Red Robin Gourmet Burgers Inc (RRGB) 2002 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Red Robin Gourmet Burgers second quarter earnings conference call. At this time, all participants are on listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If you need assistance from an operator at any time during the conference, please press '*' followed by '0'. I will now turn the conference over to Mr. Michael Snyder, President and Chief Executive Officer. Please go ahead, Mr. Snyder.

Thank you

. Good afternoon everybody, and thank you for joining us on our second quarter 2002 conference call, which, by the way is our first ever conference call as a public company. With me today, I have our Chief Financial Officer Jim McCloskey. Today, what we'd like to accomplish is; number one, a review financially and operationally of our second quarter. And number two, an update on current trends and our longer-term strategy. But before we begin, I need to remind everyone that part of our discussion this afternoon will include forward-looking statements. These statements are not guarantees of future performance, and they are inherently subject to risks and uncertainties. You should not place undo reliance on these forward-looking statements. We refer all of you to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a long - may have a direct bearing on our operating results, performance and financial condition. I also need to remind you today that we unfortunately continue to be in the post-IPO quiet period, and therefore we are precluded from providing earnings guidance until that period has ended. And that's going to be in about two weeks or about August 28th. So we are somewhat, now are restricted today. With that said, I will start with total Red Robin revenues for the second quarter, reached a company record of 65 million dollars, which was an increase of 25% over last year's second quarter of 52 million. Net income for the quarter was approximately 2.7 million verses 2.4 million last year, and that's an increase of 15.2%. Fully diluted earnings-per-share were $0.25 for the period ending July 14, 2002, compared to $0.23 in the prior year.

On a pro forma basis adjusted for the IPO proceeds

at the beginning of the year and non-recurring cost encountered as a private company and a one-time gain from a lease buyout, earnings per share were 19 cents during the second quarter.

Driving our results was a same-store sales increase of a very respectable 2.8 percent for company-owned stores. This increase was derived with - from pricing approximately five-tenths of one percent, and 2.3 percent of that 2.8 came from improved guest counts. I should note that mix - menu mix had virtually nothing to do with that - with that increase.

We're - we are very pleased with these results despite the current uncertainty in our economy. And as many of you know, we also derive a significant portion of our revenue from the Seattle, Portland, and Denver markets. These markets have been significantly impacted by the technology and telecom downturns in the last few years, causing the local economies to suffer. But fortunately, these markets appear to be stabilizing, and we anticipate a continuation of the modest comp store improvement we experienced in the second quarter as we look forward to 2003.

So, across the board, our comp company-owned restaurants performed well during the quarter with weekly sales averaging $58,892 compared to $57,294 during the same period of last year. Our franchise restaurants averaged $51,885 during the quarter versus $52,162 in the United States last year and $38,195 versus $42,185 in Canada. Please note that the Canadian results are in Canadian dollars.

We derived 96.9 percent of our revenues from our company-owned locations during the quarter compared to 95.8 during that same period last year. Franchise royalties decreased this quarter due to our acquisition of 10 restaurants from two franchisees in the first quarter of the year.

Talk a little bit about the development front - we opened three new restaurants during the second quarter for a total of five in the first six months of 2002, and we expect to open four units in the third quarter and one unit in the fourth quarter. That would give us a total of 10 new Red Robins and one relocated Red Robin for 2002.

The addition of these new stores combined with the stores that we acquired from the two franchises during the first quarter would increase our company-owned units by 25 percent in 2002, which is an increase from 77 restaurants at the end of 2001 to 96 restaurants in 2002. It's important to note we closed one unit in January.

Our IPO proceeds and the availability under our credit line will allow us to ramp up our company-owned growth as we go forward.

Franchised new units - there was one franchised unit opened during the quarter for a total of four new franchised units in the first half of 2002 and we also expect three additional franchise openings during the second half of 2002. That would be one in the third and two in the fourth quarter, for a total of seven new franchise restaurants in 2002. And for those of you who didn't have the chance or didn't meet us on the roadshow, we hired Rob

as our Vice President of Franchise Sales in the spring of 2001 and, since the beginning of the year, Rob has brought on four experienced restaurant operating groups. We're delighted with the franchise sales results so far.

At this point, I'll turn the call over to our CFO. Jim McCloskey. Jim?

