Del Taco Restaurants, Inc.

Q3 2021 Earnings Conference Call


spk_0: hello and thank you for standing by wasn't them to school third quarter twenty twenty one conference call and webcast without taco restaurant a oh now i could turn got over it and it's a rough iago many director and as your to the game thank you good afternoon and welcome ontario call or john capitola president and chief executive officer and steve break chief financial officer after we deliver are prepared remarks your open the lines of your questions but first let me remind everyone that part of our discussion today will include forward looking statements these statements are not guarantee that future performance and therefore under alliance should not be placed upon them we do not undertake to update these forward looking statements at a later date and your for you today today's earnings press release and are as you see files
spk_1: and for more detailed discussion of diverse second impact del taco future operating results and financial condition
spk_0: today's earnings press release also include non gap financial measures much as a jump to that income or just to be the jaw and restaurant contribution along with reconciliation of these non gaap measures to the nearest gap measure however non gaap financial measures should not be considered as alternative to get measures much as that income i was operating income i loss net cash flows provided by operating activities or any other gap measure of liquidity or financial performance let me now during the call over the john capitola president and chief executive officer
spk_2: peggy raphael and hello everyone we appreciate you all joining us for today's call i'm very proud of our teams who continue to drive strong restaurant level execution and is difficult operating environment or third quarter performance with in line with our expectations which i would characterize as a good outcome particularly in law well known cost pressures across the restaurant industry on the top line we drove positive comparable restaurant sales across company operated and franchise restaurants compared to last year and compared to twenty nineteen as we laugh strong performance driven by are very successful launch of crispy chicken and despite the emergence of the delta and along with well documented staffing challenges and our category at the same time the inflationary headwinds and catching our industry where managed through menu pricing totaling approximately five percent paired with operational excellence and stronger satisfaction scores across our drive through take out and delivery channels
spk_0: in addition as you may have read in numerous recent press releases we have been very active signing for additional new franchise development agreements from coast to coast since july bringing our year to date total to seven new development agreements for fifty three future commitments
spk_1: these new development agreements expand our pipeline and further support our ability to deliver five percent system wide new unit grass led by franchising beginning and twenty twenty three first i will briefly review our third quarter highlights before discussing the specifics on a new franchise development agreements
spk_2: during que three system wide comparable restaurant sales grew one point eight percent over the prior year consisting of a two percent increase in franchise restaurant any one point six percent increase a company operated restaurants during que three on a same store basis compared to twenty nine teen company's sales grew at a low single digit rate lol franchise restaurant grew at a high single digit rate geographically on a same store basis vs twenty nineteen are primarily franchise non california restaurants grew approximately ten percent while cock
spk_1: california grew at approximately four point six percent
spk_2: restaurant contribution margin decrease by one hundred and fifty basis points to sixteen point five percent which primarily related to normalized advertising expense of four percent of restaurants sales vs three percent last year in terms of profit adjusted even a decrease to fourteen point one million from fifteen point three million this reduction was primarily due to the dollar impacted the normalized advertisement through our quarterly dividend and share repurchases they returned in aggregate five point nine million of capital to shareholders and also reduced our outstanding revolver to one hundred and six million from one hundred and ten million finally during que three we opened one company and three franchise restaurants and closed one company and one franchise restaurant the end with six hundred and three system wide restaurant
spk_1: now let's discuss restaurant development and specifically how our new agreements with experience restaurant operators provide momentum for our franchise led growth so far this year franchisees open eight new restaurants and the company has opened three can company operated restaurants
spk_0: our fourth and final twenty twenty one company opening will be our first new fresh flex prototype in our new orlando seed market and we expect the one additional franchise opening
spk_2: following three development agreements for thirty units announced prior to our cue to call since july we have signed an additional for new development agreements for another twenty three units his newest agreements cover future restaurants and four states from coast to coast including the east coast of central florida and raleigh durham north carolina as well as fresno california and nontraditional casino locations in las vegas he signings demonstrate our growth potential not only in the southeast which we know how significant room to grow the brown but also in california and in las vegas where even with our current penetration we believe there are still strong infill growth opportunities importantly are steady stream of new franchise development agreement
