Texas Roadhouse (TXRH) 29 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Tonya Robinson	CFO
Wayne Taylor	Founder, Chairman, CEO & President
Brian Vaccaro	Raymond James & Associates
Peter Saleh	BTIG
John Glass	Morgan Stanley
Jeffrey Bernstein	Barclays Bank
Dennis Geiger	UBS Investment Bank
David Tarantino	Robert W. Baird & Co.
Christopher O'Cull	Stifel, Nicolaus & Company
Lauren Silberman	Crédit Suisse
Jeffrey Omohundro	Davenport & Company
David Palmer	Evercore ISI
Brett Levy	MKM Partners
Andrew Strelzik	BMO Capital Markets
John Ivankoe	JPMorgan Chase & Co.
Jon Tower	Wells Fargo Securities
Brian Bittner	Oppenheimer
James Rutherford	Stephens Inc.
Jeffrey Farmer	Gordon Haskett

Call transcript

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Operator

Good evening, and welcome to the Texas Roadhouse Third Quarter Earnings Conference Call. Today's call is being recorded. [Operator Instructions]. I would now like to introduce Tonya Robinson, the Chief Financial Officer of Texas Roadhouse.

You may begin your conference.

Tonya Robinson

good and Sunita, you, evening, everyone. Thank you for the now, should XX, have release earnings our to third access XXXX. By quarter September ended in be website It on the texasroadhouse.com also Investors may section. found at our

part filings not them. our should our begin with not undue include including of need everyone today remarks, Before We future of materially of SEC. Statements performance, relevant actual earnings provide release outbreak. more we to factors discussion are forward-looking cause factors formal our recent statements. a our you reliance upon the COVID-XX refer documents the and of to could statements, from all be to I remind those differ These detailed placed the that related guarantees results forward-looking discussion to therefore, will that and

refer our the of can In non-GAAP addition, non-GAAP be release. GAAP we earnings found the measures may applicable, measures. information If reconciliations in to to

call of Taylor, On the is Chief Texas. Executive Kent and Founder with me today Officer

our call we for questions. will Following open the remarks,

the call over Ken. to turn I'll Now

Wayne Taylor

Tonya. Thanks,

in pleased saw line in a than traffic. decline are with quarter, down third X.X% improvement the less XX% included we and year-over-year top only which We comps the

been sit week sales will continue positive great in are in to to October down has we or our recovery climb of To-Go recovery in either due operators October. shutting our the our and improved As and pivot to find detail dining consequences to October. to and accept our approximately has at The adjust dine X restaurants sit a our most style to restaurants Roadhouse are the as in slightly per strong in onto of Consumer to the our serve Texas first mid-March, support results biggest and teams. now. never ever, comps comps throughout of X of more demand won't be to with discuss positive. as and go the holding fail, efforts Tonya and turning with our had our trend see and we September to strong, when guests. rooms new our also we pleased inside both the quarter, but The in all ways going challenge we is maybe faced restaurants well. It back and except we satisfied with back - Beginning consistently be Bubba's in our for there and shortly, sales choice approach been right continued business-as-usual Weekly $XXX,XXX weren't sales averaged our

Our innovation curbside and family business focus began an steaks the our the ready-to-grill packs by right go of lots on our guests. we in to taking outside rolled safe manner. offering With parking and meet challenging and sales, to away efficient needs out a operations off-premise our

also employees. We to in the programs several rapidly our financial put of place with sourced were we ensure needs and helping protective equipment that

to employees our booth reopen, addition, installing and early had around for In In preparing rooms implemented some early this in by restaurants May, of our our dining we checks the electronic we temperature surveys July. as and finished at were our restaurants. began partitions

curbside, to and outdoor restaurants to includes reopened of safe dining of and all locations serve capacity, have to go are adding almost some as rooms on that working more conversion to and the many in in same our of our some dining include and outside This testing we Now our manner. areas. staging inside pickup Corrals ways of guests even efficient

a accept efficiency. including method labor testing pickup introducing the to-go texting cards to for Our with potentially we new a Texas as process gift the system curbside guests ability improve improving And in further new a both drive-through even way Roadhouse while We're roadhouses. windows payment. app out few our X mobile recently for Bubba's of Texas are features, rolled to and more also

casual fast a brand year, new our significant X increase will third sales be Jaggers we has in past seen location Later Our opening performance in prototype Louisville, Jaggers months. this and Kentucky. over the margin with

We for which too. model for to of continue franchise taking growth. to include could will a evaluate allow our options restaurants, our faster outside is Innovation Jaggers, place

restaurants stock to During guests at experienced the looking shutdown, from home. on steaks our a up demand

and guests we Texas Roadhouse opportunity our saw to new an with online Roadhouse Shop. [indiscernible] a the quality Butcher result, our Texas provide same As handcut initiative to

are dine-in over those are we Texas we We been time on But of and able focusing in a price increase to was menu our every job closer With mix operators help waste more X% feel stay To-Go plate details attractive serving working run. doing April such comfortable this food opportunities, have the initiatives sales potential for out that which most on with focused originally both are year. food and details share are forward These With are rolling our levels, to as week. our this which in scheduled that and increase, long of excited early a the positive will managers effective historical way. we To trends Roadhouse. are To-Go guests, are minimal quality, this the every also and about on margins several XXXX. seeing moving at efficiency, legendary with assist things on labor a to container with more for spend costs and margins. low-risk we trends our of with will margin happening from early Many approximately you improvement, we retail investment

pleased invest us I months see guests working with taking commitment company of move and momentum look business going Texas current their face up our the to Jaggers or from I opportunities of you want us. our year. in to balance which front XXXX, to to to us to of grow cash last entire care thank any and continue sheet and to our bubba's The in flows our operations, forward continue forward. are into unprecedented allows this our all challenges business. XX well sets for the Roadhouse, to we of of grow strong we As our family throughout and strength

take Now Tonya away. it will

Tonya Robinson

Thanks, to of areas room an sales Comparable To-Go a approximately per and sales comp loosened improved approximately sales sales positive mentioned, We return of sales, X.X% a restaurant. sales in X.X%. the August the to July, increased third third as and country throughout Sales and accounted dining for declined September for see of To-Go of momentum quarter, for restaurant our XX,XXX and some the which each third decreased And in month decreases restrictions Comparable sales respectively. as of fairly the XX% sales our restaurant periods, with Kent stay level continued weekly X.X% quarter were comparable quarter of Kent. X.X% averaging the continue traffic XX%, quarter in by XX% to month, October. average consistent benefit October from approximately in pleased moderated. and