Thanks, Mike. As stated, our second quarter revenues were driven by

, 8 percent increase in

store sales. That was on a comp basis 70 units, as well as revenues from the 10 acquired units in the first quarter of '02, and the seven new units opened since the end of the second quarter '01. We saw a 4.6 percent decrease in our franchise revenues, due to less units in the base, again, due to those same two acquisitions we made in the first quarter. And a 0.5 percent decrease in U.S. franchise comp store sales and a 9.5 percent decrease in Canadian comp store sales. The Canadian franchise units were experience some negative results from the implementation of some menu changes and operational policies that were foreign to our Canadian guests in 2001 and these franchises originally changed course in 2002 and we're beginning to see some sequential improvement in sales there.

Average weekly sales for Company owned restaurants was just over 58.8 for the second quarter, representing an increase of 2.8 percent for the week, compared to the same quarter last year, as Mike previously mentioned. Our new restaurants open since the beginning of 2001, are achieving weekly sales averages in the $60,000 range, slightly higher than our Company average.

Pasta sales for the quarter were 23.2 percent, a 50 basis point improvement over the second quarter of last year. This improvement is due primarily to management initiatives on reducing the food costs and beverage products, especially waste, and then some favorable trends in commodity pricing.

Labor expense for the quarter was 36 percent, 190 basis point increase over the second quarter of '02, and this increase is comprised of three items.

percent of the increase was due to intentional efforts to increase restaurant labor. When sales increases begin to diminish, many operators reduce labor accordingly. We call this managing your sales down, and it works if your objective is to simply keep the labor percentage constant from quarter-to-quarter. Our objective at Red Robin is to build sales and when consumer confidence is shaky, the last thing a guest wants is substandard service. To put it simply, we invested in labor at the restaurant level, making sure there was enough hostesses at the front door and enough servers to handle the guests coming in. Our comp sales were up 2.8 percent for the quarter. Towards the end of the second quarter, we began to fine-tune that investment in labor we're making, while maintaining a very respectable 2.7 percent sales increase. We have continued to see improvement during the first three weeks of quarter 3.

Operating expense was 15.4 percent, a 70 basis point increase compared to last year's second quarter. Now this increase was due to the effect of the 15 additional corporate restaurants, the 10 acquired and five new.

Occupancy expense was 6.9 percent, a 15-basis-point increase over last year's second quarter. Occupancy costs as a percentage of total revenue are higher on our new restaurants opened in 2001 as well as the recently acquired restaurants, especially those in the San Francisco Bay area.

Restaurant-level cash flow margins were 18.5 percent in the quarter, which is 222 basis points behind the same quarter as the prior year and that's due to the higher labor

and occupancy costs that I've noted above.

Depreciation/amortization improved by 20 basis points. The company adopted FFAS Number 142 in '02. As a result, second quarter '02 had no amortization of goodwill and assembled workforce intangibles. Q2 '01 in fiscal '01 year-to-date, through July 15th '01, included 377,000 and 880,000, respectively, of amortization expense.

Our G&A expense as a percentage of total revenue decreased 11 basis points to 7.35 percent for the second quarter compared to the same quarter last year. This improvement is primarily due to additional infrastructure leverage from higher revenues and offset by costs associated with our preparation for the IPO and being a public company.

Operating income before pre-opening expense and a one-time lease buy-out gain for the second quarter was 5.4 million, which is essentially flat as compared to the second quarter of last year. Our pre-opening cost as a percentage of revenue will increase as we accelerate our restaurant openings. In the second quarter pre-opening costs increased to .8 percent of revenues from .5 percent last year. And as Mike mentioned, we expect to open 10 revenues over the course of '02 versus the six we opened last year.

Net income for the second quarter of '02 was 2.7 million compared to 2001's net income of 2.4 million. And let me reconcile those two numbers. Starting at the net income of 2.7 million you reduce it by the one-time gain on the lease buy-out of 944,000, you add back the net effect of the improvement and interest expense for taking the IPO proceeds back to the beginning of the year. That'd be a million 303. Making it - you adjust for that of the Quad-C management fees, 46,000 - little over 46,000. And then the tax effect of that is 176,000. So pro forma net income is two million nine sixty.

The GAAP EPS is 25 cents, and that's based on weighted shares outstanding of 10 million 767. And as Mike said, the pro forma EPS is 19 cents, and that's based on weighted shares outstanding of 15,200,000.

We completed the IPO of four million company shares on July 18th. Therefore, several quarter- ended balance sheet figures have changed materially. The pro forma long term debt was 41 million, and that equates into a 42 percent debt-to-equity ratio, with equity around 96 million.

