Chuy's Holdings Inc (CHUY) 2020 Q4 法說會逐字稿

Good day, everyone, and welcome to Chuy's Holdings Fourth Quarter 2020 Earnings Conference Call. Today's call is being recorded. (Operator Instructions) On today's call, we have Steve Hislop, President and Chief Executive Officer; and Jon Howie, Vice President and Chief Financial Officer of Chuy's Holdings, Inc.

At this time, I'll turn the conference over to Mr. Howie. Please go ahead, sir.

Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter 2020 earnings release. If not, it can be found on our website at www.chuys.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 conditions.

With that out of the way, I would like to turn the call over to Steve.

Thank you, Jon. Good afternoon, everyone, and thank you for joining us on the fourth quarter earnings call today. I hope everyone is staying safe and healthy.

I'm pleased with the results of our fourth quarter, which like most of 2020, required us to adjust our business on the fly as the result of a changing external environment. The resiliency and flexibility of our team resulted in sequentially improved comparable sales in the fourth quarter compared to the third quarter and an adjusted earnings per share of $0.19. This, despite the closure of a number of our dining rooms in November and December due to the heightened COVID-19 restrictions during what is typically a very productive time of the year for our restaurants.

Despite some weather interruptions, we continue to be pleased with the overall direction of our first quarter sales trends as in-dining restrictions have been relaxed in many areas. While we are cautiously optimistic for a steady return to a more normal operating environment, our teams will continue to stay focused and nimble in an external environment that remains unpredictable.

Turning to the fourth quarter profitability. Our continued focus on cost management and operating efficiencies resulted in an approximate 10% improvement in restaurant-level profitability compared to the same quarter last year as our margins improved 600 basis points, despite an approximately 23% reduction in sales due to the pandemic. We are confident that even as we ramp up dining room operations and return to a more normalized level of operations, our efforts throughout the year will have a lasting positive impact on our profitability. Again, none of this would have been possible without the dedication and hard work of our team members in serving our guests while at the same time, keeping them safe and healthy.

Since the onset of the pandemic, there have been 3 key pillars that have resonated with our guests: safety, convenience and value. With continued uncertainty, even as we enter 2021, we believe these pillars remain crucial to not only guide us through the current environment but also help our company to emerge stronger when this pandemic subsides. Let me quickly update you on these pillars.

Safety continues to be at the forefront of all of our activity. And as we've spoken about in the past, we are investing in technology to help us not only improve the in-restaurant peace of mind for our employees and guests but also create efficiencies that can help our business long term. Along with a pay-at-the-table device that we noted last quarter, we continue to look at other payment methods, including QR code payment and pay-by-tech solutions that we are testing in several of our stores. While early feedback has been positive, we will continue to look for ways to minimize contact points with our servers while we still provide the best-in-class hospitality that Chuy's is known for.

Convenience is also an important factor during this uncertain time, and our off-premise business has given our guests additional opportunities to enjoy our food. Our off-premise business remained strong during the fourth quarter, maintaining a mix of approximately 33% of revenues and at a rate of more than double our pre-COVID-19 levels. While this mix will likely recede as our dining room capacities return to historical levels, we believe we can continue to hold off-premise mix in the mid-20s rate due to the enhanced level in convenience and how well our food travels. All in all, we believe our guests appreciate the unique appeal of our high-quality made-from-scratch food and drink, and we continue to enjoy strong demand of our offerings through all current avenues of our business.

Lastly, we continue to grow our value by not only streamlining our menu but also offering convenient family meal and beverage kits. While we have no plan on making major changes to our menu at this time, we expect to add back several popular items and restarting our digital marketing efforts to further drive awareness on our current unique offerings.

Turning to development for fiscal 2021. We are targeting between 4 and 6 new restaurants, one of which opened in February in Pembroke Pines, Florida. The operational changes we have made as a result of COVID have served as a learning tool for our development team. As we look at our long-term development plans, we would expect that increased use of our smaller prototype to provide the same unique dining experience for our on-premise guests but also better allows us to execute increased off-premise business for the safety and convenience of our guests.

With that, I will now turn the call over to our CFO, Jon Howie, to discuss our fourth quarter results in greater detail.

Thanks, Steve. Revenues for the fourth quarter ended December 27, 2020, decreased to $78.7 million compared to $102 million in the same quarter last year, primarily driven by traffic decline due to COVID-19 including the loss of 145 operating weeks due to the various closures of restaurants during the fourth quarter of 2019 and the first quarter of 2020. In total, we had approximately 1,196 operating weeks during the fourth quarter.