outdoor offering dining. Additionally, as performance in to contributed to we restaurants that approximately of much quarter of level X.X% X% as the our outdoor our XX% with some sales estimate third comp sales

average At in believe over weather decline growth. outdoor offset volumes. country, driven parts it percentage sales increase While basis it this declined X% locations up. the months. warmer week winter the we for sales, certain X.X% offset XX.X%. store the climates by trajectory we may current XXX by to given weekly by quarter, by were in be a generate decreased will in picking coming as points restaurant the total a Overall, we margins, margin Restaurant Again, X.X% the partially margins sales in by dining levels, expect be a somewhat total restricted our monthly quarter, mid-teen revenue to encouraged of of sales of

total to The main lingering July in points caused due pressured processing beef the and to of quarter. increase inflation by XX.X% in sales the higher of and many related cost as do second mostly sales, approximately a by costs margins to to [indiscernible] continue third percentage COVID-XX. plants expect the impact be increased X in basis quarter. We of X% the to beverage was ongoing to costs commodity Food higher driver labor beef of

entrees increase also shift percentage to which XX.X% guests a Labor compared year in XX an total food X.X% down other points offset to third by The inflation the includes percentages. decrease were the cost quarter. increased is Labor driver X.X% as prior prices, per to wage other store of of dollars menu higher hours, sales higher of the in have week basis partially The a X.X%. with typically and period. some reduction by

million insurance primarily million, $X benefit largely million a we by benefit Other payroll million to expense this was compared quarter addition, retention driven last a $X.X items had year. a tax X% employee by offset $X.X In charge which credit. included [indiscernible] enhanced benefit, onetime of a reserve $X.X

as credit than last costs percentage a negatively and our higher $X.X operating was added XX.X%, by year. Other were year. overlapping costs purchasing basis for the dining for the million XX of sales includes points renting of of a general million expense outdoor impacted analysis points quarterly Approximately well volume which items liability other $X.X sales from to increase last XX relates year, reserve charge which PPE lower this also insurance, operating a the as total basis use. Finally, was as

in and cash a everyone a million as for housekeeping The prior $X.X XX-week costs note, of expense. and primary restaurant $X.X On to a XXXX the fourth equity below I decreased decrease G&A were reduction from of claim, of travel was a Moving drivers period. of want sale $X quarter million the compensation credit million remind a a quarter meeting margin. the $X.X that for the reduction million the compared and period year us. to legal

week we an positively restaurant by per fourth XX the fourth estimated As by and sales of $X.XX XXXX that may total earnings margin to you points. share $X.XX, as diluted a extra percentage quarter quarter basis recall, estimated impacted

- XX is the restaurants ended cash schedule the early flow and remainder many by to end coming Based XXXX, company-owned XXXX. expect company-owned of first million expect $XX opened we from million for $XXX year to as end cash, third The projecting our was new from $XX the locations. increase the quarter, of We CapEx development. which new with to we $XX driven restaurants for to most million half this quarter. million with of at openings up XX of XX and year quarter of Through quarter the offset and open the We $XX of least as are operations, on million in million capital $XX of the expenditures. have from flow the fourth quarter. third currently second with store the cash Moving of of

the open return development we please to full That openings. our line For company-owned questions. hope our year, for remarks. XX to prepared normal the of target concludes Sunita,

Operator

your [Operator first Bittner from And Instructions]. Co. Oppenheimer Brian & with question comes

Brian Bittner

Hope well. you're doing

question just First have volumes your the business. we is on seeing in you're

Some do new peers volumes expecting capacity October roadhouse September the and restraints fully if of in that environment to improvement unlocked. probably view? significant sales remains opportunities are state for continued improve they're volumes to guys in share you being Do the a steady for suggested here your even at perhaps while, not see until Texas from of industry dining Or and levels are continue seen the that you unchanged.

about would the color any put element, outdoor but helpful. on talked be you You dining can that

Tonya Robinson

Sure.

Wayne Taylor

Minnesota Kent. some the stores, northern is Well, or up obviously, This states. of in there some are

lose get we dining. we their outdoor As colder, will

much Louisiana, it's or and in, Florida or hot in in too the summertime, Arizona. However, very too rainy - and hot say,

this So of many states. buildings, put the and But in states of you our obviously, it's up control northern southern some we states those point. up with how pick people some at can of then unknown give those

Tonya Robinson

and you I say, positive hard little - first is started has well. a to Monday little finding mean and Yes. They're whole sales restaurants even so And through of I daypart. increase in that really a give bit because continued to half we've we've looking to been would next seeing bit their of thing But see at restaurants volumes how We're of the getting coming do volumes. stores a comps positive on ways week, months first color to this up. into back say comps seeing environment. getting weekend. just sales kind the And QX, little the summer and of to on think uncertain Thursday flat we're fall couple our of recently the I it an

look you XX% September, at think I all, of over if So all restaurants PXX, in October, had and positive our had comps. PX we

them see that, they to our continue environments drive So like can those continue continue I They to I have weekly towards sales to average in tough to even confidence in doing sales find operators. up. everything working always to we'll just think there and ways drive that

Brian Bittner

margins, said which $XXX,XXX it you I under on before margins expect Tonya, the hand more mid-teens are volumes, type off X week. approaching And of these you a

just the a on volume generated You margins doing in quarter now. lower third than mid-teens you're

margins So to than kind you range, of coming would expect kind volumes your volumes quarter, the kind under guess third were out which the wanting of end be cap how the to mid-teens? but margin Is they just clearly expectations XX% you here as I to in better expectations, these want understand quarter? do to you're that clarify improving be in are third high of the of dynamics us of your that margin

Tonya Robinson

Yes.

lower labor from I range, the Brian. even what more get you're throughout maybe we bit find the we're Margins The to don't perspective. to mean like ourselves continue anywhere have In right, profitable, a increase September, quarter. operators I QX to be what from ahead of we to than it as be margin that a month I expected, optimistic saw more as labor stabilizing, from mid-teen perspective. those that maybe then efficient July, just a that's which to challenged from July be mentioned, sales XX%. and think definitely, happened was from Kent in little were XX% in they're a being been ways perspective, of cautiously was continuing it very with could a particularly We was perspective. encouraging but fair, want

this be mid-teen COVID, we're we that in So of - of to that challenges staffing, all, perspective, quo a have pleased a going from of we kind to be have for this while seeing going because still pandemic, we're XX% would from restriction a middle status very on. have throughout first the going to some perspective, labor to assuming up margin some still still

sales, You've a things that's percentage and bit higher with got labor To-Go of PPE little expenses And costs that. that you're higher incurring. a like

pressure. So to of expecting continue to we're that just bit a be

Operator

next question Saleh comes your Peter And from with BTIG.