We believe that the net proceeds from out IPO together with anticipated cash flows from operations and funds available from our new revolving - $40 million revolving credit facility, will be sufficient to satisfy our working capital and capital expenditure

requirements through the end of third - or through the third quarter of 2004. At this point I'll turn the call back to Mike.

Thanks Jim, but before we go to Q&A, I'd like to mention a few main

that we believe best express Red Robin's current outlook and strategy. For us, at Red Robin, it all starts with the brand, people and positioning. Our brand is very strong in our current markets. We believe our concept is keenly positioned for opportunistic growth. We believe we have the team in place to execute it well. we are also focused on an attractive market segment, and are very dialed in to our loyal guest base, particularly the teens and

of America. Other interesting point I'd like to make is that our - we have a high loyal guest base, and a very high average household income demographic of $72,000. This gives us additional confidence that our guests will continue to support our concept through these uncertain economic times. Just as they have done in the past twenty-three years that I've been owning and operating Red Robins. And I think our 2.8% top store sales increase validates this. And with our intentional labor investment, this is going to serve us well as we go forward. We have a - we further enhanced our great value proposition and our unbridled service. They're our experience that we will be rewarded for that type of investment going forward. Our store economics are solid. Red Robin's cash-on-cash returns on new units average 35%, and we continue to average over 3 million dollars in annual sales per unit. Last thing I want to say about our opportunity here is that we have a lot of room to grow. Our brand is significantly under penetrated and we have substantial untapped geographic territory. Today we have 170 company owned and franchised restaurants in the United States,

relative few markets, which, in our view signifies room to grow with wholly owned units or franchisee relationships. In fact, we see the ultimate penetration of Red Robin to be in the neighborhood of over 1,000 restaurants over time. Again, I need to reiterate that I am disappointed that we cannot give you more forward-looking information because of this post-IPO quiet period that we're in, so at this time I'll ask Tracy, our operator to please open the call for questions.

Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you've a question, please press the '*' followed by the '1' on your touchtone phone. Your questions will be queued in the order they are received. If you'd like to cancel from the queue, please press the '*' followed by the '2'. Please be sure you lift the handset if you're using a speakerphone before pressing any keys. One moment for your first question. Your first question comes from

from

. Please go a head sir.

Oh, good afternoon. Good quarter. I am going to ask you a couple of questions. If you don't think that you can answer them, then just say so. First of all, maybe this falls in the guidance. You did give unit growth for the balance of

, can you just maybe give us a little color on all three of the first questions, second let me just follow up. Jim, you mentioned in your remarks, I think you were talking about labor, but you were - I wasn't sure if you were saying labor or - if you were referring to labor or same-store sales because you said that you started to drop, you know, labor off towards the end of the second quarter and you were seeing continuing trends in the first week - three weeks of Q3. Were you talking about lower labor trends or better comps in that first three weeks? That's the first two questions, please.

Yes,

, I could handle both those questions.

What I was referring to is that we started to fine-tune our labor - we made an investment in labor in the second quarter, and that drove comp-store sales up. Now, we started fine-tuning it, and what I wanted to give is some guidance that as we fine-tune it and therefore lower our labor percentage, in the latter part of the quarter it did not affect our same-store sales growth. It

- it made - our same-store sales growth over the quarter was fairly constant.

So, on the second question you asked me about ...

back to that, so you're saying that the trend of labor being lower is intact and the trend of sort of constant same-store sales is intact the first three weeks of July?

No, I didn't mean to mention - to discuss the labor trend. You know, I think our labor guidance, you know, on the road show was one-and-a-half to two-and-a-half percent. We're going - we're - you know, we still feel comfortable in that range of same-store sales. One-and-a-half to two-and-a-half - I think we're still comfortable with that.

OK. All right.

You asked a question about unit growth ...

In '03.

Right. You know, that guidance, you know, I don't think is

. You know, but the - we will - we will build 10 units this year and we will build 16 units next year.

OK. And then, maybe just a housekeeping clarification - for the first quarter on the press release, it doesn't appear like revenues what precisely ...

First quarter press release?

Pardon me. On the press release, ...

Yes?

... total revenue is

. I think they tally to

.

Well, thank you. I don't know whether that was an error in translation from us to ...

So, I mean, it's not material. It's $2,000. Just - it screws up the model

somebody get back to us on that, it'd be helpful.

I will.

