later in the year.
Speaker Change: It's it tracks along with our seasonality tracks, along with general sells leap up sells them labor leverage and so the opportunity presented by the operational streamlining as well as b.
Speaker Change: Additional.
Speaker Change: So we have coming up later in the year.
Speaker Change: They really come wide in the latter half, the busier half of the fiscal year. So for labor, we continue to be full.
Speaker Change: They really come lives in the latter half of the busier half of the fiscal year, So for labor, where we continue to be bullish.
Speaker Change: and then I'm already staffed, I'm good, the inflation
Speaker Change: And then on commodities.
Speaker Change: Okay.
Inflation.
Speaker Change: Inflation for this quarter on cogschef was basically flat. In fact, it was just flat deflationary year of a year. So we're very happy with that is and I don't expect the significant increases or any significant inflation for the remainder of the year for cogs and what expect that line as percentage sales to remain where it is or even turn down somewhat for the remainder of the year. If you looked year of a year last year, we were 29.8 and this year we're at 29. So that's a big improvement over last year and I expect it to potentially, it'll say the same or potentially get a little better if we have some stars aligned and things
Speaker Change: Inflation for this quarter on Cogs, Jeff was basically flat.
Speaker Change: In fact, it was just quite deflationary.
Speaker Change: Year over year. So we're very happy with that is I don't expect to see significant increases or any significant inflation for the remainder of the year for Cogs and would expect that line as a percentage of sales to remain where it is or even trend down somewhat for the remainder of the year. If you look year over year last year, we were $29 eight and this year we're at 20.
Speaker Change: Nine so thats, a big improvement over last year, and I expect it to potentially.
Speaker Change: It'll stay the same or potentially get a little better if we have some stars align and things go our way.
Speaker Change: Yeah.
Speaker Change: And my last question was from the labor initiatives. I think you guys previously talked about how you'd already achieved maybe a hundred basis points from back-of-house initiatives. And I think you were talking about how maybe the reservation system and the self-seating system had potential for another 50 basis points of opportunity. I'm just wondering how that's tracking and maybe what
Speaker Change: Got it and my last question was just on the labor initiatives. I think you guys previously talked about he had already achieved maybe 100 basis points from back of house initiatives and I think you were talking about how maybe the reservation system and our self feeding system had potential for another 50 basis points of opportunity I'm just wondering.
Speaker Change: How that's tracking and maybe what.
Speaker Change: You know, keep the performance indicators you'll be able to share with us over the next few quarters to kind of see it sounds like your first one is in February where you're going to be rolling that out. So just what kind of expectations you have over the next few quarters in terms of the initial impact. Thank you.
Speaker Change: Now keep performance indicators, you'll be able to share with us over the next few quarters to kind of see it sounds like your first one is in February where youre going to be rolling that out. So just what kind of expectations you have over the next few quarters in terms of the initial impact. Thank you.
Speaker Change: Yeah, so we're ready.
Speaker Change: Yeah, So we're really sorry.
Speaker Change: We're really pleased with the operational improvements. We mentioned that we started them in fiscal 24. We're a lot was complete by September and so they're live and pretty much every restaurant. In terms of the productivity, beyond the doubt, we've seen very meaningful improvements. We're very, very happy. Thank you.
Speaker Change: We're really pleased with the operational improvements we mentioned that we started them in fiscal 'twenty four rollout was complete by September and so their lives in pretty much every restaurant in terms of the productivity.
Speaker Change: And the doubt we've seen very meaningful improvements were very very happy with the results that being said we didn't see.
Speaker Change: That being said, we didn't see, you know, the labor of the percentage of sales improve year-over-year, just given that the high single-digit wage inflation was more than we expected. That being said, the nature of the improvements is, but it's a station consolidation. And so you can go from five people to four people or four people to three people, but you can't really go smaller than that. And so the opportunities where you can go from four to five, or I'm sorry, five to four or four to three. Those become much more frequent as we approach the summer and the end of the summer. And so the upside from those that hundred basis points is, you're really going to see that in the back after the year. In terms of the 50 basis points that we expect from self-seating and the reservation system, that that remains.
Speaker Change: Labor as a percentage of sales improved year over year, just given that the high single digit wage inflation.
Speaker Change: With more than we'd expected that being said the nature of the.
Speaker Change: The improvement is.
Speaker Change: It's station consolidation and so you can go from five people before people were for people the free people, but you can't really go smaller than that and so.
Speaker Change: So the opportunities where you can go from four to five or I'm, sorry, if I could for quarter three those become <unk>.
Speaker Change: Much more frequent as we approach the summer and we entered the summer and so the upside from those that 100 basis points. As you you really just see that in the back half of the year.
Speaker Change: In terms of the 50 basis points that we expect some soft seating and reservation system that that remains unchanged.
Speaker Change: Thank you very much. Thank you, Jeff.
Speaker Change: Thank you very much.
Speaker Change: Thank you Jeff.
Speaker Change: Yeah.
Speaker Change: The next question comes from the line of Jon Tower with sitting. Please proceed.
Speaker Change: The next question comes from the line of Jon Tower with Citi. Please proceed.
Jon Tower: Great. Thanks for taking the questions, guys. And happy New Year to you. So maybe just I guess a couple of nuances on the quarter itself, the fiscal second quarter, just on the modeling side, I believe in January , you traditionally take some around pricing and it didn't sound like you spoke to that yet. So did you take any pricing number one and number two. Last year there was leap day. I can't recall whether or not that was included in your same star sales number or if it wasn't, but could you speak to both. I'm sorry. I'm sorry. I'm sorry.
Jon Tower: Great. Thanks for taking the questions guys.
Speaker Change: Happy new year to you so.
Speaker Change: Maybe just I guess, a couple of nuances on the quarter itself. The fiscal second quarter just on the modeling side I believe in January you traditionally take some around the pricing and it didn't sound like you spoke to that yet. So did you take any pricing number one and number two.
Speaker Change: Last year, there was leap day, I can't recall, whether or not that was included in your same store sales number or if it wasn't but could you speak to both.
Speaker Change: In terms of the lead day, we adjusted for it and so it was not included in our scenes or sales. Okay.
Speaker Change: In terms of the leap day, we adjusted for it and so it was not included in same store sales.
Speaker Change: Okay.
Speaker Change: and then Jeff on pricing. We took about 2% price the first week of November . And so the effect of pricing for Q1 that just ended is about 4.5%.
Speaker Change: And then Jeff on pricing, we took about 2% price in the first week of November.
Speaker Change: And so the effects of pricing for Q1 that just ended is about four 5%.
Speaker Change: Okay, and similar, okay, so we'll have a little bit closer to five percent say in the fiscal second quarter because I don't think anything's rolling off unless there is
Speaker Change: Okay.
Speaker Change: And similar okay. So we'll have a little bit closer to 5% say in the fiscal second quarter, because I don't think anything is rolling off unless there is.
Speaker Change: There's a little bit rolling off on January 1st, just rolled off, but your number around 5% for a factor price and for Q2 is about right, a little bit over 5. And then in terms of additional pricing, menu price increases, we typically take them, as you know, beginning of the year and in the middle of the year. We took the beginning of the year one early, as I mentioned the first week of November . And right now, we don't have any additional plans to take anything in the summertime, but we typically do. But that is to be determined as we continue throughout the year. And I think we all hope that we have to continue to provide the great value for our guests.