Peter Saleh

maybe? Ken, butcher Can or Great. it having consumer the rolling that you just is more if opportunity? these for all like the a the your size customers? types sense on of customers in some existing the now. saw benefit shop up from bringing if offerings won't sales? give feel guys this you're new you this clearly, spring out aggressively Just you Or at you're that us in And cannibalize in-store

Wayne Taylor

Well, explain. let me

supplier frozen. now would and send guys would your would So steaks we from and our would cases. is ready-to-grill only in the that through you we order are with have spring, we the of lots were that some our come operating a steaks, you to Amazon from directly Omaha third-party Steaks house steaks. - This a your sell they Similar to it in do the partnering those tents parking lots, under parking and that we the would where display like

what than different did much we spring. very it's So in the

Tonya Robinson

feel it restaurant, this it's guest mean feel don't to it's feel guest or we same is away restaurant but different is take I experience. we a Peter, like - as don't maybe we like from going the Tonya. the And that like

quality So can of and it brings anything, restaurants brands - impact shouldn't as we with see offering the we - that awareness those the negatively, steaks something we're to the with more if this steaks. the the it

that's the looking kind of way at So we're it.

Wayne Taylor

typically the guys a running weeks do the to up sales those month Christmas that holidays. know running we And the their up of X lot in or

we wanted holidays. to prior make the advantage done this took we getting that so by And to sure

Peter Saleh

on But do I how labor thinking to the know start color it Just much into inflation about Should Great. then, yet didn't dynamics just out And think And different? XXXX. understand guys you this look outlook. next you as to how guys XXXX. year like inflation finish we year? we on are about commodity off next slightly year? trying provide Very the going helpful. Tonya, or

Tonya Robinson

A look room we dining think, going on restrictions Sure. to it like, is as I head of XXXX. the into depend what lot

the as probably place, some to of you similar those have is we're significant to Hopefully, doing long what right pretty easing see be think So going as I now. environment in restrictions we pretty restrictions.

supply what will it's see out just obviously right mean is the I perspective, really and normally locking a happening, that of from which amount a continue we early. soon XXXX little We tougher good. But is looking from tell. pretty high and we Overall, work pretty they're margin Hearing would it hearing sales perspective. demand just meats of really that but help some retail that to continue do, half now to to in it suppliers commodity perspective, our too up not could and maybe the back the and locking buying. up get with seems we're costs, with a

on perspective lot And a pandemic. to to facing commodity to staffing make scheduling perspective, there you, going need to a to but and us what so find I'll sharing that to using year. job with tough we're do land. tell get through from from going Labor, a takes, the pretty ways operators it staffing that with they're a though, with puts perspective. similar to our them continue that be there's are and with from of said, resources of line, get hope lot this where seeming okay a to and a it's doing really phenomenal more And even with we're do efficient the challenges we we'd And we're say, investments to Peter,

more those There's increases. to states The that we'll inflation ready vote getting that to stay. next state-mandated are on here to about expecting to see helping. hearing that to continue We're I seems year. So be think increases wage see we're

next year, pressure would is So imagine around be too. I going wage to

Operator

question with Stanley. from John comes Morgan Glass Your next

John Glass

and back come question of you where trend or right utilization Are at are kind the to terms where do you states the stand. a utilization How change total that more you available you've you versus of at seats what you either restaurants capacity Did question lower capacity a Did Where the start XX%? think now? your you to that wanted just And quarter? partitions over talking gotten pre-COVID. now the the it in - capacity through quarter? change because is part or in in? put I about of XX% did

Tonya Robinson

say because time. tough that's like of all restrictions and which to better to John, just continue indication wait usually capacity times things watch that, mean really we it's I the else. changing than are anything a

aren't wait Our changing changing whole - consistent. really a staying times aren't lot, pretty

we there, and more fill So to able is be capacity seats think demand get lifted. continue as we restrictions we the to

what So that's that it kind our facing. of doing a job dining look And the our focus they're think we the capacity way too. is that's helps great is really at now with those And restrictions we right are operators then outdoor is And many a they go not the seem just from just filling as backwards keeping doing hopefully, status quo things They seats it. here and be - standpoint anymore. seeing great focused they're job a as can. of restriction on to

Wayne Taylor

Kent. is This

buying You their robust. for just for To-Go lunch couple next evening, the got not lot days. might to of be items be our they their dinner buying very of still people remember A well that as to the go also is might

John Glass

And good that's a segue.

there of thinking loyalty those, To-Go strong it I a and about a of to I make things the business. in those you about in - the you're guests, that reasons. think to use you're know to lot there's To-Go maintaining sort business sales? you CRM a those through right do demand ways [indiscernible] average now, revisit won't future? retain but level, retain either of for sure intend how for To-Go Are So contact that you sales that where do currently To-Go can continue the do experienced folks the How those lot program,

Wayne Taylor

guys been I'm and seeing might by how efficient Well, have Chick-fil-A sure you a are. those

folks well. side picking guests at the side To-Go build your and on the make that of you home for business found that app, we or our an And think I those make add app, tasty think And go. pick how think well. money will execution. we going more to our through some because that we to And as think provide when to app, or - curb we but as is definitely order the food people may app easy the not we there for a easier only that And you just bit with really to have how up To-Go continue I bit in area. sure that's execute quite To-Go just going make little people little to them is are easier will an way a they not Curb more So that me, on strength a mentioned, and and we and as then To check that's stronger hot. options efficient give the as the training up time, we is about. where to spent that redid best transaction

Operator

Next comes Bernstein question with Barclays Jeffrey from

Jeffrey Bernstein

questions. A Great. couple of

versus on the The the would think just I'm most maybe assume part, what that some if gave to quarter. I capacity wondering But XX% things. have that where in just in break following I up maybe we're down increased. terms XXX% last bucket first by your of for all on color or terms sit restaurants XX% geographic, at on percent being of or capacity markets side able X you of

you be if any of wondering just that So helpful. kind would those, have bucketing of