Thanks.

The next question comes from

from McDonald Investments. Go ahead, sir.

I had a clarification. I think, Mike, you said that - or maybe Jim did about pro forma long-term debt being about $41 million. Is that the correct number?

That's correct.

OK, and where was that at the end of the quarter? Was it around 80 and then you paid off around 40 million of debt?

Yes, we've paid - we've paid off - the net proceeds of 44 million

used to pay down the debt.

OK. And just wondering if you could break out the first quarter comparable store sales the way you did the second quarter. You had company stores, U.S. franchised, and Canadian franchised all separate. Can you give us those numbers for the first 16 weeks of the year?

I can give you - for the first quarter?

Yeah.

The same-store sales growth for Company, was 0.4 percent and we've broken that out farther, Dennis, in that, you know, we have - there's three core markets that were down, they were down 2.2 percent, and the rest of the Company stores were up 2.6 percent.

OK.

As you move forward into quarter 2, those big three markets then turn positive, 0.4 percent, and the rest of the country for us was up 4.9 percent.

OK.

All right?

And that gets you to the 2.8?

That gets you to the 2.8.

OK, what about franchise in the first quarter?

OK, that was negative 0.2 percent. And then in second quarter, it was 0.5 percent.

For U.S. and Canadian, the Canadian was down 9.5 percent in the...

It was. It reached its peak low in the first quarter of this year.

Which was down how much?

Down negative 13.6 percent.

OK. Why do you think there's such a difference between U.S. franchised and owned stores?

You know, that difference, you know, we're really talking about pretty small numbers I think, if I can put them in kind of perspective. You know, if the franchise -

financial

. You know, we've looked at this, there's about four stores that have had some local economic conditions - one outside of Detroit, one in Exton, PA, and two stores in Alaska that have had some differences. But if you look at that - if they were at the same level as our Company, so if it went from a negative 0.5 to a positive 2.8, I calculated that net after-tax effect on income would be a whopping $30,000.00. And so, you know, there's - if you look at - so if you look at this U.S. franchise, they're coming off a pretty good year. You know, their comp last year in the second quarter, the low one was 5.6 percent, so they have a much tougher comp than we were coming off.

The domestic franchises?

Yes, they were up 5.6 last year.

In the second quarter?

Of '01, that's right.

That certainly is a good explanation. Alright, good, thank you very much.

Your next question comes from Bob

from

Capital Management. Please go ahead, sir.

Hi, thanks. The debt is 41 million at the end of the quarter on a pro forma basis, is cash zero on a pro forma basis?

No, it's 5.5 million.

OK. When would you guys anticipate having a - having stores in the New York and Boston markets?

Those markets are slated to be franchise markets, and we're currently ramping up our sales efforts for those markets. And we're beginning to see some very good interest in those areas.

OK. Ramping up those now, does that mean that it's conceivable that as we get out towards the end of 2003 that would probably be the earliest but not too far from the truth?

We are currently negotiating the Boston area with a potential area developer at this time. So I hesitate to give the name, but I don't believe it would be this year that you'd see any restaurants in the Boston or New York area.

OK. But 2003 is not out of the question?

Correct.

Yeah, OK. All right. I wanted to follow-up on

question. I think what I heard you say and I think what

heard you say but he didn't - he was polite and didn't press you too hard on it, the - OK, you altered your labor spend towards the end of the quarter and then into this quarter downward. You - sales stayed constant. So the implication there is that, you know, for the last three weeks of last quarter and for the early part of this quarter you are, all other things equal, experiencing higher restaurant-level profitability because you've got less labor and the same amount of sales. Is that fair?

That's correct.

OK. And then finally, oh, is the - is the average square footage of your company stores and your franchise stores pretty similar? So if we look at, you know - if we're doing this comparison of company-owned restaurants versus franchise restaurants would sales per square foot difference be about the same as the actual difference in sales per store?

Currently our prototype is 6,400 square feet. And more and more of our restaurants as we go forward will be that free-standing, 6,400 square foot prototype. I think if you do the math today you'll find that the average square footage for our franchise restaurant is probably two to 300 - I'll say 200 square feet larger than our average.

I'm sorry, company owned is two to 300 larger?

Franchise would be larger.

Franchise is larger. So ...

Correct.

... the average - the sales per square foot in franchise is more - is lower by a greater amount than the sales per store?

That's correct.

Yeah, OK. All right. I think that's all I have for now. Congratulations on a good start and here's to many more.

