Dutch Bros (BROS) 8 Aug 232023 Q2 Earnings call transcript

Thank you for standing by, and welcome to the Dutch Bros Inc.

Second Quarter 2023 Earnings Conference Call and Webcast. This conference call and webcast are being recorded today, Tuesday, August 08, 2023 at 5:00 PM Eastern and will be available for replay shortly after it has concluded.

Following the company's presentation, we will open up the line for questions and instructions to queue up will be provided at that time.

I will now turn the call over to Paddy.

welcome. and afternoon, Good Joth Christine by Charley President; Jemley, CFO. Ricci, joined Barone, CEO; and I'm

earnings for Relations The press June our uploaded investor issued We release also now investors.dutchbros.com. after along the been market deck, release have XX, our the the closed at press today. Investor earnings to with supplemental website XXXX, ended quarter

forward-looking and statements subject by than our responses quarterly XX-Q. Form to in risks, be assume Please those historical filings, assumptions cause cautionary remarks risk of prepared our report that factors no aware press are are our We update any that differ obligation actual in the XX-K release all including and statements fact and and uncertainties report the results forward-looking our our are questions, to materially. statements other earnings and qualified in annual statements. most on SEC may your latest recent They to in Form on to

also reference We today's non-GAAP on will financial measures call.

a review nor that GAAP. earnings results release. superior our under neither are non-GAAP prepared non-GAAP to Please substitute for in financial As reconciliation to comparable measures of press measures GAAP measures the are reminder,

now Joth. would turn I that, over to to With call the like

long-term Thank plan in a environment. is a demonstrate the the and Good team's take changing everyone. result adapt a collective continued you, growth Paddy. the QX of results, vision of afternoon, to momentum business. This ability to

growth on targets spot. remains unit after deliver consistent to new ability Our breath quarter a quarter

states, June shop through we In XX. with across new XX open QX, new eight XX shops openings

including XXX X.X%, shifted source This helped as improvement XXX of our basis in XXXX. points than trends. reflecting sales propel revenue in more quarter-over-quarter increase are We through traffic to shops objective halfway a better positive a XX% year-over-year, same new

were margin. a operated We underscored beverages expansion cold. In increased basis this alongside growth, XXX our company shop served delivered contribution by revenue profitability XX% point of QX, approximately in

as levels the inflationary seasonally saw return COVID-related XXXX quarter margins shop we The period, emerged characterized to normalized second results. by from

almost shop than we $XX company growth, drove more the SG&A reported in investments XXXX. what million Revenue in QX, adjusted productivity, EBITDA, and disciplined double

team We accomplishing by and what are our of proud strength. underlying encouraged very and the it's

remain After a is years As we clear with and strong two we business working ahead, five long-term as and long team nearly ever. our with vision healthy and Dutch years believe IPO, runway. the focused as grows Trav look a very in I after

President is the to As is finance. Dutch with in Barone person marketing company, next growth. will we the XX, and demonstrated I its CEO, believe rare and a XXXX. Christine stage of phase pleased of January share set the for operations step in Christine abilities and She to scale am effective the Bros lead role I right leader into the

been has her as traffic, data focused been us overall impact she in Since and analytics, action strategy, February, driving our on has joining marketing decisive improved has immediate efforts. real and estate

We planning the are of current as the executes XXXX the leads the she and business beyond. feeling leadership team and her against impact at

Christine to with position long-term coming will success. best side work side business the I the Over by months, for

drives how driving for excited Dutch XX traffic, in our of I important, the and future goal what strong our seeing the years. this X,XXX against for efficiently. shops towards vision execute years of optimizing look Christine's will great and We Most shops brand selecting I plan, XX building and am to forward next our means sites to operations, Bros, leadership

it With that, I Christine. over to turn will

groundwork wins and have priority. laying impressed I on been team, Bros our Dutch so and execute beginning our XXXX to managers, the joining broistas, for with I am Since operators the franchises. you. Thank now quick

are gaining detail key over months, focus a driving the and been last last As six quarter, I has we discussed in traffic traction.

basis XXX points Joth substantially As of improved mentioned, trends. of same-shop of was of an sales result traffic quarter-over-quarter, all a and system-wide saw this we improvement

provided blocks. assess discuss of have building Beyond a last months position six Bros will opportunity how an brief near business' these focus to term building long attention I foundational and growth, our these driving provide strength term to we blocks strategy traffic organizational assessment over for sustainable also will of and the Dutch the the success.

