Carrols Restaurant (TAST) 10 Nov 212021 Q3 Earnings call transcript

Good morning. And welcome to Carrols Restaurant Group, Inc.

Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session and instructions will be given at that time. like recorded everyone XXXX, today, A.M. would call this at I being is Wednesday, Instructions] to that remind conference X:XX [Operator November XX, Time for Eastern be replay. will and available the over turn now I'll to Ms. conference Carrols for Controller Miles, Restaurant Gretta Group. go ahead. Please

under By both Thank have you website available released this on access morning, earnings an www.carrols.com announcement should morning earnings our now and you, the our presentation good section. Melissa, earlier and Investor everyone. Relations to that at are

performance, remind or everyone remarks, to strategy, our I respect to of including management placed pertaining would and begin businesses. not to These them. future our direction or future reliance we answers that costs are to like therefore, questions may Before not discussion include comments our should revenue, and to posted plans, or on undue forward-looking be our intentions aspects statements other statements with the of input guarantees

our details, as to the among refer with SEC impact you also other that things, could more risks statements, to forward-looking and impact our the for results, We COVID-XX. business respect including filings as with of both well

The in During the with of accordance should Dan? to prepared over Accordino. substitute available With certain Accepted earnings our we to will CEO, now call performance. that additional measures is Accounting believe and with measures release. turn this Generally for I be comparable in Principles. isolation considered or call, A useful our GAAP reconciliation as evaluating Dan not results our non-GAAP be can information in today's we discuss presentation a that, Chairman will

everyone. morning, good and Gretta Thanks,

third and worked the take A.M. least that are and quarter, let in in quarter. top keep me the the reopening. XX:XX our restaurant discuss restaurants open both standpoint, address at commodity until our experiencing; economy the to EBITDA hit advantage they XXXX From a to of X:XX I from our generally we adjusted Before and labor we elevated industry quarter headwinds cost the P.M. margins line, third in hard labor order

workers, retain pay were team average premiums members wages Given demand. hourly the XX.X%, meet and and of overtime to to increase we required shift recruit competition and our in order customer to by

our the will our given to In addition, ability labor sporadic continue challenge keep experience location-specific Delta quarter, further staffed months. least at for that next during variant closures. six challenged to to We has quarter. far least the so restaurants we believe At the headwinds for now, this nine abated

inflationary us. our these labor to revert from and challenging we habits not the cyclical The the during the was question transitory? levels. suppliers stemming XX.X% last of chain frozen manner our labor continue combination economic Domestic basket; were to use expected producers industry. do they conditions faced the commodity of the constraint struggling costs and suppliers. difficult Our We degree effect constrained to during consumer passed experienced we the from to Beef impacted domestic portion supply labor the force, requirements and pandemic what be constraints, the increases coast paper unload distributors and quarter. contributed to numerous overseas food third represents from costs on their pressures to compared timely with and it's The navigate a the and to to higher mean? to cost and product fresh to We This costs unable and traditional about in but patterns increasing supply commodity beef of that off were third those higher predict. most on fuel quarter beef on will many supply are supplying year. our don't along of are, stranded containerships a their chain frozen one-fourth follow beef California, that carrying beef And know we have costs of commodity are answer our answers

King comparable through rose Turning September and X.X% pricing ago quarter August. X% lost comparisons XXXX, as third year quarter. sales and in increases a during restaurant July sales of the We COVID and in due hours staffing-related in the that about out eased late-July estimate we sales to sequential rolled in improvement we from challenges our operating trends Burger in quarter, reduced to growth same-store that of the with

at and our drive-thru quarter, approximately takeout about restaurants, third while total to the channels the combined was eat-in XX%. Burger During contributed XX% King sales

