Fiesta Restaurant Group Inc (FRGI) 2020 Q1 法說會逐字稿

Good afternoon, and welcome to the Fiesta Restaurant Group, Inc. First Quarter 2020 Earnings Conference Call. Today's conference is being recorded. (Operator Instructions)

I would now like to turn the call over to Raphael Gross, Managing Director at ICR. Please go ahead.

Thank you, operator. Fiesta Restaurant Group's first quarter 2020 earnings release was issued after the market closed today. If you have not already accessed it, it can be found on the company's website, www.frgi.com, under the Investor Relations section.

Before we begin, I'd like to inform you that during the call today, the company will make various statements that are not based on historical information. These forward-looking statements include, without limitation, statements regarding the company's future financial position and results of operations, business strategy, budget, projected costs and plans and objectives of management for future operations. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and the company can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements can be found in the company's SEC filings.

Please note that during today's conference call, certain non-GAAP financial measures will be discussed, which the company believes can be useful in evaluating its performance. Any discussion of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and a reconciliation to comparable GAAP measures is available in the earnings -- in the company's earnings release.

On the call today are President and Chief Executive Officer, Rich Stockinger; and Chief Financial Officer, Dirk Montgomery.

And now I'll turn the call over to Rich.

Thank you, Ray. The world is a much different place since our last earnings call and update to our shareholders. I'd first like to thank all the investors and other participants on the call today for their continued support during the COVID-19 crisis.

I'll be covering 3 topics today: our key priorities during this crisis; an update on our operational and other changes in response to the crisis; and a brief update on our sales-driving efforts and first quarter results. Dirk will then provide a financial update.

Our priorities in this time of crisis have been and will continue to be as follows: taking steps to ensure the safety and well-being of our team members and customers; protecting the reputation of our brands and our company; doing right by our employees, our shareholders, our vendor partners, our service providers and landlords; and continuing to be a leader in our communities. I am proud of our team with their focus on those priorities while maximizing liquidity and developing new and better ways to drive sales and maximize results.

We have been working to maximize efficiency and operating flexibility since the crisis began. In order to protect cash availability, early in the second quarter, we drew down our capacity -- all our capacity on a revolver and had a total cash balance of $91.6 million as of May 6. We have been successfully working with our vendor partners, service providers and landlords regarding more flexible payment terms and cost reductions. We cut our 2020 CapEx plans in half and are focusing only on necessary capital projects. We were in full compliance of our loan financial covenants at the end of the first quarter, and we are proactively working with our lenders to amend our loan financial covenants to avoid any potential issues in the future given the economic uncertainty related to this global pandemic. Dirk will provide more color on our liquidity management activities in a moment.

Now more than ever, finding new and better ways to drive sales is a key focus for our teams. We are developing a better business model designed to enable our customers to enjoy our brand safely wherever and however they choose. We have expanded and will continue to expand delivery options. We have created more in-home dining options, including Pollo Pantry and TC Pantry, and are rapidly improving our curbside and pick-up capabilities to be faster and safer for our customers. Additionally, we are in the final stages of making our restaurants ready for a return to safe dine-in activity in Florida and Texas, and we are confident that we will ultimately exit this crisis as the company better positioned for future sales growth.

On March 16, 2020, we announced we have closed all our dining room seating areas in all Pollo Tropical and Taco Cabana restaurants in Florida and Texas, respectively, due to the COVID-19 pandemic. Since that time, we have continued to make proactive changes designed to ensure the safety of our guests and team members, which is our top priority. We have taken the following health safety preventive measures in response to the COVID-19 pandemic: We heightened our sanitation procedures regarding restaurant cleanliness, with additional emphasis on high-traffic areas in the restaurants. We stocked our restaurants with effective disinfectants and sanitation products, including hand sanitizer in our dining room and back of the house. We increased our handwashing protocols for all restaurant team members. All customer-facing employees and vendors in restaurants are required to wear gloves and masks. We've implemented a COVID-19 Employee Illness Protocol, consistent with the Center for Disease Control, or CDC, and the National Restaurant Association guidelines. We closed sauce and salsa self-service stations and now providing sauces and salsas in pre-packaged containers. We closed all self-service soda stations in every restaurant. We added markings in the restaurants for social distancing. All orders served are now enclosed in sealed carryout packaging; and reduced restaurant operating hours in accordance with any federal, state and local mandates.