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strategy. our on years I our to the continued As enhance opportunity our also program. three see opportunity and landscape a I last the further build market elevated marketing speed, values quality shifted service, with and on to refine focus has over rewards our build estate with see real of capabilities cost,

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continues and Our people pipeline robust to grow. is

with than to pipeline is a people and opportunity the with more cornerstone of our average force Creating driving shop qualified strategy grow years. in behind seven company the tenure candidates of is We the expansion. an have XXX operator

to strengths. many one is competitive availability growth. In our a factor At Bros, people Dutch limiting organizations, of is this

incentives operators. our service customer of we traffic. and Through We regional even align the will our of aim with in become investments, many great specifically these generation driving people, continue investing to will managers, in shop closely more whom next

our investing decades in traffic-driving two execute now space. aspirations brings to of to We're Davila believe we our investments we is scale. Marketing enable initiatives. team. multi-unit set We with customer Tana deepen experience compete will restaurant also our key and to in expansion, and Chief Officer. what growth continue program, need investing our to In more Her exactly leadership we plan marketing rewards our relationships our as than hired in continue effectively June, our as we skill capabilities support these us Tana the

opened were $X.X favorable In conditions note QX, we shops opened AUV. is have Shops company-operated. in and XXXX similar are important to despite in XX eastward. XX of newer It to which as approximately expand seen AUVs, that XXXX following continue shops, to prior what believe million to new we operating moderating cohorts, curve are profitability a what we in are more we annualizing demonstrating

of had result and January Texas state. the new the last purposeful about what in in quarter, rate, it is moderation and a shop entering twice the a was as heavily we pace XXX the Texas. an invested XXXX, in believe part XX, elevated of in Since market we development is push AUVs with in age we of XXXX June infill to we recent open in Consistent shared XXXX. classes infill have shops is level which for a in function decision of Elevated

company-operated our has a a and and high potential in securing depth there our rest encouraged critical is to enables that markets scale system. Building this and newer eastbound profitable the and operations of Being us shop margins a is as following moved the closer the curve are of quickly we we expansion. compete component foothold quickly we important similar to Texas better are southeast move in believe Texas eastward. market to profitability

of to chose facility support this just to second outside As announced, Dallas long-term our previously we roasting position expansion.

remaining refined right and at to commitment to and to body flexibility new footprint work are and to right the expanding With allows continue us right live to AUVs, shop elevated conditions at costs a purposely building X,XXX the the time strategy over pipeline, plan anticipate real completing we us our next refine built build selective. A few the we adapt We path on to shops our the our of providing shops. up estate to pace the years. moderating robust a development our of be

end, following that the we're actions. taking To

First, markets market time provide reach our we adjust as of and and new this the initial while curate comes our believe with efficiency to pace we markets demand will enter We to distribution balancing widen new density. overhead plan that market leverage of penetration. benefits

favored pursued the Second, greater delays. pressures, past ground leases, to years, and several well-documented our over response to enabled that some us development exert in partly to supply construction This development process. sidestep us control strategy enabling a over chain of industry the we

more a we opportunity begin drive-through abating, focus As lease channel. continuing while these diverse shop of the greater pursue will types, and we to to range have on pressures believe

Third, we look to for opportunities will prototypes. to continue existing engineer value our

this beginning to impact expect work see build XXXX. We in site late

Finally, by are on targeted doubling days. local we organizations down for with back partnering gift community

a to actions brand We our These We will impact of events build shop growth. represent immediately and believe XX-year new don't our our be full continuing communities, these of curation the with history investing promotions, relevant changes driving of trial are approach [ph]. revenue. in and solved a to

moderated term, as anticipate productivity work through elevated these short build will revenue the we changes shop persist believe system. In and cost new the

excellent year the change profitability. The deliver demonstrates of navigate first half can we and

shop of Company-operated operational We operated Not XXX company-operated QX, and did in XX% margin growth. basis level company SG&A revenue. total XX.X% profitability moderating year-over-year by $XX contribution approximately shop to shops combination only improvements our QX grow a almost of shop from delivered points saw margin expansion of XXXX to powers These million. adjusted growth aspiration. expansion driven shop

development SG&A propeller enabling reinvest compared new a XXX QX to falling improved us of year, when four-wall adapt and a us level basis points last margins of XX.X%. flexibility as payback percentage quick strong opportunities. of as to we and to expand. shop certain revenue A facilitating into growth, Adjusted adjust allows periods to model further Strong

are will investments revenue anticipate we We support smart the to but growth create which leverage. of remain as below rate capabilities critical to that SG&A expand, committed growth,

program, key driving quarter, acted rewards trial. up a into quarter-over-quarter remainder In team traffic. the would quickly The with shop to scaling QX, our sales paid initiative same approach, Last and activate traffic I drive driving all leveraging substantially be for traffic-driving media, innovation, promotions utilizing the leaning focus multi-prong of year improvements we the group. against to a executed mentioned and

is brief key Here on update each a pillar.

million we XXXX. Soft the into nationwide quarter, level In Last discussed QX, a took to St. three in in innovation we platform. big at we the Day. our year, have tested than making in up QX, in innovation I the time-only drinks expectations XX% flavored First launch in way last of own leaning menu with sold Patrick's Mangonada introduction our for release and of Mangonada, resulting innovation, been our limited the nearly next mixed Top more our which outperformed of quarter.

included which buzz, Later focus pulled deliver the menu topping of moment quarter, which Strawberry Rebel. drops Candy the Encouraged ingredients. Chai, response, of innovation secret we of keep in crumble quarter, to to our pantry our fresh balancing deployment this we built demonstrated wider success operational the fun simple menu customer plan quick with we offerings. and and our on product cookie Also Poppin in in by a continue of burst and Firecracker few while a to relevant, Horchata

Second, rewards.

