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spk03: Greetings, and welcome to the One Group second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. A brief question and answer session will follow the formal presentation. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. As a reminder, this conference is being recorded. I would now like to turn the conference over to Tyler Loy. Please go ahead.
spk05: Thank you, Operator, and good afternoon. Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements. These forward-looking statements are not guaranteed of future performance, and you should not place 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. Please also note that these forward-looking statements reflect our opinion only as the date of this call. We undertake no obligation to revise or publicly release any revisions of these forward-looking statements in light of new information or future events. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. During today's call, we will refer to certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. However, the presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliations of these measures, such as adjusted EBITDA, adjusted net income, restaurant operating profit, comparable sales, and total food and beverage sales at owned and managed and licensed units to GAAP measures, along with the discussion of why we consider these measures useful, we see our earnings relief issued today. With that, I'd like to turn the call over to Manny Hilario. Manny?
spk02: Thank you, Tyler, and hello, everyone. Thank you for joining us today. We sincerely appreciate everyone's continued interest in the one group. I would like to begin by thanking our team members who worked so diligently under challenging circumstances during the height of the pandemic and now continue to work exceptionally hard through the recovery period as guests seek out our restaurants. It is because of their commitment to operating the best restaurants in the industry that we move forward today with confidence in the long-term opportunity we see for the one group. Today, I'd like to provide some detail on our recent results and strategic initiatives and then discuss our robust development plans. Finally, I'll turn the call over to Tyler who will walk you through the quality financials in greater detail. We are thrilled to report that our restaurants continue to accelerate their performance as capacity restrictions have been eased, coupled with the focused execution of our sales drive for initiatives. We continue to experience industry-leading same-store sales improvements, which for the second quarter resulted in an increase of 38% when compared to 2019. a truly remarkable metric. Same store sales at SDK increased 54.3%, truly impressive considering the already strong performance in 2019. And Kona Grill same store sales increased 23%, both compared to 2019. In addition, same store sales increased 59.5% in July, including a 92.8% increase at SDK and a 31.9% increase at Kona Grill. All of these compared to 2019. The stellar performance validates our position that guests are looking for the high energy, differentiated experience that our vibe dining offering delivers. As I said earlier, our teams are doing a phenomenal job providing this experience and I couldn't be more proud of them. Also impressive, our second quarter US average weekly sales were $288,000 for SDK compared to $197,000 in the same period in 2019, and $103,000 for Kona Grill compared to $84,000 in the same period in 2019. We were then able to leverage our top-line growth into a 22.6% restaurant-level profit margin. For the quarter, STK restaurant-level margins were 27.4%, and Kona Grill restaurant-level margins were 17.2%. These strong margins are a result of our focused sales initiatives, strength in execution, and strategic cost management within our four walls. Additionally, we recorded $12.9 million in adjusted EBITDA for the quarter. This is the highest quarterly adjusted EBITDA we have achieved in the history of our company and brings our year-to-date adjusted EBITDA to 19.4 million. Turning to our sales initiatives, celebratory occasions have always been a driver of the business and have allowed us to showcase our innovation in culinary and our strength in digital marketing. Throughout the second quarter, we ran several promotions around Easter, Mother's Day, and Father's Day at Kona Grill and SDK. As a result of these efforts, we achieved record-breaking sales during these holidays. Additionally, we continue to drive sales through our elevated brunch program. Brunch is