Chuy's Holdings, Inc.

Good day, everyone, and welcome to the Chewy's Holdings First Quarter 2024 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed on a listen-only mode, and the lines will be open for your questions following the prepared remarks. 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'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 first quarter 2024 earnings release. If not, it can be found on our website at www.chewies.com in the Investors 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 and 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 risk that could impact our future operating results and financial condition. Looking ahead, we plan to release our second quarter 2024 earnings on Thursday, August 8, 2024 after the market closed. With that out of the way, I'd like to turn the call over to Chewy's President and CEO, Steve Hislop.

Steve Hislop Thank you, John. Good afternoon, everyone, and thank you for joining us on today's call. In the first quarter, we experienced the same weather and macro challenges facing the broader restaurant industry, leading to a top-line growth that was below our expectations. That said, we were encouraged to see our top-line trends improve as we moved through the quarter when adjusting March for the Easter calendar shift. In addition, our off-premise business continued to see growth as consumers embrace the opportunity to enjoy Chewy's high-quality, made-from-scratch food from the comfort of their own home. Ultimately, despite top-line headwinds, our team's continued focus on four-wall operational excellence allowed us to deliver an 18.8 restaurant-level operating margin, which remains among the best in our industry. Before I jump into our growth drivers, I want to acknowledge the hard work and dedication of our team members who make Chewy truly special. In times of macro uncertainty, our ability to refocus on the fundamentals of driving great guest experiences is what will allow us to be successful in the long term despite these short-term pressures. Shifting to our growth drivers, menu innovation remains to be the backbone of our growth as we continuously introduce fresh and flavorful options for our guests. In January, we were thrilled to introduce a new CKO iteration that includes shrimp and crab enchiladas, with our delicious lobster bisque sauce, machos nachos, and lastly, our cheesy pig burrito. We continue to be encouraged by our guest feedback on the platform, which is resonating well with our guests. To build upon our momentum, we were thrilled to introduce our next CKO at the end of April that includes green chili barbecue ribs, Pablo enchiladas, and our fat daddy flattas. So far, our guests are very receptive, with the new options, and we look forward to successfully truly knock out campaigns in the future. In conjunction with our CKO offerings, as we mentioned in our last call, we're also optimizing our menu by adding some of our guest favorite CKOs to our regular menu to further drive traffic growth in our restaurants. As part of this initiative, we were encouraged by the performance of our burrito bowls as we added them to the menu as a permanent item. We expect the CKOs will continue to be a culinary testing ground for us, but remain committed to the streamlined menu we achieved during the pandemic. Moving on to off-premise, we are pleased to have delivered another strong quarter of off-premise performance, mixing at approximately 29%. Our delivery channel continued to perform well with 130 basis point improvement year over year and mixing at approximately 12% during the first quarter. In terms of our catering channel, we remain focused on building awareness around our capabilities and working on completing the rollout of our easy cater platform to all of our restaurants. For the first quarter, catering is mixing at around 3.5%. As we look ahead, we continue to believe our off-premise channel will remain at least 25% of our sales, with catering contributing approximately four to six of total sales long-term. Turning to our marketing initiatives, our marketing approach has continued to be favorable in communicating our strong brand value and sharing our unique Chewy's experience with the guests near and far. To that end, we will remain focused on utilizing digital media platforms such as Meta, Google, TikTok, YouTube video advertising, and organic influencer programs to share our defining differences of our incredible value through our made-from-scratch food and drink. And finally, let's turn to our development plans. Unit growth remains to be a core piece of our long-term growth and development. growth plan with a strong focus in markets that have a proven track record of brand awareness and high average unit volumes. During the first quarter, we successfully opened one restaurant in New Bronzeville, Texas, followed by another new restaurant opening in Austin, Texas, subsequent to the end of the first quarter. This is aligned with our plans to open two new restaurants in the first half of 2024, and we are pleased with the performance of these restaurants thus far. As we look ahead to the remainder of 2024, our pipeline remains robust, and we plan on opening between six to eight new restaurants in our core markets for the year. With that, I'll now turn the call over to our CFO, John Howey, to discuss our first quarter results in greater detail. Thank you, Steve.