to for a in program, rewards of promotions surgically, Dutch on extra join That us make Tuesdays. was our to an the We We up April this approach members in members, Refresh. more this to of deploying favorable XX% encouraging. double We refresh four following saw who continued promotion, new bringing transactions. began reaction momentum weeks of point each providing us customer a invest Rewards March seen rewards the that promotion, activated more we Dutch Tuesday with for even incentive end which enables exciting our almost have

strategy Later quarter, frequency-based geographic, with of variety experimented in expand a to we offers, further the refine helping us and and time, our toolkit. our

innovation marketing reach an We Rewards and with media, at app-based was paid plan, driver improvement to enhancing audience refine quarter-over-quarter, robust a these us wider our our our ROI. a to in continuing promotional media capabilities, in in funnel program. efforts our digital which meaningful QX of create grounded paid Dutch into we and used to leaned enables loyalty anticipate social targeted efforts, paid full Third, a conjunction iterate traffic attractive holistic,

are friends Encouraged all new our to with encourage by In noted success ran we and promotional we especially Fill-a-Tray, Dutch visitation. in brand the call, rerun June, pull promotion. multiple-based Bringing some markets. we're experimenting timing, is March. and in experiment a we together these the of the of Bros to with Outside about, offer program is Fill-a-Tray response, the Fourth, and way we group in to promotion trial just late activities promotional last great as I with experience outcome. family customer pleased and we that what continue values, other think and this reinforce this

Taking and the quarter. initiatives, through together, traffic-driving against we've made. the gas, built have on team's foot year. We keep willingness impressed the I'm productive. our back plan and momentum and My which of half to the executing progress our exciting progress made real been we months throughout culture, capabilities in to adapt, first adding the six by the

culture, have sustained appreciate our anchored to our business. We create have the help to many key people and quickly full our me that building Joth team of immerse competitive advantage, our investments Trav, and in blocks learn the in I systems. me place made on cornerstone the

next how these greater sharing are together the strategy. quarters, shape forward few look coming this detail we in blocks to Over to

With financials. over review that, I'll to Charlie turn to it our

Thanks, profitable emphasize while decision-making, an keeping our toward future. Christine. In growth we the eye

As is across a with turned four one generated $XXX stiff Dutch key year-over-year. and summer XX% many you of the outstanding iconic increase windmill and four-blade images. revenue QX, of aspects. growth In Bros approximately Total windmill an performance million of of the breeze almost know,

XX Of term Shop track. shop was QX of traffic quarter approximately driving X.X% we in opened on the system We Adjusted and Same what reported million, with double growth, the XXXX June, in new for of eight remains wide positive which $XX sales revenue. in and the XX.X% growth improvement. contribution April, that EBITDA at limited opened XX in in we in and opened of XX quarter, their final the were QX. June. May the XX shops shops shops sales the system shops shops XX in in week

in contribution expenses. XXX grew company-operating by performance Shop includes at Net company-operated of pre-opening points margin sales XX% contribution XX.X%, X.X% profitability reached Strong is year-over-year. this surging driven shops. expanding basis shops. Note

We continue of is result improved the we productivity Labor from the to more than labor and XXX This same Better year. significant improved made points see costs basis investments a in strong period wages. last offset labor scheduling productivity. primarily deployment.

over and some the pricing practices place quarter, speaking of for for as company menu goods Christine retention down remain slightly noted, metrics people Costs and strong, retail ingredient the were As company-operated XX.X% of input sold volumes the culture, in hiring in shops. sales and took year year costs. shop help, moderation

array of week In the began the modifications. pricing, we stream-wide update system our customization to a quarter, last creating for of a wider

higher line also shops We the tiers, pricing. to market of moved a better in in number price

Going was into to XXXX, price. it not intention take our

made we for our pricing the architecture set to these moves future. However,

now is gross period as rebel to and stable last impacted adversely. million and franchising was compared our This improved the year. more than million other coffee of same manufacturing $XX.X $XX.X ago In segment, year in our business the than businesses segment a it profit inflation

the $XX of a was Please make million exclusion and million. SG&A declined to QX which slides supplemental now approximately of about for includes non-recurring the Shifting reconciliation approximately expenses, SG&A; and to stock-based to adjusted the between in for compared reference QX SG&A was This $XX SG&A for revenue SG&A. million, quarter, last $XX to stock-based in XXXX with XX.X% other Therefore, XX.X% year. compensation adjusted compensation.

as field, the as continued operators As better growth making Christine revenue and going investments build organizational leverage we in investment. but in capabilities we support expect also people our continue mentioned, outpaces we forward