now a core business in both of our concepts, as it allows us to use our capacity to capture strong daytime demand on Saturdays and Sundays. Prior to the pandemic, Monday through Wednesdays were typically for business travel diners and corporate private events, especially at SDK. Due to the lower levels of business travel, we have been able to adapt by focusing on social occasions, particularly date nights. In addition, we continue to innovate our activations and culinary offerings, such as our Wagyu from around the world menu at SDK to drive interest and repeat visits. These social occasions have been highly successful in more than replacing lost sales from business dining. Over the long term, we do expect business events will return and further enhance our unit volumes, and we have already began to see bookings for the fourth quarter holiday events. As more restaurants are open at full capacity, our off-premise business still remains a strong and additive layer of sales at both SDK and Kona Grill. We'll look at delivery as a huge opportunity for the brand with the goal of converting these guests to long-term loyal customers. We attribute our off-premise success to the investments we have made in state-of-the-art technology, people, operational execution, and the marketing initiatives we have in place. Our guests are now able to order for curbside pickup or delivery from nine separate delivery partners. During the quarter, we have several marketing initiatives around delivery targeting trial. We launched a takeout Tuesday event at SDK, which features our popular Wagyu burger and fries, for just $9.99. At Kona Grill, we offered a $7.99 KG burger and fries for the National Burger Month in May. Both of these events were extremely successful in driving up-premise sales. Overall, we believe that both brands have recovered extremely well, and we feel optimistic about their opportunities for continued sales growth for the remainder of the year and beyond. Now turning our focus to development, we have an exciting pipeline of growth through both company-owned restaurants and managed and licensed deals for the remainder of 2021 and into 2022. We still plan to open 13 new SDK and F&B venues between 2021 and 2022. To date, in 2021, we have opened six new venues, all of which are off to an incredible start. These include a managed SDK in Scottsdale, Arizona, which opened in January, a licensed SDK at the Los Cabos Airport, Mexico, that opened in May, which we believe will be the first of many future airport locations globally. We continue to be super excited about this platform as weekly sales volume near 200,000 a week. We opened a managed SDK in two F&B venues in the Westminster area of London in May at the Curio Hotel. And finally, on July 21st, we opened a company-owned SDK in Bellevue, Washington. This is the first SDK to open in the Pacific Northwest, and it's truly one of the most beautiful restaurants in our portfolio. Last week, still operating under soft opening protocols, we generated over $240,000 in revenues. As of today, there are two additional SDKs under construction. They include a company-owned SDK in Dallas, Texas, and a managed SDK in the Stratford area of London. Finally, we have identified the one group's first new opening for Kona Grill, a company-owned restaurant in the South Lake City, Utah market, specifically in the Riverton area, a high-profile suburb. Long-term, we see over a 200-restaurant growth opportunity for Kona Grill and we begin our growth journey by establishing the initial target of three to five new Kona Grill locations per year. Kona Grill's now annual unit volumes of near 5.4 million, top quartile store-level margins, and high demand for new units from high-profile landlords provide a very attractive 40% plus return on investment suburban growth platform for dive dining. For SDK, we continue to see our total addressable market of at least 200 restaurants globally. And we now believe that Kona Grill, as I discussed earlier, can be at least another 200 restaurants domestically. All of this growth will be asset lights, and any and all company-owned activity will be self-funded through internally generated cash. To conclude, our team has certainly proven their resiliency, and they are doing a fantastic job welcoming guests back into our restaurants for a great vibe dining experience. Ultimately, our focus on operations and day-to-day execution has proved effective in translating to a strong P&L, and we are very hopeful that the trajectory that we're going on will continue to accelerate in the months ahead. Now I'll turn the call back to Tyler.