Thank you very much.

OK.

Your next question comes from Matt

from GKM. Please go ahead, sir.

Thanks. Quick question - two modeling questions and actually just on the franchise. First with the franchise, I don't know if I heard you right but did you say you hired or you are beginning talks now with four new franchise, I guess, developers, and if so, what markets would those be that we should expect first to see new franchise markets developed?

Second, you were talking about the labor increase and you started breaking it down in percentages. You were saying 60 percent was intentional. I didn't catch the rest of that if you were talking about what the other - if that was - if that's how you were trying to phrase it. 60 percent intentional and, I guess, what is the remainder, the other 40 percent?

And then operating expenses, can you just give us a little color on what actually drove that increase? I don't know if you covered that or not or if I missed that. Thank you.

OK, thanks, Matt. I'll start with the franchise question. We have signed four restaurant operating groups. The first one I'll discuss is in Connecticut and in western Massachusetts. This group has owned fast food restaurants, I guess I could say the name of them, I'm not - you've got to coach me here on our first call. I can say several Roy Rogers and various pizza operations and delis in the Massachusetts and Connecticut area. Second franchisee we've signed is in the San Antonio and in Austin, Texas. Burger King operator with twenty-seven Burger King operations. In Pennsylvania - western Pennsylvania, we've aligned ourself with a well-known local celebrity type of a family operator. His name is

and he owns and operates thirty-five family type restaurants. And then we've also assigned and aligned ourselves with a great higher end restaurant concept operator named

out of Kansas City and eastern Missouri. So you can see we have a - we're aligning ourselves with area developers from four really distinct and different parts of this food-service industry. We have fast food, little higher end ticket average, family restaurants, and then deli-pizza type operator. Jim, you want to take the percentage question?

Sure. Sure,

the

did come from the buildup on the investment and

stores. The remainder - 15% of the remainder came from the - our increase from intentional investment

restaurants. This is kind of similar to what - to what Mike Snyder did when he took over

franchisor back in '96.

completely changed the personnel and policies to get them in line with the - with

franchisor and what he's been doing for the last twenty years. And then the remaining

of the new unit

.

very small effect or some effect on the wage increase of Washington and California, but primarily from new unit growth, and as our base of restaurants grows larger, the effect of these lower margins on the new units, on overall labor, will diminish over time. And I - we believe that the - if I can add one more thing, the labor investment - our acquisitions will normalize by the end of the year. Yeah, the operating expense of 70 basis point for an increase, it primarily came from the acquired restaurants.

some from the new restaurants, but - when a new restaurant comes on, it just doesn't operate as efficiently with new personnel as our comp restaurants, and so when we added that - those additional 15, it's going to take a little time for those people to operate a Red Robin as efficiently as our more mature stores.

Okay, and I guess then just to follow up a little bit, the - you said 60,000 - you're seeing at the new restaurants, that's brand new built buildings or are those also the acquired ones that you've added to your base. Or are those lower sales.

Those are just brand new.

Okay, so then the lower ones probably, it would be correct to assume are more in line with your traditional franchises, around 56,000, a week?

That's true, yes.

Thank you.

Your next question comes from

from Bank of America

. Please go ahead sir.

Hi guys. Two questions. Can you explain to us a little bit on the just the franchise acquisition integration - kind of, you know, what's gone on there. My perception is, having been in some of these stores in this area, is that you've, you know, definitely taken the labor investment up, as you talked about, in the system, but particularly from a franchise perspective where maybe those folks used to in general not spend as much time on the people and labor.

And then, secondly, can you give us a little thought on sort of the strong new unit opening volumes - what you would attribute that to? You know, sort of the - I guess the evolution of the real estate model or any other factors you may point to.

Sure,

.

take over a restaurant - we haven't - we haven't done a lot of them, but it's similar, like Jim mentioned, when I took over the entire company in '96, we virtually replaced everybody in the company. And we did a similar thing in San Francisco. We had - we had quite a few good folks working there, but we needed to re-staff the restaurants. So, there was quite a bit of turnover to align ourselves with those people who share our values and can make an impact. So, this is kind of a standard operating procedure, if there is one, for us in acquiring these new restaurants, and we expect this to be normalized in about eight to ten periods after we acquire the restaurant. We think it's very important to invest into the labor market and make sure that our guests understand the value proposition that we have. And so sometimes, the inefficiencies aren't - are there when you open it up, so we put a little bit more labor on the floor.