Speaker Change: There is a little bit wrong off on January one.
Speaker Change: It's rolled off but you your number around 5% for effective pricing for Q2 is about right a little bit over five.
Speaker Change: And then in terms of additional pricing menu price increases we typically take them as you know beginning of the year and in the middle of the year. We took the beginning of the year. One early as I mentioned in the first week of November and right. Now we don't have any additional plans to take anything in the summertime, but we typically do but that is to be determined as we continue.
Speaker Change: Throughout the year and I think we all hope that we have to continue to provide great value for our guests.
Speaker Change: Got it. Cool. Thank you for that. Maybe just zoom in on a little bit. I'm
Speaker Change: Got it cool thank you for that.
Maybe just zooming out a little bit I am.
Speaker Change: I'm a little surprised to how conservative your guidance appears on revenue for the year, again. I mean, just based on where you guys came in in the fiscal first quarter on the, you know, obviously seems ourselves an aggregate revenue front of 25% year over year, the guidance itself would imply fairly aggressive slowdown in the back half. So I'm just curious. I know you have some tough comparisons and some IP labs that you're not doing this year. But is there anything else we should think about with respect to new store productivity? Perhaps opening in markets that are maybe more challenging or you're expecting a higher level cannibalization that might be weighing on the revenue growth on a year over year.
Speaker Change: I'm a little surprised at how conservative your guidance appears on revenue for the year again, I mean, just based on where you guys came in in the fiscal first quarter on the.
Speaker Change: You know obviously same store sales in aggregate revenue front up 25% year over year, the guidance itself would imply a fairly aggressive slowdown in the back half. So I'm. Just curious I know you have some tough comparisons and some IP collabs that youre not doing this year, but is there anything else. We should think about with respect to new store productivity, perhaps opening in markets.
Speaker Change: Or maybe more challenging or youre expecting a higher level of camel cannibalization that might be weighing on the revenue growth on a year over year basis.
Speaker Change: Yeah, so Jon, the reason behind the guys, and we admit, I think in the last call that it was conserved in the 275 to 279 is conserved. I think we're all very bullish that that can be beat at some point. But if you take the clock back the last April and our call, which when we face our guidance, and then in July , we had to lower the guidance. We want to be very careful about being in the position of that happening. We want to make sure that when we do a guidance raise, that we do see a trend, and we don't jump the gun too quickly on a raise. And it really has nothing to worry about the productivity of restaurants or any additional cannibalization that we're not already experiencing we've already talked about in the past. So there's no doubt there that are causing that number to be where it is. It's because we would all like to make sure that we're seeing a trend before we put it out there and raise our guidance. And we want to do raise our guidance. We can keep our promise to the street and not have to reduce three months later.
Speaker Change: Yes, so John the reason behind the guidance and we think in the last call that it was conservative at $2 75 to 279 is conservative.
Speaker Change: All very bullish that that can be beat at some point, but if you take the clock back the last April and our call which.
Speaker Change: When we set our guidance and then in July we had to lower the guidance because we wanted to be very careful about being patient of that happening. He wanted to make sure that when we do our guidance raise that we do see a trend and we don't jump the gun too quickly on our race and it really has nothing to do with worrying about productivity productivity restaurants or.
Speaker Change: Additional cannibalization or not already experiencing what we've already talked about in the past. So there's no. It's out there that are causing that number to be where it is it's because we would all like to make sure that we're seeing a trend before we put it out there and raise our guidance and why did you raise our guidance, we can keep our promise to the street and not have to reduce <unk>.
Speaker Change: Months later.
Speaker Change: Got it. Make sense? And I appreciate that. Can you maybe then just pivoting a little bit to marketing? It sounds like obviously fewer IP collaborations in the future, perhaps more potent than ones you've done in the past. Maybe, could you speak to the differential and spend expected on those versus, you know, at least year over year in the back half. Number one in the number two, you know, your approach to marketing in general, it does sound like you're focusing a little bit more on the food side. I know you mentioned earlier, the perfect pairing promotion that you did that helped drive mixed during the period. So, you know, as consumers and frankly as investors, is that how we should think about some of the marketing going forward is more of these perfect pair promo or something like that, running through and being promoted through social media, rather than these IPs going forward.
Speaker Change: Got it makes sense.
Speaker Change: I appreciate that can you, maybe then just pivoting a little bit to marketing it sounds like obviously fewer IP collaborations in the future, perhaps more potent than ones you've done in the past.
Speaker Change: Maybe could you speak to the differential in spend expected on those versus you know at least year over year in the back half number one and the number two your approach to marketing in general It does sound like you're focusing a little bit more on the food side I know you've been you've mentioned earlier the perfect pairing promotion that you did that helped drive mix during the period. So you know as <unk>.
Speaker Change: And frankly as investors.
Speaker Change: Is that how we should think about some of the marketing going forward as more of these perfect pair promo or something like that running through and being promoted through social media.
Speaker Change: Rather than these Ips going forward.
Speaker Change: Well, you could assume that when we don't have an IT, we're always going to have some sort of alternative going on whether it's something like a perfect pair or 15th anniversary campaign or holiday scratches.
Speaker Change: Or are these actually you can explain.
Speaker Change: You can assume that when we don't have an IP, we're always going to have some sort of alternative going on whether it's something like a perfect pair or 15th anniversary campaign or a holiday scratchers.
Speaker Change: You know our our ticketing from a constantly packed calendar of IP collaborations. It doesn't mean that we're not going to continue to have a tax marketing calendar.
Speaker Change: Regarding the cost difference, the cost difference is about 150 to 200K.
Speaker Change: Got it.
Speaker Change: Andrew Pascal.
Speaker Change: Of course, some of these what I forgot that one how about the agricultural CAGR.
Speaker Change: <unk>, Yeah, and I'll put somebody funding things.
Speaker Change: And then in terms of the cost difference between say something like the perfect pair or another food focused campaign versus an IP collaboration, the difference would be about $150,000 to $100,000.
Speaker Change: And then in terms of the cost difference between say something like the perfect pair or another food.
Speaker Change: Food focused campaign versus an IV collaboration the difference would be about $150000 $200000.
Speaker Change: 200,000
Speaker Change: Did it better 200 to talk about 200000 200000.
Speaker Change: It's $200,000 more expensive, let me collaborate [inaudible]
Speaker Change: It's $200000 more expensive when we collaborate with the Nike.
Speaker Change: OK, make sense. Cool. All right, that's it for me for now, so I appreciate you taking the question.
Speaker Change: Okay. It makes sense cool alright, that's it for me for now so I appreciate you taking the questions.
Speaker Change: Thanks, Johnny. Thank you.
Johnny: Thanks, Johnny.
Speaker Change: Yes. Thank.
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: The next question comes from the line of Brian Mullan with Hypersandler. Please proceed.
Speaker Change: The next question comes from the lineup, Brian Mullan with Piper Sandler. Please proceed.
