Red Robin Gourmet Burgers Inc (RRGB) 2003 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen and welcome to the Red Robin Gourmet Burgers third quarter earnings conference call. At this time all participants have been placed on a listen-only mode and the floor will be open for your questions following the presentation. It is now my pleasure to turn the floor over to your host, Mr. Michael Snyder, President and CEO. Sir, the floor is yours.

Thank you, Enrique. Good afternoon, welcome to our third quarter 2003 conference call. If you haven't seen or heard our third quarter earnings release, it can be accessed on our website, www.redrobin.com, and then click on the investor page. A replay of today's call will also be available at the same location on our website.

During today's call we will cover the following areas. The financial and operational results for the third quarter of 2003, which was the12-week quarter. We will update you on our current business trend and projections for the fourth quarter and fiscal year 2003, and we will provide estimates for the first quarter and full year fiscal 2004.

Before I 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, therefore, undue reliance should not be placed on them. We refer all of you to our filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition. In addition, we intend to file today a registration statement with the Securities and Exchange Commission relating to a proposed offering of our common stock. I need to inform you that comments made on today's call shall not constitute an offer to sell nor a solicitation of an offer to buy our securities. Also, to comply with the SEC rules, we will not be in a position to answer questions or comment further about the proposed offering during today's call.

All right, with all that said, we are very pleased to report another strong quarter. Total revenues for the 12 weeks ended October 5, 2003 increased 22.8%, to $79.3 million. Restaurant level operating profit increased 16.6%, to $14.7 million. Our net income for the quarter was approximately $4 million, or 26 cents per diluted share. Our previous guidance has been 24 cents. Our third quarter results were driven by a comparable restaurant sales increase of 6% for company-owned units. This was the result of a 6.7% increase in guest counts offset by a .7% decrease in the average guest check. We can get into that later if you would like.

Our company-owned restaurants had comp weekly sales averaging $59,395 compared to $56,014 during the same period last year. We opened six new restaurants during the third quarter and have opened another three restaurants already in the fourth quarter. Another two restaurants are scheduled to open in the fourth quarter, bringing our total openings to 18 for this year. Two new franchise opened during the third quarter as well. We're delighted with our 6.7% increase in guest counts, as this was achieved with low media spending and no unusual promotions. We believe this was achieved by our team members providing our guests with great food and beverage, and great service, continuing Red Robin's strong value proposition.

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

Thanks, Mike. Before I get started I want to inform our listeners that on today's call we will make references to some non-GAAP financial measures. We provided the supplemental data in our earnings release that reconciles those measures to GAAP. We'll start with revenues. The $14.4 million increase in third quarter restaurant sales over the prior year was derived from $8.9 million from 13 new restaurants opened and one restaurant acquired to date in 2003, $3.5 million from the 6% comp restaurant sales increase, and $2 million of sales from the eight restaurants that are not yet in our comp base that we opened in 2002.

We saw an increase to 12.3%, or 243,500 in our franchise revenues primarily due to a healthy 5.9% increase in U.S. franchise comp restaurant sales and in royalties received on new 2002 and 2003 franchise restaurants. Canadian franchise comp sales increased a positive 0.6% in the third quarter. As Mike indicated, average weekly sales for comp company-owned restaurants were $59,395 during the third quarter, representing an increase of 6%. Average weekly sales of new restaurants, those not in the comp base, were $58,077 for the third quarter. Our comp-franchise restaurants averaged $52,455 in the quarter versus $49,536 in the U.S. last year and $37,612 versus $37,369 last year in Canada. Canadian results are in Canadian dollars.

Turning your attention to costs and restaurant level operating profit, cost of sales as a percentage of restaurant sales to the third quarter was 23.5%, or an 85-basis point increase over the third quarter of 2003. We continue to experience higher produce gourmet bread, hamburger, and pork costs during the quarter, as many others in the industry have. Labor expense, as a percentage of restaurant sales for the quarter, was 35.6%, which was 50 basis points higher than the third quarter of 2002. The leverage from our same-store sales increase was offset by the effect of the expected labor inefficiencies on our new units and higher Workmen's Compensation and bonus expenses on higher sales.