Comparable restaurant sales decreased 18.3% during the fourth quarter and included a 24.3% decrease in average weekly customers, partially offset by a 6% increase in average check. Our off-premise sales remained solid during the fourth quarter at approximately 33% of total revenue compared to 14% in the same period last year. Please refer to today's earnings release for our fourth quarter sales cadence by period.

Turning to expenses. Cost of sales as a percentage of revenue decreased 170 basis points to 24.4%, primarily as a result of switching to a limited menu and eliminating our complementary buffet-style chips and salsa Nacho Car, partially offset by a 70 basis point increase in the cost of beef and 20 basis point increase in the cost of chicken. Overall commodity inflation for the fourth quarter was approximately 2.5%. Based on current trends, we are currently expecting a modest commodity inflation rate of 1% to 2.5% for fiscal 2021.

Labor cost as a percentage of revenue decreased approximately 600 basis points to 29.7%, primarily due to reduction in hourly employees and store management personnel as the company has transitioned to an off-premise-heavy operating model with reduced dine-in capacities, coupled with the hourly labor rate deflation of approximately 3.6% during the quarter.

Operating cost as a percentage of revenue increased 50 basis points to 15.7% compared to last year's quarter, primarily due to increases in delivery service charges and to-go supplies as a result of the growth in off-premise business, partially offset by lower credit card fees, insurance costs and liquor taxes.

Marketing expense as a percentage of revenue remained relatively flat at 1.1%. As we resume our digital marketing efforts, we expect our marketing spend will increase to approximately 1.2% of revenues for the first quarter.

Occupancy costs as a percentage of revenue increased 100 basis points to 8.7%, primarily as a result of the sales deleverage of fixed occupancy expenses. General and administrative expenses increased to $6 million in the fourth quarter from $5.7 million in the same period last year, primarily driven by discretionary bonuses as a result of the improvement of the restaurant-level operating margin above industry standards during the COVID-19 pandemic, partially offset by reduced travel, professional and legal fees and other expenses as a result of cost-saving measures in response to COVID-19.

In summary, net income for the fourth quarter of 2020 was $1.8 million or $0.09 per diluted share compared to a net loss of $1.4 million or $0.09 per diluted share in the same period last year. In comparison, during the fourth quarter of 2020, we incurred a $2.8 million in impairment and closed restaurant costs as well as a $0.1 million in deferred tax adjustment in conjunction with the CARES Act. During the fourth quarter of 2019, we recorded an impairment and closure cost of $6.3 million. Taking all that into account, adjusted net income for the fourth quarter of 2020 was $3.9 million or $0.19 per diluted share compared to $3.3 million or $0.20 per diluted share in the same period last year.

Moving to our liquidity and balance sheet. As of the end of the quarter, we have $86.8 million in cash and cash equivalents, no debt and $25 million of availability from our revolving credit facility. With ample liquidity and strong financial footing as well as positive sales trajectory and resilient team members, we believe we have the means to navigate the current environment.

Before I turn it back over to Steve, I'd like to quickly discuss our limited outlook for 2021. While I'm not in a position to provide you with our usual financial guidance, I would like to give you some directional metrics that would be helpful. As Steve mentioned earlier, we will be opening 4 to 6 new restaurants in 2021. We expect net capital expenditures, net of tenant improvement allowances, of $15 million to $25 million. And lastly, we expect restaurant preopening expenses of $2 million to $3 million in 2021.

With that, I'll now turn this call back over to Steve.

Thanks, Jon. While there are still a lot of uncertainty surrounding the pandemic, we believe the work we've done to date has positioned us to be a stronger and more efficient company. We are cautiously optimistic about the strength of our business and will remain nimble to the ever-changing market conditions as we begin 2021. We will also remain prudent with our capital expenditures and ensure that everything we do, going forward, will be done with the health and safety of our team members and guests at the front of our mind.

With that, we're happy to answer any questions. Thank you.

(Operator Instructions) Our first question will come from David Tarantino with Baird.

Just a question on, sort of, the quarter-to-date trend, just so that we understand the dynamics. Thank you for giving us the number for the first period. But recognizing the second period might have had a lot of disruption from weather, I'm just wondering if you could give us an update on what you've seen through the whole period so far.