We check last delivery in of the a also for which mix $XX.XX of The XXXX. to X.X% held X.X% $XX.XX, mix compared and from quarter delivery in benefited to average size year. a quarter the third sales, compared at favorably second

we pressures, in check demand the We Burger quarter taken X.X% compared next environment [ph] on quarter. an this half we of early year, King price for that far further check including prices mitigate higher price in rose we discounts Burger in second the increase in year. so action $X Burger overall customer third of further at input King King our the is year-over-year to check our believe additional King price delivery, small. Burger taken promotional discounting. and of average X.X% October Overall, restaurants. range $X.XX, mid-to-high our to have current To percent reduced impact possible actions average in have first Based the pricing average menu Our as expected will result in increased a next increases believe that on single-digit and lower the the year, promotional

contributed quarters. outpaced XX sales our XX as remain the the and for improved once compared King to contributed in of of overall recover steady. night terms the XX% Burger to day-parts, late evening the quarter, system XXXX. increased Breakfast quarter late-night and we quarter. Burger X% in in have sales of King continued however, our We in again and the XX% third of XX% In of out done past XXXX and breakfast the day-part, the our of same quarter trends evening by sales The most

positive Burger the the actively XXXX believe reinstating basis comparable increase sales XXX exceeded quarter and outperformed quarter through drive to were comparable We sales of third Burger restaurant hours. restaurant price and King during combination menu actions system U.S. able King by a Our the we system points.

today an Royal restaurants Burger been to in sales impact July of a is X.X% to Kings since As increased one-on-one we restaurant month. and X% coupons. currently at To in on our continuing is head sales accessible the through to loyalty restaurants with are October seeing in our engagement have we paper cost platform, dining This more are October King facing. customers reducing facing positive XXXX. with last compared BK of comparable next program mobile sequential increasing also the Popeyes on use beginning drive-through short which update we room XXXX, will year, in October the comparable Burger our available Only the and the have our increased be margin our improvement of a only pricing, place currently which [ph]. time, aggressive already Perks level pressure alleviate challenges help guests beginning will that we conclude, believe app

pricing begin comparisons, comparable we erosion year a the of able from this promotional ease actions cost improve Looking menu and are sales the to relative we to be portion continue will as lower discounts seeing and ahead, potentially basis. margin benefits we on believe recapturing a

have begin President our transition years, to will to me and next the Chairman, both role. intention that, succeed any me the CEO and for company months next-generation management Carol's with I by September, Tony of my let work and to now review for is of June over in announced over retiring we with right My as believe the turn to coming call long tenure the team the leadership. help Board measure. that as person to XX And of for to year. be and financials. be by our the I a identify been I Directors Finally, XX quarterly their time, new with will in successor that

Thank compared period you, the increased quarter for $XXX prior restaurant to third of Total to year Dan. million, sales million. $XXX.X X.X% the

Berg exceeded from newly the King opened three comparable The Burger sales was with to this difference contributions overall restaurants, restaurant growth to the weekly and acquired due of comparable King increased from restaurant the levels during is restaurants XXXX restaurants King XX X.X%. King of Burger importantly, during XXXX sales XXXX. by XXXX levels restaurant the X.X% improvement King in $XX,XXX; quarter XX -- Burger the primary the compo Burger quarter end quarter third of an sales more of quarter of between Our offset the average second sales of the growth restaurant an by and per X.X% closure since

third our respect of less QX in as King XX% me our XX% representing which comparable sales comparable our the represent give restaurants, our of X.X%. we versus King states. the the sales were end X.X%. past In Northeast, Popeyes restaurants, Burger our our XX% XX% Southeast X.X% And sales the of were sales period you impactful were X,XXX sales. restaurant previous by the Midwest, Staffing Popeyes finally, our performance our X.X%. were hours operated comparable this during region, year. of positive decreased restaurants, up as Central, comparable restaurants revenues King of representing the region quarter the comparable Let XX to across restaurants, in the representing sales of of X.X%. of the Burger of representing Burger quarter up comparable a XXXX, King of operation during up King X.X% With particularly total decreased to In In Burger Burger than same restaurants, evening challenges X% South

a our XXX system However, on in outperformed two-year the basis points a X.X% We quarter. U.S. last the still increase basis. results represented Popeyes by

supplier experienced inflation be Recall adjusted between $X.XX it percentage commodity $XX.X costs quarter, and higher not that of net points points, At our $X.XX basis in Cost of the costs; million food, pass beverage decreased to September pork commodity other result quarter, the concerned, pound a of primarily restaurant come because as $XX.X sales. beef December challenges from and of to of a per sales in XXXX. as to is quarter this far that to was stated was EBITDA food increased and overall. forecasted September million, decreased we a beef, packaging last quarter margin as as X.X% did least third pound $X.XX would X.X%. XXX As in while adjusted the of basis inflation and EBITDA XXX the