As government authorities move toward reducing COVID-19 restrictions, we are in the process of implementing the following additional safety measures: We've added dedicated dining area sanitation team members in all restaurants to continually -- continuously sanitize during open hours. We are measuring the temperature of all restaurant employees and any service providers daily at the time they enter the restaurants. We're installing plexiglass shields at restaurant counter and drive-through sections of our restaurants. We've created a separate entrance and exit access points to ensure guest distancing; modifying seat arrangements to ensure required guest distancing; providing drive-through customers with credit card processing devices outside the drive-through to allow for distancing and not exchanging credit cards with our cashiers; extending our credit card processing terminals at the drive-through to allow customers to insert their card into the devices without handing their cards to the drive-through attendee. And all guests are required to wear masks upon entering any of our facilities.

We have also adjusted our operating model to better meet our customers' needs during this crisis. To improve speed of service and improve efficiency, we've eliminated certain low mix sales menu options and reduced restaurant hours during periods of low sales and/or in response to government-mandated restrictions. We've also adjusted staffing models to match shifting traffic and channel patterns of our guests and to improve efficiency.

Taking care of our people is a top priority, and we have implemented the following actions to better support our restaurant team members during this crisis: We've offered additional bonus incentives during the crisis of $1 per hour for all hourly employees, and a special incentive for store supervisors and management who are taking risks to serve our customers. Additional enhanced hourly employee health benefit programs were just recently announced. The company made a significant donation to its employee assistance foundation, the Fiesta Family Foundation, that is dedicated to assisting employees in need. Those donations were in part made possible by the Fiesta Restaurant Group's Board of Directors foregoing their second quarter fees.

Supporting our community and showing our appreciation for service providers on the front lines of the crisis has been and will always continue to be important, and we are showing our support through the following actions: Both brands have been donating delivered food weekly to local hospitals, first responder units and testing centers as a way of thanking those that are working on the front lines of the COVID-19 crisis in all of the markets in which we operate. Both brands increased discounts to 50% for all medical personnel, first responders, delivery and logistics providers as well as the military. To provide needed meals for school-age children, from 11 a.m. to noon, Monday through Friday, both brands are offering free kids meals.

To help our community members recognize frontline workers that deserve a thank you, in April, Pollo Tropical launched "Nominate a Local Hero" social campaign that allows our fans to nominate a frontline worker who deserves a thank you meal. Pollo is using the social media submissions to coordinate team food donations on the hero's behalf to their convenience at that hero's work locations, such as a hospital floor or a fire station. Taco Cabana will also be launching a similar local hero program during the second quarter.

Every day, in each of our Pollo Tropical and Taco Cabana restaurants, we take pride of who we are, what we stand for and the way in which our team members are representatives of the broader communities we serve. We are working to provide our investors and our guests with more information about our culture and how, who we are, as a business put us in a strong position going forward. In particular, we are proud of how our seasoned capital investments promote diversity, opportunity and respectful treatment of all people, which, in turn, drives quality, productivity and innovation. We are particularly proud of the fact that 65% of our field management team are women and 77% of our field management team are minorities, 29% of our officers are women, and 57% of our officers are minorities, and 25% of our Board of Directors are women, which includes our Chairperson. We believe that these core beliefs and competencies have strongly contributed to our ability to serve our mission to each other and our communities during this unprecedented and difficult time. We anticipate that this commitment will enable our growth as we move forward towards -- together in a post-COVID world and are continuing to be more transparent about these efforts on our website and our reporting, giving all our stakeholders additional insight into how we are driving long-term value.

Regarding the impact of COVID-19 on our supply chain, the pandemic has not had a significant negative disruptive impact on our supply chain or access to labor, although there can be no assurance that there will not be a significant impact on our supply chain or access to labor in the future. We are actively monitoring our food suppliers to determine how they are managing their operations to mitigate supply flow and food safety risks. To ensure we mitigate potential supply availability risk, we are building additional inventory back-stock levels when appropriate and we've also identified alternative supply sources in key product categories, including, but not limited to, proteins, sanitation and safety supplies. These efforts to respond to COVID-19 virus are constantly changing. We will continue to monitor the situation closely and implement additional measures as needed to ensure the safety of our team members and guests.