Yes. We -- like we said, we started off rather well in period 1 and the first 2 weeks of period 2, before this historic cold front and snow that came through Texas and a little bit in the Southeast. We were affected approximately about $1.8 million probably from that in sales and -- in those 2 weeks. And then we bounced back the following week with a very strong week of sales because a lot of people still didn't have power to pull people down here. So we didn't bounce back the other ones, and the trend lines there are doing fine right now.

And so I guess Steve or Jon, I mean, could you maybe just clarify on what that means in terms of what your comps have been quarter-to-date? Or if you want to talk about maybe what the exit rate after the weather has looked like? Just to give us a sense for how the business is running.

So quarter-to-date, if we're looking at that would be right around 19% down. And like we said, a lot of that is from those 2 weeks. We had some -- as you can see, a better trend line in January and then it went backwards in February because of that. But it's come back strong since then.

Right. Perfect. And then Steve, my question really is kind of on the longer-term outlook related to unit growth. And I wanted to see if you could maybe elaborate on the smaller prototype you mentioned and that being -- playing a more prominent role?

And then also, perhaps kind of talk about the strategy on site selection and how you're planning to approach, kind of, getting back to the pace of unit growth that you've talked about in the past, double digits. Is that going to be more about kind of growing within your current footprint or -- and kind of in-selling? Or are you thinking about new markets? And related to that, if you could just kind of update us on the site selection tool that you're using as you approach this.

That was a good 5 questions. Good job. The first thing is on the small proto, it's basically -- we started -- and that really will start actually in '22. All of us -- I mean, on '21. All of us don't -- I mean, we don't know, '22. Because all the stores we're opening this year, the 4 to 6 are ones that we had in the pipeline for last year, and they're of different sizes. And again, the prototype is just -- we still love [Hermit Crab]. And so we'll still be doing a lot of that, but the smaller prototype will be in that around 5,500, 5,600 square foot range, a little bit more enhanced to-go area and this packaging area, probably a little bit larger patio. But we're expecting some good sales out of that but it's obviously less employees to work it, specifically in the front of the house.

And as we've mentioned in the past, and correct me -- and stop me if I missed any of these questions that you had, we're looking at like 4 to 6 this year, and I think we've said 6 to 8 the following year. Then you'll see us at the single -- the low double digits from there on out, probably starting back in '23.

And we're -- as far as where we're going to be going, right now, we're probably going to be looking at putting stores only in all our existing markets, specifically, probably over the next 3 years. You'll see everything will be done in the backfill side of our business. And so you'll see us probably stay in our backyards for, like I said, the next 3 years out of our growth.

With proven high AUVs.

Sure.

Basically, the existing markets that have strong brand awareness.

And why don't you tell them a little bit about the site tool?

Right now, we continue to enhance the site tool. And that's the one that we're looking at in 2022. I mean, we've looked at a number of states that we believe we have high brand awareness. And we've looked at the site tool, and it's given us with this new, kind of, sales volume in kind of the $3.5 million. We believe it gives us a lot of opportunity to backfill some of our bigger metropolitan areas, whether it's Dallas, Austin, Houston, Nashville and some of those and put more sites in there without cannibalizing the sales from the other stores, because -- looking at a $3.5 million, it also allows us to go into maybe smaller markets where before, we were looking for a $4.2 million. Now in going into like an Abilene or a Longview or somewhere like that here in Texas, so I think it opens up a lot more markets when we're looking at that kind of volume.

Now I think in some of those markets, we're still going to see some higher volumes. But when we're looking to pick a site, we're looking at kind of that and where we can backfill in some of these very -- these areas that we have high brand awareness.

I think that was most of the questions that you had.

Yes. You did an excellent job. I'm sorry for throwing them altogether in one. One other one, Jon. What are the desired or projected unit economics on that $3.5 million and that 55 -- I assume that's the volume you would want on the 5,500 square foot prototype. But what are you looking for from a unit economic perspective?

I think with what we've learned during the pandemic, that's what's exciting about it. With what we've learned from the pandemic, I think we can get those high-teens restaurant-level margins in that 17%, 18%, if not a little higher, depending upon in the areas that we're talking about with lower cost to run those restaurants.

So we're still looking at that 30% return on investment. And looking at an investment of -- in the mid-2s to 3 going forward. So we're looking with our national contractor to not only revamp our design but also reengineer -- or value engineer the building itself. So we're looking at reducing some of the cost there as well.

And that's not only just on a prototype, but that's on any remodel that we also have.

Our next question will come from James Rutherford with Stephens.