reopening Although, we remainder of between year Restaurant remain quickly economy for the quarter we unprecedented. year. last dramatic staffing elevated environment the same sales was $XX modest required the the absolute operational commodity third the experienced we increased compared quarter on XX.X% million. and in costs The ago. and XXXX increased of expense million the the cost a of restaurant a labor adequate have in or contrast the increase quarter third will workers in costs supply us remain to imbalance XXX reduction $XXX labor to competitive million to points of two now from the and On in wages as believe weeks, impact labor costs restrained that demand percentage XXXX operating with through seen hourly $XXX the an to of the levels. beef between basis basis, Again,

managers million were the wages million members overtime to such labor the even Other for by additional increases expenses higher increased our team base take a on were increase paying team While quarter, cost pandemic, $X.X including labor. in XX million hourly hours premiums utility in the rising last an restaurant retention, employee-related insurance costs. rate and opening of incentives, in need members along response increased numbers as average and salary restricted to last overall restaurants year, additional assistant period year the to spend impact $X added basis due the quarter. for us closing factors, points $X.X in by for with that dollar responsibilities other same increases operating in of the the higher our worked recruiting of to The hours overtime our and cost number about with

year to was in greater security, points quarter Safes locations a from of due General expense provide due of a the faster last expenses decrease compensation in higher was also $XX.X in third leverage. incentive the terms fell cash of and partially to our of The million expenses. primarily $XX.X sales basis million in added XX restaurant collection to compared declined and costs. XXXX year, administrative quarter this administrative X.X% third installed sales. lower also year prior XX rent and sales percentage Restaurant operating basis which Smart and accruals to for to King offset Burger decreased by majority points the regional to dollar period, We as that

$XXX.X was of per to In net loss loss or Our our excluding the letters at when net or diluted adjusted the the the XXXX. credit the finance our share. basis, balance, had million, cash us We We period, $XX.X facility, prior third third share. of credit million $X.XX with was quarter of in million non-operating dividend $XX.X reduction of per quarter the facility. million quarter $XX.X certain an $X.XX adjusted portion quarter. and cash quarter EBITDA including year was per third $X special of quarter $XXX.X under Free the such unused $XXX.X drawn compared per facility, added provided $X.XX to adjusted million was million dividend our current diluted of and adjusted $X.X $XX.X million left of $XX.X cash liabilities difference million million On in on million. was and items, net this This primarily diluted million -- XXXX on the cash X, end the availability or million ship third in income for October XXXX under was The debt, revolving the funded $X.X to third $XXX cash year. flow We and equivalents year with period. $X.X long-term had million and due issued lease of credit liquidity of ended the share. prior of special

one revolver maintenance covenant X.XXx this senior senior the When As of effect, are that At under threshold a being more ratio, leverage secured available capacity with compliance to XX% ability covenant used. debt utilize no to is we need effect our with secured and reminder, to net requires in only requirement. than EBITDA. our capacities in and stay we below have point,

so the capacity. headroom ratio X.XXx quarter, of at senior our was have at we Our use secured the considerable to end revolver available current

with as our below any that pushed debt senior the XXXX. shares during next at to defined $XX We quarter X.XXx net remodeling now our third to line stood the the EBITDA year. believe repurchase net stock ratio quarter. be projects as the quarter, credit at the covenant total third third expenditures delays earlier have some the of not million of our capital compared did and construction common at target Our will We newbuilds in end end of facility of in the

this $XX Our This will current XXXX. be and next million XX in is and XXXX capital of remodel the which include nine expenditure of will year. completed plan half the forecast that Popeyes restaurants, year will be includes remodels remainder completed mostly

year. building $XX expenditure also online of in our capital Burger XXXX, go are reduction XXXX XXXX King six spend restaurants which eight move plan. will We this The in will into million

go menu generate operator, date to believe year, margin affecting we'll And To with potentially ahead And that half we now into do multi-restaurant we basis, our through we headwinds portion that, to as pressures the combined any XXXX. M&A for the the currently particularly the with conclude, in in of front, business erosion easing in cost the to the clawback we the open actions we move this of let's is our a are believe our achieved certainly meantime, near-term be liquidity meaningful ability next will a lines cost In the ample as experiencing. on able clear, On price and not taken questions. future, back EBITDA. is have pipeline. transactions year-over-year are and while be