Now I'll highlight recent sales trends and our efforts to accelerate sales in the changing environment. Post-COVID-19 comp sales trends stabilized in late March to early April at both brands, having realized sequential sales improvement weekly at both brands since that time. April comp sales were down 49% for Pollo Tropical and 26% for Taco Cabana. For both brands, our sales have been improving every day over the previous weeks. Driven by strong drive-through and carryout alcohol sales, recent Taco Cabana comps sales for the 2 weeks ended May 3 have improved to down 18.6%. Pollo Tropical sales for the 2 weeks ended May 3 have improved to down 37.8%, driven by increased drive-through and delivery sales. At those sales trends, we estimate that we will generate roughly breakeven profitability, which we believe should substantiate -- be sustainable and provide us a base from which to rebuild the bottom line as the economy reaccelerates.

The changes in the state of Texas to allow drive-through, delivery and pickup alcohol sales have created a big opportunity for Taco Cabana. This change has brought new and last customers to the brand and has been a big driver in post-COVID period, driving sales growth at Taco. Alcohol mix has averaged just under 11% during the post-COVID period, driven by $2 margarita and gallon margarita packages for $34.99. This led to a record-setting day at CDM, Cinco de Mayo, with sales growth versus last year Cinco de Mayo Day at 24%. Reported on account was up 61.5%, and we sold over 60,000 alcoholic beverages. We are working on increasing visit frequency to these new customers with food-focused repeat purchase promotions, such as return visits and bounce-back offers.

Off-premise sales more than doubled versus last year in the first quarter at both brands, with penetration improving from 2.6% of restaurant sales to 7.1% of restaurant sales at Pollo, and Taco penetration improving from 2.5% of sales to 5.6% of sales. Off-premise continues to be a big opportunity, and we continue to improve our capability in this area as follows: During the first quarter, we significantly grew the number of delivery service providers that offers our brands, including the addition of Uber Eats, Postmates and Favor, to supplement our previous and ongoing partnership with DoorDash. With the addition of Grubhub in May, Fiesta now has partnerships with all major DSPs. In addition to the expansion of additional DSPs, we are testing delivery with our own delivery drivers, first with Taco, to enable alcohol and order deliveries. We believe that the added benefit of home delivery of alcohol represents a big potential and incremental purchase occasions and we will leverage the popularity of drive-through alcohol and food sales that are currently creating drive-through lines throughout the day at Taco.

We are continuing our work with Bottle Rocket, a leading digital strategy, design and development company, to significantly improve the guests' digital experience via our apps at both brands. Those enhancements will include a curbside pickup feature, mobile payment features and frictionless ordering experience to go -- with go-to-marketplace of June to Pollo Tropical and September for Taco Cabana. These improvements will provide our guests control over their interaction with our brand features, which we feel are essential in the evolving landscape.

To better meet consumer dine-at-home preferences, in April, the company launched the Pollo Pantry and TC Pantry menu platforms. The Pollo Pantry menu is aimed at providing fresh, high-quality, in-home dining solutions at a great value. The menu features are famous 24-hour citrus marinated chicken that consumers can cook at home, with whole chicken for $5 and 6 of our chicken breasts for $10. Additional proteins available for bulk purchase include marinated Churrasco steak and shrimp. In addition, the menu features our famous ready-to-eat white rice and black beans in larger-sized packages that can feed up to 10 people for just $5. Taco Cabana's TC Pantry is also designed to provide consumers with additional quality in-home dining options at a value that includes ready-to-cook items, such as a dozen flautas for $6.99 and bulk-sized seasoned steak fajita meat and seasoned chicken breasts that can be cooked on the grill in minutes. TC Pantry offers Heat & Eat options, including our popular seasoned ground beef at $5.49 per pound and shredded chicken at $4.49 per pound. TC Pantry also includes large-quantity options of our most popular sides, including refried beans, rice, and peppers and onions for $4.99 and chips and queso for $8.99, all in portion sizes to feed 10 people. Sales of these pantry menu items have been building weekly with more aggressive marketing and [field training] support recently commenced.