Congrats on the quarter here. A lot to discuss. I just want to start with Texas and just how you all will approach your Texas restaurants now that you have some latitude to make your own decision about capacity. Maybe if you can talk about, kind of, where capacity was before the new rule and where you think that might go during the first quarter, if you expect any changes at all?

Yes. Right now, the capacity that we've been at is probably -- in our restaurants with 6-foot distancing, would have probably been on 50% capacity, because most of our restaurants are tables. Although our dining sales is right in that 65% because of our patios also.

And then initially, I don't see that changing a whole bunch. Everybody is coming out down here and everybody is keeping all the restrictions. And obviously, now there's big fights with all the mayors and the governor of what they wanted to see done in the markets compared to us. But as far as us, we're going to maintain the 6-foot distancing in our stores for currently. And we're also just going to be pushing the flow-through of that. And we're all going to be wearing masks in our restaurants for the safety of our employees and the customers that are coming in.

And as time goes by, as people get more accustomed, we'll start growing that as long as we don't go backwards as a community. We'll be growing that, and then we'll be hiring more people to get into the -- come in and work their service and so forth. And we'll expand it as people get more comfortable with these new, new information from our governor.

Okay. Yes, that will be great to see. I also wanted to ask about the hourly wage inflation that you all saw. That seems unique compared to some of the restaurants that were -- that we also cover. Is that due to the mix of restaurants that you're operating today? I think you've closed a few since the fourth quarter of last year. So maybe what's driving that, or is it state specific?

Are you talking about the deflation, right? We had deflation.

Sorry, deflation. I misspoke. Yes, the deflation.

Yes. I mean a lot of it, I tell you, James, is driven by the front of the house. We -- yes, it's all in the front of the house, and it's offset by some increases in the back of the house.

And when we went with to-go only, we kind of made a company-wide edict, if you will, to pay the minimum tipped wage. Because we felt that the tips -- because we reduced the staff down to very low to do to-go only and so there are several, just several people that were running the to-go out, and they would get a lot of tips, and they did. I mean we had kids that were walking home with $300 a day, if not more.

And so they were making more money, and we brought that tip wage. Because in the past, with our to-go not being very strong, we had people making $10, $12 an hour there. So a lot of that was that kind of edict that we made in bringing that price down, that's overall. And as we've hired people back, we still have that strong to-go. And so we were able to hire them back, get in more in line with the nation -- or not the nationwide, but the specific state-wide tip wage.

Our next question will come from Nick Setyan with Wedbush Securities.

Congrats on the great margin. In terms of the off-premise sales, can you just remind us what the breakdown now is between third-party delivery between the Chuy's app and the website, and then walk-in or phone-in?

Sure. Let me get that in front of me here, Nick. If you're looking at total -- let me make sure I'm looking at the right thing here. If you're looking at total breakdown in the fourth quarter, our online takeout was approximately 12.3%. Our call-in takeout was about 11.5%. Delivery was about 8.5% and catering was 1.1%.

So if you look at total digital, we were a total digital of about 20% and that includes basically our online and our third-party delivery partner. We are about 20.7% total digital in Q3, and we remain there, right, pretty close to 21% in Q4. So that's been pretty steady. As we said earlier, too, we are at 33% on off-premise in Q3, and we're at 33% in off-premise in Q4 as well.

Understood. Are you able to now gather, I mean, the kind of data where you can actually mine that data in terms of the customer database and do things like one-on-one marketing in a way that you weren't able to do today pre-COVID? What have been the sort of customer sign-ups in terms of the growth rate and where is it now? What are some of the opportunities because of this higher digital mix going forward?

There's a lot of opportunities there, Nick. And what I would tell you is we're still accumulating that data and mining it for information that we can do that.

We do have -- once we get up in dining room and we're attaching a lot of things to our seating management tool, which is likely that, that can mine some of that data. And that also has the one-on-one marketing associated with it, where it will identify lapsed users, that will identify specific users of a particular product, maybe specific users of our restaurants during lunch, not dinner or dinner and not lunch that we can target, market those individuals.

And we currently have that today. We're just trying to tack on more customer data that we're getting from other different areas that we can put in that database. So we're still trying to gather that information and use it, but we're not right at -- we're not using that information today, but we're gathering it. So I think we'll be there. We should be able to be there by the end of the year.

That's very helpful. And then just last question. Any early thoughts on G&A for the full year?

I'd use a target -- right now, I would use a target of 2019 just as a kind of a precursor.

Our next question will come from Andrew Strelzik with BMO Capital Markets.