Whiteman Thank your comes proceed question. line you. Please from with Instructions] Research. first question Wolf Fred with the [Operator Our of

here think of in portion going back structural next performance clawing guys wanted unpredictability we the when understand a inherent about the revisions the year, of the the and there's I I guys. of the But to sort margin about just here. forward? on talking sort margin of you that half are loss degree to outlook margin follow-up how Hey of back should of business

in I know increases early and next how today we on carry be year. plan place it's price with we price of menu to at combination next unpredictable. all, doing least first the we think over totally year. it's We -- agree -- increase one menu to that put they'll going But a year

terms likely of direction traffic margins. -- traffic margins, to helpful -- will we it just almost be in be back And it's but they're in The of be three But of next traffic feel high don't our as is wage; there we hands been wage at we in as wage and So reliant then, we of as -- the increases, -- strong probably that out this year there half, as the activities. it's see got year, good that of really hourly is -- price of will affecting the could that or given kind day. four increases certainly menu about because it's RBI years this some believe will -- be they're we I quarter that the don't not hourly don't and one this on kind increase year. holding possibly

our So, it's that is year; based will view you unlikely so some sales be know, get dramatic we'll it that that. on leverage next

-- the the see but it's could materials we distribution have stabilization a a and in from that commodity again, of situation not raw some costs. of unpredictable. -- year commodities lot other the year. idea see like production aspects reasonable. we relief, think our will And that's you it labor be the thing next even now, -- will We though seems relief we're just what labor no is And then, seeing So don't totally

than quarter year. robustly less did are of they mean third So that up the could this that cost the sales going in

trends versus the trend what it third touched in did just And Makes October the looks on, you two-year if that the decelerated you guys think we sense. about like quarter.

sort sort what touch direction you could the on you're again? should line So, moving get the in when of we expect top of right seeing on to that and

X% with -- in what was October, low seeing. in consisted we're average and and single consistent the X%, down saw down traffic We X%; teens that's third low -- it -- was what of in about so was ticket it up the quarter, was

that's we bit the price a good good piece quarter. little big of is traffic aspect the it probably is the price -- -- through the again, think think probably -- probably But uncertain. driver I is the

Thanks, Great. guys.

you. Thank

from your comes question proceed Stephens Rutherford question. next with Our of Please the Inc. line James with

very Dan, you happens. on incredible retirement announced calls very on in we so, Thanks the a once transition certainly have that I industry, congrats months another we'll much. Great. or on career but these miss you know the six for

congratulations. So,

another still I anyway. have call,

Sorry, what was that?

I'll call said another have still I anyway.

you've the wage again in expect Yes. make start you quarter? are we're certainly levels your get levels as that levels? quarter fourth those to do do think increase want to curious question, to glad; the staffing a we're And the through part in from you trended place levels. to But how put that to XXXX increases to at Or glad. the I'm I enough? versus to meaningful stores any back those need XXXX level sufficient competitive staff wages second

in The flow through continues pretty consistent. were actually month. staffing number the be challenge The applications. up past the application up fair ending with The has a of retention. to quarter with picked levels We're

to X is wages night; premium I that's of stores keep part and employees wage, o'clock of that base o'clock and fine. to at core really than for $X most, to open struggling wage get pay our where don't that's at industry. seem Where we're labor average seeing biggest o'clock the premium XX period rather whole be a in the we're time. we XX think night, restaurants true we rate beyond to of inflation and consequently, $X.XX to work We or the to the prior the the paying close want increase hourly past is the