spk_1: he has been aided by very strong interesting qs are drive through development and ultimately made possible by a highly desirable del taco traits including are unique us are plus positioning ubiquitous and they knew that drives broad appeal strong track record of eight consecutive years of franchise comparable restaurant sales growth across his teens states
spk_2: and attractive new fresh flex prototype which expands real estate opportunities to help lower net investment and modernizes the guest experience on a related note we recently announced a new delivery only license agreement with reef a leader in their growing those kitchen space we expect to open our first reef outlet in the dense urban need city area of los angeles later this month which is the first of several planned outlets we're excited about this new delivery on lee partnership to help expand access to the brand where there is strong delivery demand particularly in high density urban areas as a reminder we expect a modest step up in system wide restaurants in twenty twenty two compared to twenty twenty one as existing franchisees begin to leverage fresh blacks however we believe our growing franchise development pipeline including seven new agreements for fifty three del taco restaurant sign the here put us in us strong position to deliver on our stated goal of system wide new unit growth of five percent beginning and twenty twenty three regarding our test remodel program we are currently integrating are fresh flex prototype into our remodel design and remain on track to complete up to twenty company operated remodel to the sheer including ten extensive remodels of older facilities and ten remodels have more modern facilities with primarily cosmetic upgrade at a lower investment level we're excited about the transformative impact these are models are having on the restaurant and expect to continue to continue to invest in this important brand and a you v driving initiative as we move into twenty twenty two
spk_1: turning the sales and marketing
spk_2: we continue to execute on our five sales acceleration drivers and those are value leadership then you innovation brand engagement digital transformation and ultimate convenience these pillars are anchored by our focus for better operations execution strategy designed to ensure that we provide guess and employees outstanding brand experiences
spk_0: let me start with operations
spk_2: the entire industry is feeling the impact of labor staffing challenges and we are no exception for certain restaurants with labour availability challenges we selectively increase wages and in some cases temporarily closed dining rooms or limit or late night and early morning hours of operation
spk_0: the need to reduce operating hours increase throughout que three and impacted the company operated comparable restaurant sales by slightly under one percent during fiscal que three we believe this impact has peaked at approximately one percent thus far during fiscal que four based on recent improvements from our efforts to combat the labour challenges as
spk_2: specifically we are executing are holistic staffing strategy focused on both recruitment and retention on the retention side we are showing appreciation for our team through things like daily pay free meals and doubling a referral bonuses along with special events like employee appreciation my and we have also enhance our talent acquisition through new digital recruiting efforts to increase our presence on job boards and simplify the application process to reduce friction for applicants recently our actions have begun to translate into increased applicant slow that is allowing hotspot restaurants to return to more normalized operations as we add staff to these locations we are also investing and additional training to set the new team members up for success turning a sales and marketing in august we leverage our menu innovation introducing another exciting platform stuff case of the attackers which takes our fan favorite case the and ads creamy case of blanca folded into the shape of a taco shell and stuff with grilled chicken carney assad a steak or crispy chicken
spk_1: that was are fresh guacamole as an ad on
spk_2: if tacos represent a trade off from our current tacos and have been met with strong consumer demand mixing it over six percent of sales us far which has helped us maintain our positive sales momentum as we laughed a very successful for speech of chicken launch a year ago next month we welcome the season will return of are authentic tamales menu which we consider a perfect holiday comfort food or tamales are made with season shredded pork in a fire roasted salsa surrounded by a layer of soft stone grounds corn masa and wrapped in an authentic cornhusk we also offer to mali fiesta pack with twelve tamales to feed the whole family with a simple trip through are convenient drive jews or delivery channels
spk_1: on the day part from delivery remains a key driver of sales girls representing over seven percent of sales during the third quarter delivery is particularly well suited to capitalize on guess demand for convenience and value during our late night hours of operation when delivery over indexes and it's helping to drive outsized
spk_2: one and two year growth in our late night day parts turning now to digital transformation last month we successfully launched our new holistic fear and platform and introduced our new loyalty app called delhi yeah rewards daily our lord's is a point base loyalty program featuring for tears named case so scored show inferno and epic that unlock a
spk_0: citing offers rewards and experiences which increase along with the usage of the out yeah yeah rewards also enables us to unlock our customer data to dry personalized and value experience valued valued experiences by delivering unique messages and offers in a way that members are most apt to respond to we are very excited by the launch of this loyalty program and look forward to sharing more on it impacted the business on future