spk05: Thank you, Manny. Let me start by discussing our second quarter financials in greater detail and then provide an update on our cash and liquidity. For the second quarter, total graph revenues were $70.8 million, increasing 324.6% from $16.7 million for the same quarter last year. Included in our total revenues for the quarter is our own restaurant net revenues of $67.8 million, which increased 310.9% from $16.5 million for the same quarter last year. The increase in revenue is primarily attributable to strong sales momentum as state and local governments ease seating capacity restrictions in the markets in which we operate, along with strong execution of our sales driving initiatives. Domestic consolidated comparable sales increased 38% for the quarter compared to 2019. For SDK, comparable sales increased 54.3% versus 2019, and Kona Grill comparable sales increased 23.0% versus 2019. As Manny mentioned, consolidated comparable sales for July increased 59.5% compared to 2019, including a 92.8% increase at SDK and a 31.9% increase at Kona Grill. Management, license, and incentive fee revenues were $2.9 million in the second quarter of 2021 compared to $0.1 million in the second quarter of 2020. This increase is primarily the result of local governments easing seating capacity restrictions in the markets in which we operate, coupled with the opening of SDK Scottsdale in January, SDK Los Cabos Airport in May, and SDK Westminster with two F&B venues in May as well. Owned restaurant cost of sales as a percentage of owned restaurant net revenue were 25.3% in the second quarter of 2021, which were flat to the same quarter last year and in line with the first quarter's numbers. Owned restaurant operating expenses as a percentage of owned restaurant net revenue improved over 2,000 basis points to 52.1% in the second quarter of 2021 from 72.8% in the second quarter of 2020. The decrease was driven by increased sales volumes coupled with actively managing operating costs, particularly managing restaurant labor and implementing operating cost savings measures. Restaurant operating profit was 22.6% for the quarter, a record high for the company. Again, we have made tremendous progress in running more efficient operations since the beginning of the COVID-19 pandemic and plan to continue to execute the current operating model into the foreseeable future. On a total reported basis, general and administrative expenses were $6.1 million compared to $2.4 million in the prior year. This year's results include $1.1 million of stock-based compensation driven by a substantial increase in our stock price during the quarter. When adjusting for stock-based compensation, adjusted general and administrative expenses were $5 million in the second quarter of 2021 and $2 million in the same quarter last year, and this year's number reflects accruals for performance-based compensation. As a reminder, the company minimized general and administrative expenses during the second quarter of last year, while our restaurant operations were limited due to the COVID-19 pandemic. As a percentage of revenues, adjusted general and administrative expenses were 7.1% of total revenue in the second quarter of 2021 compared to 11.7% of total revenue in the second quarter of 2020. We incurred approximately $1.1 million of direct costs related to COVID-19 during the second quarter, composed primarily of costs for regular electrostatic cleaning of our venues, personal protective equipment, and sanitation supplies to prevent the spread of COVID-19. This compares to $0.7 million of similar costs last year. Interest expense net of interest income was $1.2 million in both the second quarter of 2021 and in the second quarter of 2020. Income tax expense was $1 million for the second quarter of 2021 compared to an income tax benefit of $3.2 million for the second quarter of 2020. Net income attributable to the One Group Hospitality, Inc., was $13.8 million, or $0.41 net income per share, compared to a net loss of $2.9 million in the second quarter of 2020, or $0.10 net loss per share. Included in this quarter's net income is an $8.6 million gain related to the forgiveness of CARES Act loans. When adjusting for the gain related to the forgiveness of CARES Act loans and COVID-19-related expenses, adjusted net income was $6.5 million, or $0.19 net income per share, compared to an adjusted net loss of $2.4 million in the second quarter of 2020 for $0.08 net loss per share. Adjusted EBITDA for the second quarter attributable to the one group hospitality Inc. was $12.9 million in the second quarter of 2021 compared to an $824,000 loss in the second quarter of 2020. Our adjusted EBITDA does not include any gains related to the CARES Act loan forgiveness and marks the highest adjusted EBITDA quarter in the company's history. We have included a reconciliation of adjusted EBITDA and adjusted net income or loss, the gap net income or loss, and the tables in our second quarter earnings release. Finally, to touch on our liquidity, as of June 30th, we had $41.4 million in cash and cash equivalents on our balance sheet, and we generated positive cash flow throughout the second quarter. In addition, on August 6th, the company amended its current credit facility with Goldman Sachs, The amended agreement provides for a lower interest rate and extends the maturity date for both the term loan and the revolving credit facility by five years. The amendment provides for a secured revolving credit facility of $12 million and a $25 million term loan. Other key modifications include the removal of many limiting restrictions and the removal of all financial covenants except the maximum net leverage ratio of two to one. Under the amendment and calculated retroactively, the company would have been compliant with this covenant throughout 2020, including during the toughest times of COVID-19. Key headline, with the amendment, we will save $2.5 million in cash interest expense annually, and after cash in hand, the only $5 million in net debt. And lastly, on July 13th, the company received word from its bank that its remaining CARES Act loan of $9.8 million has been fully forgiven by the SBA. As a reminder, Due to the uncertainty of COVID-19, other than development, we have suspended all financial guidance for this year, but will provide further business updates as warranted. I will now turn the call back to Manning.