-- currently. should increase in of will XXXX, an much my experiencing be less a in sense much is So percent in what it more terms of wages be increase we're than it

that? that was wage that is of and Tony, And Or Okay. overtime the additional inclusive to XX.X% premiums? growth shift

just No. wage. base It was the

then, different want just with overall, queue. one where in I I'll it you and don't Okay, that's a quarter? October? wage. in to know bps by XX turn but trended can the increases for the of put question throughout base the you. whatever, give or price month menu more are just you it Thank how with the me But the And added back to And today if you place? you give necessarily running sense

increase It of was was pretty did increase went And then March up end the we of -- late one March July, at and August. to during the one X%. quarter in on because that backs first sizable the -- a the

sitting or the about price So, being And I due minus think at X% increases. about it quarter right the menu X.X% check increase price of was plus now, ended up for to from increases. menu we're

also, in Okay. a well is to that I in less of net total which discounting there's about think And little X.X%; check? the sort as included bit then is way think, there not fair a

XXX James. our this significant, this I small is pretty less discounting XXX year points basis period. we're not It's mean, ago was than quarter it like year points Yes. the It's basis a -- to --

sort prices and it's up the more So, dollars that; more that discounts. drive trend price A) some guests promotional an fewer average we're and in it's ticket the the are of few we're sticking, guests who helped are there spending spending on and the which reduce are items raising and very promos the just the restaurant, of seeing interesting the

Certainly, very it's interesting a dynamic.

help. the for thanks Okay,

you. Thank

the question Securities. question. Jake from next comes Our of Bartlett with with Truist proceed line your Please

sales And RBI really great you. XXXX question. it to fruitful a a a look know communicate with work Dan, first with working in on I Great, strategy, some term? waiting strategies question So, some over meantime, rather was that these to near in the years. been there's But in you than plan measures just the the confident has start thank King Thanks at leasing place regain how the and on term congratulations then this it's it's into try I franchisees, And place to or take to for strategy -- that regain put career, long that the strategy that trajectory. the my and communicated the question Burger market place to the near in you are been approach, is, long-term [ph]? market confident shift in needle are for of move in really can you or the how share share. that that

new think it for place be going six year, plan a balance The The but the of to is, ago. and it's what be December, for the while new it community will was strategy -- we take challenge to I their the in and for a know provided take plan to months. next will implement. and the this marketing the pretty in franchise some much put at convention at effect while it that

will Jake. share the least So, continue market mid-part for think the at of I XXXX, until challenges

it. Got

speed have period -- interim -- but over story bit. that's -- But to less And you the where coupons paper it then, sales quite we Okay, believe been probably there as have hasn't have a the less for an digital helpful. impacting yet. shift support less I channel, launched channel up you the hasn't seems discounting, don't margins good been the paper of maybe is to loyalty because through in digital couponing the

in channel? kind shift a that that of you the permanent think a in the the just Or -- of question would of just back So here discounting expect real digital a less level more discounting we do is, on does kind normal to go the to for brand? the once there's happen, form

just those and had digital; not the been all I the changes menu. the lifted. in it's caps the were Well, there's we on dollar mean value couponing menu items, the

year on for two at five for six for running So And we're had a now two currently opposed a ten we kind regular those and things. of items as to charging more a we're basis. ago, two for

are more is I So than the with couponing, on going probably relevant whatever Jake. changes those think

more And sustainable.

terms open payment the fewer then measure remind the you question to mentioned last lumpy puts turn just sure on previously And sales we there's can CapEx is you'd And stores of kind capital, working CapEx Tony, to so on there's maybe flow. expect and likely place indication just anything the XXXX indication free the is, what ins a as -- to CapEx; -- if capital us look in making understand and free whatever also, to maybe than there whether and Great. that Any in Any outs of can Burger of of that? we it. capital pressures? be then, is Got really cash you sure And if some cost requirement make been kind has 'XX. into for we in we given going how cash then, it environment planned, Or from whether the just around? on could for on King ins flow? XXXX working be? outs is know pushed

can capital. working deal I'll deal with Tony the CapEx and the with

that sense, Jake, first the in part got already opening year. and XXXX, next is of that terms the some open my are we've works in restaurants In they'll in of

now getting X-month a because so year Beyond get the about is, kitchen in forth. later simply that, going guess it's to time be equipment. There's lead we're the problems my to probably X.X, equipment having and