Tonya Robinson

restaurants include is to of have, some system-wide, not company our with this going capacity. We're be numbers open are I owned. of to This at our stores. about room And Sure. XX% going dining franchise the type just is

that stores capacity. at So which been about end at XXX% PXX, the we would had have are XXX yesterday, of

that about XX% next would biggest portfolio. And about have with I about bucket think XX%. at of We the the total XXX the been had bucket XX.X% XXX%. was So then

around watching a And the I'm are little the and all states bit. sure seeing you so headlines moving some of

kind little have moved from I of - a our think up bigger bit. we Texas, where XX% bigger of presence, a X

continuing happening. so see we're that just And to

Jeffrey Bernstein

said half you of at And it. you like if are should And XXX%, that was you talk that the that But like I incremental, are stores know comping To-Go stores at I think when about said they're your To-Go the total. of positive. XXX%. assume XX% being Got I

Is outsized So - mix from To-Go those view or stores are relative like you're to you it To-Go XXX%? to do stores how when seeing at get sitting XXX%. back when

Tonya Robinson

the sales doesn't lot whole where seeing what change they're stores in. performance. To-Go To-Go capacity all the pretty So mix based From consistent a the on We're are, buckets restaurants.

So I think that even outdoor dining, To-Go, just shows how the XXX%. that operators be. are whether fighting They're out it's whatever sales, might there even for at more

So so like seems that's to what sales. the of a we're good we're It seeing far. holding on To-Go portion

Jeffrey Omohundro

sounds my great. It that's limited the No, like tune you quite and are just about Kent, October. on I for recognition. still happy And comps how talked know brand the the you September question sang last positive you way of And Bubba's. has

maybe XX of 'XX So of in beyond terms of do that the rollout we little the terms in about the it's impressive. mix more Bubba's stores of think a anticipate? and How total you

Wayne Taylor

you will math as into I of that next look our XX% will store be next I'm to trying I the here, do year. year, tell [indiscernible] growth

Operator

your with UBS. comes question Geiger Denis And from next

Dennis Geiger

higher something can go? little more if for the average off-prem, the off-premise I about gap? labor you margin, the And driving check bit the to a opportunities ultimately, if there. cost to off-premise where with that wonder could relative off-premise I on-premise don't doing the kind know if it's Are there narrow talk currently? it's a of

that about and ultimately. where happen thinking you're could how wondering Just it go

Wayne Taylor

dining are restaurants, up to might might you're Well, a when obviously, a have have you you that go. beer, in not getting pick you if have drink you a margarita, you our soft typically might

a And are as it's washing margins then so slightly whatnot, the giving utensils definitely So plate far versus you inside. - margins less. would be and as To-Go better

Tonya Robinson

Yes.

at. And we're ahead, some looking of the Dennis. Go things

Dennis Geiger

I'm Tonya. please, No, sorry,

Tonya Robinson

looking to calls coming - online the say more of that to of the in Kent we're was ways I cost or go getting to trying things To-Go, a that's that those texting, this another a feels way, more the calling the with little some coming are at app doing thing more we're to the earlier of the Corral or those how looking have mentioned that again, into is areas, versus at some seeing of of app conversions get the or efficient, more some Corrals, because just and like and staging efficient, through restaurant these maybe we're ordering that lower bit. to X-way going just

Dennis Geiger

then great. last And That's question. just a

Just on regions. kind anything a from spike case wait COVID of worth spike perspective, areas, demand that's COVID perspective, there time noting? Seeing

Tonya Robinson

No, nothing that's we've what I from point seems mean or out. different surprising I nothing that would seen.

if that's across are the dine-in capacity, I everywhere and and think rooms across guests in again, some country dining and hotspots that's wanting in open the the type And of come to have we the restaurants. country happening where possible.

see that the like behavior. that. data the you slowing down So action, guests says, I'm not or maybe And hearing of operators "How anything how anything from that

Operator

from next Baird. Your Tarantino David with comes question

David Tarantino

to strong you could was but factors the if margin recovery, Tonya, understand the impressive. about question on the on leading some that the for of very long-term company. sales Congrats on margins, I wondering your a margins. guidance restaurant the I have I mid-teens guess goals elaborate I are

whatever you call that choose? - I the factors still range teens, about are the to think what want in you've XX% it, the going the the mid-teens next teens high over I the - goal, And XX% what horizon and you'd if the are is past, it from to to high to is the guess time like take see. talked to that's

Wayne Taylor

it and drinks, away, Soft margaritas. Tonya. beer Take

Tonya Robinson

In yes, rooms. dining get are into addition dining absolutely, that, to those able seeing restrictions to just lifting, more are people

Sales lived, comfortable kind feel higher very what's XX% we there. you, is to that goal a that check - still historically I'll with the goal XX% and target that. You or We driven certainly where of had. that's increasing helps. get kind we've tell we've that of

Hopefully, this get little maybe it we going you a from some you'll crisis as to those range. you a restrictions now. are easier. that lifted, have and through - think start of see we to bit that see I get easier right gets things perspective, Because costs back away, staffing into get

perspective line. little the you'd what To-Go there a help that the dine-in on do we're catch would bit kind have And we and hold all will We labor an $X from to talking So focused of on, and impact. see about of we a then that those were To-Go. knowing between a things start earlier have you of gap that's things And envision. think about

the to watching just things really back get are those So the we're that.

else labor just in to the crisis, XX worst through those for be As the see where something to But think still I storm, and sure. as COVID we we is speaking once [indiscernible] as that. to this get live want continue it think of staffing And would I see XX we're long issues. we to

David Tarantino

one, Yes, where similar I this it. what look little from a that's low? was dollar point I given so like year might And know was then to G&A. a lot wondering, a perspective, dollar good a helpful. past lower perspective. a this - for us from you year you've as in give an And than look that question on Got outlook run if the could starting XXXX