spk_2: calls finally reflecting our commitment to deliver shareholder returns we paid our third quarterly cash dividend of four cents per share in late august and today announced our fourth quarterly dividend of four cents per share which will be paid on november twenty fourth
spk_0: we also repurchase approximately four point four million dollars of common stock during the quarter as part of our buyback program looking ahead although the current environment continues to present staffing challenges and inflationary pressure are relevant us are plus positioning use of innovation and ability to deliver value across our barbell menu strategy provides us with significant pricing power that we will utilize to manage inflation as we exit twenty twenty he won and in or twenty twenty two this focus along with are strong foundation which now includes or new delhi yeah rewards program and an expanding group of franchisees eager to invest in our brand for the long term
spk_3: i've set us up for continued growth and expansion now i'll turn to call over to cedar of your que three financial results and outlook thanks john for the third quarter total revenue increased two point nine percent to one hundred and twenty four point three million from one hundred and twenty point eight million in the year ago period company restaurant sales increase two point two percent to one hundred and twelve million from one hundred and nine point five million in the year ago period which is primarily driven by positive comparable as from sales and to a lesser extent the company operated restaurants for it's revenue increased eight point one percent year over year to five point six million from five point two million last year
spk_0: the growth was primarily driven by the increase in franchise comparable restaurant sales couple with additional franchise operate restaurants compared to last year is john said earlier system wide comparable us from sales increased one point eight percent consisting of the one point six percent increase that company operates restaurants and two point zero percent increase that franchise restaurants turn into expenses food and paper across as a percentage a company restaurant sales decreased approx three thirty basis points year over year to twenty six point two percent from twenty six point five percent it's was primarily driven by many price increase in the bronx we five percent that exceed
spk_3: food completion of just over four percent as expected inflationary pressure materialize during the second half of twenty twenty one and are projected queue for food inflation is approximately five percent resulting in full year inflation of approximately two percent help manage it's inflation we accelerated the time
spk_0: finding and magnitude of our full price increase and now expect many price of five point five percent in the fourth quarter looking ahead we believe are you a surplus positioning in the attractive price point we offered across or barbell minister energy grey's that compelling value proposition in provides us with significant
spk_3: pricing power that we plan to utilize in the new year and mean as food inflation that will likely extend into the first half of twenty twenty two
spk_0: labour and related expenses as a person's a company restaurant sales increased eighty basis points to thirty three point two percent from thirty two point four percent driven primarily by minimum wage increases in california and nevada is will wait three pressure from restaurants with labour availability challenges where we'd selectively increase wages these impacts were partially offset by the impact from are positive comparable restaurant sales including ld to many pricing effective management a variable labor and a reduction and workers' comp expense be on favorable underlying trends
spk_3: occupancy and other operating expenses as a percentage of company restaurant sales increase by approximately one hundred basis points to twenty four point one percent from twenty three point one percent last year this increase was primarily due to higher advertising expense which normalized and four percent a restaurant sales compared to three per se
spk_0: i'm in the prior your hoarder and higher utility expense restaurant contribution decreased six point three percent to eighteen point five million compared to nineteen point seven million in the prior year while restaurant contribution margin he tweets approximately one entity basis points to sixty point five percent or make a point zero percent primarily due to the apron mentioned fighter advertising compared to last year
spk_3: general and administrative expenses were eleven point two million and from ten point eight million last year and is a percentage of total revenue was held steady at nine point zero percent compared to last year the increase was primarily driven by increase noncash stock based compensation travel expense in general inflationary trends partially offset by lower management incentive compensation expense
spk_0: just leave it the decreased eight point zero percent to fourteen point one million compared to fifteen point three million last year and decreased as a percentage of total revenues to eleven point three percent to twelve point seven percent last year depreciation and amortization was six point zero million down from six point one million last year due to the impact of fully appreciate assets and decrease twenty basis points to four point eight percent of the percent of total revenue it just expense with zero point seven million compared to zero point nine million last year the decree it was due to a lower average outstanding revolver balance and lower interest rate compared to two thousand and twenty during the third fiscal quarter or outstanding revolving credit facility borrowing was reduced from one hundred and ten million to one hundred and six million in the remaining availability under the revolving credit facility was one hundred and thirty point six million