So the to in would year. restaurant, to wanted if they -- be open we even occur the it's later going

our next I next like So of new year. what looks get to on be than to store we've completed some terms originally of part And we've got planned. think development the we'll hope in could get carryovers chain again year what we see Remodeling, supply the some by that the again, less equipment. ability then had first remodels, got we

completed again, will XXXX, of brands for It's be QX. required in King both rollout the already and of of second both will required both, in end menu of mandates in quarter second King and for the the equipment been be the terms Burger board by equipment half Popeyes In kitchen ordered -- for Popeyes, of digital there the are because XXXX Burger and constraints. will place supply be equipment by kitchen

is Got Burger for would a boost that CapEx terms to the in the that But the we expect then, the significantly? to again, question I the Popeyes, capital. Tony, working it. the King of -- -- on boost investment 'XX up equipment just significant should And and

I boost significantly. remodels construction may CapEx don't think CapEx to whatever dollars the are The new and going it's we -- the 'XX major do.

King, So said, overall to to based that relatively our be will for be, upon Popeyes and supplies the and the as that's both, -- requirements remodel of open get small our ability fluid to I percentage restaurants. Burger The somewhat budget. CapEx CapEx going are

Great.

did Yes, lapping they're what and we year. this

on -- the outflow interest couple cash interest first going couple of first actually of the is good calendar year, this deferment XXXX, much. half are we days change bad biggest -- the And working last you capital guide plus so than of hit lot that XXXX. have of the for a working less it of So, so guide our the interest expense million the our received to year total; $XX in in know, that the that of working is bonds next our our good first year I'd that that's then, repay XX. all, day capital to is -- a to our -- that's the impacting will expense, actually be say first to payable shouldn't on fiscal A we because interest things December capital. on of FICA guide are

in So, first day actually be we in this paid also to have it -- XXXX. have the cash the flow will payment so we And or second will the of be payment then, XXXX a benefit year.

just bonds new now that thing So, of have outstanding. we sort a the that's --

a lot. it. Appreciate Great. Thanks

you. Thank

of Our with Group. Jeremy next your Please question comes with line question. Hamblin proceed Craig-Hallum from the Capital

a execution pleasure cost; just you, demonstrating Thanks. pretty environment. some actually really I working with Dan. And tough Tony, beef in a It's again, commodity -- to impressive to add I'll my price. start wanted with congratulations And the you. been you're

over How pork that commodity QX or it's of next I have And think $X.XX that was of pound an trended start I that the math kind the in your costs, has whether QX. know to on a trended things have update expectations also and kind also, on to some here I where other whether elevated. costs, wanted chicken get protein of QX? in several months? the here remained

really say seeing recovery current third a slowly the bit commodities have that it's I'd for and and all the general same average slowly coming a of a but little for have say plateaued the chicken above a decline, the little price view that would with pork and They -- declines. direction, now right is down. say in bit is huge I with quarter, is there, of same to slowly coming stabilized, they -- we're not beef the down, bit slowly. little seem on the But all I'd is good other And other commodities. heading they're the the

so, to don't does. some hedges the steady, distributor items; but be fries French of it for food we down, are coming seems some items other bakery So, but in have some from RSI, and we have our

comparison maybe and say to a steady the at teens. in the starting of the quarter mid-single the maybe I'd down quarter lot. a in fourth because tunnel see fourth coming the to not to bit, be of I mean in but is just low and costs year holding the to definitely commodity to So, but stabilize some probably light some that going the low of last really starting little end inflation

a year. still it's last headwind So, versus

be the probably we've to was biggest going in fourth quarter seen to So, and low year. all -- last the going year, mostly headwind it's it's base that the because so

cost rate trends fair run slightly in the you sales assumption? a saw of from up is that that QX; probably So

sales and lower bit, think I leverage, steady leverage stuff might might that. I and be it promotions it little yes. be think of But because a like

a got pricing. lot more We've

on a Yes, got pricing we've that. lot more

Okay.