Tonya Robinson

now. pressures, many because be probably what like in not into we'll to going seeing we're different just heading not to is as doing probably going think think see now right having QX be I some QX you're it's to still than right meetings, going we're be in still see 'XX, much and We're to I going down. travel

and of assuming on So what like just impact somewhat I virus, be would of status travel, from things envision. that a it's kind COVID of the would quo

into targets more hold depending You've obviously, too going that got where the see things for into to opportunity we're of of out hopefully, dive used focused that, different, normal. on that long David. know back I But be we'll But as lot could see kind be and have continue you, And then that the save and half outside I bonus term, all detailed That bit could I most from a so of as it and hopeful gets back the company, tell think higher about of on getting we back sustains that's a higher would this money. a little in the and that, even as really, could a on to XXXX. to of gate. little how go. G&A. like half give an little a opportunity things the bit I'll of be I'm it there, out restrictions a this you comp head year, that are what heading really the really through that into And the to don't we really of perspective, through to we're We've you spending

Operator

Chris O'Cull from Your next Stifel. with comes question

Christopher O'Cull

to should follow-up you just like that to color quarter? expect what fourth as on question. we Do in any G&A Tonya, have last look to the

Tonya Robinson

to a think fourth that lot going whole difference. I of know I you're don't see the quarter,

just And assumption. I into think that. Again, what happened with things have know of normal be only making that I'm will different on we're left go. months We like it, in course, going it's come might right higher now. bonuses month to too little the two seeing to a But right? be it X things might we're really be true from don't that bit - I it in QX, and up

is that. So assuming more be changing that we're would perspective us from not that going to more, spending we anything are where on see materially traveling kind to of lead

again, a lot think, don't So will it Chris, I be whole that different.

Christopher O'Cull

the the during Comps digits. current the which double think, and in low were margin company the indicated Okay. And low to would last be I then better a mid-teens, on, the and averaged at levels, call, obviously running restaurant improved rate. was based time, sales that quarter on much down

you can - some are range given targeted better? the being that prevented that the through margin surprises you or better cost could from walk comps of restaurant than describe So

Tonya Robinson

Yes.

we little earlier, was more I a probably mentioned bit of than headwind a have a perspective. July from would As expected labor

like, So what open. labor with kind was models from staffing those things just look the dealing like dining it getting - rooms was look being the into in like. what on going of we just were challenges through all and to staffing restaurants, a that Everyone working

and September, And better They so more and things coming a little in we a about a In improvements we really there. scheduling July, August really on the line. lot of operators. with getting saw bit focused like that stepping, of did great out that talked job

maybe food inflation really that QX, was cost I to a you for had was X%. believe was in that. And So close big more then beef think July. I

on number, August a then beef September. it - headwind was and it in tempered big July pretty a and pretty big So in July side in the

So those were really impacts, I would more bigger - those were probably the tell you.

Wayne Taylor

we a don't some on say, those or then us after October And us, us of joining of and in unemployed to look have, folks that that with of then right we had then kind September. happened, people leaving that as we necessarily a training lot gives payments that the were toward and with lot I November, much would also rolling happen that say December. board had folks off, And positive in

Tonya Robinson

so And care restaurants, and I actual the taking the to get based other to things from bonuses we operators as more just them with seeing away bonus get of heavy, came sure we're our more We of way going more, making that was Chris, better the improve move operators it being whole thing, moving tell better, got the and an actual as But as managers more pandemic you is, sales one being more results. sales and bonus on restaurants. were into - actual this we've guarantee. compensation, to and

a that's So versus of earlier headwind later. bit in the a quarter little

Christopher O'Cull

one Just last one.

those on the You mentioned of you margin. a COVID-related as quantify costs pressure costs? Can impact

Tonya Robinson

quantify and talking to things about that PPE number like what it's difficult just do. couldn't We're and really No, really that gloves different is.

Operator

Silberman Lauren from Crédit comes Suisse. question with next Your

Lauren Silberman

continues think but So assuming as at and above you sad on-premise on off-premise you touched of prior to how stay levels to the impact these about this, operations and year weekly do to you volumes get levels. kind levels, build

execution? staff the Given required? necessary there is the any to team layout how incremental changes or focus on Are

Wayne Taylor

Can you - question. understand I'm not once - I fully answer I will that the

you to you improvements having changes? building or are Or make What actually we So are saying, saying? are

Lauren Silberman

thinking year, you impacts average how weekly you levels, that the have off-premise say, prior how How to about on-premise that continues assuming let's year you says build, are same, the thinking execution? or execution, about last sales are well operations above

Wayne Taylor

we've very for, number our how of accommodate within and I the works sales. at greater the If curb and guess. building changes the side that's we're a outside some Well, flow good our buildings To-Go doing buildings to within gotten going what making you're To-Go

Tonya Robinson

mean, you, we have Yes. sales now, doing way restaurants right And tell doing Lauren, I'll average. higher volumes I better than the

operators and they to maybe high example on how They the able capacity into at the learn from were We to to continue that To-Go that the were we've in. So doing so higher we learned were to kitchen. manage great have lot with got a - crisis. do of a because To-Go. on able impact We an execute that we that lot XX% from coming of a learn do efficient more kitchen to close how and doing volumes those stores that. your they in kind the to volume handle higher from can't volume. get volume those stores To-Go coming more They're But them

Wayne Taylor

So we're it, February. were, like what call in we triple

in. So a had you lot it dial to months of

Tonya Robinson

capacity wherever to additional about that Yes. handle ability their land. good We feel that might

Lauren Silberman

XX% margins on restaurant David's sales, historical these XX% above prior off-premise the level? Okay. question, fully get And on-premise then expanding return assuming sales. you Can to maintain you just

Tonya Robinson

like. of like, what It depends like and inflationary It what labor, looks on really Laura costs things looking depends, - that. on environment the what are kind food

wages to those the increasing across country types continue We see and of things.

to different pricing be and range, handling or things another our point right of goal now, to that we I think be now. in what would could taking else we that So like look then we'll and to we at like, things see But it. else want how that. take what XX% But be be look want be right to a at XX% would look doing

Wayne Taylor

does week less that than week week. typically that than their that's store With store a are margins does a doing $XXX,XXX less way $XXX,XXX XX,XXX that a a a said, a store

the the higher sales, the obviously, So margins. better

Lauren Silberman

And last on Okay. volumes. question, just a follow-up

reductions market, XX% see in XX% see so you or to you capacity As XXX%, increase increase a in commensurate sales? a do

Tonya Robinson

I capacity, mean see do that. you an they things sell, got more Yes, more like seats that can increase. they've obviously,

you see do a in room So sales. step-up dining

similar a To-Go still down that they're stores those of to in You to holding but To-Go on might sales bit, little other see come the a good portion system. again,

up So we - are sales dining once kind seeing away. capacity restrictions go that taken capacity of the or tick any room

Operator

Your comes Farmer next with from question Haskett. Gordon Jeff

Jeffrey Farmer

Ken, is this you. for

of of and end of wage potentially lot peers on about be your $XX would the the tip-to-minimum Anything have a an that asked have wage. casual to So you terms thoughts prospect a been dining helpful in federal one. minimum

Wayne Taylor

Oregon, that a California, dealing with bunch in states. Well, of already other Washington, are we Nevada,

price different our why XX So menu. have that's we on like tiers

states we those New that's care to two bumps when to had in over raised theirs, example, we've it. of an we take basically a increases. course had the of So over significantly It's reacted price the take those raised York wages XXX% - care But how never various have that year, of time.