Operating expenses as a percentage of restaurant sales were 15%, a 20-basis point improvement over the third quarter of last year. This is due primarily to leverage from our 6% same store sales increase, the discontinuance of one of our marketing funds in the first quarter, offset by higher utilities, telephone, and supply costs. Occupancy expense as a percentage of restaurant sales were 6.8% or about a 20-basis point better than the third quarter of '02. Improvement in occupancy is due primarily to the fixed portion of these costs being absorbed by our higher sales.

Restaurant level operating profits were 19.2% for the quarter. In comparison to the third quarter of '02, it decreased 100 basis points due to higher cost of goods, Workmen's Comp and bonuses and the fact that we have more noncomp restaurants with higher operating costs than we did in the third quarter of last year. Restaurant level operating profit decreased 40 basis points over the second quarter of '03 due to the continued rise in commodity costs and bonuses on our higher sales and the inefficiencies of the six new units in the third quarter versus two in the second quarter. Overall we believe our team members did a great job in managing costs this quarter despite historically high beef and produce costs our margins continue to be very good.

Depreciation and amortization expenses as a percentage of total revenue increased 40 basis points to 5% from 4.6% in the third quarter of '02. This increase is due to higher depreciation on a larger group of new restaurants and charges for the early retirement of equipment that was replaced under our refurbishment program.

Corporate overhead which includes G&A and franchise development expenses improved 150 basis points over the third quarter '02. The improvement over the prior year was due to improved economies of scale and lower marketing costs. It should be noted that the third quarter corporate overhead costs were favorably impacted by a few open positions that are being filled early in the fourth quarter. The corporate overhead should return to the expected 7% to 7.5% range in the fourth quarter.

Pre opening costs increased $475,000 or 82% compared to last year. We opened six restaurants in the third quarter of '03 versus four in the third quarter of '02. We opened a couple restaurants in remote market with extra support this quarter but the overall average was about $83,000 per restaurant. Income from operations was $6.8 million or 8.6% of revenues compared to $5.8 million or 9% of revenues in the third quarter of '02, after excluding the $150,000 impairment for property held for sale last year. The leverage from our same-store sales increase and lower corporate overhead, tempered rising costs in the quarter. But the primary difference in income and ops between the third quarter of this year and last year was due to the higher pre-opening expenses this year.

Net income for the third quarter was $4 million compared to pro forma net income of $3.3 million for the third quarter of '02, a 19% improvement. Diluted earnings per share for the quarter was 26 cents compared to pro forma diluted earnings per share of 22 cents in the third quarter of '02. Capital expenditures for the quarter totaled $16.4 million, including $11.5 million for new restaurants, $2.5 million for capital lease buy-outs and $2.4 million for remodels and replacements of FF&E and computer equipment. Cash flow from operations has provided about 73% of our funding per capital expenditures this year while borrowings provided 27%.

At this point I'll turn it back to Mike.

Thanks, Jim. Based on our current outlook for the remainder of 2003 we are offering the following update. We expect to open five new company-owned restaurants in the fourth quarter for a total of 18 new units and one acquired unit in 2003. This quarter we have opened Tulsa, Oklahoma, which is a new market for us, Centennial, which is a suburb of Las Vegas, Fashion Island in Newport Beach, California, and our third restaurant in the St. Louis market, and Avon in the Cleveland market and Milford in the Cincinnati area. Our third unit of the fourth quarter opened today in the Lincoln, Nebraska area.

We expect our franchises to open four restaurants in the fourth quarter, three of which are already opened, including Cedar Ridge, Texas, which also opened today, for a total of ten new franchise restaurants for 2003. We expect restaurant comp sales increases in the range of 4% to 6% for the fourth quarter. We expect fourth quarter 2003 revenues to be about $79 to $81 million and full-year revenues to be between $324 to $329 million dollars. Capital spending for the balance of the year is expected to be about $13 million which will bring our total CAPEX for 2003 to approximately $57.5 million dollars.