the think it may leverage. the is, of So, of be QX to be I a just -- little it actually may favorable because net it

here again, labor. environment of extraordinary it. And then, on got Okay, kind

QX have labor. look you -- people sounds like out, we challenge there. Presumably, despite days improvement to of typically in some kind are impact? an menu near-term having in going have that the well, As staff there's the of period of that that around in terms pricing and getting or be volume some expectation a lower are you're kind staff the is of continue offsetting you -- holiday your labor But to it costs

the states all that generally balance shape, we're doesn't things next there's think at with few I stabilized I because wage good effect a paying But have year, minimum have on more in Again, recently. currently. for just much that this Jeremy, us we're year, of minimum Starting movement. some than think pretty because wage the have

may So, next there again, I but movement magnitude it's going year of think, not I really -- the experiencing. be some anywhere near to be we're what currently

years special thing where able o'clock because the looking after a catch just till it kind -- [ph] -- restaurant a quarter, at now we're and if any not -- are and doesn't of traffic like a one was And really really XX on it's ad a year we're the to just last not is Swiss over but breath -- labor not profitable. our ago -- hard no-brainer I o'clock given look labor the was we're it's XX other open, over but are, we're take two find that, XX think hour staying doing -- because Bank what stuff, the analytics we six AI third sense saw -- to by that -- to the worth it's that costs staying costs. weeks starting happened close we ago, in the look starting it instead o'clock last we're is we because to really restaurant open staying they at of in and make because

quarter, at about sense get a to the diligent X:XX same open And it we'll fourth that's much A.M. the in So, I if start more in -- A.M. quarter. first definitely -- don't something doesn't being X:XX that -- versus going in little we the make for goes morning. it the think the

had us it than I question think harder and was So it's just gone, little past. that kind where it than a it's a the was to seems to that of optimize look that a it the the I has we're been in than open. in in has long because stay taking haven't more front, of it's a been things front just no-brainer of just for -- we've more given like do on lot center before there but to at it's kind past to wage -- the past;

Jeremy, that the to we're year. I get is to so want When I only start going year we make, the -- fourth prior is labor the next the versus year; is quarter labor quarters will to where going that -- in and be point to this we to start have the the increase So, think lapping left second of big a quarter that probably lapping other quarter we're to the started of going see -- the issues next year. first two

So it a should certainly -- of we will several headwind headwind this year. in quarters but of a less be still than it headwind less be saw a

Moving any that in assets? as continue done anything the for other guys Central one underperformance those in know I to about Last Southeast there the know I strongly. a couple terms are areas? region? although full I the for improved be frustration of Is kind that me of -- ever that you out necessarily now [ph] you're stubborn you thought productivity been to performance, those is, see it's know stimulate versus thought have of you the really that Or of things monetizing Understood. been seeing region. margins. not that don't also maybe there think can they've you South there Is because underperforming have know, compares to industry. of here -- you did how a perform that years

actually they've positive we're Central The actually, Cambridge, now and basis. Cambridge is in we're primarily on two-year South a Yes. turned around, And positive the restaurants.

So, years would this do. We a much sales that. did margins we would it we from we what standpoint, said than said the get more quickly two to take got us we

a making because -- think progress there, in is rate we now, the heading labor struggle -- the the in we're making we're So, there direction. I think we're right Carolinas. I And be lower we'll have with those restaurants. Right

specifically all and can when those that's we But restaurants South and yesterday had right trying new asked stores, that's concerned not in North trying legacy and drilldown where King, a We market the the specifically, the I determine some that in aspect the have that Greensboro [ph], to challenge. a creating there's particular are King that of why that's balance in GSA, call an And and with see for negative about don't where restaurants, negative say we're those the determine most answer they we're we're markets. Carolinas; true doing we across day-part they if on Carolina, in we those well, and us if their if it's every And really negative of Jeremy, Charlotte, we're going. there's Burger is we're have more did to a are reason share analytics -- we're negative question, to and see now. across I'm operate to aren't but -- region for really Burger

help coming hopefully, cause to contribute the taking months. guys. parent Well, Best questions, Thanks the my positively in wishes. can for [ph] here

Thank you, Jeremy.

you. Thank

of America. from proceed Please line with comes the question Bank next William question. your with Reuter of Our

Good morning.

think that you'll year and year I year Do the after a of 'XX. planning of fiscal one in [ph] have you're price increase that you increase 'XX early sense implement? price magnitude the X.X% October, So this we of fiscal nothing the in remainder for have the

X.X% be essentially to implementing we had X% will which will one we increase mirror a that at The be March will number, the in of of that kind XXXX.