It's actually Dan on for Andrew today. You guys, like others, have benefited from some of the higher check averages that we've seen over the past year, which has helped to offset, obviously, the steeper labor or the steeper traffic declines. And I guess I'm just wondering how you're thinking about the evolution of check-in traffic as you sort of trend back towards a more normalized operating environment? I mean, obviously, I think we all anticipate traffic recovering. But is there an opportunity to hold on to some of the higher checks you've seen? Or how do you kind of think about the evolution of both of those?

Well, yes. The part of it is also the bulk orders and a lot of to-go, especially with our Olo or [a lot of constants], and we're doing some extra selling in there also. But we see that because of the mix change and where fajitas has actually moved up a little bit, that the higher check averages, most of it is the mix. It's mostly the mix and our kits.

And they're not going to go away. The evolution of the menu is -- I'm not making any changes to the menu in the short term. As we get back to all our markets have a no 6-foot distancing, you will see m add a handful of menu items back on and that won't erode probably where the mix is currently. As far as pricing that might go along in that, we're going to have -- and we just did about a 1.75% price increase for this year as we move forward. So that's going to move it a little bit. But I don't see anything that's going to erode our check average from -- materially from where it's at currently, maybe going up a little bit because we just took the price increase.

And a lot of that, Nick, is the family kits. And if you're looking at the percentage of those family kits, they've been very consistent, really this period 6, at about 5% to 6%. So in -- even in period 12, it was still 6%. So it stays even as we've opened dining rooms and it was just totally on to-go, I mean, they've really stayed consistent.

Got it. That's helpful. And then I just had a question on sort of the broader labor environment. I appreciate the color on some of the labor deflation you guys have been experiencing and what's driving that. And I guess I'm just curious how you're thinking about the labor environment more broadly. On one hand, there's still higher unemployment, but then we have open conversation around the changes in tip wage, increasing minimum wage. So just what are you seeing from a labor perspective in the marketplace as you're looking to hire, and kind of like what are your expectations for that maybe moving forward?

The key for us is right now, as we've been at basically 50% of our dining -- indoor dining as far as our capacity, but we are -- like I said earlier, we're in that 65% range because of our patios. It's tough hiring right now. It's really tough. Obviously, when -- and when we can move eventually, get rid of the 6-foot dining, we're obviously going to be in a market to be doing a lot of hiring, specifically in front of the house on the server side. But it's very difficult out there for the hiring situation currently.

(Operator Instructions) Our next question will come from Todd Brooks from CL King.

A couple of questions for you. One, just with another quarter of really stellar restaurant-level operating margin performance, I know you had some initial thoughts of how much of this improvement you're likely to hold onto on the back side of the pandemic with another strong quarter north of 20%. Any change in what you think you're going to be able to hold on to, Jon, on the backside?

No, Todd. I think at this point, I mean, we still believe that our labor is going to go up. As Steve said, when we start hiring back to full capacity, we're still at similar capacities today than we were in the fourth quarter. And going even in Texas, even though they're opening up, we're going to operate in a similar manner that we did in the fourth quarter.

In the fourth quarter, we did have 11 stores in November and December that were closed to only -- to-go only in certain states. And so they've opened back up in January to get more consistent with our third quarter. But they've been consistent, and we haven't really changed the mix from a dining standpoint. And as you can see, the online is still consistent at 33%. And so until we can start staffing the dining rooms to get them up to 100% capacity, we still anticipate that increase in labor. And still, however, with that increase, we still plan to have that 300 to 350 basis points improvement to maintain prior to prior years, the saving.

Okay. Great. That's helpful. And then, Steve, I know we're in the window that you had initially talked about evaluating the 9 stores that had been temporarily closed through the pandemic. What's the status? Have you and the team gotten out and kind of looked at those markets and made any decisions on those stores?

I'll take that one, Todd. At this point, we've been assessing kind of what their -- what we think we can do in those markets. We haven't been able to get out. But we think at this point, it's probably more likely than not that those stores are going to maintain closed. And we are currently looking at a real estate firm to help us get out of some of those leases as well as some of the other closed stores.

And so we're looking to get out of those leases. That's probably going to cost us between $12 million and -- $12 million to upwards to $20 million on a conservative basis to get out of those leases. But we don't expect -- like I say, there may be one or 2, but right now, we think it's more likely than not, they're not going to open.

Okay. Great. We can factor that in the model then. And then additional question, gift card business this year. Could you talk about how much the gift card business was down at holiday? And then typically, what your window of redemption is? I know some other peers have talked about 80% or 90% redeemed in the first couple of months after the holiday. I'm wondering if that's kind of muting same-store sales to the downside a bit to start the year here.