Speaker Change: Thank you. Just a question on development. In the prepared marks, I think you spoke to continuing to move into smaller DMAs over time. I'm just wondering if you could speak to the targeted volumes of those stores. The DMA dictate what the volume of a store can be or is it really just a function of the size of the box and it really doesn't have to do it.
Speaker Change: Hey, Thank you just a question on development in the prepared remarks, I think he supposed to continuing to move into smaller dnas overtime. You know I'm I'm. Just wondering if you could speak to the targeted volumes of those stores that you know does the DMA dictate what the volume of a store can be or is it really just a function of.
Speaker Change: The size of the box and it really doesn't have to do with the location.
Speaker Change: So it's okay. So.
Speaker Change: First of all, we've been saying the same thing all along, but when opening a new restaurant, we consider cash-on-cash return as one of the basic criteria. So, we focus solely on aspects like store size, rent, and sales. Therefore, there is no particular correlation between doing a smaller DMA and AUV or sales.
Speaker Change: So I've got gradually.
Speaker Change: No no no what do I put them on them a little enabled it could even just get them all but let's see if at all open to the thing I don't know Mike touched on density call on all of a sudden osceola marquee lumpiness, you'll just get off on that on all those things on all thoughts as it is so powerful that I think that's what we do I get my funding all of whom I think well I can let me get let them none.
Speaker Change: And then I'll get Paul.
Speaker Change: Tomorrow evening, you'll debt on them.
Speaker Change: Oh, that's a lot of the email affiliate with a thoughtful easily.
Speaker Change: The concept of critical silicon feeling that nice.
Speaker Change: Quite a lot came out, but quite a lot came out.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Brian , when we do site selection, our focus really is on cash on cash returns. We don't have a target AUD and so that remains unchanged in terms of how we approach smaller DNAs. We're focused on cash on cash returns and our standards for the smaller DNAs are the same as all of our other DNAs.
Speaker Change: Hi, Bryan when meeting site selection, our focus really is on cash on cash returns. We don't have a target of <unk> and so that remains unchanged in terms of how we approach smaller dnas, we're focused on cash on cash returns on our standards for the smaller dnas are the same as all of our other dnas.
Speaker Change: Okay, thank you. And then just to follow up, just a clarification item, you gave the menu price for the quarter. Can you just let us know what traffic was and I apologize if I missed it?
Speaker Change: Okay. Thank you and then just a follow up just a clarification I know you gave the menu price for the quarter can you just let us know what traffic was and I apologize if I missed it.
Speaker Change: Traffic Juliet, a traffic was cancelled.
Speaker Change: Tragically.
Speaker Change: Traffic was good.
Speaker Change: Trapped with San on 2.3 and price and mix was 4.1% [inaudible]
Speaker Change: Traffic was down 2.3 on price and mix was four 1%.
Speaker Change: Okay, thank you very much. Thank you.
Speaker Change: Okay. Thank you very much.
Mark: Thank you Mark.
Speaker Change: Thanks, Ryan.
Speaker Change: Thanks, Brian.
Speaker Change: and the next question comes from a line of Sharon Zackfia with William Blair. Please be
Speaker Change: And the next question comes from the line of Sharon Zackfia with William Blair. Please proceed.
Sharon Zackfia: Thanks for taking a question and happy new year. It was really nice to see the improvement in mix, and I know you touched on earlier some of some of the drivers there. I guess I'm curious on your thoughts on the sustainability mix becoming a more neutralized part of comps going forward.
Sharon Zackfia: Thanks for taking my question and happy New year.
Speaker Change: Yeah.
Speaker Change: Thanks, It's really nice to see the improvement in mix and I know you touched on earlier some are some other drivers there I guess I'm curious on your thoughts on the sustainability of <unk>.
Speaker Change: Next we come in and more neutralized part of Commscope can fluctuate.
Speaker Change: First, regarding the side menu, basically, this time we ran a special promotion. Typically, the effect of such promotions tends to fade about two months after the first mark, but as we enter December , we are still seeing a certain level of improvement. Fundamentally, while there may be fluctuations, I don't think we will see the kind of high single-digit or mid-single-digit negative mix that we have experienced in the past.
Speaker Change: Or.
Speaker Change: I'll try to make any concept. So once again you come back off a little bit can put almost all you have done just get them. All most of them are put on most of them are well that they thought the market and you don't get to make all of it because I'm just getting a lot what what do you think about.
Speaker Change: Considering that the heightened market from that obviously, the nickel and put them in so they can learn from the Muslim digging you Michael I don't know if I saw him uncle, you'll get a lot of demand to get them, all well put them on they know not all high single digit to the government.
Speaker Change: They're not all on all mix and a minus.
Speaker Change: Other than that I like eating almost a month.
Speaker Change: Mike, given that this is relatively recent, without giving too much forward expectations, we think the days of a negative high single-digit mix are behind us. We're really pleased with the efforts the marketing team has made. Typically, when we have a two-month campaign, you see deceleration and the effectiveness in the second half, but we're continuing to see success in December with the most recent feed-on campaign. Without commenting about the long-term sustainability of the flatish mix that we have, we think that we're in a much much better position before, and we've got all these levers that we never even considered to pull in the past. And so this is great, great progress.
Speaker Change: Hi.
Speaker Change: Given that this is relatively recent without giving too much forward expectations. We think the days of negative high single digit mix are behind US. We're really pleased with the efforts of the marketing teams made typically when we have a two month campaign you see deceleration the effectiveness in the second half but.
Speaker Change: We're continuing to see success in December with the most recent you don't campaign and so.
Speaker Change: Without commenting about the long term sustainability of the flattish mix that we had we think that we're in a much much better position than before and we got all these levers that we never even considered to pull in the past and so this is great great progress.
Sharon Zackfia: Okay. Okay. Can you talk a little bit about it? Sorry, I've [inaudible]
Sharon Zackfia: Okay. Okay can you talk a little bit and Sharon and out Richard go ahead.
Speaker Change: Yep.
Speaker Change: Yeah.
Speaker Change: In addition to the great efforts by the marketing team, one of the other reasons why Mix is improving is for the past year to year and a half when we've taken when you price increases, we haven't touched the side menu items at all. So we're lapping the increase, the menu price increases on side menus, which when you take some menu price increase on things, it does impact Mix to some extent. And because we're lapping the price increases on side menu, I think that's also why Mix is coming in line a little bit as well as the previous increasing mention more. [inaudible]
Speaker Change: And in addition to the great efforts by the marketing team. The other one of the other reasons why mix is improving as for the past year to year and a half when we've taken when your price increases we haven't touched the side menu items at all so we are lapping the increase the menu price increases onside menus, which when you take some menu price increase on things that it does impact mix.
Speaker Change: You know to some extent and because we're lapping the.
Speaker Change: Price increases on <unk> I think that's also why mix is coming in line a little bit as well as the previously mentioned mark.
Speaker Change: And then I'm sorry if you talked about this myself cut out and I had to re dial back in. But I'm delivery. I know that's, you know, a more nascent part of your business. And I understand there's obviously some operational tensions. It's given how busy the restaurants are. I mean, where are you on delivery at this point? Is it fully kind of turned on all of the time, all locations? How are you handling that? Is it proving to be incremental or bringing out of new people to the brand? And?