Product innovation in our field will continue to be a priority at both brands. At Pollo, we recently brought back multiple fan-favorite on our menu items, including Cheezy Yuca Bites, Nutella empanadas and corn fritters, all priced at a value under $3.29 and performing well since they were reintroduced. Taco Cabana's upcoming product reintroductions include delicious flautas, Mexican corn and the Nutella empanadas.

In closing, I want to express my appreciation for all our employees, especially our restaurant and operation team members who have placed themselves at risk to continue to serve our guests as well as my leadership team that has been working around the clock to respond in a positive way to this crisis. We are encouraged by the improving sales trends we are seeing week over week, and we believe we will exit the crisis as a stronger company ready to continue market share gains and to continue to be a positive influence in our communities.

Now I'll turn it over to Dirk to cover the financial highlights.

Thank you, Rich, and good afternoon, everyone. I'm going to provide an update on first quarter results and then provide some commentary on our financial management strategies during this period of economic uncertainty.

Total first quarter revenues decreased 11.5% from the prior year period to $146.7 million due primarily to the comparable restaurant sales declines at both brands and the impact of COVID-19, underperforming Taco Cabana restaurants in the first quarter of 2020. We continue to make progress in off-premise sales during the quarter, consisting of online catering and delivery. Off-premise sales more than doubled compared to last year in the first quarter compared to prior year. And our penetration is still well below our competitors with 7.1% at Pollo Tropical and 5.6% in Taco Cabana. Off-premise continues to be a huge opportunity for us, especially in these times.

The consolidated net loss was $7.3 million or $0.29 per diluted share, including a $0.17 per diluted share negative impact from other items, including $3.2 million in impairment charges and $1.2 million in closed restaurant rent charges, compared to net income of $2.3 million or $0.08 per diluted share, including a $0.05 negative impact primarily from $1.1 million closed restaurant charges in the first quarter of 2019. On an adjusted basis, the net loss was $2.9 million or $0.11 per diluted share. This compared to an adjusted net income of $4.1 million or $0.15 per diluted share in the first quarter of 2019. Please see the non-GAAP reconciliation table in our earnings release for more details.

With that, let's go through some of the significant accounting entries during the first quarter. We recorded a $4.2 million noncash impairment charge primarily related to assets for 3 underperforming Pollo Tropical restaurants and 2 underperforming Taco Cabana restaurants that we continue to operate, which had an unfavorable impact on net income of $3.2 million or $0.13 per diluted share in the first quarter of 2020.

Now turning to our individual brands. At Pollo Tropical, comparable restaurant sales decreased 7.3% compared to a 2.6% decrease in the first quarter of last year. This year's decline consisted of an 8.3% decrease in comparable restaurant transactions, partially offset by a 1.0% increase in average check, inclusive of an approximately 0.2% in pricing. Pollo Tropical continues to gain market share as evidenced by the outperformance compared to Black Box on both the comparable sales and transaction basis for the quarter. We have also experienced an estimated 35 basis point impact during the first quarter from new store cannibalization within our core South Florida market. However, we view new development is a positive for the brand overall since it allows us to enhance the guest experience while growing our total share in the market. Comparable restaurant sales for Pollo Tropical increased 0.6% during the first 10 weeks of the first quarter of 2020, building on the sales momentum from the fourth quarter. We were pleased that the Pollo brand has generated 4 consecutive months of positive comps through February of 2020 before the impact of the COVID crisis. Reflecting the impact of COVID-19, comparable store sales decreased 32% during the last 3 weeks of the first quarter of 2020. Comp sales decline due to the COVID crisis stabilized in late March and early April, and Pollo has realized sequential sales improvement weekly since that time with the sales trend for the 2 weeks ended May 3 of down 37.8%. We are seeing improvement every week now.

