Chuy's Holdings, Inc.

Good day, everyone, and welcome to the Chewy's Holdings third quarter of 2023 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in listen-only mode, and the lines will be open for questions following the prepared remarks. On today's call, we have Steve Hislop, President and Chief Executive Officer, and John Harvey, Vice President and Chief Financial Officer of Chewy's Holies Incorporated. At this time, I'll turn the call over to Mr. Howey. Please go ahead, sir.

Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2023 earnings release. If not, it can be found on our website at chewys.com in the investor section. Before we begin our 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. Looking ahead, we plan to release our fourth quarter 2023 earnings on Thursday, February 22, 2024, after market close. With that all the way, I'd like to turn the call over to Chewy's President and CEO, Steve Hislop.

Thank you, John. Good afternoon, everyone, and thank you for joining us on our call today. We're pleased with a solid performance during the third quarter, highlighted by revenue growth of over 6% and a comparable sales increase of 2%, including positive comp growth across all periods. Equally important, our ability to maintain a strong value gap relative to our peers has allowed our traffic performance to exceed our broader casual dining peers as we continue to gain share. We also drove improved profitability with a 17.6% increase in restaurant-level profit dollars and an industry-leading restaurant-level margin of 19.4%, representing a 190 basis point improvement over last year. This result further demonstrates our team's ability to effectively and efficiently execute our four-wall operation. We are proud of what our team was able to accomplish during the quarter. As we look towards the end of the year, we will continue to make progress on the various initiatives we have put in place to drive sustainable top-line growth and profitability. With that, let me update you on our growth drivers. Our team's focus on menu innovation has allowed us to generate one of our most successful Chewy's Knockouts, or CKO campaigns during the quarter with items like Hatch Green Chili Burger, Steak Burrito Bowl, and Chicken Tenga Enchiladas, clearly resonating with our guests and driving incremental traffic to our restaurants. To build upon this momentum and keep our offerings top of mind, we are adding a slight twist to our next CKO offering. In late October, we introduced our first barbell approach to the CKO platform with Braised Short Ribs as a higher-priced CKO menu item, along with Stuffed Avocado and the Elvis Presley Memorial Combo offering. We are encouraged by the early feedback thus far. We are also pleased with the continued strength of our off-premise channel during the quarter, mixing at approximately 28% of total sales as compared to 26% last year. Similar to last quarter, we enjoyed another solid performance from the delivery channel, which was mixing at approximately 11.4% of our third quarter sales, a 300 basis point increase versus last year. Catering also performed well, with mixing increases 80 basis points year over year to 3.3% of total sales. To further capitalize on the catering opportunities ahead, we recently partnered with Easy Cater and are currently in the process of rolling out the platform to all of our restaurants. We continue to believe our off-premise channel will remain at least in the mid-20s of our sales, with catering contributing approximately four to six of total sales long-term. Turning to marketing initiatives, we continue to optimize our digital media campaign using Google, TikTok, Instagram, and Facebook, including organic influencer content, YouTube video advertising, and the promotional advertising with DoorDash and Uber. Ultimately, we believe this approach to marketing yields the best results in our effort to effectively communicate our defining differences from our incredible value from made-from-scratch food and drink to our exciting CKO offerings and overall differentiated experience at every Chewy's restaurant. Finally, I would like to provide an update to our development plan. During the third quarter, we successfully opened our third restaurant of the year in Harker Heights, Texas, bringing our total restaurant count to 100. We are also on track to open one additional new restaurant in December for a total of four openings for fiscal 2023. Due to continued construction and inspection delays, our new Bronzeville, Texas restaurant, originally expected to open toward the end of December, will now open in late January. As we look forward to fiscal 2024, we are initially expecting to open six to eight new restaurants with a focus on markets where our concept is proven with high AUVs and brand awareness. The delay of our new Bronzeville opening will likely move our development target to the higher end of this range. Overall, we are very pleased with the performance of our recent openings and remain excited about our organic growth opportunities ahead for the brand. With that, I will now turn the call over to our CFO, John Howey, to discuss our third quarter results in greater detail.