You take it?

I don't know.

Todd, I don't have those numbers in front of me, but they generally aren't a significant piece. And they've been pretty -- actually pretty flat. I mean they were down a little bit consistent with kind of what our overall sales have been, but they've been pretty flat and really shouldn't affect our sales going forward.

Our next question will come from Chris O'Cull with Stifel.

This is actually Alec on for Chris. Just curious, what's kind of driving the change in thinking on those 9 locations? Was it that the markets weren't strong as a whole, or was it bad real estate within the market? And then can you kind of help sort of frame up the level of sales underperformance of these stores relative to the rest of your system or your core markets pre-COVID?

Yes. Alec, on these stores, we decided when we went into the pandemic that we were going to close them. They were not top-end performers to start with. And again, it's not in any one market. It's spread throughout the company. And it could have been a real estate issue, it could have been a parking issue. I mean it's also one where there's not a lot of daytime pop and ability to really grow our to-go areas, and that's how we're kind of evaluating them as we move forward. But they were not big time performers to start with.

Okay. And any sort of level of underperformance relative to the rest of your system, like 10% lower or 20% lower, anything like that?

I would say they were in the high 2s to mid-3s as far as sales-wise. And so that's definitely when -- prior to the pandemic, our overall average was around $4.3 million.

Got it. That's helpful. And then your off-premise sales remaining in that 30% to 35% range quarter-to-date seems to indicate a continued stickiness even as dining rooms reopened in January. Are you surprised with that level of off-premise retention? Do you have any metrics around repeat usage, or any change in the mix between delivery and carryout in recent months?

Again, we've really not had any change in dining room metrics as far as how much of a -- we can maximize our dining rooms. As I've mentioned to you earlier, we're still -- like we have been for several months, at about a 50% capacity inside of our restaurants because of all the tables and the 6-foot distancing. And that still remains today at the same level. That's why you've seen a consistent number of about 33%.

We do expect as dining rooms open and as they eliminate and get more comfortable with getting rid of the 6-foot distancing, we do anticipate that to go -- that dining number, I mean, that to-go number to come down a little bit in the mid-25 range as dining rooms too get a little bit busier.

(Operator Instructions) Our next question will come from Bob Derrington with Telsey.

Yes. Steve, I'm just -- I guess, looking into the crystal ball for Chuy's as we look out towards more of the population getting vaccinated, the pandemic coming under better control. The alcohol sales, your bar sales have historically been really strong. And I'm just trying to envision a point in time, and I'm sure you've given some thought to this, when you might have a more lively bar scene, how do you envision the reopening of those?

And certainly, I think, historically, I think margins on alcohol adult beverages have historically been pretty good. Do you have some thoughts around that?

Yes. I'm pretty pleased at where we're at with alcohol sales with our bars and our gathering places, which is our bars that are currently very slim and nought to none because of the 6-foot distancing. And as that goes away and people get more comfortable about going in, I'm not talking 3 deep at the bar, I'm not talking 2 deep at the bar, I'm saying where you'll have all the chairs at the bar. So again, when we see that, and we will see that. When? My crystal ball is awful foggy. It's not as clear as I'd like it to be, but I don't see a huge mad rush into restaurants as this thing goes away any time in the next month or 2 months or even the next quarter to 2.

As my crystal ball is cloudy as is, I'm looking probably as some of the distancing will be eliminated, hopefully, by the fourth quarter of this year. And our expectation would be to get the bars opened a little bit more as far as customers in there with no -- at our waiting area. And see us get back to historical in that 17% to 18% and be able to grow from there.

Is it reasonable that we likely will not see the nacho bar come back and it will -- maybe chips and salsa at a minimum approach?

Yes. I think -- yes, I think it's very reasonable because, again, it's a buffet style and a lot of our health departments aren't going to allow that style any longer as we move forward. But you will see, as we get back to normal and get rid of the 6-foot distancing, you'll see us as we do currently now, you have the drink specials from 4 to 7. You'll see us add something from an appetizer section or some type of specials that will be an added draw for happy hour in the future. But probably not the nacho.

This concludes our question-and-answer session. I would like to turn the conference back over to Steve Hislop for any closing remarks.

Thank you so much. Jon and I appreciate your continued interest in Chuy's, and we will always be available to answer any and all questions. Again, thank you. Stay healthy, and have a good evening.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.