Jeffrey Farmer

a then as just that. follow-up And to

would So wage minimum and what and their some happen. the spread states potentially of largest between current south the wage and could southeastern tip-to-minimum have the

in It increases? price terms much or of price don't to pushback like in too you mentioned some about sounds you So again, But seen want words pushback increases. just taking menu thinking those mouth. the put haven't on consumer I your

Wayne Taylor

country you, tell in would the it's in of are stores some volume I our No, highest California.

shock. term, both a short-term there would adjustment, is and our I So the side on there's say then an side. And guest long

Tonya Robinson

how And increases of to a I any lot stepped a of to kind there increases imagine does would number those in give a get of things. like kind more would our depend would the play. typically used time over just which too years, stair that consumer on be little

Jeffrey Farmer

pushing to themes the of sort in That's or just restaurants sales asked, sort unrelated, consumers operators' some to a all of - softer going terms things, are just and best those worst-performing some So back of is same-store beyond their have or same-store a the dayparts. thinking of several but common to week of job with then ability But maybe your do about outdoor question like of sounds that ability this these restaurants, worth noting? sales teams, common worst-performing there best that And dining, helpful. are some people and good it right. parts

Wayne Taylor

of But when come run of bottom to the know. I have know, don't you $XX,XXX, you our you and you get or don't to then us one restaurants, give Sure. line. Whether XX% know

their so that So And we make talent a level say, put more huge operator together. to ability and depending than, they have an partners the difference employees. can team really a on typically, have

do they And we're reason stores that's quite and we're us, our say expectations, still very very, work glad well. And that and as would don't company. performing are a that of maybe of the I So they're beyond stud-ests well that and long-tenured lot stores at really studs proud still extremely do got them. with our some very biggest versus way we've

Operator

comes Evercore David Palmer Your with ISI. from next question

David Palmer

on result. Congrats the

before. a stuff year, talking the XX% restaurant you're were about about margin, Last we margin on talking level Just follow-up mid-teens.

or of big is XX% XXX If follow-up. to ask mix, basis idea basis it with the that biggest going change to have you a like points from doing comps, and that that And margin of have I impact? seems to gap, mix partly and X% over not some you're it And are XXX I positive that that points is higher a the business go labor below the more year contributor of to component that? you're of ago,

Tonya Robinson

wage it a rate. piece on of hours it mean To-Go. it on it fewer To-Go versus I is but the higher dining does - Yes, the take a labor the David. Sure, is is experience,

that's it be can a deal. So that is big something impactful and

can range. those our see margins that we mid-teen hope above think is I that be

we on going continues on really every changes, going we're environment a think challenge. September of mentioned, a everything give confidence also week Again, in as results in us some staffing optimistic I be think But bit every to I be lot with that. cautiously saw day, I to on a great of that. this that

to handle making throughout an deal. encouraging work any different really to to this we're things like we're they're that just they're want that's make sick, sure operators able to make aren't because so And exclusions, sure well-staffed investment And we that. people

part those operators as of we So continue to going side that's make we're It's To-Go even of a probably bigger those it do deal that. investments want that things. and assuming to the just to

probably that it. would be So

David Palmer

number of that follow-up on of XXX%. And seating some then capacity just stores the are there, the mentioned you XX%, XX%, at

in is number as those the, Some is lift have or being regulations you the operators pushes Can those something less back. you consumer restrictions of sales less lifted, gets steps and at to you least get in regulated comps that said that see social used, of the as of or kick because not or maybe to distancing of there? other more more get at start out the you lift talk open out seats other step-up and each

Tonya Robinson

you've because restrictions. quantify there's to tough dining outdoor things the just of really just part be in would many they I beyond got the it a that, and have mean Yes, number different so there. like seats pieces it, other playing just

would down it it be David, So break like really to tough, that.

doing that's can be I think and their dining operators and can great to again, To-Go, focus seem a the seat are push get of working just the outdoor they job they and every fill it. possibly they hard to really

Wayne Taylor

And there's really average. Right. no

store You XX%, one XX% another doing might XX%. X doing To-Go and have

to hard them basket. all X put in it's So

Operator

And from Levy MKM question partners. your with next comes Brent

Brett Levy

both I you with on guess go-forward to the are the to And thinking the Corrals the a are existing now about about about And and want you've do Got how change - I do Texas development have think you of change terms when talked you question. you boxes? change plans, the else your infrastructure. to thinking what guess, you what's need be, What the existing how Bubba's what know where you boxes. about to you in I in prototypes. might that's

Wayne Taylor

Sure. This is Kent.

deliver do we've we it push do So got to how how guests. to the we go, -

we're through already making well. push at and some we X patios So then How at seating, we're we And and had Bubba's. as have changing X different as it we new that things and the the as covered on far looking testing different it also We're we've do guests conversions we've stores? outdoor push testing. got at some things roadhouses in kitchen, whatnot, do how to that

that's enclosed. might possible. that got patios. up covered have out some we coming are fully bump bump It's before a We've So outs where done

coming you So gets out those wraps the can weather basically - people entering do can around plastic and of the winter be outside, of winter, as course, so as colder, well. in the the the winter

about we're buildings, things how various we're get and we're trying yes, differently So designing quite our to thinking learnings.

So on we're other not stuck thing, in X words.

