Fiesta Restaurant (FRGI) 5 Mar 212020 Q4 Earnings call transcript

Welcome to Fiesta Restaurant Group Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Raphael Gross, Managing Director at ICR. Please go ahead sir.

Thank you. Fiesta Restaurant Group's fourth quarter 2020 earnings release was issued after the market closed today.

already website, it Relations www.frgi.com, not on be section. have company's the under you accessed could it, found If the Investor

outcomes Important cause factors be call, can SEC the those believes today's that, differ expressed forward-looking materially and the company limitation, projected discussed, found during implied in not results to strategy, filings. based for Before in Actual you from historical position statements budget, information. results will statements like measures and by will the I'd non-GAAP company's statements financial on the correct. the various note the call include, be be that or which actual and Please future certain could conference its what no and in comparable measures from such forward-looking for can release. earnings company's objectives plans, forward-looking during as such give prove financial is prepared without that make assurance and forecasted are in we may substitute information management with business in isolation performance. be of results to is evaluating Any or a discussion be company results regarding costs accordance and statements, the today, of company company's that to or in materially can to statements will operations, such should These differ the operations. a expressed useful reconciliation statements not begin, GAAP, of considered that, forward-looking available inform future GAAP

now, Financial to Officer, are Officer, Chief the call Chief over Rich and with I call today turn me Executive the and will On Dirk Montgomery. And Rich. Stockinger; President

key priorities be on investors three all topics a on I'll first a of Raphael. brand, you, fourth then will an for the our other for provide in recap today quarter for each XXXX. today, continued the their participants financial key call like and I'd sales-driving Thank overview support. of priorities, initiatives the of the progress covering thank Dirk of made the XXXX update. to we status and

XXXX, closed against we we in our pandemic with strong progress As the March were when priorities began. made we the identified pleased

place liquidity customers increased of guests restaurant result and continue we EBITDA through will in our to platform we capital sales investments XXXX. maximized that property efficiency, expect sales. we margins, first, safety growth in the working our We made important in strong digital And and

of COVID, we sales, we fourth other comparable quarter, closures, restaurant XXXX. of brands versus third brands, As of result XX% to we our room to concentrate sales perspective, growth tripled the compared last channels offset fourth quarter adjusted representing a approximately to our than improving sales year. XX% the more continued dining sales. compared a our sales had And the generated margin pre-COVID of comparable to at the In least on loss of restaurant From from XXXX. drive-thru margins from the momentum EBITDA both fourth delivery have quarter, both quarter at

reduction extra in the and XX% cost efficiency. EBITDA was a consolidate XXXX. to $X.X versus the adjusted adjusted year, margin non-GAAP on income impact and Our million labor XXXX adjusted compared in the After $XX.X EBITDA, at pre-tax to Consolidated increased The estimated million. $X.X million. excluding week week EBITDA for consolidators, XX.X% food last is extra the grew XXXX estimated, continued million fiscal improvements income by fiscal of was year Net driven quarter. in measure, improvement was $X.X

improved overall the financial Our position start of the from pandemic.

to liquidity, By maturing consumer greater initiatives. $XX.X in growth, XXXX and digital XXXX million will as We very non-GAAP million million provides measure the the debt, prior properties of reduced also at that a investments allow the end we own January the over pandemic, start our was a continue our selling progress, made the of good $XX.X us and credit agreement, facing flexible closed With in debt and senior including of quarter. replaced the we into XXXX. financial XX more facility new million XX agreement net XX the of leaseback had of or $XXX.X January $XX.X half down on million, On of sell longer-term of proceeds reduction remaining the credit to Net which of November first X, three from entered the XXXX. and properties, properties as expect sale our senior XX, in X, of year, the with from XX, a generating transaction to pandemic, as the sale to in loan total $XX.X XXXX. at start March

be However, will there that the sales assurance the anticipated remaining no can occur. property