And then I'm sorry, if you talked about this my style cut out I had two.
Speaker Change: Redial back in but on delivery I know, that's you know a more nascent part of your business and I understand there is.
Speaker Change: Obviously, some operational attention is given how busy our restaurants are I mean, where are you on delivery at this point is that fully kind of turned on all of their time at all locations.
Speaker Change: Or are you handling that has that proven to be incremental or bring in.
Speaker Change: New people to the brand.
Speaker Change: Yeah, so I think it's definitely incremental. I think, you know, as soon as somebody opens up their Dordashop, they're basically committed to eating inside. So that guest wouldn't have been coming into our restaurant anyway. And so any so we do believe is incremental. I'd say in terms of where we are on that journey. Dordash has been alive at all of our restaurants for almost a year now.
Speaker Change: Yeah. So I think it's definitely incremental I think you know us.
Speaker Change: Soon as somebody opens up dirt road I shop, there basically committed to eating inside so that wouldn't have been coming into our restaurants anyway. So any sale. We do believe there's incremental I'd say in terms of where we are on that journey.
Speaker Change: It door Dash has been live at all of our restaurants for almost a year now.
Speaker Change: Yeah, almost eager. And it is a proof of it is the issue. We're constantly hitting ceilings just because our restaurants are busy, which is a great problem to have. Yeah, that's great.
Speaker Change: Yeah, almost a year and it's it is a throughput.
Speaker Change: The issue we were constantly hitting ceilings, just because our restaurants are so busy which is a great problem to have but.
Speaker Change: We're always going to be prioritizing the guests that have gotten the trouble of coming to our restaurants. And so, actually in film markets, and we're able to use the incremental restaurants as sort of pressure release valve for the kitchens. That's when we really see the off-premise opportunity becoming more meaningful. But at this point, we're happy where it is, especially given that it's incremental. And we don't want to distract ourselves from the major opportunity, which is the tremendous white space.
Speaker Change: We're always going be prioritizing and guests that have gotten into trouble coming to our restaurants, and so as we infill markets and were able to use the incremental restaurants is sort of pressure release valve for the kitchen, that's when we really see the off premise opportunity, becoming more meaningful but at this point, we're happy where it is especially given that it's incremental.
Speaker Change: And we don't want to distract ourselves from the major opportunity, which is the tremendous white space.
Speaker Change: of the United.
Speaker Change: The United States.
Speaker Change: Great. Thank you.
Speaker Change: That's great. Thank you.
Speaker Change: Thank you. Thank you.
Speaker Change: Thanks sure. Thank you Sal.
Speaker Change: The next question comes from the line of Mark Smith with Lake Street Capital. Please visit
Speaker Change: The next question comes from the line of Mark Smith with Lake Street Capital. Please proceed.
Mark Smith: Hi guys, our first question to me is really on the cost side on corporate kind of GNA, you know, really solve a leverage during the quarter. You know, curious, you know, if the guidance is maybe conservative as well as it kind of doesn't bake in any additional leverage throughout the end of the year, but any incentive you can give us on the guidance and if there's any costs coming in here later this year that maybe we should be watching for. [inaudible]
Mark Smith: Hi, guys first question for me is really on the cost side on corporate G&A really solid leverage during the quarter cures.
Curious if the guidance is maybe conservative as well or is it kind of doesn't bake in any additional leverage throughout the remainder of the year, but any insight you can give us on that the guidance and if there's any cost coming in here later this year that maybe we should be watching for.
Mark Smith: No, there's no there's no more cost coming in and where the guidance is implies a 60 for a 60 basis point improvement year of a year. And I'm still comfortable with that number. I do believe that after having 80 bips two years ago and 90 last year in leverage that it's hard to keep that trend of 80 to 90 points a year. So I'm comfortable with the 60. However, if sales trends do pick up and and come in higher than where we expect them to be then there's the additional leverage here. So when we get into April , I'd be happy to give an update on that if we're at the point where we can, but I do want to get through a couple more months marked before I'd increase me guidance on DNA because I still think that the 60 basis when improvement for the years pretty good.
Mark Smith: No Theres no theres number of costs coming in and where the guidance is implies a 60 for a 60 basis point improvement year over year.
Mark Smith: And I'm still comfortable with that number.
Mark Smith: I do believe that after having 80 bps to 90 last year in leverage yet.
Mark Smith: It's hard to keep that trend of 80% to 90 points a year. So I'm comfortable with the 60. However, if sales trends do you pick up and come in higher than where we expect them to be then the additional leverage here. So when we get into April.
Mark Smith: I'm happy to give an update on that if we're at the point, where we can but I do want to get through a couple of more months Mark before.
Mark Smith: Increasingly guidance on G&A, because I still think that a 60 basis point improvement for the year is pretty good.
Mark Smith: Absolutely. Another question for me is just around kind of pre-opening expenses. You know, came in a little lower than we'd expected during the quarter. You know, was that a function of just kind of the timing of some of the openings earlier in the quarter? Or are you getting more efficiencies in lower cost kind of as we think about pre-opening expenses, maybe even in some of the smaller markets? [inaudible]
Mark Smith: Absolutely.
Mark Smith: Other question for me is just around kind of pre opening expenses came in a little lower than we'd expected during the quarter was that a function of just kind of the timing of some of the openings earlier in the quarter or are you getting more efficiencies and lower cost kind of as we think about preopening expenses, maybe even in some of these.
Mark Smith: Walter markets.
Mark Smith: First of all, regarding Q1 of last year, 9 stores were under construction. So for this term, 6 stores are under construction, and they have already opened.
Mark Smith: So rather than alternative or Q1, and you talked about in the Q temple and according to at that time.
Mark Smith: Can he got that all the time, but luckily could you give us a bit on almost any I know my opening.
Mark Smith: The first point is that the number of management trainees is different. Another point, which is also related to the relaxation of G&A, is that we are actually rethinking the structure of the opening team. We are opening with about 1.5 teams instead of 2.5 teams, and we are doing this by increasing the number of teams. Some of the opening team members are local.
Mark Smith: Manav you meant the insulating no on assignment I forgot to ask you know a month ago, Although Mike ball I don't call that you'd have to send them a classical understanding what are the elements.
Mark Smith: Opening the team on a sort of a job, but that's still kind of thinking out there.
Mark Smith: And what's even more difficult.
Mark Smith: Good afternoon.
Mark Smith: All of them equally update Linda.
Mark Smith: Keep it all on opening the kimono and borrowed all cut at all and all.
Speaker Change: There is a part where it was assigned to the manager, and in that aspect, training costs have been reduced. These are the two points.
Speaker Change: But again I don't know I think you talked about most of that that's the only the tunnel training.
Speaker Change: I know you don't want them, Oh I'm sorry.
Speaker Change: There are two major things that work to our favorite in terms of pre-opening. The first is, last year, we had nine units on their construction. The sixth unit we had on their construction during the same period this year.
Speaker Change: Okay.
Speaker Change: So there are two major things that worked in our favor in terms of pre opening. The first is last year. We had nine units under construction plus is of the six units we had under construction during the same period this year.
This.