spk_3: along with us debt reduction we also repurchased four hundred and forty nine thousand three hundred and twenty four shares a common stock and an average price of nine dollars and eighty seven cents per share during the third quarter for a total of four point four million in paid or third quarter cash dividend totally one point five million at the end of fiscal to reporter approximately ten point six million remained under our seventy five million dollar repurchase authorization that income with three point eight million or ten cents per diluted share compared to five point eight million or fifteen cents per diluted share last year
spk_0: we also reported adjusted net income which excludes items identified in our earnings release in the financial tables adjusted net income of four point two million are approximately eleven cents per diluted share compared to six point zero million or sixteen cents per diluted share of last year and today it's earnings press release sweet formally announced our fourth quarterly dividend of four cents per share a common stock that would be paid on november twenty fourth twenty twenty one to shareholders of record at the close of business on november third twenty twenty one finally to the first five weeks of our sixteen week to fuck you for or company operated comparable restaurant sales were up approximately three percent in franchise comparable us from sales are up over four percent despite the impact from reduced operating hours that john referenced please refer to the today's earnings presley's for a to school twenty twenty one guidelines that concludes our former remarks as always thank you for your interest in del taco and we were happy to answer any questions and at this time it will be conducting a question and answer session if you like to ask a question please or star one on your telephone keep a confirmation told will indicate your line it and the questions you you make for star to if you like to remove your question from que the participants using speaker equipment it may be necessary to pick up your hands it before question start one moment please while we call for question amber question if i'm alex sligo jeffries
spk_2: fleet will see with your question
spk_0: right thank you down on know things are satisfied to walk through some the drivers and i'm trying to think through some the biggest cow and and head when say it sounds like the trans and proved i'm pretty good year order to day but maybe first just one that they enter l a d c r and platform about the programming just how we should think about that in terms of directly impacting the camps in the early stages if it all of me think about that piece yeah if it's it's it's early and i'm alex setting it we're we're seeing some really good directional transmit were only four weeks and should as a reminder we launched on september ninth and random we did a hard launch which was point of purchase materials at the restaurant starting to do some of the marketing on september sixteenth to just a few weeks ago and then really are second wave campaign which was really a focus on marketing and acquisition and getting close to transition get out on not only get new members to get from the transition from the old after the new app you know kicked off you know here on october fourth with me out some tags on television and radio and promoting it through our direct mail and emphasize drops and we've also got some good you will need a acquisition going show so it's early days but i've been out when i would what i would say is that you know directional actually you know it it's what's happening is kind of what we wanted to have app and which was in a you look at the the motivation that occurs at both current and new members related to the point based system and that that structure designed to motivate and reward behavior should eat we've seen you know this unique active users already in the first four weeks without perform at a similar level than that we had with our old out and that's before we've even completed the migration not you still got guess that are moving into the new out from the all that the other the other on kind of that we thought was you know really telling an interesting was that nearly forty percent of the new member of the members coming into delhi our rewards are actually new members so does your folks that were not in the old out show so again the know just kind of speak to the motivation around that out not just being an offer engine there there's reasons to be involved with the brand and engage with the brand and that and certainly gala to earn you know points and and in and move up into loyalty tears is is a big part of that so we feel great about the first four weeks executions been denied and and a lot more marketing to come on you know in regard to that app as we move to the back in the and here or about you for and into the into obviously twenty twenty two them
spk_2: how how many members are you up to now
spk_0: can we have a nearly two hundred and fifty thousand members in the first you know in the first four weeks so again that combination of those new folks i referenced nearly forty percent in and both migrating over from the old out into into the new lab so you know again just to underscore when you see the unique active users performer
spk_4: get a similar level on the first four weeks
spk_5: in aggregate in totality of that on that two hundred and fifty thousand and number compared to the one point five million that we out in the old out that the it's that's pretty impressive and i think it speaks to the frequency and usage it's happening within a within the new loyalty program
spk_2: none