In generated by full flow provided addition, million. cash activities of we $XX.X year operating

progress wherever our Now to of to changing We continued business status highlight we'll results the QX better channels, our during brands and to environment a developing quarter fourth across in model enjoy however, they brand. choose. the safely initiatives and on made customers accelerate at each designed all enable sales this our

quarter Our enhancing big drive-thru and were the two experience. focus digital platform improving areas further our over the

are stars of We currently new ratings positive Pollo our compared prior App for in ratings on for three XXXX. app. stars the high XX% Total consumer brands improved sales X.X below of Taco, seeing and to quarter on benefits apps brands both across versus feedback both have at fourth brands. X.X online and building our Store Both

enables Taco the via of XX% addition, began our the important new placed curbside we Cabana. know In implementation Tropical the online to which creates arrive include XX% to have quarter, is the run orders ordering communication were consumer customers the promotions. ability averages enhancing app geofencing since ready, apps launched check when restaurants the pickup pickup, fourth for and the order enables by increased to In Pollo to for at that and that customers, customers their functionality, our location-based to very

completed the be in to fencing first half geo XXXX. on implementation the expect of We

be began technology. current an we with forward leading And channel, continue the very industry initiative channel drive-thru fourth important. move Regarding technology in as infrastructure our to the digital drive-thru upgrade we believe will quarter replacing to this we our

car first The the in faster to and further will These connectivity lines. in peak will drive-thru improvements upgraded into cycle of faster encouraged back remote quarter improved improve called with fourth results this early the take payment phase customers in XXXX. ordering order And in with are pods, initiative upgrades periods. continue our we devices time devices demand initiative, which during began and of the drive-thru

location-by-location open to based be approach on and key to rooms dining Our criteria continue a basis. will two

ability a profit maintain on health generate rooms dining staffing, all on team to to Partly our ability and sales while dining in consumer recently believe based members response its time are brands open. rooms to Pollo interest, safe we dining environment Our at and we is our deteriorating Cabana incremental both now growing what opened margins. and late currently rooms with not open guests the to has began Taco Tropical units. open February. our four XX exception to of patios in

evaluating sales business. should open unit trends are which to determine weekly We be for dine-in

highlight have acceleration again year of in quarter quarter, impact channel. XXXX quarter growth changing quarter the with both fourth fourth to the Pollo improved I’ll with XXXX sales more versus of status to each QX last sales this XX% than XXXX. improvement comparable of compared compared December brand, Storm, strong grew third quarter. showed driven and Tropical, of for sequentially led comparable the sales minus in off-premise January into the sales initiatives points improved comp fourth to off-premise of check fourth with the trends accelerate tripled showed restaurant our Now fourth channels accelerated of traffic adjusted would comparable even by sales the basis down marketing at and approximately the Delivery strong Starting X.X% promotions. quarter the Eta restaurant environment been above sales sales and and comp comp in the the Drive-thru also quarter, versus of delivery Pollo Tropical the by to and sales over and XX course higher. continued during last X.X%. and sales stronger X% growth year sales the The from restaurant comp quarter Drive-thru quarter After adjusting results

sandwiches our absolute contribution were line Handheld the XX% mix, well doubled On more innovation compared margin to resulting new than pre-launch inspired for accretive menu compared in dollar quarter. in sales. category over company the performed fourth the of and the all pressed Cuban both five averages and front to brand to sales check sandwich averages growth

perspective, Miami prior fiscal to Pollo last The year. in we Chicken Spicy increase margins, customer includes co-marketing point extra new with lapsed to further Pollo EBITDA XX.X% adjusted extra Sandwich, compared After in EBIT team. XXXX margin to from restaurant windows. Heat launched level visits line adjusted sales been We in week, basketball and measure XXXX. of XX.X% a expand We Crispy improvement back are From margin HEAT the Miami non-GAAP this XXX have a XXXX our over plan promotional or NBA also grew adjusting level we recently basis in year. restaurant rate the which an would a margin an XX.X% a week brought

comparable XX% quarter. improved growth the Cabana, from fourth fourth driven basis off-premise last XX% of also and to quarter in during into fourth quarter sales in delivery to Delivery The XX% above by year January versus The tripled for in quarter growth promotions compared more restaurant and the quarter Taco the compared sales drive-thru down. grew the than to points off-premise led third sales comparable again comp sales XXX and improved third XXXX improved accelerated strong the showed versus channel. restaurant down quarter, restaurant quarter Drive-thru Turning marketing. year trend comps to by sales channels last improvement traffic the continued comparable from the XXXX.