Speaker Change: We have four managers for any new restaurant, and so that's 12 managers across the three restaurant difference that we had in training. So that's an environmental labor cost incurred in fiscal 24 that we didn't have this year. The other major change is the shift in our opening team structure. Now that we've established beach heads largely across the country, we don't need the right now we have two and a half or historically we've had two and a half opening teams. Now that we've established geographic presence in enough markets, we've been able to pair back to 1.5 teams by reassigning the other members to become store managers at local restaurants. And that has meaningfully reduced our training costs as well. And so that's helped with labor, it's also helped with art.
Speaker Change: We have four managers for any new restaurant and so you can.
Speaker Change: 12 managers across the three restaurant difference that we had in training. So that's an incremental labor costs incurred in fiscal 'twenty four that we didnt have this year. The other major change is the shift in.
Speaker Change: Our opening team structure now that we've established beachheads largely across the country. We don't need the right now we have two and a half where historically, we had two and a half opening teams now that we've established a geographic presence in enough markets, where you've been able to pair back to 1.5 teams by reassigning. The other members to become the store manager.
Or is it local restaurants and that has meaningfully reduced our training costs as well and so that's helped with labor. It's also help with our G&A.
Speaker Change: Okay.
Speaker Change: Excellent. Thank you.
Speaker Change: Excellent. Thank you.
Speaker Change: Thanks, Mark. Thank you.
Speaker Change: Thanks, Mark and good.
Speaker Change: The next question comes from the line of Jim Sanderson with North Coast Research. Please proceed.
Speaker Change: The next question comes from the line of Jim Sanderson with Northcoast Research. Please proceed.
Speaker Change: Thanks for the question. I wanted to follow on to some of the conversations about mix and the shift from mid-single to negative to flatish. Have you built similar promotions to drive items per check similar to I think what happened in the first quarter? If I understood the benefit of the Paracombo, is that the right way to think of it?
Speaker Change: Hey, Thanks for the question I wanted to follow on to some of the conversations about mix and the shift from mid single digit negative to flattish have you built similar promotions to drive items per check similar to I think what happened in the first quarter. If I understood. The benefit of the pair combo is that the right way to think of it.
Speaker Change: We haven't done anything similar to this before, but this time we did it for the first time. Also, as Jeff mentioned earlier, we need to re-text price the mini price again. We continued this for a year, and these two effects are contributing to the results.
Speaker Change: Yeah.
Speaker Change: I know, we're coming up with a lot of appetite to get them all on a phone call.
The auto market.
Speaker Change: I'm proud of them and you put I feel I don't know.
Speaker Change: But I think we can actually now clearly tenants until they get that I'll call them stuck in the hole and I'll.
Speaker Change: It was really to hit it is normal to us.
Speaker Change: Yeah, no, we were really pleased with the perfect pair campaign. It's the first time we've done something like that. And so I'd be very, very surprised that it was the last time we've done something. We'll do something like that. I think it's going to be a useful tool in our food focused marketing box. Jimmy, I'm sorry. What was the second part? Yeah.
Speaker Change: Yeah, No we were really pleased with the the perfect pair.
Speaker Change: Campaign, it's the first time, we've done something like that and so I'd be very very surprised if it was the last time, we've done something well do something like that.
Speaker Change: Could it be.
Speaker Change: A useful tool that our food focused marketing box Judy I'm, sorry, what was the second part.
Speaker Change: Plus, as Jeff said, everyone is gradually hearing that we didn't take the final menu price for a year.
Speaker Change: But I feel like that kind of thing.
Speaker Change: I saw you could end up I don't know if there's anything.
Speaker Change: Okay.
Speaker Change: And the other part of the mix is that we haven't taken pricing on side menu to the last year. And the reason that that's important in terms of mixed headwinds is that there's less attachment on side menu items. And so you get less flow through on pricing that you take on side menu versus pricing that you take on plates. And so that was a mixed pressure, now that we've laughed at, that's less of a mixed price.
Speaker Change: And the other part of mixes that we haven't taken pricing on side menu up to the last year and the reason that that's important in terms of mix headwinds is that theres less attachment onsite menu items and so you get less flow through.
Speaker Change: On pricing that you take onsite menu versus pricing that you take on place and so that was the mixed pressure now that we've lapped that that's less of a mix pressure.
Speaker Change: Additionally, we are doing LTO (Limited Time Offer), and we are introducing attractive items through LTO. By doing so, we are continuing our efforts to have people eat more than usual.
Speaker Change: Okay.
Although there is a deal that didn't get them all at a deal that you've taken like inventory instead of putting your pitch it seemed like in the open market.
Speaker Change: I don't know the school kids are shifting.
Speaker Change: Another thing that we're doing sport mix is leading into our LTOs with some more premium items. We've seen that if we have the right LTOs, we can just increase attachment. It's not really a trade so much as just, you know, a tech growth opportunity. And so that's another lever that we have for. And so that's another thing that we're doing sport mix. And so that's another thing that we're doing sport mix is leading into our LTOs with some more premium items.
Speaker Change: Another thing that we're doing support mix is leading into our L. T OS with some more premium items, we've seen that if if we have the right LTE owes you can just increase attachment, it's not really a trade so much it's just.
Speaker Change: Check growth opportunity and so that's another lever that we have sort of a mix.
Speaker Change: All right. Thank you for that. Just a follow-up question on that. I think you had a promotion in the current quarter that is related to a contest for average check higher than $70. Is that the type of promotion that could help improve mixed going forward? Is that the way?
Speaker Change: Alright.
Speaker Change: Thank you for that just a follow up question is I think you had a promotion and in the current quarter.
Speaker Change: Is it related to a.
Speaker Change: Contest for average check higher than $70 is that the type of promotion that could help improve mix going forward is that the way to think of it.
Speaker Change: The first time we created such scratch cards was not due to the high cost associated with marketing campaigns. In past IT collaborations and giveaways, if the cost exceeds $70, you can buy a T-shirt. Such efforts allow us to see the impact of check sizes and mixed attach cards.
Speaker Change: Absolutely.
Speaker Change: This is the first time, we've done like a holiday scratch or any sort of scratch cards, but this is not the first time that we've tied a marketing campaign towards spending threshold in the past when we've had IP collaborations we've had giveaways, where you can get say like a T shirt or something if you spend more than $70 and these sorts of efforts have yeah, you can really see.
Speaker Change: The impact in check size and mix of attachment.
Speaker Change: All right. Thank you for that. Quick question on traffic trend. I think on a two-year stack basis, you saw a deceleration in traffic trend. Is that where we are today? Is that a good run rate? Though the low single positive positive traffic on a two.
Speaker Change: Alright. Thank you for that a quick question on traffic trends I think on a two year stack basis you saw it.
Speaker Change: A deceleration in traffic trend is that where we are today is that a good run rate.
Speaker Change: The low single digit positive traffic on a two year stack.