Brett Levy

this it's whether urban targeting, Midwest the dynamic changed around gone then... suburban, whether versus it's has kind and versus Northern of versus that's And you're Southern where country

Wayne Taylor

call wouldn't Sure. in The were XX,XXX I open look XX,XXX I of stores year, would of XX And towns answer And to years say, say, been our medium-sized of, in this in X will mix is our no. towns it. We've I of stores X markets. like and of the the even in think kind that ago, America. XXX of in I as out always smaller mentioned zero the for year, we've XX% would And next markets, urban Bubba's, the next got remaining maybe markets X our say planned far those mid-sized XX% be I versus stores, as X but year. stores would of that

Brett Levy

And Sure. units then said you X/X offering dining. when your right now about you outdoor - are you have that of

what being an into that - that option? terms move winter number units we in pursuing As will of of that to will the able as months, you foresee or currently do are or be

Wayne Taylor

weather, we I yes, hot made Texas. Florida could that had off, - super this the making But I'm in, just offering Arizona, and would again, say that bugs Seating you far not let's I'm southern the say, this not just would I out. stores the hot, outdoor - do with XXX summer. say

$XXX. say So becomes $XXX slightly this would the I winter over

you're So the that lot weather those because in we not wintertime. losing a a you the little lose do states nice but pick enjoy up do bit,

Operator

Strelzik from question next your comes And with Andrew BMO.

Andrew Strelzik

behavior follow-up. I unrelated an questions had then two quick and consumer

are there's So on mixed frequency seen customer in mentioned start, customer? use brand. customers Is presumably, And you to a menu customers big the a How differently? about to in discernible step-up the then benefits. the new-to-go and and prepared the tgx difference between side, you've of off-premise remarks seeing since dining number the the there you a

Tonya Robinson

more combo take like some that. meals, first a part seems the of the bigger to kind can that are What on it things I moving of we're of mix, Well, seeing folks steaks, that question. the little bit like

of earlier, little As items. we mentioned higher-priced a bit

on little You activity apps. see a more

little check You see going a bit. up the

getting is dining see what to things a people the a get you perspective, are from perspective, back an excited perspective. into alcohol that, more as like from expect think rooms, I little soft attachment be to of you kind room would dining bev out we're seeing used what

on think what those give data I'll let recurrences Ken I and on we I know if this point thoughts. on the much the have detail really offer don't I too. of his that, his Kent, or side, To-Go To-Go at opinion guests. cannot

Wayne Taylor

the app that we've some more suggestively And certain check. I we this on will the and to our tell as check more app ways folks use month, positive past these our those sell have frequency and of some you improved seen that higher added app items, kind the changed the our and of instances.

seeing we got move app very So forward. happy forward we how performs it a we've as new are that look and to

Andrew Strelzik

would some has the of data materialize and your different slow unfortunate others. point. some then ways, the pandemic that of know to kind of than And suggest be peers was Okay. other my some can in markets question and of potential consequence been this closures your some the independent to just I

hear. there on I in you're So color terms of Is guess can your key that on share just on to markets? I wanted you any that seeing what

Wayne Taylor

the understand about saying sure you Are I'm not question. I competitors like closing?

Andrew Strelzik

side. Correct. the particular, on And incentive in

Wayne Taylor

that really there a surprised few We're in I just have for has closures markets traveling many of bit. some Yes, are that some there. years been that no hard there you're but bit noticed it's from a had to so a been discern, that that longer stores around quite little

Operator

comes with from And Ivankoe your next question JPMorgan. John

John Ivankoe

we your understand be. on on, With some to the higher around average of holiday types of are and example, of probably volume them sales 'XX restaurants is in some you of presumably I XXX%. 'XX. days versus question be very higher Can you kind hold that comps, to over restrictions maybe kind even weekly December the and this current weeks where December, specifically period to close as positive of are capacity The guess, for going into kind to you going specifically as get

across base some You during basically months utilized into store next December and the of year? days, the like kind also

Wayne Taylor

This is Kent.

I probably tells were in ask would negative said our said, you'd - then are not. we $XX our which have million in just usual, where as basically were October, would me would and if you we positive And have operators, October? that here, you positive If July, you'd in expectations. be me exceeding

I I give can't look I operators, by solid just to a being our being that I answer. forward and keep know So surprised surprised. continue you

John Ivankoe

ask this. you me Well, let

Sorry, go ahead, Tonya.

Tonya Robinson

was I Kent. agree just going from totally you say, a I I'll with No, to just technical tell perspective.

You do shifts on. some have going holiday

seen of crisis softer. things how a I knows Eve, this lot been far have get would differences point, You've Friday, that to play back be Day, Christmas. But we've little a Wednesday periods, a are come through kind little more to into that to to a bit who from mean as daypart. as Christmas out. Christmas of got going that Tuesday, negative as maybe when you Thursday, a going tends Kent's into that we've

Our not expectation proven than would be. little have a to have been softer

just to But shift. be holiday expect that negative typically, we'll So little we a see. would that

John Ivankoe

kind XX% will a have you're Well, mean available. are a just year, in or just asked know don't I'm to you're your it. to if stab sake. capacity But number, slightly question at XX% if, just example, in 'XX, using just your seats I not, be utilizing the different just way It this take effective numbers I so and for of I going lap. again, math of to the discussion of at right hard

wasn't on your are you stores you way given in operators, a - secondly, to adding kind significant So by I talk more place are is of And adding that? just necessarily when store to in week. in wanted that your in 'XX, add fashion any just thought capacity get of hours which kind the to hours about you

Wayne Taylor

and I So thing. the question hours first do your Tonya answer let

and to say, To-Go XX% now it. quarter that with on you X% when XX%, So capacity, sure at Well, up we're down say then that first and the in X% for To-Go. makes XX%

John Ivankoe

number that those is I was lucky Well, for absolutely necessarily right, definitely, as right. you're using again, I a yes, with just was XX just and got my I XX But numbers. then my I if right. mean But didn't XX example. think

Wayne Taylor

could pleasantly doing more they're they're back All some that pulled yes, inside, and I've or the been that I'm building. I've we surprised there And what is pleasantly no. outside saying levers that packs been like at family an add it. doing were were if back surprised than what pulling go April not today we in pushing we're like always not that to example, always March as and meaning that we today felt we could our that