$XXX healthy credit lenders. a balance week, capacity, expanding amount comments that liquidity. generated million to interest our of for successfully facility on our syndicate we in few and the Last Now transaction a of health a on upsized our million adding $XXX sheet

this view outlook long-term in a company's Given the credit financial confidence growth as outcome of the vote strong we and prospects. tightening markets,

million, $XXX undrawn million Our term delayed facility approximately XXXX, approximately overall June $XXX which drawn million which $XXX now of credit as draw of term was made million of million total $XXX $XXX is up XX, drawn a loans. of of and revolver loans,

up In we As our June and had prior debt. $XXX financing, in of pre-tax our approximately spending million QX, net upsizing, million approximately this capital to generated from Inclusive company we operations and shop million XX, have million million SG&A leverage. before against $XXX liquidity in $XXX flow, in facility, had cash productivity of of $XXX would liquidity approximately our expanding $XX refinancing. reflecting approximately

consumed the we advantage full in company, our $XX runway long thoughtful shop quarter, vast growth manner. we CapEx, balance million is have the responsible approximately the to of the and In new a fund position We well-capitalized believe to and priority in a majority ahead take growth. sheet,

to on guidance. Moving XXXX

and you context. quickly take the changes specifics, some highlighting through First, I will the

openings Our expectation XXXX in total shop system for unchanged. remains

open at least company at which XXX will We to new expect of shops, operated. XXX least be

the unchanged. new $XXX million the spending opening $XX to expenditures capital regarding outlook in Capital range million, which remains which open XXXX. expenditures facility, $XX a shop in $XXX Given to roasting includes is presented also is being guidance approximately to in estimated for of XXXX are unchanged, million million

in and at system growth expectation we the the to greater our billion. clarity which growth range will traffic pricing believe low sales last expectations, $X Having Our previously partially million trends of moderation same-shop offset and estimate by performance, trends of pricing revenue remains considers digits. and We single traffic six lower This reported full-year $XXX XXXX revenue the the communicated of recent quarter. age end in seen believe have we XXXX sales actions. will negative classes, now be in same-shop months offset we of actions improved

revised $XXX lower year-to-date million, our end profitability stronger reminder, typically $XXX first seasonality, now reflects of than when This year million than offset up partially expectation million. range. between to expected by the at of least and of revenue trends, is from EBITDA a As at half lower Adjusted modeling revenue. estimated our the the our back is $XXX our half be

Our reflect outside expectations adjusted key EBITDA support investment for increased communicated. full-year what levels has of also priorities previously been to

take please we open Operator, the lines. questions. you your Thank and now will

you. Thank

will question. We line And session. the Chris Stifel? instructions] now your [Operator be with Please from with O'Cull the conducting the of first question question-and-answer comes proceed

the question. at Christine, congrats career promotion taking for Joth, the the Thanks successful and Bros. on on congrats

Thank you.

could reach changes type was development to structure? comments and on to different lease a the as relates your and/or it So widening pursuing the I shop specifically about hoping Christine, and of maybe you strategy elaborate

Yes absolutely.

things estate of real to So, our we couple a as we look for. are refine working strategy,

we we it will that markets, build new brand the That to penetration, I'm So, allow as some go widen one, is we move we piece as new the reach. the our as think markets. into really time into widening

then looking through And types. in lease your question types shop second and

have shop types. that at And we react variety today increased really lease to we been we've ground So, a leases time, and we to of seeing. have market our look when the conditions those, over

code And move way, supply so, kind of all and pieces time there's [ph] forward. over market the leases we ground we chain those the to an conditions pull back a work on believe opportunity as of team as their bit

of of portfolio couple going at as we've also a types openings with a that experiment. of had we'll shop portfolio a variety different so, Certainly, our to have our and We continue we forward. will continue look within impacts to part and

for encouraging the IPO? profitability how rest to cost unit new the to Okay, helpful. on of maybe changed hit average the then and may as how provide investment And have system. new update can an curve stores from you similar target returns, the But that's the it's the

Charley. it's Chris, hey, Yeah,

we shape happening; it relates at outside had return returns the we to and investment, in IPO. as the the haven't you look specifically historically, So, if shared what's returns. of But results

which cost the heavily. but costs, with the new at cost and a and as If the in-filling pleased in build going on got term, short are on so AUV the result, we've IPO, XX% to the as ground suit we're profitability relative and moderating targeted shop you time our we are between and leases noted, XX% up those of forward, XX% project elevated that on a volumes a return model, build take investment shop XX% we in basis

the in to what So, the excessive more near -- we'll down coming relative coming highly likely term. and moderating returns IPO see was

okay, guys. Okay, Thanks, great.

question Blair. with comes of your with next the proceed from the Zackfia Sharon And line William Please question.

strategy Hi, there you've good sounds infilled up to could ramifications the anything want maybe to on just to perhaps markets, to in also it there's refinement a on Texas in as real a replicate. slower line want Texas enhancement, you into if seen I maybe Is do the if you any drag, as had that's P&L you've new afternoon. through of the think I Charlie, clarify it from in the if trying quickly over, us estate there the so you guess as little might fortress that is and strategy. for kind refinement, bit following case. some that's I'm bottom you think AUV ramifications not but an go that? thoughts the fair And give to

learning Texas. Great, I from can with start

think So, of growing the one I things grow, is very we're we quickly.

each we So from shop better time, little the each of get learnings understanding in taking how bit to constantly right. openings new are and a the

that's So improvement. constant a

response For in Texas important into way. the really for a the part Texas. that from And landmark in the is to country country rest a pleased been gone It customer incredibly for provides growth us. of our of pad in with launching really the really we've have big us,