So based on these assumptions we expect our earnings per share for the full year of 2003 to be between $1.01 and $1.02 cents. For the fourth quarter of 2003 we are projecting 25 to 26 cents earnings per share. For the first quarter of 2004, which is 16 weeks, we expect total revenues of $108 to $112 million and net income of 25 to 26 cents per share. These projected results are based upon an expected comparable restaurant sales increase of 2% to 4% and the opening of six to seven new company-owned restaurants during the quarter. Please be aware of a couple of first quarter items.

In addition to 16 weeks and the front-loading of some restaurant openings in 2004, please be aware that the annual Red Robin conference occurs in the first quarter and this year will cost materially more compared to prior years. Therefore, we expect G&A for Q1 of '04 to be in the 9% to 9 .5% range, which is our highest G&A percentage quarter. We are updating our 2004 earnings guidance to $1.15 to $1.17 per share, which includes approximately a 3 cent dilution from the issuance of additional shares in the fourth quarter. This compares to our previous guidance of $1.14 to $1.16. Therefore, we are increasing our earnings guidance adjusted for additional dilution from the proposed secondary. The 2004 plan assumes revenues of $390 to $395 million and comparable restaurant sales growth of 2% to 4%. Also includes 20 to 22 new corporate restaurants and 14 to 16 franchise restaurants.

So this concludes our prepared remarks, and Enrique, our operator, would you please open the call.

Certainly. The floor is now open for questions. If you do have a question, you may press 1, followed by 4 on your touch-tone phones. If you are on a speakerphone we do ask that you please pick up your handset to minimize any background noise, and if at any point your question has been answered you may remove yourself from the queue by pressing the pound key. Once again, if you do have a question you may press 1 followed by 4 on your touch-tone phone. We do ask that you please hold while we pause for questions. Once again, if you do have a question you may press 1 followed by 4 on your touch-tone phones at this time. Our first question is coming from Jonathan Waite of McDonald Investments.

Hi. My question is regarding '04, your estimates, and kind of your expense outlook. Wondering if you could go through where you see commodities headed, labor, and any other things you find that's materially different from what we see this year.

Yeah, Jonathan, this is Snyder. I'll take the commodities category. Overall, we're looking for some increased pressure there. We can go through each category if you would like. Hamburgers, as we all know, or beef prices, are at a pretty high level. We think the herd expansion is underway but we probably won't see a real benefit from that until later on in the year, or perhaps later than that. I guess the Canadian border closure could -- or reopening could help that or speed it up. Please remember that only about 2.4% of our total food cost is derived from hamburger. Poultry, we've locked our pricing in for '03 and '04, so we think we're in pretty good shape. Seafood costs, which aren't huge to us, we think we're going to pick up some benefits there just through some menu engineering. Fries, which is a big part of our costs, we expect minimal increase for '04. The only real threat there we think is from perhaps higher fuel charges and freight costs. Canned and dry goods, we're looking for a little improvement there. Actually, the biggest improvement is coming from a switch in our dressing program, which should help us out quite a bit.

All in all, like everyone else, we are feeling a little bit of that pressure but we anticipate taking a small price increase in January to offset, more than offset, hopefully, any of these upward pressures. Jim, you want to address labor?

Sure, Mike. We estimate labor will be fairly consistent in '04 than in '03. I think there are a couple of items like Workmen's Comp that we expect to continue to be high in '04. This was a little bit of a surprise for us in '03 in that traditionally we've been substantially below the industry average, and now of what our Workmen's Comp experience or injuries have been. We're not quite up to the average, but we're getting closer than we had before.

The actual rates of Workmen's Comp, as everyone knows, California very high rates. We're hopeful, along with the other business people that have units in California, that the change in administration, the governor's mansion, will start to ameliorate some of those high costs. We are going to continue to expand the number of units by 17% to 20%, so we'll continue to have some inefficiencies in our labor, because of the new units, that's 3% to 4%. But, on the other hand, we're building more of our units outside of the high cost west, with very high labor rates, high minimum wage, very high Workmen's Comp. So we think that will have some positive effect going into the year, but we think the most conservative position is to estimate that it will be about flat.