John Ivankoe

an that road. myself saw May. own and kind job lot And you I executing that. had a its of Yes, of was incredible of And did store every guys

to operators. your credit So

Tonya Robinson

pre Yes, COVID, from an absolutely. than a that were I seeing a perspective. right demand opening little bit hour's later. open bit we the so you some you're And more stores little even that maybe mean do had staying or earlier maybe

stores see a I Even lot And would need we the out comp happen. to COVID, highest would that. from continue that to see, expect come got growth I with surprisingly, that that would the volume. see do stores that definitely pre there. you've continue to in stores happen we So think of

they just So find it. do continue - they again, to ways to

continue I where things going to that of maybe think is and lot COVID you'll out before. X lower-performing grow find opportunity a ways sales and find those the weren't they to learning a of they're see lot, they're to your of stores,

that's difference And ways sales. sources those be. will think continue the grow I again, So to find where the to

Wayne Taylor

in idea gap. then we Sure. that they maybe how got, And could these fill some no with we have initiatives of retail new

Operator

Fargo. with Jon from question Wells next Your comes Tower

Jon Tower

quick. them make and try I'll

To-Go the I now versus, Just you or but hit ago, think, the the excuse online - offering the pandemic. me, second a height Kent, this of say, on offering just

Aside from is anything then? that's the family there now versus packs, else different

Wayne Taylor

to on No. But wanted and did were focus those doing has pull so outside then at as opening stuff offerings so and folks employment remember, good we our get outside I stabilized We're that capacity we've we then now gotten because inside. we've now more than not have actually gotten the execute inside, so to offering are we more if we less little that our really ability we up lever, open back simplify employment, good choose a could our inside outside at definitely that base the creative really to said earlier.

Jon Tower

then the taken your And done Okay. weaker and just about down environment advantage improve thinking actually things in you swing of sales handful that It terms of a overall competitors of think to your like the seem guys menu, I all. doesn't at operations. have

areas the like from aside perhaps the perhaps combos has of the nice feel channel or there crisis? where improve that additional through prior turned in you are adding the other piece offering either into you, So place to off-premise options for obviously menu that a weren't can you

Wayne Taylor

We right test this a see, we yes, don't that at But I to testing just few now want to things items have to in yes. are moment. speak it few a

Jon Tower

plate center more add-ons? like those are it is Or of the And stuff? proteins

Wayne Taylor

call you let know. we'll February, this on bet you're you if in I

Jon Tower

I be. one for bookkeeping we lastly And to hope Tonya. then on go. Here

chance you quarter, down for of In us the traffic, any terms that break please? could in price/mix

Tonya Robinson

Sure.

was About how check. we kind - with It's had of on then out. were And X.X% of pricing, So that X% traffic. you X.X% that you X.X% it the of pricing. almost X.X% was comp, the build

Operator

from next Vaccaro your Brian James? question comes Raymond with And

Brian Vaccaro

But I If margins margins, July comment have might pressured. where I said it, think were you currently store could PXX you I on so the right, on missed issues, are P margins that's phone Major running? or more apologize. store X

Tonya Robinson

that believe, Yes, the want I'll benefit did $X.X not I benefit get of did XX so a to million credit to give you on lot wanting tax a didn't give basis the margins, about by of that really the tell months. lot September points. detail that payroll detail, of we

good So we getting items of we kind a very be recommendation end that, higher the feel into mid-teen you where those seen. be if adjust to the that about very September, I'm maybe about remains the felt range XX%, for closer good remembering to in fell even correctly, to of and possible And that it and little out of we again, onetime landed.

that specifically noise, get details the more where land. of on a on, to lot on of into kind didn't the I really But noise will So month, want months.

Brian Vaccaro

Sure.

Okay. on growth. Bubba's That's helpful. And then

just prototype Bubba's ramp I Could know working on As latest on targets you your you've it forward? to of continuing growth model. thinking the moving optimizing and been revisit the

Tonya Robinson

those development how we think you costs? of So talking cost, development about kind Brian,

Brian Vaccaro

What cetera. Yes. expectations and AUV that on concept, are et margins for Yes. your

Wayne Taylor

the months, we it relates to I'll the Tonya saw are handle AUVs let as two North Well, over as that. last heading cost,

Tonya Robinson

specifically Yes, to - from are Bubba's, a right? you speaking cost speaking perspective, to you're

Brian Vaccaro

Yes. Yes. Bubba's.

Tonya Robinson

we've of as Contractors bit. opening now. a we I just we've restaurants seen material the we've inflation. an when carrying little costs, expect, are talk preopening mean development a talked a costs - like given a that climb of restaurant labor we of uptick of mean, that just we given we we're talk issues. in had, an little delays with so about in, bit things including as cost cost until there. we would seen haven't in We're a - just lot I change all that and And And then the dealing preopening. increase you staff get open. Yes, seen bit some those can bit we're from up a always right seeing whole

a we had has tell maybe you, on So we will just But running great done bit job. think I'll be just average. been what a those higher than Bubba's little

comps. stores Bubba's also are We in have positive running of They a and in number that the positive portfolio ran PX PXX.

encouraging So which sales and profitability, working certainly on what been great They're very has it's to that improving we're on driving seeing side. see. hard

Operator

And your from with Rutherford comes Inc. question next Stephens, James

James Rutherford

of frame help that, don't can ahead kind any the like ourselves you so sort we margin of just set for Shop if then learn offering. lot's the financial And discussed if offering some the to of goalpost wanted and level on and I back call. or to around Butcher the just get the of just mechanics of been please? possible, just revenue A circle potential, that

Wayne Taylor

to answer it, talk, would will. let but like so I to been I I've told Tonya

Tonya Robinson

like attractive. we're to get be right I'll tell that what still level for mean, are But Which the obviously, you, going from into those perspective, than did better now. We is would James. early very margin think really say. seeing at a it definitely slightly very we feel this margins I business, we attractive to into. us it line store in knowing it's

put think benefit To material model to I in there's early. be going right there. It's now. any from careful a would to very assume the be modeling anything perspective, I really

of a kind I'm in lot it. holiday appealing. on clarity more a do And it. the February way - more We share sure after it. perspective, season, to But able that's at little look the we're forward things Yes, have to - So a be information, margin give say. looking we'll have more it's to very from we'll we'll

Operator

there questions. this further At no are time,

Tonya Robinson

All right. really appreciate a doing Well, I tonight. look thanks, night. forward soon. everybody, Have it. for to joining to everyone hope and is well, We great you us talking

Operator

Ladies participating. and Thank gentlemen, you this for concludes today's conference call.

may disconnect. You now

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