Turning to branch profitability for the first quarter. Restaurant-level adjusted EBITDA, a non-GAAP measure as defined in our SEC filings, decreased at Pollo Tropical by $5.7 million to $15.4 million or 18% of restaurant sales from $21.2 million or 22.3% of restaurant sales. As a percentage of restaurant sales in the first quarter, Pollo Tropical experienced higher cost of sales due to sales mix and higher commodity costs, restaurant wages and related expenses due to the impact of lower sales and fixed costs and other operating expenses. Other operating expense increases included higher third-party delivery fees and contracted cleaning services in addition to the negative impact of lower comparable restaurant sales. Adjusted EBITDA, a non-GAAP measure as defined in our SEC filings, decreased by $5.5 million to $8.8 million for Pollo Tropical in the first quarter of 2020. During the quarter, we also recorded $3.7 million of impairment charges primarily related to the assets for the 3 underperforming Pollo Tropical restaurants that we continue to operate.

At Taco Cabana, comparable restaurant sales decreased 13.5% compared to a 0.5% decrease in the first quarter of last year. This year's decline consisted of a 14.9% decrease in comparable restaurant transactions partially offset by a 1.4% increase in average check. The increase in average check was driven primarily by limited-time offerings and an increase in transactions with alcohol sales. Comparable restaurant sales for Taco Cabana decreased 8.6% during the first 10 weeks of the first quarter of 2020 prior to the impact of COVID-19 and decreased 28.3% during the last 3 weeks of the first quarter of 2020. Comp sales decline due to the COVID crisis stabilized in late March and early April, and Taco had realized sequential sales improvement weekly since that time with the sales trend for the 2 weeks ended May 3 of down 18.6%. Drive-through sales from March 9 through the end of April grew 11%, driven in part by alcohol promotions and strong food sales. As Rich mentioned, driven by the strength of our Cinco de Mayo margarita promotions, we have the strongest Cinco de Mayo holiday sales in 5 years, with May 5 holiday sales growth of 24% compared to last year's holiday sales. We believe the Taco brand has very good momentum, and we're seeing new customers come to the brand.

Turning to the brand's first quarter profitability. Restaurant-level adjusted EBITDA, a non-GAAP measure as defined in our SEC filings, decreased at Taco Cabana by $4.2 million to $5.3 million or 8.8% of restaurant sales from $9.5 million or 12.8% of restaurant sales. As a percent of restaurant sales in the first quarter, Taco Cabana incurred higher cost of sales due to operating inefficiencies and increased discounting and promotional activity and higher other operating expenses, including higher third-party delivery fees and insurance costs, in addition to the negative impact of lower comparable restaurant sales. Adjusted EBITDA, a non-GAAP measure as defined in our SEC filings, decreased at Taco Cabana by $3.8 million to negative $0.1 million in the first quarter of 2020. During the quarter, we also recorded $0.5 million impairment charges related to assets for 2 underperforming Taco Cabana restaurants that we continue to operate.

Turning now to a few additional financial items. Under our current share repurchase program, we repurchased 0.5 million shares during the first quarter on or before March 12. We have suspended share repurchases during this period in which we are closely managing cash flow. Total capital expenditures in the first quarter of 2020 were $6.1 million. Our expenditures consisted of $2.5 million for maintenance, $1.6 million for new company-owned restaurant development, $1.0 million for restaurant remodeling and $0.9 million for technology and corporate.

Now turning to our financial management plans in response to the economic challenges presented by the COVID crisis. Our entire organization has been working to improve efficiency and protect staff from day 1, implementing the following measures: We aggressively cut our capital expenditure budget for 2020 to only necessary investments. 2020 capital expenditures are currently expected to be in the range of $20 million to $25 million compared to previous estimates for 2020 of less than $40 million. Working capital efficiency has been improved as a result of vendor and landlord payment term and pricing renegotiations, which are expected to improve cash flow in 2020 by $10 million to $15 million. We have a very disciplined process in place for improving capital spending and vendor payments. Rich and I review all projects and payments. In early April, a total of 168 office and field personnel were terminated or furloughed, representing total annualized salary savings of approximately $9.3 million, of which approximately $5.5 million is related to terminated employees. In addition, the salaries for all vice presidents and executives were reduced by 10% to 35% for at least 1 quarter. We intend to market our 15 owned properties for sale or sale-leaseback, and 4 properties now are either in the letter-of-intent stage or have contracts signed for sale, although there can be no assurance that any sales or sale-leaseback transactions will be ultimately consummated.