I a margins Texas think very are that existing we it productive productive call terms drag, quality in the as of noted our the as portfolio. P&L, our shops, profitability

mean So on to of to going look a drag we're It our little profitability. to But doesn't as we pace. going see we change it shape a widen we're out it. and development further, reach shouldn't go slow our means the

are we very costs. The like-for-like notable dollars year, refined pre-opening thing is we've basis opening beyond is seeing on approach this our margin a saving on productivity the other and we're

we're refinements about go help us of forward going move this. those how this shifting should we as all So through

Please question Andrew with Cowen and comes line proceed of from the Company. with your the next And Charles question.

be sure to of strategy, both with findings, real it's your I some Great. you. still you growth the for grab Joth, you Christine mid-teens want insist that annual and but can estate in guys make confirmed support touched Charlie, you'll just of to able beyond? this, and prior to your targets that just XXXX

Yes. Absolutely.

then, quick Okay. of Charles, can traffic mix and performance? bookkeeping provide to the QX Thank And one, you price you. components

Yeah.

on have number system a got estimated plus traffic six So transfer approximately when our you've sales price points. comps, net you sales flat and a break of to is you down XXX transfer, basis approximately be

Very you for are good. And you, little bit Christine, to more one same can about gap What store that consistent? opportunities in a then sales talk company-operated XQ. locations a you in attribute a franchise question to the that what make the to help and

Yeah.

So one I the our as that we is gap, things look still at think of are program. we rewards growing

rewards so newer adding ramping nicely shops, they really up our are and And over time programs.

I as too, promotion. thanks the really rewards increased so And we you noted,

also promotions. did would we throwback of call We what lot a

that things get really So excited customers in our the done we've about. that past

some We markets of have promotions. familiar our in of these with with seen older franchise success are new great markets these markets, are some more -- which

Yeah.

sort company Christine, that, particularly off it of the the of costs in we markets, And the see to in promo so shops, in dovetailing higher brand. as

operational kind difference. then of company growth is And that are a rate difference that. some where are faster the out and therefore all between higher So and the the the rewards franchisees in the we're relative lays rate see for versus sales to an going allow shops we're the there's where seeing. We of there. don't company higher differences cost, franchise portfolio transfer a in geographical because higher, company -- And

portfolios. there's an difference company data between operational say that We would have and no the franchise

helpful. the Thanks Very color. to

the America. next comes the of Please your line And Sara question Bank Senatore question. proceed of with from with

Oh, great. Thank you.

please. a a Just question then clarification and

a margin, perspective, So understand the influences But tends from states. early contribution higher trying any restaurant ground opening extent to know points, suit two what there in build or nice from level your the have you to from I did to from a lower of margins bridge. shift lease cost to are in that terms really the

I then, the to about understand some be. apples-to-apples Just a what I'll think impact marketing about, of is, sort might margins, of as the we make as on any want of have I of I initiatives. like kind on sure, question think mix And kind basis

suit build so effect reported shop company Yes, lease a or ground the no margin. has a lease on type, the

then it's upward again, And price ahead is of So that -- the to margin operating half labor rest efficiencies that And nothing expenses. police of done. rest that costs do East a of and as move is It's lower and it about the menu the savings as savings so operational and type. not and bound. factor. pre-opening and we've we We have impact walk things a wage walk

weighs So a also factor in. the portfolio as that's

was Okay, leases part the philosophy present just to eyes. was reimbursing behind weren't leases doing understanding kind ground expense clarify, you that, landlord my that for lower the had case? of of that sort rent ground of lower keen because Is not the

of gets gets reclassed rent, that interest a accounting GAAP that difference inferred gets and cash the expense. interest for but do down inferred lower gap have purposes, part I from as

Right, driving more mix media in of traditional of initiatives like had how revenues of or traffic the in All offline. mean the marketing, some terms previously? you're kind of how you a some are changes done of okay. maybe as What going does about then you thinking thinking about what media, sort that these of right, initiatives. of that forward the percentage the versus seem terms And take of, I'll marketing, the kind like paid

on that performance return at that have and think targeting them I ad see we data looking all the up percent what mix we we've of so ramp and to I of looking one, those job from we types and our with way look put in her looking spin, doing. specifically different think And from as CMO, at things we're really a can we forward, the is we're new think at percentage. program, things we're Tana, and the just would she's actually beginning our I now the a brought rewards our we're I all that a of in But initiatives. right in So of that what that, the share not

customers. them What for to our bring new in brand so looking new expose markets we're really and many is in. to looking We're

in effective than targeting in and we're is an looking actual an really rather ROI drive what can so And growth, our what can percent, drive what spend. trial, at marketing

Got you. it. Thank

And Please the with question. proceed your Bernstein Jeffrey with the line of in nice question comes Barclays.

you Thank questions. Great. much. very Two

consideration AUVs just fronts both build know what what's the the a but you work through down and course being initially both one, you're whether a already not expecting or on working to term unit Christine of mentioned growth even diligently industry-leading fronts that, consideration? up, I more from you're there if maybe units, perhaps near levels on to kind with First the mitigate headwind the or for to was you little you time to were slowing was with the new absorb of wondering dealing as give down even I'm that bit just from