spk02: Thank you, Tyler, and thank you all for your time today. Let me conclude by saying that although COVID-19 is still not fully behind us, I'm very encouraged with our results to date and our prospects for 2021 and beyond. Our financial position, balance sheet, and operating performance has never been better as reflected by our record revenues and restaurant operating profits. Above all, I'm grateful for all our teammates who bring our mission to life every day to be the best restaurant in every market where we operate. They do this by delivering exceptional and unforgettable guest experiences to every guest every time. I also want to thank our guests that have continued with us over this past year and are coming back to our restaurants and enjoying the vibe dining experience they have been craving. We appreciate everyone joining us on the call today. Tyler and I are happy to answer any questions that you may have. Operator.
spk03: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Nicole Miller with Piper Sandler. Please go ahead.
spk00: Thank you. Good afternoon and great quarter. A couple quick ones. The top line recovery is amazing. Can you talk to that relative to capacity? So where do you stand in terms of any mandated restrictions or even just social distancing restrictions you're placing upon your own stores would be the first question.
spk02: I mean, thanks, Nicole. I think from a capacity perspective, I would say For all intents and purposes, in the U.S., we're at capacity, meaning we can use the majority of our restroom space. Obviously, there's still some places where we have to do some social distancing. But in general, we're pretty much where we need to be from a capacity perspective. So I would say no limitation. Tyler, do you want to give any of the color on that?
spk05: Yeah, I think that's right. I think that what we're seeing in most jurisdictions now is 100% capacity for the time being. And so we're fully open in most places.
spk00: And then also on the top line, just a day part, if you could, you know, thinking about the strength of brunch, right, which now we should take into consideration, I assume, as not only a recovery of AUVs, but additional. So if you could talk about day part or day of week mix in comparison to brunch. you know, total sales or the call out on July, that'd be helpful as well, or even just the most recent quarter. Thanks.
spk02: Yeah. I mean, so the day parts, it's strong and stronger. I mean, I think we've been, we're very strong across all day parts, all days of the week. I would say that the strongest, The day of the week for us would be Friday and Saturday. So we see a tremendous amount of demand for all brands, all properties those days of the week. And then Monday through Wednesday, we've been heavily promoting date nights, which seems to have become a significant go-out day part. And we continue to leverage that. So I would say the strength is across. And we've seen, as I mentioned, Saturday, Friday and actually Sunday is now becoming a very significant day for SDK and corner grill and we believe that our emphasis on brunch has really brought that on so so strength across pretty much all day parts all days and and we we think that we're still early on brunch we still have a lot of opportunity and as you know brunch is habitual So as more people learn about where we could have a great brunch, we'll work on their frequency. So I think that the game relative to brunch is very, very big. And then obviously also we continue to be encouraged by takeout and delivery business. We haven't really seen a slowdown whatsoever of that business. As a matter of fact, we look forward to continuing promoting that business, and I think that's still a great layer of business. So I would say right now I don't see really anything but strength in all the parts of our business. The only place that there's huge opportunity and probably not a strength is events, and I think that as we look out into the fourth quarter, we're starting to see a lot of demands for holiday parties. So I do think that in the fourth quarter, that will be the next layer of business that will totally sit on top of the underlying business and will even further drive our top lines.
spk00: And then just a last question. We didn't hear too much on beef, and I'm wondering if that's two reasons. I mean, you have some option on cuts, I imagine, and even the presentation, but then also a great beverage mix. So maybe you're getting some help there. Could you speak to that? Thanks.