Speaker Change: Yeah, I mean, the thing, the number, really, I want you guys to focus on is the improvement from Q court, the minus 6.1 to minus 2.3 in this quarter. I think that's what's important because you know, we have some bumps in the road last year when we in July and summertime and we talked about that and some of our previous calls. And where the number came out for this quarter at 1.8% we're very happy with that. And quite honestly, even though we don't get quarterly guidance, I don't have a problem showing you a tire that I thought it would be for Q1. And I think it's higher than any of us thought it would be. So I'm happy with that number. And I think it's most important to look at it that way, just the summertime, something like I said, some of the bumps in the road during the summertime. And then also some of the weird things happening in November with the election. I think there's a lot of noise to look at on a two year stack. So I'd rather focus on the quarter of a quarter from Q4 to Q1 improvement.
Speaker Change: Yeah Yeah.
Speaker Change: I think that number currently I want you guys to focus on is the improvement from Q4 at the minus six one to minus 2.3 in this quarter I think that's what's important because you know we had some bumps in the road last year when we in July and the summer time, and we talked about that in some of our previous calls.
Speaker Change: And where the number came out for this quarter at one 8%, we're very happy with that and quite honestly, even though we don't give quarterly guidance I don't have a problem telling you it's higher than I thought it would be for Q1.
Speaker Change: And I think it's higher than any of us thought it would be so I'm I'm happy with that number and I think it's most important to look at it that way.
Speaker Change: The <unk>.
Speaker Change: Summertime sounds like I said some of the bumps in the road during the Summertime and then also some of the weird things happening in November with the election, I think theres a lot of noise. So look at it on a two year stack, so I'd, rather focus on quarter over quarter from Q4 to Q1 in Paris.
Speaker Change: All right, last question for me. Could you just briefly review the shares outstanding to be used for a second quarter in physical 25 based on the follow?
Speaker Change: Alright last question for me could you just briefly review the shares outstanding to be used for a second quarter in fiscal 'twenty five based on the follow on.
Speaker Change: Yeah, I have that number.
Speaker Change: Yeah, I have that number.
Speaker Change: <unk>.
Speaker Change: Why don't we go to the next, I'll get you that, Jon. I don't have a final date, but I'll get that. I believe it's $12,000.
Speaker Change: Why don't we go to the now I'll get you that Jeff.
Speaker Change: Thank you can front of me.
Speaker Change: I believe its 12000.
Speaker Change: 12 million. 12 million shares. Yeah, I'm just yeah, I mean, well now that it's only
Speaker Change: So the $12 million I'm sorry, Scott.
Speaker Change: Chairs.
Speaker Change: Yeah understood.
Speaker Change: Well now.
Speaker Change: 12 million or something like that.
Speaker Change: Okay, very good. Thank you. I get it.
Speaker Change: Okay very good thank you I got it.
Speaker Change: Yes.
Okay.
Speaker Change: The next question comes from the line of George Kelly with Roth Capital Partners. Please proceed.
Speaker Change: And our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed.
George Kelly: Hey, everybody. Thanks for taking the question.
George Kelly: Hey, everybody thanks for taking the questions.
George Kelly: First one, I think you mentioned in your prepared remarks that there's a new Mr. Fresh dome launching in February . And I was just kind of surprised to hear that what's the opportunity there is.
George Kelly: First one I.
George Kelly: Thank you you mentioned in your prepared remarks that there's a new mixture fresh dome launching in February and I was just curious kind of surprised to hear that what's the opportunity there is it.
George Kelly: Uh, maybe more kind of labor intensive than I would have thought or just what what's the the reasoning behind that that one?
George Kelly: Maybe more kind of labor intensive than I would've thought or just what's the reasoning behind that that launch.
George Kelly: Do you remember the first time you went to the Kura Sushi, and you tried to open one of those Mr. Presses? They're not included.
George Kelly: Do you remember the first time, you went to occur sushi.
George Kelly: And you try to open one of those Mr brushes.
George Kelly: They're not intuitive.
George Kelly: You sort of need somebody to explain them because you need to go under and lift it and pretty much, if you go to one of our restaurants, you I pretty much every time I go I see somebody trying to pry it open like it's sort of like an auto with a clam and it's it's just
George Kelly: You sort of need somebody to explain them because it's you need to go under and lifted and pretty much. If you go to one of our restaurants.
George Kelly: Pretty much every time I go I see somebody trying to pry. It opened like is there like an order with a clam and it's it's just.
George Kelly: You know, it's confusing because most things aren't open like that. And because it's not intuitive, our servers will spend two, three minutes explaining this. They'll even bring a Mr. Refresh to the table so the guests can actually practice it to get accustomed to that. And so it's not very desperately. It eats up our server's time. And the new Mr. Refresh is just, it's a push button. It's, it works exactly as you'd expected to work. And we're really excited. It's just, it's a lot friendlier. It could be intimidated to come into a restaurant and not know how to, you know, order, not know how to take things off the belt. And this
George Kelly: Yeah.
George Kelly: It is it's it's confusing because.
George Kelly: Most things arent opened like that and because it's not intuitive our servers will spend two three minutes explaining this though you can bring a Mr. Fresh to the table to the guests can actually practices.
George Kelly: Get accustomed to that and so it's it's it's not very guest friendly E E.
Speaker Change: Surfers time, and the numerous refreshes just because it's a push button. It's it works exactly as it as you would expect it to work and we're really excited it's just it's a lot friendlier it can be intimidating to come into a restaurant and not know how to order not know how to kick things off developing this.
George Kelly: This can provide a very kind experience to everyone.
George Kelly: I think this just makes it a premier experience for everybody.
Speaker Change: Also, we are updating the touch panel at the same time, and on that touch panel, there will be guides for first-time guests on how to enjoy dining at the restaurant, how to order using the touch panel, how to pick up ordered items, how to open Mr. Fresh, and what to do during reviews. These guides will be explained on the touch panel, which will significantly reduce the server's workload by covering everything.
Speaker Change: Okay I don't know if that's funding amount what anybody building up with it up with it will sit I'm just getting old.
Speaker Change: Many of the demo plus time gift elite electrical put out there.
Speaker Change: I was hoping Youll English that's fine it isn't all that much about that at all desktops all kinds of things.
Speaker Change: Adobe stock question I'll kick off the adult even though if you could give us a little color.
Okay.
Speaker Change: That's one of the data that sits in this idea of an update on that so do you have to meet they have clinical today cannot be.
Speaker Change: On a local basis.
Speaker Change: He can Nicholas.
Speaker Change: There are a lot of things that are unique to our restaurant that need to be explained if you're coming for the first time, such as how our place plots work, the fact that we pick up ons or you can win prizes. And so for first time, yes, you need to go through and explain all of these different things, but in tandem with the Mr. Fresh 2.0, we're actually we're releasing a new order update to the order panel software that on its landing page, we'll have a button asking for your first time to ask. And if you put that, it'll play a video. That will basically teach you how to enjoy Kura. And so that meaningfully reduces server work as well. Having to do dozens of those during like a weekend peak hour is just, it's a meaningful drain on productivity. And so being able to streamline this is something that we're really excited about.
Speaker Change: There are a lot of things that are unique for a restaurant that need to be explained. If you are kind of the first times. So just how are placed what's worked in fact, we've got ponds, where you can win prizes and.
Speaker Change: So for first time, yes, you need to go through skill explained all of these different things, but in tandem with the mis refresh 2.0, we're actually.
Speaker Change: We are releasing a new order.
Speaker Change: Date to the order pedal software that.