As a result of our efforts, cash balances since the first week of April, when we drew down on the revolver, have actually increased from $76.3 million to $91.6 million as of May 6. As Rich mentioned, our sales trend is currently at breakeven profitability. Our goal is to fund capital expenditures through the increased cash flow from working capital efficiency and property sales. As a result of all of the efficiency efforts and the recent sales trends, we feel confident that we will have adequate liquidity through the end of 2020.

In closing, we feel very good about our top line momentum. It continues to improve weekly. We are very focused on improving efficiency, and we will continue to stay focused on the safety and well-being of our customers and team members. We are confident that we will ultimately exit this crisis with the company better positioned for future sales and profit growth.

Thank you for listening, and we will now open up the call to questions. Operator?

(Operator Instructions) We will now take our first question from Nicole Miller from Piper Sandler. (Operator Instructions)

Can you hear me okay?

Yes, we can, Nicole.

Great. I wanted to ask a couple of questions just about the nature of the concepts. I'm thinking about the Taco Cabana improvement specifically. And could you talk a little bit about that being maybe more suburban in terms of locations and maybe more influenced by dinner patterns, both of which seem to be holding up in the marketplace?

Yes. I would say we've been consistent from sales improvements from what we had before. Again, that is again being driven by the new rules in the state of Texas. The only area, I would say, that is lagging a bit behind and has nothing to do with anything else, that is Houston. And as you know, Houston is not only getting hit by the negative impact of COVID-19, but also in the oil and gas industry. But other than that, no, we've seen consistent line starting at lunchtime, 7 days a week, regarding our alcoholic beverage promotions as well as -- again, these are new guests and they're having our food and enjoying our food and coming back again that in the past might have just driven right by us.

Okay. Very, very helpful. Last question. I mean I was just kind of thinking back to the beginning of this story, maybe as a public company. And it was always the unit-level economics were strong, and that was the basic premise. And there's a home-court advantage for each brand. So could you talk somehow and let us understand core versus noncore or by vintage or top-tier versus bottom tier? Or are literally these the comp trends and the performance across both concepts across every single location? I would love to just understand some pushes and pulls there.

Sure. The sales trends right now per portfolio is pretty much consistent. So it's not just core being down or rental being down. It's much pretty across the board. And again, as you know, because of the [yearly yield] is different, the profitability margins are much higher here in core than they are outside of core portfolio. And at Taco, I would say, again, I think we're in a new era and we're seeing this. With the increase in the alcoholic beverages and the guests that are coming in now are different than in the past, we believe that margin enhancement is a great possibility, even more than we had said in the last quarter. We've taken actions regarding food costs that are -- and lowering the value of the food cost. We've now got the labor schedules down significantly. So again, for Taco, San Antonio is doing well, Houston is hurting a little bit, like I said before, and Dallas is showing the most improvement.

(Operator Instructions) We will now take our next question from Brian Vaccaro from Raymond James.

I wanted to start on the sales performance at Pollo, if we could. And Q1 seemed to play out about as expected, but it seemed that April worsened maybe a bit before starting to recover and it seems to be lagging the broader industry recovery we're seeing. So I'm just curious to get your perspective on what may have driven that, maybe something regional or macro specific in South Florida or something else that's worth highlighting.

Yes. Great question. At Pollo, versus Black Box, [improvement is] right there and again within our market. We're not doing as the quick service is doing. Keep in mind, in South Florida, before this happened, 25% of the people in Miami Bay were living at the poverty level or below. I'd be afraid to ask what it is right now. So that's why we're pushing hard on the lower-cost, lower-priced promotions. We're pushing hard on things like the Pantry, which we've just introduced. But these prices are lower than the local grocery stores. So I would say we are not doing worse than our local competitors in [that class and] we're not doing as well with the quick service. And one area also, keep in mind, our menu is a lot different than quick service. So quick service is much more [in-house] and we're not. So without the dining room, we've lost a lot of those people that are coming in for the platters at Pollo. And we expect as the dining room restrictions start to be removed or lessened, those people will come back.