So I mean, in the past you guys have talked about a flat restaurant margin looking out. Is that still fair to say that that's your assumption in your '04 numbers?

Right now, Jonathan, we're not betting on the come. We're going to assume that the commodity cost and the Workmen's Comp costs will continue to remain high, that the price increase, whatever price increase Mike decides to take in January, will bring us some relief, but not materially.

So what sort of delta should we look for in '04 versus '03 restaurant margin?

I think the restaurant margins in '04 will be slightly higher than what we've experienced in '03.

Okay. Thank you.

Thank you. Our next question is coming from Howard Penney of SunTrust.

Jim, the margin pressure you saw in this quarter, how much, if you can attribute to the inefficiencies of the new units versus the cost pressure?

Well, clearly the amounts on the labor line is where the inefficiencies come in. That's the biggest inefficiency. So the new units are generally about, oh, in the third quarter they were about 3% to 4% higher than our comp base. The pressures on commodity costs was probably the more significant issue on the food costs line, there is some inefficiencies in there with all those new units as they gear up and try to get better -- they have less waste and things, so even in a flat commodity environment we would see some inefficiency because of all of these new units, but I would say 75% of the costs or 80% of the costs is really related to commodities.

Secondly, the acceleration that you've seen in your comp trends, is that partly due to the comparison of the markets that were performing poorly have accelerated and specifically how's Denver doing?

When you have this kind of same-store sales increases, Howard, everybody's got to be working. It's all got to be working. They do represent 40% of our sales. When we follow the big three -- we pointed out those big 3 because they were an anomaly, and they're less an anomaly now. If the average was 6%, they're closer to 4%, which, obviously, puts the other 60% up quite higher than 6%. But we would say that all of the markets right now are healthy. Some are just a little healthier than others.

Thanks for your time.

Thank you. Our next question is coming from Mike Smith of Oppenheimer.

Good afternoon.

Hey, Mike.

Did you run any special promotions during the quarter?

No, Mike, we didn't. Well, let me restate that. We had the sirloin steak burger, which I think is very special. But, no, we didn't change our methodology or the way we run our promotions.

Was there strength in your comps in any geographic region more so than others?

Mike, yes, I mean, there always is. I mean, California was strong, and the East is strong, but, it's pretty darn good in a lot of areas.

I guess I can't ask anything about the offering, but -- well, I guess I just won't ask. Never mind.

Thank you. Our next question is coming from Matt Difrisco of Harris Nesbitt.

Can you actually just help us get to the operating weeks that you're looking for or that -- your operating weeks that were in the quarter here, you gave two average weeks of sale numbers, a comparable and also the new stores. If you could just give us the total aggregate of operating weeks for the company-owned stores.

For actual through quarter 3?

Uh-huh. In the quarter for 3Q entirely. How many operating weeks do you have in the company, if you have that available?

We'll have it just here in a second. 1,302.

Okay.

That's off the cuff, that's the calculation, but we'll call you back if it's wrong.

Okay. For 4Q what is your share count that you're using to get to that EPS?

Hold on. I've got that right here. It's 15-8.

Can you tell us also what you're using for '04 for your EPS guidance so far to date?

For the full year, 16-4.

Okay. And then I guess, the price increase that you currently have now running, what is the pricing factor in your comp?

We took a 1% price increase January of '03, so out of that 6.7% guest count, we had 1% of price increase in there.

Then last question, any new markets targeted for '04 that you could talk about now without setting off a competitive disadvantage?

Wilmington, North Carolina. Also going to be in Arkansas, around the Little Rock area, I think it is.

Okay. Thank you.

Yep.

Thank you. Our next question is coming from Andrew Barish of Bank of America.

Follow-up question on the check average being down, even with the pricing increase. Are you promoting some lower priced items, and I guess that sort of ties into the changes in marketing, kind of what the spend has been. Did you sort of kick off some TV that you may have been doing in some of the big three markets a year ago, and kind of what's Dwayne's latest view on where the marketing is heading over the next year or so?