Hey, it's Charley. AUV. I'll new unit the speak to

if seeing also repeat wider. that's remember a $X.X over the Texas, about. Jeff, that and want out lot you talked IPO, moderate heavy the are reinforce from million, know, class going necessarily we ejected that we of to we go earlier user would into at the We we we $X.X We So, million. as a million, well infill in $X which little

different so years the trajectory this types front to we things feel to project versus want using the as costs, going shape about in and seamless are and They'd change of of really don't building. earlier. growth stage, should build don't elevated which that cost an do talked that There into we like next be sticky. that's free cap, terms our ground-up build is few lease a through They costs. the doing some pretty can I well, standing In well. this at up Prototypes, our we take cash

Yeah, real robust that really that add is have pipeline. Jeff, to a what we I would estate

And same so allows us what to growth that it us and still lined makes shop many continue on our is on that how allows to take allow to I will our have up keep over in we for where go, we the adjust that pace. think growth. for but think sense And places of pipeline robustness learnings sites time that

a of XXX really margin quarter some incredible. XX% the follow-up points. on my up restaurant then Understood. just and this And north That's of basis margin, is

with eyes, retail like store? whatnot, willing wondering, of well as there industry well, platform. from any the business to some set those margins of maybe over-earning within seems above this others the you. to in thought in maybe just spur look being to opportunity reinvest you Thank and is maybe business there's Christine, those It the strength some Just a come level of an having fresh and at are benefits to reinvest and that

Absolutely.

of couple a So things.

as one, is mentioned, easily highest quarter. revenue Charlie this think our I

built quarter. we communities, driving the as So trial. helps reinvesting this again, and investing with investing people about that absolutely in brand think was bringing on profitability And and really then in also in local new

to continue with really and guests are going so work to that us. log doing we And allow follow to new

David question next comes question. from And proceed line the Tarantino Please the of with your with Baird.

over about lower much I talk guess if Hi. guess could called lapping I related comparison you just how of out? real the those Good I and based each about of trends was lot the you afternoon. underlying I have versus had to factors? improvement initiatives wondering how traffic improvement of that been might the improvement kind on a improvement quarter. was traffic maybe that of of the related certainly a from first a to much But question

a that the easier the evenly to QX the we quarter-over-quarter. traffic of of due We split rest traffic then improvement the Yes, look pieces. third at lap And XXXX. is improvements of from really believe over about

the all spend, really rewards, So that advertising improvement traffic. innovation, of Dutch the all and in rest in increase split

Got it.

then the how I the of your guess of rest the And for what's year? the guess, expectations year traffic evolves? I the for the inform second that picture is Okay. outlook did half

guidance digit down break year noted But, transfers, we then full from a the right. top. in perspective. it element and an single we've low pricing mentioned we sales well as total in got don't there We There's that of

the to traffic So investments. we the and talked about as keep get we're just to can pushing try on gas and the going as we lift high that

So…

Yes.

QX. of we've I would lot I done things that with add the think, what to a is we've learned that in one

the so of different offers, the same perspective experimented on a rewards geographies. we've parts, with We've from And different different promotions again done front. types day

the move enhance the we'll the But as learnings I similar we QX profitability activities. differences. forward, would doing we say continue understand to with had so where really And from we've have that biggest actions made are, and those

one second more to of the lead in I going increases but I that of to that the type could squeeze pricing be the are of if end amount you I pricing year? I it, missed in, QX. Charlie, you and pricing half have And effectively Great. running at what of the implemented might guess, did what guess

took. a full going price X% we move price lap, now year to basis, to from Well, range that on just approximately a year with about full up that X% a we're

And with the the Haskett. Please next Farmer Jeff question of your with comes proceed question. in line Gordon

Right. Thank you.

these they better or of I the or specifically the seem to that point. to extent the infill share curve sales you're comp shops, to at understand looking shops development willing base of headwind volume units this to more these guess some Just sales in a as tailwind are

so market, the in now, really it's the this comp at example, very minimus there's Right low. few of shops, set, Texas in point. for It's these it's di

day as forward, going hit XXth to first forward. go the we the ratchet Now, start month as we of up that'll

the Texas. had XX we I approximately base shops quarter, maybe think comp or shops in from the second XX in

going see So more. you'll forward, that

Okay.

infill two, second, growth up just back in the of I'll thinking of of terms AV rate, comparable three locations? terms growth but there of I you units terms shop in one, the in about, anything year understand from store lower, trajectory we So, for year year in share are volumes those a all terms infill the the can think that of but

and class of right. 'XX 'XX talking early, late too high being about 'XX's We're infill. rate So the

don't remember, board day the till they who So their to settle. we annualized shops month, over a the climb over comp XXth haven't allow first number And of themselves. launch curves,

So it's it's just to premature -- too know. even

I guided for in EBITDA I'll shop XXXX. level, year, to just you just one I more broadly had think margin sort guys the And take one, Okay. on of, the early and last apologize, then

basically said flat. your you Any shop think there I your level expectation for in expectation year terms was that the be XXXX would EBITDA full of it margin? update

confident that. feel the very like and outperform flat We're probably we'll we in

the commodity strong the demonstrated we that self-ness. we've some pricing we've given taken quarter, to beginning belief shoots the and in results are our green fact it's see the forward, -- of commodity Going