, I think this is another good time for me to say something along the line that - it's kind of a sidebar, if you will. We strive to put more labor on the floor during peaks than a lot of other concepts. And we find that this practice of making sure that we can take care of our peak hours and generate high sales per hour comes to fruition. And this strategy and this seeking knowledge of how to generate high sales per hour helps us generate these high average unit volumes of $3 million out of 6,400 square feet.

Number two, the second question you asked about the $60,000 opening volumes of our new restaurants - yes, we are getting better at picking sites. No question about it. Our guest response to the - to our prototypical new 6,400 square foot building that we've been building for about two years now has been very good. I think a lot of you have - if you had seen the road show, you would have heard that our marketing expense is only about 3.2 to 3.3 percent of total revenues. So we're not relying on major media to generate top-of-the-mind awareness, brand awareness, and generate guest counts. We use a lot of local store marketing initiatives. And combined with a - with a good real estate model, a wonderful real estate guy by the name of

, who is keeping our real estate pipeline full of very high-quality sites - combine that with our local store marketing efforts, we're generating these high average volumes out of the blocks in Germantown, Maryland; Dulles Town Center in D.C.; Mesa, Arizona; Bellevue, Washington; Parker, Colorado. So it's all over the country.

Thank you.

Your next question comes from

from Wachovia. Please go ahead, sir.

Good afternoon. Just a follow-up on the 60,000 per week number. What time frame was that average volume over?

With respect to the opening of the specific restaurant or I could answer it over the second quarter.

Yeah, I think I heard that it was from 2001 until now. I'm really interested in did the Q2 openings -- were they in line with that longer term average?

It's the Q2 openings that we're very excited about generating that $60.000.00 plus.

OK. I think you're working through the Tiki promotion now. I wonder if you can tell me how pleased you are with the results from that effort and what's on the horizon on the promotional front?

, we're students of marketing and, as you can see by the small percentage of total dollars that we spend on marketing, you know, we don't do a lot of it. Only seven-tenths of a percent of that 3.3 is major media. And so we're constantly trying to learn how to use major media better. Tiki, it's OK. I don't think the return on investment was there, quite frankly. Though we're shifting, or seeking, knowledge on how to market this concept even after 23 years of doing it, we're continually trying new things. So we're going to be shifting from these celebratory types of promotional functions that we do three to four times a year and we're going to shift it to more of a broader coverage of top-of-the-mind awareness technique. So as we go forward, you won't see as many, if any, of these celebration things. You'll see more brand identity, brand communication type of promotions or communications. With respect to that percentage, 2.2 to 3.3 percent of sales with respect to advertising, I don't see that going up.

OK, and then last, since there wasn't much of a mix impact, I assume the average check was pretty flat.

It's about the same, yeah. There's really no impact.

Great, thank you very much.

Alright,

.

The next question is a follow-up question from Bob

from

Capital Management. Please go ahead, sir.

Hello?

Yeah, Bob.

Yeah, I'm sorry. Is there any seasonality that you would note in your business? From looking at the historical numbers I can't really ferret out any consistent pattern. What are the sort of seasonal patterns for your business?

Well, it's -- Bob, I've been doing it for 23 years and I can graph the annual sales every year and probably every year going-forward identically. The shift in seasonal percentage is relatively small, but typically, and it could be similar to all other concepts, starting out in January it drops. First quarter you've got a slight downturn, second quarter it kind of levels off, third quarter it starts to pick up a bit, school starts. It falls back down again and then builds towards the - throughout the holiday season. And then it just repeats that line year after year after year.

But you're saying from quarter to - you know, the quarters plus or minus are 25 percent a piece plus or minus a little bit.

Yeah, Bob, this is Jim McCloskey. You know, the - on a quarter-to-quarter basis you have to remember the first quarter has four periods in it and then the other three quarters have three. That is the most significant change ...

Oh, OK.

OK? And so the - in terms of the seasonality on a quarter-to-quarter basis it is very small.

Right. OK, great. Thank you and can I actually just tell you guys one thing? I am - I'm renovating my house. I have no kitchen, had to strike a deal with my kids that we could only go to Red Robin every other night.

We love those kids.

All right, take care.

Thanks for the business.

There are no further questions at this time.

All right. Well, thank you all very, very much. And again, we are apologetic that we're still in our post-IPO quiet period and please look forward to some additional information in the - in two weeks. Thank you very much.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.