Okay. That's helpful. And I guess a follow-up on that. Rich, could you give some perspective -- thinking about some of those dynamics you just mentioned, could you give some perspective on quarter-to-date, how variable has it been if you compare South Florida to Orlando, Tampa, some of the other markets? Could you give any perspective across the individual regions?

I can give you a top line. It's pretty consistent on the sales decline, and there's not much difference if you look at Northern Florida, Central Florida and South Florida in terms of the range being down around 30%, 32%. We kind of are closed there right now, and we're working on that. But no, there hasn't been a significant variance in the geographic region.

Okay. All right. I wanted to also ask, the Pollo Tropical off-premise, I think you said it was 7.1%. Could you share what percent of that is delivery? And could you also just give a little bit more on the traction that you've seen thus far with Uber Eats, which I believe has a pretty dominant share in South Florida in particular?

Keep in mind, we just signed on Uber Eats the end of the first quarter. They have been a new partner, as they all have. Uber Eats, as you know, is the #1 DSP in South Florida. And we just recently started rolling out. And guided in now into our core market is Grubhub, which is #2. So we expect that number to grow in terms of the off-premise. Is it as high as our competitors? No. Is it as high as we want it to be? The answer is no. And again, I think it was more of a timing of getting them. We've got Uber Eats on and now getting Grubhub, which is the #2, and we expect those numbers to improve.

And in terms of the mix of off-premise right now, the delivery is accounting for roughly 60% to 70% of the total off-premise dollars. That's currently a little bit skewed due to the conditions. We've had very good success in catering at the end of the calendar year, very strong momentum. I think we expect that once things get back to normal that catering contribution will dramatically improve because we've had great traction at the end of the fourth quarter in that channel. We also expect, as Rich said, that our online sales should increase dramatically as we launch the Bottle Rocket, new online -- an app which is supported by Bottle Rocket.

All right. That's great. And then just last one for me. On the G&A cuts, obviously, very difficult decisions that you had to make. But in terms of the permanent cuts that you've made, just curious if you could share in what functions you pare it back? And just any other color on the permanent changes, structural changes that you've made either from a personnel or maybe from a headquarters standpoint. Are you still going with the 3 headquarters? Or is there an opportunity -- have you made a decision to pare that back perhaps?

Sure. So I mean we made cuts across the board in all functions in all locations. Obviously, our focus was around making sure that we maintain the support that we needed to support operations in guest-facing activities. And as we mentioned in the press release and in my prepared comments, roughly $5.5 million of the estimated $9.1 million of annualized savings were from terminations versus furloughs, so no date yet when furlough -- when the furloughed employees will be brought back. But those are kind of the mix dimensions of the separation. So I think we -- the $5.5 million certainly would be viewed as more permanent. And the remainder comprising of furloughs is going to depend on the business front.

Brian, we tend to look at every aspect of our business. And I'm taking a line from Governor Cuomo, who has done a great job in the State of New York as a leader. We are reimagining every aspect of our business, not just the overhead but the way we do things going forward, because none of us on the phone call or in New York knows what the new world is going to look like. So we're undertaking this opportunity to look at every aspect of our business and not just replacing what we did before, but try and find a better method, a better opportunity as we go into the new world. So we're not -- we have no specific plans, but more to come. We're looking at ways to improve our business top line, efficiency and the bottom line.

Understood, certainly unprecedented times. I hope everyone's well and stays healthy.

Thank you. You too.

That concludes today's question-and-answer session. I would now like to turn the call back to the management team for any additional or closing remarks.

In closing, again, I just want to thank our team members for their passion, for their loyalty, their hard work, not only the people who are in the office and support who've been working from home, very difficult, but most important, the people that are in the front lines. There's another saying, "How much is a human life worth?" They're priceless. And that's why we're taking every opportunity for the safety of our frontline employees. So again, thank you to our team members, thank you to our shareholders, and looking forward to speaking to you again next quarter. Thank you, everyone.

This concludes today's call. Thank you for your participation, ladies and gentlemen. You may now disconnect.