leverage be Margarita events Margarita revenue opportunity a from check platform. And a developed continue of this calendar in has drive-thru. Platform XXXX, to of continues growth Taco for Our to the the to growth driver promotional

as in to per addition, third providers select we’ll incremental alcohol differentiate delivery expanding dollars and XXXX In drive party sales service sales brand our way be a order. with

perspective, overview XX.X% the we'll an over fourth menu period. margin drove mix in a launch to creating year. In grew check EBITDA key in XX.X% all to category in After of quarter concentrate are compared category grew sales, growth averages introduced My the and margin last of additional continue above fourth results total From guest have developing measure XXXX In Taco higher plus As differentiated of historical evolving in the across menu non-dine-in of – Cabana points culinary We over this to guest per third we in the in the is from Enchilada basis to more the our and company and And topic the of course to continue would average line fiscal from brand average gross will non-GAAP differentiated XXXX plan the were pre-launch extra a well to XXXX the to extra we X.X% have XXX accretive X% great match our and that year. transaction behavior. for week channels. experience versus to includes a on adjusting and a quality sales we adjusted for margin recipes XX-year-old I Enchilada focus brand. experience pre-launch grew focus last enchiladas items on or X% rate channels a changes mentioned improve quarter. true quarter. also check authentic XXXX, dollars and that Taco Taco customer to our EBITDA to on week, adjusted margin of The restaurant. XXXX. quarter, heritage margins, an innovation performed Tex-Mex refocused been XXXX. the priorities.

improve curbside marketing. drive-thru order cycle LTOs orders. to continue make improve sales for experience, speed digital check ease planning and new and menu improvements to designed through our and differentiated are delivery to to for technology infrastructure to channels, We times improved platform, in changes such enhanced speed use geofencing digital traffic enhancements We intend off-premise and to the as drive designed further effective and and of drive-thru introductions,

will rooms in be in We also a driving key dining component XXXX. also the reopening believe of our sales

continuing the refining brand of In process the Tropical are assets. we addition, Pollo

have plans existing results refinement We to markets. new process in qualitative completing research the is strategy in brand allow brand the brand paused completed for this us In the positioning development are The to and quantitative an of clear will enhanced research both COVID our develop research. phase in part of and and new we and effort process, our that a XXXX. restaurants of provide

market learned will intend we have research. the during of and to future. However, resume development we COVID-XX in pandemic new restaurant the our new Development incorporate what restaurants

XXXX, enable Pollo both we locations. geographic for expansion we and franchise operating company owned to During plan complete future brand will that and through model positioning refinements believe Tropical,

I team Cabana over for will margins. than existing are crisis more to are will unit fourth we be over the highlights focus for pleased in believe now and and members to improving XXXX. financial strong are that I'll today ensuring to the sales and and await continue stronger the course to thank improve of to cover the the when primary initiatives opportunities XXXX that average on Taco and to Dirk Our about beyond it XXXX continue with we turn quarter momentum that summary, results detail. capitalize we began to ready our want the crisis. accelerate build sales in are In our growth optimistic

the fourth and you We in restaurant $XXX.X were plans our at improvement. in fourth of to due to revenues brands, everyone. X.X% along fourth sales margin the the good restaurants and very with both million declined of sales, performance quarter our quarter driven of decrease on quarter a pleased Rich, profit an which by $XXX.X XXXX. to comparable you, with Cabana. sales COVID-XX, principally I'll our million impact XXXX update results reviewing in financial start fourth was related provide in with Total by Taco from of quarter and then closed growth for Thank terms afternoon, XXXX in decreased the