spk02: Yeah, actually, interesting enough, I would say that our big help on COBS has been our emphasis on the premium product line like Wagyu. If you go to our restaurants, we have an incredible quality product, and we are able to get pretty good price on that product. So we've actually utilized our promoting products. if you will, product to really help us offset on that part of the menu. And as you mentioned there, you know, obviously wine, liquor, and the beverage being in that business really helps you with the overall margin. So we've offset some of our pressure on commodities too there. We do have, if you will, pricing commitments on beef. So we did have protection from some agreements with our vendors. So we did benefit from that in the quarter. We do have agreements for pretty much the rest of the year. We obviously have been flexible with our vendors because we don't want them to necessarily be put out of business. So we have given some concessions. I think that's a good partnership and that's how we approach the business. So overall, I think that we've utilized promotions, our PMICs. We've added a lot of emphasis on toppers for our steaks. If you go to our restaurants, you'll notice that we put a lot of salesmanship around having people add items to the steaks, which we've engineered them to be cost-effective to us. So, yeah, all in there, and I think overall we have seen a lot of erratic behavior out of supply chain, but I think for all intents and purposes we've done a good job of managing through that.
spk00: Thank you for your time.
spk03: Thank you, Nicole. The next question is from Mark Smith with Lake Street Capital Markets. Please go ahead.
spk01: Hi guys, a couple questions for me. The first one that I wanted to ask about was just the off-premise. You guys did a great job over the last year and a half or so of driving off-premise sales. Can you talk about conversion of these customers to dine-in? Are you seeing that? Do you want that? What trends are you seeing from customers?
spk02: Thanks, Mark. Fantastic question. So we have seen, particularly in markets like San Diego, I would consider them to be the mid-sized markets. We have seen the takeout delivery platform as being a great introductory price point offering to those markets. And if you look at our menu, we very carefully crafted the takeout delivery menu to be an extension of the dining room menu. So think of things like we offer a quesadilla that's a short rib. It's exactly the same short rib of what we have in the dining room. So we've really done a good job of utilizing the same products at a lower price point on takeout and delivery. So we believe, and we have some anecdotal and some factual data that people are you know, being introduced to the brand and then coming in and celebrating their birthday or celebrating an anniversary with us because they got introduced to the brand through the takeout delivery business. So we do think that takeout delivery business has become a complement to happy hour. Remember that we always use happy hour under the same strategy of introducing guests to the brand. So now we do have a one-two punch with takeout delivery and happy hour providing lower price points to introduce people to the brands. And then we're also doing the same thing with brunch. We do have fantastic price points in our brunch menu that also acts as introductions to the brand. So check the box on that. And then the fourth area where we utilize area for introducing people to the brand is holidays. And I think we spoke about that in our prepared remarks where our continued added emphasis on holidays has really expanded our consumer base, and we're starting to see a lot of people who will try us for the holiday season, and then we'll come back for a more regular type of dining. So I think those are the four areas, but as you astutely pointed out there, we are very happy with takeout and delivery as another arrow, if you will, on our ability to introduce people to the brands.
spk01: Excellent. And then you touched on it a little bit, but, you know, Have you seen any changing trends yet with business travel, even for restaurants like Las Vegas, vacation travel, anything that's maybe helped sales?
spk02: Yeah. I mean, the suits are back. I was in New York last week, and you're starting to see people coming in with suits. So there's a tremendous – so you're starting to see that coming into the restaurants. But in terms of how we approach our business, Our core demographic are women. So even today, if you go to our restaurants, we have done a fantastic job of driving our dining rooms to be 55% female-driven, both grants, Kona Grill and SDK. So that has become a big part of our business model. And then also women groups have become a significant part part of our business model where historically there could have been more of male groups in for business dining, but now we're seeing a lot more women groups in social occasions, particularly Fridays and Saturday nights. They've really become very noticeable in our dining rooms. Business guys are back and ladies are back, so we're starting to see a lift on that. As I mentioned on my statements there. We're starting to see lots of demand for holiday parties and people are wanting big holiday parties. All the inbound requests are for either big buyouts or some really big dollar events. So I do think there's some big demand for big dollar events coming in the fourth quarter.
spk01: Okay. Perfect. And then you touched on commodities a little bit, but can you talk about any other places you're seeing inflationary pressure, you know, primarily labor and what you're doing to kind of retain and hold on to some of your good labor?