spk_0: thinking about some of the other drivers staffing obviously that lot that being a hundred basis points term impact game i guess for a that down and then just in terms of menu innovation and promotional lacks to you can what would you call out the biggest driver for us to think about i turned on changing their trajectory it coloring the cops yeah i think it's it's important to remember that you know q three was positive going over positive for bought the company franchise same store sales trans and and queue for as far as we noted is is also positive going over positive for company and enfranchised or it you know it's it's important remember that we were able to achieve same store sales growth and que three and que for twenty twenty despite the pandemic and we just yeah we just happen to roll over in que three one of our mana the more successful product launches a military the company which was the crispy chicken taco and you know are the crispy chicken menu in twenty twenty i think overall what what i'd say on that on this ron as the product launches with stuff cater the a tacos and and double cheese breakfast tacos along with kelly yeah rewards which will continue to build momentum are are driving improved year on year same store sales trans as we look at the first five weeks if you for compared to que three and naturally despite those operating you know that the the
spk_4: yeah no operating in a more challenging environment year on year
spk_0: we do some of those staffing challenges that that we that we reference in those hotspot stores so so overall you know we expected finished twenty twenty one would six consecutive quarters of same store sales growth in both the company and franchise and that's that's basically going back to obviously the last negative quarter was cute you and twenty twenty on which was the first quarter that and down actually ageing overall on on you know we feel good about pitcher and and programs and we launched recently and we think that that's know they're they're going a long way in helping us continued right to censor sales growth and just and last question is one that he went on delivery you're seeing any changes in in demand or anything the barb tangling past the than shown
spk_6: benefits and stimulus when extended unemployment benefit to the team
spk_0: we continued it's the a delivery the system both company in franchise sergeant huge ground modestly we'll be completion franchise were north of seven percent during to school kids receive on we would you be little to consign is but she completed your employment you know there's a slight uptick to our
spk_7: many price premium for delivery on the complete side your company restrooms about twenty two and half percent your franchise evolves one that low to mid twenty percent
spk_0: you'll get about the model and the trend they aren't you next question is from nyc said you would would be security because he was your question thank you what was the global average second quarter see it was in the mid my name's and you know five hundred percent pro union in queue for you know zooming you campaign that five percent range like in first half of in for several twenty two i'm he didn't get kinda gave us by percent you know from cost inflation into for i mean that imply like we should he conquers understand compound you for russia's queue for a glass years and make sure that we should think about in need the commentary the of getting a dog food inflation joy and did you praise be to be do that you'll find plus procedure which he implied flattish for for on the heater of year basis which is bigger actually correct english know your waist inefficiencies consummately end of the few lines wealth not to mention the applauded next thing you're in general that would be a ladder shooting the implications for you for your of a year and i guess the sustaining question on labor in a qq during several five percent i'm assuming six percent inflation i'm i'm know about eighty of of labor the leverage is getting level of pricing in a perhaps you know i would have thought it would have been a little less and they're like overtime pay their bandages kind of me go to the putting take somebody but that we should think about in terms of you know how to think about the overall economy our growth vs just inflation in your house you actually think about that as we can think about how the model the labor mark young leader neal is kinda cool with our california heavy into that a heavy footprint on the of the need drivers inflation jews california and nevada minimum wages dead it was working jumpstarts i would still be operational efficiency at has been very good at the restaurant level so that you'll get a positive operators are echoed executing that very well since the ditch and backing them which convention the driver in in eugene touched on it in certainly showed needs more and more limited basis but there are you know kind of hotspot restaurant at the global charm and minority on the dates are situations where we are you a p o a higher your prevailing wage here as appropriate in the union tradition some of the lever a real building challenges that john touched upon your did that of course display in here you're not some proteomic of operating hours but also in teach me on that had he treats you have taken over time i'm flaw that serves the the stuff average effective wage which includes the impact of overtime young each than your average wage mean can he to kick up during the course of year you this year that you additional really growth has been higher in for year you didn't we've seen before yeah that's not a long term basis is you know young average wage yield with a job for the footprints your we are on a path towards fifty dollars an hour were in which culminates in california of starting january one just a few months from now tactic too keen on level of then beat he through twenty twenty three said certainly possible see this in the earth you have chicken wage to experience beach the timing issue when you take like a long term yeah that said he only it was pressuring that's a bit and he'd three