XXX Tropical to quarter same-store X.X% basis basis comp the down points trends same-store from quarter and fourth third the Pollo for fourth sales with Our fourth points XX% sales improved levels improving quarter, Taco Cabana comp down comp improving trend quarter. the XXX XXXX for to

dine-in debt measure negative $X.XX XXXX margins EBITDA restaurant the impact has off-premise including impact fiscal of or consolidated their both As consolidated adjusted same-store After allowance, compares XX% including million the Rich included extra This was net share to non-GAAP valuation per $X.XX quarter to extinguishment a quarter restaurant the and by tax Consolidated diluted consolidated share a reconciliation the XX% $XX.X allowance. XXXX adjusted non-GAAP adjusted per prior drive-thru sale-leaseback and loss tax increased share, year, per $X.XX closed offset year by charges. diluted million. quarter deferred a dine-in is the more approximately to income favorable of of $X.X share EBITDA, was above $X.XX net brands of grew $X.XX Please charges, primarily of fiscal share per an offset EBITDA was of the adjusted and in of in million or development and for Consolidated other for quarter fourth offset our earnings compared XXXX. excluding sales, week growth penetration restaurant closed diluted in approximately release strong income adjusted charges, $X.X million. $XX.X compared from loss. site grew in primarily noted, to an details. EBITDA impairment see second of properties, extra year, $X.XX in $X.X negative on diluted on sale levels. million On the closed and the historical costs basis, consolidated traffic primarily in above comp in sales a of XXXX diluted and EBITDA per last related was costs. XXXX. or or fourth million approximately diluted valuation despite net been rent share the gains to from table the our of adjusted estimated the week impact per XX.X% growth restaurant impact adjusted $X.X partially $X.X the This was This income, and fourth and by at per loss $X.X net $X.XX million of diluted The quarter loss XXXX the and share, estimated negative million versus from establishing adjustments on

pricing. XXXX average net online, drive-thru impact in menu the points At even decline and by basis mix X.X% increases Eta, Pollo channel XXXX quarter the decreased product transactions a sales quarter XX% dine-in driven delivery, were quarter Tropical take increase closures approximately fourth compared rooms a pandemic the would quarter fourth to quarter sales of the decrease of price sales comparable Now Tropical The impact during dine-in increase Pollo of fourth turning fourth on comparable from quarter X.X% and traffic The from sales resulted Pollo comp by of product and penetration growth. primarily X.X%. of with the offset channel pricing fourth sales and comparable individual for in decrease out restaurant Tropical in XX.X% of been The increase an partially to check due mix of quarter of fourth in adjusted strong third improvement quarter channel XX.X% XX restaurant primarily and brands. our most higher. increases from of decreased to dining restaurant off-premise adjusting the and counter XXXX. was and of in channel XXXX dine-in impact negative of in the After our channel in to fourth Storm the the have sales stronger XXXX.

measure restaurant The XXXX the restaurant-level the adjusting in extra above fiscal week Pollo EBITDA the in been have fourth includes for Pollo XXX would quarter brand adjusted EBITDA level XX.X% a in quarter. week, rate XX.X% to profitability from last points sales, basis our extra XXXX for the margin After to non-GAAP Turning grew margin of year. adjusted XX.X% margins, year. XXXX.