spk02: Yeah, I mean, so we mentioned beef. I mean, we could have talked about other commodities like, you know, seafood. We saw a little bit of that. And then obviously labor. I mean, obviously it's well documented, all the challenges in the environment. And and we're obviously not immune to all those issues, but we have done a very good job through what we call our rapid deployment strategy of being very aggressive in recruiting and bringing employees in. As a matter of fact, I just looked at our statistics. We are at about 100% par on hourly employees and about 105% on salaries. So for all intents and purposes, and I'm going to knock on wood, we've done a very good job of keeping our restaurants fully staffed to what we need. That doesn't mean that every restaurant has the ideal number of restaurants of employees. There's still some geographies where we have some challenges within the portfolio, but those are few than many. So that's good. So we can be able to manage within that. In terms of what's happened from an inflation perspective, is all the wages are up. I mean, obviously, demand for particularly back of the house employees is significant. There's a lot less of those out in the marketplace. So we've had to roll out what we call the perks, the one perks program, TOG perks. So we've had to soup up all our benefits programs. And I think in general, those have been very beneficial bringing people to the company. So all in all, very challenging, toughest probably environment that we've ever operated in terms of people and getting people on board. But yeah, We really have gone hard on strategy. And then at the end of the day, the last thing on people is the best strategy is to retain your people. So I think I spent a lot of time talking to the management team about making sure that we retain our top talents, and particularly GMs and executive chefs. I think that our track record of retaining those key individuals is phenomenal. And also at the multi-unit level of operations, We have a pretty intact team there. So I think the ultimate weapon in this environment is retention and keeping employees around.
spk01: Perfect. And then just one last one from me. You know, happy to see some development happening again with Kona Grill. Can you give us any rough timeline of when you expect to maybe sign leases or have some openings there?
spk02: Yeah, so we have, so the first one I spoke of, in the prepared comments. We do have two additional ones that are literally LOI and getting close here. So we will have three within the next several weeks that we will begin design. And the one in Salt Lake City, we should go into construction here very short because we plan to open up that location in May of next year. So we'll be working under a very aggressive development schedule there. So we're super excited about that. I got to be honest with you. I mean, you know, our intent with Kona Grill was to really work on volume and margin. And I think that the results this quarter got us, frankly, above where I thought we would have been. So our average volume is about $103,000 a week or $5.4 million annualized. And our show level margins are starting to get up there. So $17,000 plus for the quarter. And I do see a path here to have 20% plus margins for Kona Grill. So if you start doing the math and all of that, and the fact that the landlords basically have, you know, continue to call us and offer some incredible real estate at some incredible value, TI, so we're super excited about starting that up again. And, again, that brand is super strong. I mean, I think some of the things we've done with the bar program, the music program, the addition of the – of the brunch has been right on because we're in lots of suburban projects where people on the weekends need things to do, so we're kind of playing off that. And then we're also leveraging our strategy with patios, and I think that's what you'll see with the future of Kona Grills is an emphasis on patios and rooftops. We like rooftops on Kona Grills, so you're going to see us being able to drive very great economics with a low real estate cost because we'll have rooftops and paddies in all these locations. So we're super excited about that.
spk01: Excellent. Thank you, guys. Thanks. Good work.
spk03: The next question is from Mitchell Sachs with Grand Slam Asset Management. Please go ahead.
spk04: Hey, guys. Fabulous quarter, by the way. Thanks, Mitch. If you could talk a little bit about kind of the opening schedule on the STKs as you kind of see it rolling out over the next few quarters. And then second question has to do with, you talked about the restaurant level margins of the CONAs. If you could just kind of talk about what kind of target restaurant level margins you might have at the owned STKs.