Andy line question. with And the proceed the your with question next comes Jefferies. Barish of in Please

guys, guess that at levels? I kind Hey, million the at is these new and gotten of anything uncomfortable that pipeline, store look first, stabilizing number makes and Christine you specifically, you've just, as $X.X productivity with there involved

no. So,

work got working obviously at look look every and shared It's I as As a think, ups we that, are lot estate we've downs. the on part of we real as I of so things forward, on an we're there are here that And, important pipeline. what day.

infill going new a that the are AUVs. to see going in bit, rate, So a we are market, where take that, going we fresh but into higher down little know it's to we AUVs market

a the And so, back building new when at an demand in infilling to that way don't take. kind in very time then think we're way, can going that then going it's markets I it's you we and and pipeline our demand and, while coming of look by build shape the between really that and these infilling long

and look richness like, have look as very So, at opened like. will data our so many what of in pipeline we we this shops of the growth having, I'm the all after that as what pipeline forward go confident now, in the Texas, I look will

puts the are the that a there's lot XQ call then, analyst at I $XX the and adjusted what And in investment you're guidance Charley, million year of like, here areas you flowed just least maybe, Great, that from of but about updated EBITDA, beat appreciate by expectations, share? you takes, if to willing some through. know key it full and for on that. the seems that

that place, a around in, making Yeah, team of making new in keep as support we future but of the capability solid will go activity see driving and sure we lot going and even investing markets be been outlined rewards those growth more traffic to areas we've those so Christine our using we forward, productively things going promoting the in forward. forward, have to a sort program targeted sure

go I'll more, commentary good little to being that the have So, our a we're very to through mindful the XX-plus firepower and to observation going we do that. margin back that and we're XX% flowing about reinvest the and

guys. Thanks results. very much, Nice

the with question your Please with line the Mullan And next Piper Sandler. comes of from question. proceed Brian

while seen bit a tap thanks. softness. where in maybe had call the nicely Okay, held of was frequency of in Last lower little that was, the customers you shared it it really cohort that had you where quartile

in what So, that with on pertains balance of if terms the are then cohorts to of as you second to your and it you quarter, both speak frequency, those the year? expectations saw what of the maybe for

Yeah, we so we saw QX, saw some across in improvements cohorts.

to As activity. we again, rewards increase forward, continue look our we'll

would So, in to activity. continue great with really improvement we're the seeing we reward frequency. response customer hope that, that from see And to

Securities. Setyan proceed And with of question. the your Please the question line comes Nick with next from Wedbush

system pricing. hone really Is I to in QX? guys first, margins. on said Thanks. the for company-owned But X% kind of that stores you want in the line

it's versus move. pricing company move not dissimilar pricing system No, the

sounds going Is be pricing X%. like close that fair? QX it's then to and Okay, to

X% pricing make a just to full year. it's X%, that not that. Last ahead wanted took. understood for over. go that full X% on pricing for X% roll please move sure year then, Sorry, quarter basis an be X% was approximately I question. the would with price the we It's reported just It annualized And you we a your move.

QX price was Year-over-year menu sorry, to price. be the the what? So, all-in menu clear. all-in Just

year only, versus QX X% over year. is In all-in last year

going recent pricing of did forward in increases inclusive the Okay. QX, translate that what to then year-over-year? And

for effect So, year-over-year. at it's now estimated X% QX approximately

it. Got

mean, increases for year? going bps really of And full QX, QX in QX, which XXX be perhaps XXX if decent much the Is bps, a I above big X% why we margin sounds meaningfully year-over-year the to some like in flat leverage, last that see half, that drag? above first pricing So, forward by shouldn't year? is

So, you've about got price. X%

low shot you points is single And X% a price. guys of we So, running guide basis from XXX coming we're digits. around sales from transfer.

Okay.

talking low X% kind puts that digit we're minus X%, from sales about. single range that transfer you plus your in of So,

least the year? be year. uniquely fair the EBITDA the wall you it year, four in the said full year like the margin, half, that Is for it for first be then And should for flat just Sure. above over seems given should it but at flat performance

big from took reported that. large and climb to over income climb. fourth quarter. year last quarter. We in to the the last that have quarter in the that …In year breakage in breakage fourth 'XX climb fourth a a That's that million profit $X we for for we entry over was Got breakage the 'XX

question with next your proceed with from the [indiscernible] the comes JP And Please question. line of Morgan.

Good you on the system rollout. of then system exiting Thanks this to on also where homage from of taking I'm efficiency tap our allow the check for question. wanted of has And this guys my rollout Can curious me afternoon, the system you XXX just now? in guys. on how the labor have you rollout tap much XQ? the leverage came I bps got within

can that. I take absolutely. Yeah,

phase. So our tap system still in a testing is

XX are now. that shops operational in currently are We right

labor labor we've we've best systems in investment of teams our labor investment made and it's scheduling efficiencies, labor on like labor the So in at it's as at the peaks driving I far as piece, made in not how any looking and scheduling against schedule across educating our really what's driving look efficiency really When that things markets. our that.

seeing we're That's the that's result. from what labor So a really perspective.