And with by if that, your increasing? how and to of there overtime? labor guess way be driven try and paying that's a to helpful. your if not wages I'm to would costs, figure much increase you're increased Okay. of regards some the is figure some actual this labor out trying out in And that's I there's then component adjust being

was players that piece team overtime the for Yes, the significant. not

staffing think but because can a overtime we're more we year we overtime, it the either stay year, of that up. less way would we for could could bodies; Alternatively, way. kind we pay the to required pay if till goes paying world next next And up, we be -- get the still wash it so, be can't get so could -- staffing

more XX If the team that seem doesn't future. while, right let's the in like store members. us go So time or I more able world in I members to whether any of through -- overtime the it think team is -- cost to members -- it's going if that's a base per be now, that for coming be going hire to think us we're team near that's regardless with over

then, front. So, on it that managers of overtime a now the a from will year same And reinstatement probably just pre-COVID. overtime look was had for the they

there of kind cut pre-COVID getting back in may some generally that to it's back be the But So speaking, to ability future. levels.

work XX-hour managers paid are assistant a they hourly, have week. and Our

of of didn't because And to consequently, that, have rest any our XX-hour hours the challenges -- they managers didn't restricted a COVID all and work During week. obviously received less they and income, all back the we moved we of and overtime. assistant the all management

in that reinstated So that. was quarter lapped of the third just and XXXX, we

So...

wages that finally to do your only up? mentioned the or Okay. it's I in can much. were environment for for of rising, And we minimums going the or looking a minimums; at wages me, are there back you dramatic that if guess wages of you think wages is above history, of go state labor so of change to down just you precedent terms a lot see any pool sort most won't grew, then, where hurt not the your impact going

think depends I it geographically.

at are other employees think what that's where mean it's State, newer food way fast hiring for $XX, to be in the York the paying. I going fact, I And be. rate there be a there than may currently the places we're like some is where markets New lower minimum we workers will and

be market, rate. new employees have future I So, think in South actually may a Alabama, opportunity Tennessee, there I think at in Kentucky, to the in South come lower in the Central Carolina; an

turnover benefit only turnover staff. high of -- the It's high

at team stuff of potentially the with can see of rollback the You level. we kind turnover some

all Good me. Thank hear. for All that's you. Great. to right,

Thank you.

proceed Michael Our question. next your question the comes JPMorgan. with Please line [ph] from of with Kopla

thank questions. our taking and for Hi, you good morning,

You were that magnitude free that mind in know, flow cash the and priorities I is sort that of or to mentioned capital of debt. you curious we reduce guys that you've working to there goal saw use had cash flow outside any if you planning for was free earlier?

-- our debt I we're swap, senior to required until to clarify, we stay $XXX point, mean, have it's $XXX then -- have we swap; we of $XXX and million this at secured just million notes, -- until that a and is two million things change to obviously. we if so at

So, really we we'll repayable our that reduced and of our debt, sort means have of we this indebtedness, not time. We which at debt. net cash reduce it's million in comments $XXX net said build to

stay versus don't and because at target and on the at to XX-month But we we indebtedness. this of EBITDA extent a year; did just it's -- have leverage quarter, again, obviously, free of last money not denominator was the other used the basis. trailing Xx flow we're or we is year below right And numerator, yes, have the to cash flow, uses because our So, cash generate Xx extraordinary to less. free of reduce this because which our down the net it's

really what to us Xx. back drove So, -- that's what's

Great, thank you.

comments. you. Ladies and session. floor concludes back our management I'll turn any gentlemen, to that Thank for final the question-and-answer

speak on to for to joining this and would Thank further you those who like all forward with speaking us. look we to call, us

next you in virtually call lot much, we'll virtually. you a and in we'll to year. conferences or so. you. of We we're early of either Thank in person have next or number Bye-bye. And person hopefully, or conference very the attending, meet months over next in a talk X.X the Thanks

Thank conference. you. concludes today's This

at this your Thank your may time. you for lines participation. You disconnect