plate and events up to the leverage that you saw in a given the train battle continuing to queue for will will expect you to leverage on that line engine with the love single digit your call it seems for sales trajectory on that's what leads to the to leverage over all understood and this last question he can have commented that you know more recently you seen some of the labour pressure come down and out person that a correct interpretation and second not understanding that nearly have a crystal ball but i guess what your internal estimator or expectation or you know how your area strategizing for you know for for what what what when the do the timeframe for one one that you know me normalizes it by then the queue for that more like in the middle of twenty two in terms of the staffing issues joey any negative remains very fluid it's hard hard to predict exactly what's going to happen but also we got a very holistic strategy that you know we talked about on a couple of calls now in regards to our thinking about both acquiring equality and talent as well as you know keeping quality talent making sure that were trained
spk_2: in developing them and in overall and or operators and are franchisees or soon outstanding job you know leading league leading in that environment with our people from first focus and in navigating kind of a very challenging time you know that said you know the hotspot restaurants where where we've reduced operating hours
spk_8: bye bye bye an hour marcel you know that that roughly roughly represented somewhere in that kind of need to i came to the percent of restaurants
spk_7: you know kind of the you will get a week to week it changes a little bit week the week depending on the situation with the restaurants we are managing it or operators are for entities are managing a daily and weekly
spk_0: but the commentary around it peking anyhow so far and que que four out of our one for sad that that's due to a really nice improvement in apple can flow coming into the system in the last few weeks and down you know that that is related to you know he digital recruitment campaign that we're investing into that we have the ability to kind of really target on a zip code bases and and put extra dollars into stores that need more help and cakes and dollars away from stores that don't need quite as much help and that's actually improve the apple applicant pool for us by for acts over and over the last few weeks so that
spk_2: those quality applicants coming into the system that step one for the top spot restaurant than getting those folks trained properly and develop properly to create great that's experiences that step here but but certainly on we've we've seen of these and some of the top spot restaurants starts at returned that to more normalize behave you know normalize operating hours i should say
spk_0: in recent weeks understood thank you in owners question is from cod books would seal team associates was he was your question
spk_3: hey good afternoon guys good job navigating a tough environment
spk_0: i'm wouldn't lead off with just kind of same store sales progression for the comparison obviously crispy chicken a massive platform for you guys are good success with new products
spk_2: during que three allowing you to still cop positively them with penguins from labour hundred snug kind of comparison
spk_0: ah look across the back half of the fourth quarter melted what you've talked about tom comparing against and that that three three percent four percent range so far in the corner doesn't evolve into farther and do the crispy chicken launch for for the system todos company in franchise or a sixty fourth quarter second the distillery oh get to form better year do than the first eight weeks so you're the computer yell will give you a little bit more difficult is round out the back half of the quarter good at the same was her at the same kind of out at the you know the burn off from crispy chicken started do occur we were maintaining higher sales next to that an issue excitement around crispy chicken really was burning off then in september and and now obviously having somebody of new platforms that we launched you know and and help to continue to see gaining he gaining momentum along with our somalis out here that happens you have kind of in november we think we're in a pretty good position he noted to obviously have a how positive positive change or sales and on the company in the franchise isn't as and in in queue floor and and down you know put up a nice result pretty and you do have the benefit of go yeah now which he did not have last year as a driver definitely a great secondly keeps details behind the reef partnership haven't sat work workers that a royalty arrangement i guess if you look at the markets a you're operating under your back to open the first later this month but what's the potential of kind of densely urban market so you could see if this works
spk_9: dropping out on a reconstruction and term
spk_0: yeah we're we're excited about it yet the from stout the made of this month or a very dense urban area against urban area of l a yeah really that virgin series zero expand access to the brand games particularly intense areas where there's a lot of justification that we're just not servicing today's we're excited about that here in even huge there are several more planned to yeah overall to plus do it really is very it kinda franchising the lights and steel very similar to a franchise arrangements although does feature a reduced of marketing contribution you which is appropriate beats on the nature of this young kid the real news channels so really focus right now is having a good successful launch years yeah movie for the additional be helping and openings down the road in the early learn from it and then decide from there are you in partnership with repeal what looked to future looks like so we're excited and lot more to come including the a performance sort of the first of several hours none of final one for me real acceleration in your franchising activity here in the third quarter with larger scale partners to which which is great to say against two questions on this front how does kind of the pipeline look behind it are there people that are conditioning their their decision to go on on c n kind of the first harsh for six come out of the ground in florida this quarter and secondly with the types of partners that you're signing with my senses the band with as their that the sign deal if it works could grow pretty dramatically could you talk about maybe i'm other brand name plates that these partners are running and
