Chuy's Holdings, Inc.

Good day, everyone, and welcome to Chewy's Holdings' second quarter 2021 earnings conference call. Today's call is being recorded. At this time, all participants have placed in a listen-only mode, and we will take your questions after the presentation. On today's call, we have Steve Hislop, President and Chief Executive Officer, and John Howey, Vice President and Chief Financial Officer of Chewy's Holdings Incorporated. At this time, I'd like to turn the conference over to Mr. Howey. Please go ahead, sir.

Thank you, Operator, and good afternoon. Good afternoon. By now, everyone should have access to our second quarter 2021 earnings release. If not, it can be found on our website at Chewy's.com in the investors section. Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not a guarantee of future performance, and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. With that out of the way, I'll turn the call over to Steve.

Thank you, John. Good afternoon, everyone, and thank you for joining us on our second quarter earnings call today. I hope everyone is staying safe and healthy. Let me begin by saying how pleased I am with the solid improvements we've made during the second quarter. I truly believe this was a direct testament to the hard work and dedication of each of our team members as we continue to navigate this environment. For the second quarter, most of our restaurants, while open, were still operating under various capacity restrictions. Despite this fact, we grew our top line by over 64% compared to last year, and further narrowed our comparable sales gap to negative 1.4% compared to pre-COVID-19. The COVID-19 pandemic has given us an opportunity to reset our business model with continuing restaurant-level operating margin improvement. This ongoing focus on cost management and operating efficiencies during the quarter resulted in another company record in restaurant-level profitability, both on a dollar and margin basis. With our business trajectory heading toward the right direction, we are all eager to return our business to more normalized operations and increasing our dining room capacities back to 100%. To that end, we are focused on our efforts on retaining and re-recruiting our existing employees, not only to ensure that our restaurants are properly staffed, but also stay ahead of the curve as we are facing industry-wide labor availability challenges. One of the ways we are doing this is through our management retention program, which we described last quarter, and it includes an investment in our managers in the form of bonus payments to be paid in the second and third quarters of this year. In addition to staffing, we believe it's more important than ever for our team members to focus on our three key pillars that have resonated well with our guests throughout the pandemic, safety, convenience, and value. Safety will always be at the forefront in our minds. And during the second quarter, we continue to invest in ways to minimize touch points between our team members and guests. We expanded our pay at the table, our QR code payment, and pay by text solutions to two additional restaurants during the quarter. While we are still improving the overall processes, we believe these investments would further improve our in-restaurant peace of mind from our guests. Our off-premise offerings also resonated well with our guests during the second quarter, providing them additional convenience to enjoy a high-quality made-from-scratch food and drink. This was reflected in our strong off-premise mix at approximately 27%. As we've mentioned in the past, we believe we can maintain a low to mid-20s off-premise mix going forward, given the enhanced level of convenience and how well our food travels. Lastly, With streamlined menu, including convenient family meal and beverage kits, our guests really appreciate the value in our current offerings. Looking ahead, our plan is to maintain our current menu until the end of the year. We will then slowly add back some items off menu starting in the fourth quarter with a goal to return to our new menu by the middle of the first quarter of 2022. Again, our menu has always been value-oriented and it will stay that way. Turning to new restaurant development. We successfully opened two new restaurants during the quarter, one in Southport, Indiana, and one in Amarillo, Texas, and are pleased with the initial reception. We also have one more restaurant slated to open at the end of August in Brentwood, Tennessee, which will bring our total openings year to date to four restaurants and complete our development for the current year. Although it's still early, we currently expect to open between six to eight new restaurants in 2022, utilizing a smaller prototype that will be more efficient to operate and will allow us to better serve off-premise guests while still providing them with the same unique dining experience. With that, I will now turn the call over to our CFO, John Howey, to discuss our fourth quarter results in greater detail.