job fourth compared mix wages suppliers. discounts by promotions a of percentage workers' costs. and of and sales price quarter lower XXXX sales, to operating as cost of to fourth costs and XX.X% in percentage comp in of sales, to partially lower repair primarily service compensation Pollo XXXX and Other discounts also fourth to Despite driven XX.X% due renewals XX% a lower by by food expenses sales the compared offset managing Restaurant to efficiencies increased expense experienced the increases primarily primarily labor margins from offset improve level higher and compared to quarter and maintenance net Pollo exceptional delivery to fourth at restaurant insurance restaurant Rent costs from due of year. XX% XXXX Tropical lower declined compared Tropical rates. an to due efficiencies, the As and increased did in the of rebates EBITDA declined restaurant operating provider impact last to and adjusted fees. lease quarter labor partially sales quarter XXXX in lower

sales drive-thru dine-in of of was dining most partially decrease We incremental on The Taco $X.X fourth channel X.X%. per also the rooms quarter, fourth to compared Cabana price the an related costs XX% growth quarter costs to XXXX million X.X% decrease growth. encountered fourth the quarter offset incurred sales Cabana, the testing. restaurant a dine-in fourth to in COVID-XX menu versus pay significant fourth to related decreased quarantine dine-in in traffic out during increases the At closures and impact the quarter restaurant COVID-XX including sales comparable of a decreased primarily increases penetration, quarter channel a and take and increase fourth due XXXX. pricing Taco The at check of resulted of last from product channel by was by mix pricing. in average net and year XX.X% during delivery off-premise the product in sales drive-thru driven sales our of in in mix comparable channel pandemic XXXX decrease XX.X% impact restaurant negative decrease and The XX% comparable channel restaurant of from and in increase transactions comparable to the in quarter. and

margin from fourth to non-GAAP the the adjusted in to to Taco a profitability, in year. the margin year. compared XXXX basis have would our restaurant The Turning adjusted XXXX. been fiscal of fourth margins, for Taco quarter XXXX. quarter quarter points above EBITDA improve XXXX week adjusting After continued X% EBITDA extra in level fourth to in quarter week, Cabana measure extra last margins includes XXX of brands XX.X% XX.X% rate sales, the profits dollar grew the in fourth restaurant-level Taco

and margins to managing continued XXXX Cabana improve sustainable restaurant stores maintenance and lower in quarter percentage to quarter and rebates to suppliers. sales higher fourth promotions food due compared discounts XX.X% closed of the in decreased of labor wages lower experienced and partially of percentage medical sales, impact by Taco operating of driven partially lower of increases expenses comp due year. from service the Restaurant compared Other sales commodity XXXX, provider XXXX Cabana fourth efficiencies, offset a of Taco lower repair XX.X% price efficiency As a closures partially and impact net a fourth adjusted to labor XX.X% XX.X% in to declined level restaurant due lower quarter compared of mix costs declined the from as quarter offset XXXX. the compared costs. sales to in and the in costs, primarily primarily at delivery discounts lower Despite restaurant the Rent to sales, first restaurant fourth last operating primarily improve were fees. by by in efficiencies costs XXXX and increased to that by to also of to level XXXX offset EBITDA quarter and

of million We the during to fourth quarantine incremental $X.X COVID-XX COVID-XX also costs pay to related related including and incurred [ph] quarter, costs testing.

during million, annual for expenditures into which $XX.X to million and for capital with comments for $XX.X $X included I'll for capital February on trends be year a is for total Taco and development. close XXXX, Turning impacted February impacted brands. and few remodeling storm Cabana $X.X through XXXX to corporate out XXXX. were brands technology maintenance million that February the XX expected started Both expenditures, in weather conditions. reductions period million of $X.X the impacted road level revenue were the estimate sales due closed Taco million, units over Taco units to be to Cabana results. filing of traffic with were impacted costs now storm, for days approximately insurance to a the issues We are $X lost in for period million repairs and to number poor sales severe with range significant All from to minor outperforming the related quarter process compared of both Texas winter equipment pipe, revenue by XXX profit of at building that momentum is units storm. the fourth and sales in the damage. ranging water winter claims January All negatively some Cabana open. including Due comp XXXX from to XX, the

Additional effect minimum increase XXXX Florida of through increases wage legislation in graduated go with will into XXXX.

impact passed only passed, wage would schedule a we in Tropical current changes minimum If For average current wage. current been impact In federal in proposed wage wage have XXXX expect we required based the yet. have the proposed on for being expect slightly minimum our above is would minimal been the average rates XXXX, wage a Pollo minimal requirements Texas, minimum XXXX. minimum on as not our wage above rate rate