the I shops and -- components number about a and think you being on to the of pricing guys have customization peers. now is different priced I here. One for higher side, two other pricing moving higher talked up follow the And more

higher what much categories this price pricing of to which the So base component moving I'm contributing the versus customization the pricing menu taken shops and the like between curious, is tiers. just of to was step two up mix how on is

half that price customizations pricing that drinks increase really than was drink so pricing long-term and was actually to X.X% related took those rest them. then tiers modifiers moves to pricing a have is architecture the Yeah, why is in those pricing moves this way and the we really set in to included little in one more so reasons of of right modifiers and or moves. And make the about the of up so price for

regions have when one, you of felt look so our there's a movement looked That were as for changed. just where moved when at at into kind that catching we moving at during looked of some of where like tiers. competitors, have there's prices obviously was how reasons, And and with and of been COVID pricing we people where we couple pricing versus priced these really that, up we why new

and pick really a a from way. nice of in architecture then standpoint, what pricing our allows choose customers And this up to customization they our and kind do set long-term

helpful, Is quarters? the cohort any you frequency in of change So One if cohort, $X.X the the over in Christine. now. see Understood. you specific one any of like you visitation million did may. change last within That's really follow-up frequency notable have visitation? members I store change rewards On members can take past there few your figure up

customers how Yeah, as new new for we're looking not also right we're both the rewards at shops improvements, looking but when we to overall in. we those now. it track so number traffic looking of have, And exactly track think we're we changes, with frequency data, add our that's

have those them. within cohorts members so changing And do

increasing And for frequency new what quickly looking is to the frequency want we so and of are also really we're their then increasing bring customers. that over customers time existing in our

the on congratulations for a answering Perfect. Thanks lot and questions my role.

your the from Gregory And the Francfort next with one with Guggenheim proceed question question. Securities, of Please comes

the follow-ups. Hey, quick question. thanks Two for

as we maybe you're about on these going to stores. first think the changes just lease is the The finance how is

million of that under $XXX new year, have you're to this million looked what mix like considering? CapEx would $XXX the the from maybe Within

I the I tell I that. speculate couldn't the be. but like what forward fly, going understand that couldn't you on question, would

for so I months XX looking we think of sites planned months now is our is first our to majority it's to too, for XXXX. the XX important and in note pipeline currently out are time

to you're on be And shop every make look and the more want this versus this we that really a will is here, very clear abrupt sure from new opening. we're learning we're growth something refinement. a at just continuing change that so gradual As continuing focus

the labor. to back going just maybe then understood Understood,

guys out right to go? you the It's maybe Do I place labor guess settled big you've and fourth that curious think gotten you feel to out middle changes and where think it to of the think somewhat quarter. kind now you schedule was a of the an I'm of you more I take have Do months. kind might around that just done? to these so want reinvest? you it's how that put nine It is versus labor How maybe opportunity like where you level? or been you in in it change

we we up labor was we pricing Yeah, well, moves really made. the made, catching look last our at change it that scheduling when the with system year,

changing the pricing you if our labor the We just amount with the So was were think we shop of it in moves. that it catching about at actually weren't stores. up level,

great please brand really we shop that And as of is turnover our have within stores. the in the time, the we have ensuring and working that people that parts important. look awesome we investments labor, within of to our make right broistas the believe customers our super systems, over one is strong I of our number our people think have number environment that we And an really the our and

in will efficient line-speed to labor than our more our shops. not cut we we're changes a other from perspective, So looking make but are that to not make in looking things shops labor

had I debt be will Thank helpful. any versus know all are Understand. been equity just on Maybe front curious, that you. fundraising a one top I'm last updates the with, financing but really just Charley. thoughts it's one, financing. of I about

any pleased noted, join out we great. and turned had but broad We accordion future that pleased actions, effort. we're that a in we that very wouldn't syndicate we as the It comment on us upside through very

Wedbush follow question. up the Please is Nick with from question with Securities. next your proceed And Setyan a

the Thanks for question.

Just what to do inflation was we it be QX inflation in quarter, now? and inflation in food cost and expect the what - labor QX

that Nick. forward, don't We guide

So the remember, rate waiting we move wage low we inflation down. outside as digits. wage moves for is single made was of the East, And our quarter

We give inflation. don't forward. going by quarter out figures helps wage to any So those abate it

XQ? that And from cost what inflation for

in So down QX. actually X%. elevated X% about went cost. about were shifted ingredient They've from input They lower cost higher now X% to input of

are this no gentlemen, and time, questions. at Ladies further there

Now, the I'll to for floor comments. Joth back Ricci closing turn over any

questions. for you your Thank

are plan optimizing be We shops, ahead, our selecting efficiently. building plan we and adapt look clear sites driving our great to plan are goals learn, and operations, against and We continue we focused. executing smart, traffic, to our As playbook. strong run

delivered deliver and offense to begun efforts our year-over-year. have approximately plan XX%. saw Throughout profitable and growth EBITDA sequential our growth the to We in XXX% we bear top fruit. language progress our We adjusted traffic quarter,

continue growth. your I'd a for Most your for time support to creating like build and Dutch of foundation to Bros. thank strong We continued you importantly, quarter-after-quarter

and Ladies teleconference. gentlemen, conclude today's this does

time. a your may day. You Thank and lines for great have disconnect your this you at participation