Speaker Change: On its landing page will have a button asking for your first time guests and if you put that it'll play a video that basically teach you how to enjoy correct and so that meaningfully reduces server work as well, having having to do dozens of those turning like a weekend peak hour.
Speaker Change: It's a meaningful drain on productivity and so being able to streamline this is something that we're really excited about.
Speaker Change: Okay, excellent. That's helpful. Thank you. And then second question for me is, or maybe a couple questions on the reservation system. Most of the conversation in this call with respect to the reservation system has been about the opportunity for for cost saving.
Okay excellent. That's helpful. Thank you and then second question for me.
Speaker Change: Is or maybe a couple of questions.
The reservation system most of the conversation in this call with respect to the reservation system has been about the opportunity for <unk> for.
Speaker Change: For cost savings.
Speaker Change: But I'm curious if you could also discuss the opportunity to drive comp growth and what I'm unclear on I guess is sort of how much you talked about it and I think improving comp performance for a bunch of different reasons in the back cast is the reservation system is that a big factor in that sort of accelerating comp as well and just how is it going to work or are you going to open up a lot of inventory to the system or is it really just kind of shoulder periods or if you could just give more detail there to that would that would be helpful. Thank you.
Speaker Change: But I'm curious if you could also discuss the opportunity to drive comp growth.
Speaker Change: And what I'm unclear on I guess is sort of how much you talked about it and I think improving comp performance for a bunch of different reasons in the back half as the reservation system is that a big factor in that sort of accelerating comp as well and just how is it going to work or are you going to open up a lot of inventory.
Speaker Change: On to the system or is it really just kind of shoulder periods or if you could just give more detail there too that would that'd be helpful. Thank you.
Speaker Change: Yeah, so in terms of inventory, that's actually one of the most difficult parts of this project is figuring out the right number of tables to allocate for reservations. And that's actually we need to do that on a scroll by store basis. And so that's the operation scene is hard at work on that in terms of the traffic opportunity. So what to pan saw with its implementation is that the peak hours would fill up pretty much immediately. And people would realize that and rather than show up and wait for an hour and leave. They would make reservations for the shoulder periods, 5 o'clock, 9 o'clock, 10 o'clock. And if.
Speaker Change: Yes, so in terms of inventory that's actually one of the most difficult parts of this project is figuring out the right number of tables to.
Speaker Change: Allocate for reservations and Thats actually we need to do that on a store by store basis and so that's the operations team is hard at work on that in terms of the traffic opportunity. So what Japan saw with its implementation is that the peak hours would fill up pretty much immediately.
Speaker Change: And people would realize that and rather than show up and wait for an hour and we he would make reservations for the shoulder periods five o'clock nine o'clock 10 o'clock.
Speaker Change: And.
Speaker Change: They didn't want to do that, and they made reservations for the next day, or the weekend. And so...
Speaker Change: They didn't want to do that then they need reservations for the next day or the weekend and so.
Speaker Change: Yeah.
Speaker Change: With our historical weight list, we've had about a 20% drop off where people will sign in and then not eat because the lines are too long. And so that 20%, this is an opportunity to address that directly. I'm by no means my expecting a 20% traffic bomb, but that is a massive opportunity for us. I'm really excited.
Speaker Change: With our historical Waitlist, we've had about a 20% drop off where people will sign in and then not used because the lines are too long and so that 20%.
Speaker Change: This is an opportunity to address that directly.
Speaker Change: By no means my expecting at 20 per cent chocolate bar, but that is a massive opportunity for us I'm really excited.
Speaker Change: Okay, understood. Thank you.
Okay understood. Thank you.
Speaker Change: Thanks George, thank you George [inaudible]
Speaker Change: Thanks, George Thank you Jos.
Speaker Change: Any expression comes from the line of Todd Brooks with the benchmark company? Please proceed.
Speaker Change: And the next question comes from the line of Tom Brooks with the Benchmark Company. Please proceed.
Tom Brooks: Hey, thanks, and great start to the year.
Tom Brooks: Hey, Thanks, and great start to the year.
Speaker Change: I have just a few tag-in type of questions. Just following up on George's questioning there. How quickly does this turn on? Once you start the roll-out...
Speaker Change: Just a few tuck in type of questions just following up on George's questioning there.
Speaker Change: How quickly does this turn on once you start the rollout.
Speaker Change: of the Reservation and Self-Seating Platform. Ben, you said it. It's a store-by-store algorithm, but it's just a start to turn on in Q2, and it takes a couple months to turn the system on, or is it a longer duration?
Speaker Change: Of the reservation and self soothing platform. Then you said it it's a store by store algorithm, but it's just a start to turn on in Q2 and it takes a couple of months to turned the system on or is it a longer duration than that.
Speaker Change: So the goal that I'm holding myself to, which is ambitious, is a full system wide roll out by the end of the fiscal year. And so everything so far has moved on track. It's been remarkably smooth. We have our first in restaurant test next month. I'm extremely pleased with all of our partners. Everybody's really coming together to make sure that this goes on schedule after we have will probably test in the first restaurant for about a month or so, and then begin the roll out. In earnest, my expectation with the eight.
Speaker Change: So the the goal that I'm holding myself too which is ambitious.
Speaker Change: Full system wide rollout by the end of the fiscal year.
Speaker Change: So everything so far has moved on track it's been remarkably smooth we have our first in restaurant test next month I'm extremely pleased with all of our partners.
Speaker Change: Everybody has really come together to make sure that this goes on schedule.
Speaker Change: After we have we'll probably testing the first restaurant for about a month or so and then begin to rollout.
Speaker Change: In earnest my my expectation would be April.
Speaker Change: Okay, great. And you spoke to Japan's experience in rolling it out and picking up shoulder reservations and four-day reservations.
Speaker Change: Okay, Great and you you spoke to.
Speaker Change: <unk> experience in <unk>.
Speaker Change: Rolling it out and picking up children reservations and forward day reservations.
Speaker Change: and you talked about the abandonment off the waitlist here in the States. And you talked to the experienced in Japan from a traffic lift standpoint from having the system pull their roll down.
Speaker Change: And you talked about the abandonment off the wait list here in the states can you talk to the experienced in Japan from a traffic lift standpoint from having the system fully rolled out.
Speaker Change: Mugano.
Speaker Change: No no no.
Speaker Change: Since they are different companies, to be precise, I don't fully know their information accurately either, but I think there was an increase in traffic at a meaningful level in a sense.
Speaker Change: Got it.
Speaker Change: Oh, gosh, I definitely won't take up I'm, just kind of put it on the dual hole on a lot of small companies. They doesn't hold on I guess get them all because I didn't meet my need is already been an all all carotid upwards.
Speaker Change: As for the rest, what is more certain is that the headcount will definitely decrease, so we are anticipating that. If sales increase, I think that would be a bonus.
Tableau public is none of that.
Speaker Change: It doesn't relate at all even when you've got the whole company if it isn't one of them.
Speaker Change: All in all what it went up a nickel NEMA.
Speaker Change: And also could have blown them kind of picking them up.
Speaker Change: I've given a career in Japan as a separate publicly traded company. We can't speak to them in too much detail. Our understanding of what we've heard from them is that it did have a meaningful impact on on traffic. It's the third eye.