spk_2: can you feel in the potential for it to grow into something if for really works for them thanks
spk_0: yeah sure time we we sail first off on from a pipeline perspective and we've been building we obviously building pipeline with a great group of existing franchisees for some time now and i think i'm our our existing group on that really is the foundation of our pipeline has done a nice job and israel
spk_9: lee excited about fresh flags and continues to build you know are opportunities and especially now you look at having a what are many other a new strategy more and more assets to grow with then we had before it's not the old cat and a cookie cutter model any more an hour we've expanded the asset group to the drive through all a was in smaller footprint on it
spk_0: perhaps gives you the opportunity to access traitor as you couldn't have access before all the way up to more of a standard you know prototype with the dining room so that existing group is has been and will continue to build pipeline and in be a big part of our our growth the hardware store in i know what your references to set a new deals her and fifty three and it's that we signed this year obviously
spk_10: does will start to come to fruition here over the next over the next eighteen to twenty four months after that initial stores are opening and and to your point
spk_0: we're absolutely taking a quality over quantity type of an approach with these groups weekly we certainly see some operators that we sign that have some big brand new know nameplates the airplane and out capability and and and you know current store accounts and that you know them all tie doesn't range and and more and more you know that with with success gets you know indicates excitement and and more success and that's or intent on delivering and supporting our the partners to do the shell to your there's there's definitely some upside though we need to execute we need to deliver the brand we need to get our news partners the support for them to be able to you are kind of get to that next level of growth if you will
spk_10: okay thanks john that and again as a reminder for anyone have any questions you make or star one on the telephone keep that dunes old ensure your spine question yesterday you know next question is when the call miller iverson salmon before she was your question
spk_3: thank you so much and good afternoon on to a couple quick ones under the fourth quarter price five and a half percent the that certain a one of for q or that coming now it it all along slowly brought the corner but he had dropped a corner we will be getting somewhere between five and six used on the time what we're all over
spk_0: the listen to each one more in the five plus area okay or that's trying to true it up to on the commentary of the quarter to date comps i appreciate that to see how much more prices on economists against you know difficult compares given that the earlier question on and and second on comp
spk_11: and isn't potty needed a nuanced but company owned improvement
spk_0: the could reflect you know easing compares but franchise com gets more challenging and they're doing much better on we know price could be a factor is there anything else you would point to any other channel the part regional trend that we should be aware of
spk_10: yeah tuesday have a very afraid for trump's be movies or geographical differences show your current issues or the usual california southern california believe in las vegas where is your fridge or operating address of staying fit for a change to see on a one to your juices image of slaves the a very strong performance your project was outside of california of that shields large server for answers he on their each year marketed regimes of the california performances much more aligned with your much more modest franchise outperform and killed a millionaire geographic feel
spk_0: we'll continue v
spk_3: you're very pronounced in favor of franchise
spk_0: okay thanks and then to the last one i mean are the kind of listening to on the presentation and and thinking at a very high level this is really about swapping and and franchising some stores for a high flow through you know you did ah stream right answer and others mention of like two percent raw
spk_10: avenue growth but i'm looking out what was like five percent of total system the old growth and up almost or more than ten percent versus twenty ninth yang so have i characterize up properly and and the systems probably growing faster than just looking at that total revenue line right
spk_12: yes subject a metric system wide say age too young it's champs yell or the outfield six hundred justice system is certainly reflect the of the more it as does great scratch yours
spk_0: john the company that the red line good at english influenced by job congress restaurant chains that are certainly coughing positive and great yeah but at a lower rate compared to for had shaved the awards princes revenue to show that with that's great that you need to do yeah new for past them stores right and that's the plan so again in favor of a recurring world history and so on
spk_13: i guess i just wanna make sure like where all you know making that comparison as well so on

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