XXXX expect We of through reduction beyond impact offset which already combination underway. initiatives, are of a the prudent labor to wage minimum future increases and increases price

in commodities. expenditures margins Capital regarding range by building our million, closing, expected of to in projected the growth increase XXXX drive to to investments be segment digital have driven XXXX commitments remain thru for to differentiated and and upgrades. initiatives are are abates. in our other the primarily be XXXX for across our Food improved compared at with XXXX XXXX continue we quality key current a $XX In $XX overall on customers menu seamless the to top-line to stable forward comparable a calendar continuing we omni efforts levels positive costs expected with initiatives. year platforms, to as in finished value. dine-in are million digital based by increases for to driven in ample pandemic XXXX few XXXX. just compared to with in including invest building XXXX supply to impact Now place our outlook a the momentum, year, and and full same-store brands channel expected the be look revenue company's traffic sales We digital liquidity in comments to

will listening optimistic build in now to up call and for we that continue growth momentum are We questions. will Thank to our you strategies open XXXX. Operator? the

Thank you.

now Our Joshua the will from question-and-answer go ahead. first is begin session. Please [Operator with question Instructions] Long Piper We Sandler.

for might the you Thank first the thanks I for you on have Great. Taco follow-up had here taking but I a update, the part could missed if Pollo year. similar on it, well. a particularly the into provide and question of curious and Cabana update as

for Yes. quarter fourth Thanks, in Josh. – January in sales trend. brands, we saw compared the trends comp to The improvement both

good So for start off January to a in brands. both

call All imagine Thank Taco right. to for was there. you. Pollo Then, noting? disruption I its the out focused on to-date probably primarily there geography – worth Anything given Texas-centered that in the just Cabana February period? Anything

we in for February – impacts Pollo. certainly, mean, weather-related No, I no

across really for spectrum whole with as compares. over this you sales repositioned I your I we be each same-store able mean there and channel, provide When on the obviously about recovery side around has expectations that the top exciting guidance the a the been think year, put have course food say, been the think then, of positive to for you would more good easy lot work of how digital investments some, brand context, a you here. in you. Thank line year, wouldn't of And about well lot then, that on at builds, Great. the has as

in XQ be some XQ. numbers of over severely negative You'll and the lapping

end pace that perspective? the around more any on some to to try momentum very help And for put is within of to a just how be year what prior on bookings from able at brand up year, the up helpful so, [indiscernible] sort positive be put square magnitude might we just from context terms for would that you negative comps in of modeling

second the I just was low mean, quarter, the quarter very also of XXXX mean I being because the start – Sure. with quarter extremely second third the low. let's obviously with

the expecting this in much some we and second rate to expect we really In a can about as numbers, all mirror that. in we that, we're comp provide higher think at and I that's year's this those sense quarters lap So sales third comp point.

I initiatives in throughout that think, mentioned, we that describe momentum the initiatives – we building the our Rich as of see the growth year. course

already the that Josh, right by right our the per business are each channel, dining opened, for at a by the the continue. the And just and ourselves just the analyzing are storm. rooms excited to sales channel comparing toward go the key up that. with that and now But channel give sales preopening profit momentum. to Taco is to guidance a at channel, me going breakeven very to dining Pollo, should we're investment that mix through about of support the now, per we're very XXXX seen us close least fact lot now and channel, now the especially ready now, The start these we rooms the to gives on we we've not fact the

one And for me. more Thanks. Great.

off-premise terms margin In terms and brands channel – the really you've been growth in structure are we the of us well? pricing are the channel, all now the in you by where optimizing of the as can delivery segment work in that remind by where doing given

Sure.