Speaker Change: Hi.
Speaker Change: Given the current Japan as a separate publicly traded company.
We can't speak to them in too much detail, our understanding and what we've heard from them is that it didn't have a meaningful impact on traffic, but I.
Speaker Change: We're not able to quantify that right now. In terms of the salesman,
Speaker Change: We're not able to quantify that right now.
Speaker Change: In terms of the sales lift.
Speaker Change: What one thing that we're really excited about with the reservation system is that there is a guaranteed benefit in head count reduction as it is coupled with the self-seating system and it is a massive improvement to get satisfaction because we're introducing reservations for the first time and our primary complaint is [inaudible]
Speaker Change: What one thing that we're really excited about with the reservation system is that there's a guaranteed benefit and head count reduction as it is coupled with the self seating system and it is a massive improvement to guest satisfaction, because we're introducing reservations for the first time in our primary complaint is.
Speaker Change: or Ray Times. And so this is a direct way to address that. And so we've got two things that we know for a fact or coming with this project. And so you're going to see there isn't a sales lift. There's still plenty of upside. We do expect a sales lift. Bye.
Speaker Change: Our wait times and so this is a direct way to address that and so we've got two things that we know for a fact are coming with this project and so even if there isn't a sales lift there's still plenty of upside we do expect the sales lift but.
Speaker Change: In any case, we're still happy with this problem.
In any case, we're still happy with this project.
Speaker Change: and the follow-up, different angle.
Speaker Change: That's great and the follow up different angle.
Speaker Change: with the labor efficiency, and you look at the initiatives around consolidating the stations down to three in the back of house and you look at upcoming self-seating.
Speaker Change: With the labor efficiency and you look at the initiatives around consolidating the stations down to three in the back of house and he looked at you'd look at upcoming self feeding.
Speaker Change: Can you look at what took the staff the restaurant two years ago versus what it should take to the staff the restaurant, post the rollout of self-seating. How much is that number dropped from a number of bodies to him?
Speaker Change: If you look at what it took to staff the restaurants two years ago versus what it should take to staff. The restaurant post the rollout of self seating how much does that number dropped from a number of bodies standpoint.
Speaker Change: First, with just back-off and sailing seating, I think we can reduce at least one person in the host and software positions. Additionally, considering things like misapprehension and touch panel updates, I think there's a possibility of reducing one more person during peak times. However, I think we need to actually try it out. There's a certainty of reducing one person, and possibly two.
Speaker Change: Well a lot of those I'll call it the Hudson.
Speaker Change: He didn't see things that they do.
Some of them are hostess hustle and put it online and then how many of whom he said I cannot say that the lingo.
Speaker Change: Well, let me start with it so that's probably enough with that though I'll flip them off and I think.
Speaker Change: Most of my adult well figure it out and look at it though most of that kind of fill out the window.
Speaker Change: What do you think that the I mean.
That particular, one I still don't have any sense, because I do nothing with the amount of the month to month.
Speaker Change: Uh, just to confirm, are you are you talking about historically or expectations going full?
Speaker Change: Just to confirm are you are you talking about historically or expectations going forward.
Speaker Change: I'm just trying to get an idea, the efficiency, if you pick, um...
Speaker Change: I'm just trying to get an idea of the efficiency.
Speaker Change: You pick.
Speaker Change: I'm pulling the numbers out from memory, but if it was 22 people per shift, then...
Speaker Change: I'm pulling the numbers up from memory, but if it was 22 people per shift and.
Speaker Change: with what we say to the consolidation, are we going to 18 people per chef, once we get to the end of these improvements?
Speaker Change: With what we saved with the consolidation and say are we going to 18 people per shift once we get to the end of these improvements.
Speaker Change: So if we're comparing, like, say, like, pre-pandemic staffing, I'd say that it keeps Back of House and Front of House has gone down by about two people each. And so it's been a pretty meaningful. But...
Speaker Change: So if we're comparing like say like pre pandemic staffing I I'd say that a key back of house and front of house has gone down by about two people each and so it's been a pretty meaningful.
Speaker Change: Streamlining the operation
Speaker Change: Streamlining.
Speaker Change: The operations.
Speaker Change: As for the back of house, we are down one person, but it is limited to peak times. Busy stores are also busy on weekdays, but it is mainly limited to weekends, although busy stores are also busy on weekdays.
Speaker Change: Although luck over the holiday.
Speaker Change: So to hit didn't get them all on the <unk> you can't get anything.
Speaker Change: Other things about hey, get somebody to get on a weekly and been played out.
Speaker Change: He doesn't want me to get them all.
Speaker Change: As I mentioned earlier, in terms of having fewer betrayals like the ninth point, there will be fewer days when the number of people decreases.
Speaker Change: And then in terms of the data.
Speaker Change: Oh, Doug enough Tonight to go to do it all hit in the U K to India, the heater skin up with other people.
Speaker Change: And then in terms of the operational streamlining that we discussed in the past call about the station consolidation, that opportunity really does come from the restaurants being busy.
Speaker Change: And then in terms of the operational streamlining that we discussed in the past calls.
Speaker Change: About the station consolidation that opportunity really does come from the restaurants being busy.
Speaker Change: and so the upside is just going to grow and grow as the feasibility kicks in as we progress through the year.
Speaker Change: And so yes.
Speaker Change: The upside is just going to grow and grow as the seasonality kicks in as we progress through the year.
Speaker Change: Okay, the last one for me.
Speaker Change: Okay, and then last one for me.
Speaker Change: You obviously have visibility into the IP partnerships for the back half, and I think-
You, obviously have visibility into the IP partnerships for the back half and I think.
Speaker Change: We had two in Q1. We won't have one in Q2. How does the back half from a number of partnerships match up versus I think three last years? Is it three to three or are we stepping down a number of partnerships but maybe making it up with the magnitude of who we're partnering with? Thanks.
Speaker Change: We had two in Q1, we won't have one in Q2, how does the back half from a number of partnerships match up versus I think three last year. So it is a three to three or are we stepping down a number of partnerships, but maybe making it up on the magnitude of of who our partner. Thank you.
Speaker Change: Regarding our back work, we only have two strong IP collaborations.
Speaker Change: I wonder what about goals when it comes to almost nothing on Sealy 80 kilometers long.
Speaker Change: It looks like it looks like.
Speaker Change: This is also very much in our favor due to these two factors.
Speaker Change: But I'm looking at something that might be doing.
Speaker Change: They pull into the month.
Speaker Change: We have two lined up for the back half. They're very strong. We're really excited.
Speaker Change: So are we to lined up for the back half, they're very strong we're really excited about them.
Speaker Change: Okay, perfect. Thank you. Thank you.
Speaker Change: Okay perfect. Thank you.
Speaker Change: Thank you.
Speaker Change: There are no further questions at this time, and this will conclude today's
Speaker Change: There are no further questions at this time almost will conclude today's levels.
Speaker Change: We may disconnect your lines at this time and enjoy the rest of your time.
Speaker Change: Connect your lines at this time.
Speaker Change: Enjoy the rest of your goal.
Speaker Change: Okay.
Speaker Change: Hmm.
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