spk02: So the schedule, I think we mentioned Dallas is under construction early construction but that's under construction we do have the Stratford also location is also under construction that's a managed location and then we do have San Francisco kicking here very soon so it'll be a horse race between San Francisco and Dallas to see who's going to open up their first and then we do have A couple, three other deals that are heavy on lease negotiations. So think of Dallas, San Francisco, and Stratford there within the next, call it, three to six months. And then in terms of the margins for SDK, I mean, I think Tyler commented on this quarter. We worked at 27%. type of margins. I think that it's pretty reasonable to expect that our target is around the 27 to 30% range. I do think that as we get up there on the super high volume restaurants, we're able to break 30 rather easily. We do have a great cost structure. Our cost of goods is fantastic. As you probably saw on the financials and down You know, just because of the velocity in our chat, labor is becoming a pretty small incidence on the P&L. So our prime costs at SDK are probably, you know, 45%, which is, you know, probably, you know, it's an incredible cost structure. So we're very bullish about that. Our biggest challenge now is open as fast as we can. That's why we're getting Dallas and San Francisco running. As we mentioned in our prepared comments, Bellevue did over $240,000 really on its first week of being open. And that's without the patio. The patio has another 100 seats, and we're still keeping marketing down in that site because we're getting the operations really lined up for that. So I think that with those kind of revenues, the margins are fantastic. So I would say that. Internally, we'll have a target of 30, and we'll keep pushing for that.
spk04: And then in terms of restaurant design, as you do these new restaurants, and you mentioned you had nine partners for delivery, are you designing them differently so that you can do a larger volume of takeout and delivery?
spk02: Yeah, so another great question. So the Bellevue restaurant, you know, was one of the first restaurants that we designed within the COVID period. So We did establish a separate takeout delivery area in the kitchen. So if you go to the back of the house, you'll see that. We've also added some technology back there to help them work on it. And then we're also utilizing a second line on the kitchen to take pressure off the main lines for the dining room. So we're adapting our model to take advantage of that. And then Dallas... is going to be the first restaurant that we actually open that will have a takeout delivery area separate from the restaurant. And our rationale there is because a lot of people come to SDK to pick up takeout or delivery, and some of them may not be dressed up and they walk into the lobby of the restaurant on a Friday or Saturday night. They may not feel as comfortable walking into it, picking up takeout and delivery. So we do think that having a separate area within the restaurant dedicated to... to takeout and delivery makes a lot of sense. In some of our bigger takeout delivery restaurants, we're doing annualized over a million dollars in takeout and delivery, maybe in some cases a million and a half. In a lot of cases, that's almost the same half volume of a casual restaurant. So we're definitely in the takeout delivery business in SDK, so we need to seriously make sure that our restaurants are able to execute very well.
spk04: And final question has to do around alcohol. If you can kind of compare and contrast, you know, how you're dealing with alcohol sales prior to COVID and how you're dealing with it now, and then kind of what you think the opportunity might be as things go back to some form of normal.
spk02: So I have mixed feelings about that. So, you know, so let me give you a little bit of a background on that. So we obviously like the margins on liquor and wine, and historically, If somebody would ask me, I would tell you that we love to encourage people to have the pre and after drink. But right now, the demand for the dining room is so high that, frankly, the alcohol mix to us is important. But the way that we have our pricing and our cost structure set up is the advantage of liquor to food is not that much. And the check is dramatically higher on food. As I would have told you two or three years ago how I would have loved to become, you know, really big on wine and liquor, sales were a lot more tempered today because it's really a table turn game, right? Making sure that we can get as many customers with a great experience in the least amount of usable time of the table. So sometimes selling, you know, that extra $30 or $40 drink is not on the interest of that table when we can make up hundreds of dollars on the next sitting at that table. So You'll see us really doing a fine balance now between determining, you know, what's the right liquor balance or not. So what I would have said, 35% liquor was ideal a couple years ago. I would say that's somewhere between 25 and 30 is probably our sweeter mix right now. Anyhow, I thought that was going to be a long answer just because, you know, as we continue to have these really high volumes, that's one of the things that we really have to weigh into the business model.
spk04: Great. Thanks so much.
spk02: Thanks, Mitch.
spk03: This concludes our question and answer session. I would like to turn the conference back over to Manny Hilario for any closing remarks.
spk02: Yes, thank you, everyone, for your continued interest and support of the one group. And as always, I'd like to thank the incredible teammates and team that really makes it happen here in the company. They're fantastic professionals and one of the best teams in the industry, so I'm very proud to be associated with them. So I appreciate that. And then for all other of you, I look forward to running into you at our restaurant. So see you all soon. Thank you, everyone.
spk03: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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