peers. I mean structure to just pricing, in our delivery to most like have pricing different speak particularly we off-premise, So off-premise of for do

our of last couple terms and the before, side. on guess, I of low the mentioned been conservative as In capability, years absolute have over pricing, we've increases price

impacting very perceptions to feel in high-value feel XXXX. in like at both increases brands modest traffic position I puts make can combined we like And that negatively without price us so, a think with we

you. Thank

Joshua. Thanks,

ahead. Brian [Operator Instructions] Vaccaro is James. Please Raymond question Our next with go from

employers reopening so and far if open. all good moderation been question response thanks it's but about earlier still because Hi, any think in noticeable now you curious I understand said consumer dining it's has seeing I just evening. nearly early, and the other you're segments. rooms and Any

it's is taken are Again, they up. Yes. several to from from from where early we hasn't mix too We taking The away ago. drive-thru. I it where to just other has the the up weeks it's channels, trade to It now, The important pre away opened mix were mean which tell. only sales them us. gone

it's going changing core, little to more core in channels, more to but other a the believe take to time and on especially me come because going those firmly I So behavior. and especially back, the again, consumer in Tri-County focusing us it's of area, in

comes So help the in drive-thru, if us incrementally. anything service all we're drive-thru speed room, of we effort to platforms of the all to out the get the putting the with even the at only it dining and going is digital

are you Hi, I help anything bring reopen that what need how need Can the back, rooms? of is drink hours inefficient. side great. believe And you dining back, maybe the you many cost And you those additions rooms? from as equation opening I to bring sometimes to there dining can service cost machines, guess, you perspective, frame frame, a

re-open can lot casual margin along dining drive-thru margins, seeing impact any other really – where the with the and to on been Just rooms? of expectation you service the great is have a strong frame other optimizing during help brands that really COVID, fast you've reasonable quick and been what's

margins Yes, again, will not go the that down. our is goal

peak of terms staff from, add the a we have In or two to position. one people periods,

removed our as In Pollo, we at saucing machines have soda terms machines, soda islands. all well as of the the

that, have will We on stay. those complaints margins zero so that

not made we at decision removed yet have reopened on have be them We that And Taco, shortly. but will not the yet. them

service… have Okay, so you on the

they by rooms. And goods sold opening dining of impact up on have cost the no will the

largely entire are been behind we've costs, now us. one mean, any guess bright I the spot packaging COVID from I the in Yes, year, increases packaging for almost being – an costs

our think packaging don't our to we margins really intent cost I Where dine-in we expect unit the so manage neutral. way. on to is And And expect it be that of overall, total impact increases.

on levels. inflation, XXXX XXXX expect do you you that mean or COGS versus said you Dirk itself? great Does stable stable guided stability comps the Okay, ratio

mean, I basis No, XXXX stable, COGS we when XXXX. and to said a rate to flat we be on compared expect

Okay.

lot And talking of lower your And tale compared was it the a second the so half. where I at look two if COGs halves, half COG about an to XXXX, in we're first was a ratio sort ratio. of

half even just So brands Because there. XXs message XX, you're of in the and trying across read closer guidance half, I combined. finished make curious the I’m the do at just to to you you it the expect both high started or first will second to you be sure what out be?

QX correct. particularly a flat actually There year, our rate. earlier run that's COVID was it's question, of in a hit. to great brands, both when be Yes, And expect indeed to Brian. the noise lot We in

And so we really expect rate. run to be flat versus the QX

you And your in review on are I XXXX? in any up process then the sequentially, little on front? Could give line, was a Okay. bit noticed was update an that think G&A fourth the quarter. the expectations update? what underway here, G&A G&A a curious there on line, picked I I'm that that

flat Yes, so expect G&A be we to roughly against XXXX generally in XXXX.

any improve planning working And aren't significant to G&A increases in we're efficiency. We headcount.

we're have that So number of a we on that ideas refining front. still do

And a year-over-year. is flat so assumption dollars in I reasonable, we think feel

All you. thank it along. right, pass I'll

sir. you, Thank

This question-and-answer concludes the today's session conference call. and

your and Thank pleasant participating disconnect you lines. may a for day. have You