Yeah, Andy, as I mentioned earlier, no strategic or tactical change in what we're doing. The difference is, and it will fluctuate from quarter to quarter, year to year, and you were right on, the items that we're promoting. For example, this quarter our average guest check for Q3 was about $10.05, last year, 2002's third quarter was about $10.12, the difference being two or three items that we were promoting that had higher menu prices last year than this year. To be specific, in 2002 we were promoting an Ensenada chicken plate that was $9.79 and a crispy chicken salad -- great salad, by the way -- which was $8.99. This quarter, or Q3, we were promoting a lower priced menu item, so that is the only reason that we had a difference in the guest check averages. The rest of your question, what was it? Looking to the future on the change of marketing plans? We're actually quite boring with that, Andy. We found success with our consistent brand image communication, staying away from the big quarterly type celebrations and just promoting some great new products very carefully throughout the course of the year. Don't see any change in that strategy.

Thanks.

Thank you. Our next question is coming from Jeff Omohundro of Wachovia Securities.

Couple of questions. First, give a little more color, I think I might of missed it in your commentary on the G&A tracking in the quarter versus the Q4 expectation.

Yes, Jeff. Well, if you look at our actuals in Q3, we combined both franchise support development and other G&A together through these percentages. And so in the first quarter of this year we were around 9%. Second quarter, 7.7%. In the third quarter we dropped below 7%. That's a little unusual for us. So we think we will be somewhere between 7% and 7.5% the fourth quarter.

Any specific driver on that Q3 being off? It's certainly a little below our expectation.

It's just the way it worked out. We have Doug Gammon, our VP of HR, actually started today, and his predecessor in that position was open during the entire third quarter. The number 2 person in construction started during the latter part of the third quarter, so we'll catch a full effect of his salary in the fourth quarter. We've been beefing up our franchise support operations because we expect a healthy growth in franchise openings next year, and we're gearing up for that. And so a couple of those positions started in the fourth quarter. I think those are actually all the big ones. The rest of them are less senior positions.

And is there anything new on the performance of your new store openings? Do you continue to be pleased with that, and how is that relating to this unit opening growth rate we're looking at '04? Any chance you're going to increase that target?

No, we're going to stay in that range of 20 to 22. If it was up to real estate and new sites, we could grow faster, but as Mike always says, we're going to grow with dignity, and so, as you know, there's a lot of pieces to the growth. It's not just getting new sites. And so we, in growing our people, growing our distribution system, having new restaurant opening teams, we're going to stay in that range of 17 to 20 for new unit growth.

And the new stores, have they been opening well?

They have. We've changed some of our assumptions over this year. I think last year at this time we talked about a three-year ramp rate. They're ramping faster than that. As you can see, they're just a shade under our comp base, and so, yeah, they're opening very, very well.

That's why I asked about your commitment to that 17 to 20, given the apparently effective reinvestment. Very good. Thank you.

Thank you. Our next question is coming from Dan Geiman of McAdams Wright.

Good afternoon, guys. As you look into '04 and look at your comp guidance of 2% to 4% percent, what accounts for the difference between that guidance and the 3Q comps you just reported and also the 4Q guidance of 4% to 6%?

Dan, I think it serves us well to be on a conservative side. There's so many variables out there that we cannot predict. We're comfortable with the guidance we gave irrespective of the strong sales performance that we've been experiencing recently. So, Dan, it's just due to our conservative nature, and there's just so many variables out there that we have little control over. So that's our answer.

Great. And I assume your '04 comp estimates assume an increase in the menu prices.

Right now, it's just a very small assumption. We'll make an announcement soon on what we actually decide on our menu increase. Historically, Dan, we've averaged about 1.2% per year on price increase for the last five years, so based on what the world around us is showing us, as we get closer to that January date of, tentative date of, raising prices, we'll be somewhere around our historical average. Hard to say right now.

Great. Thanks.

Thank you. As a reminder if you do have a question you may press 1 followed by 4 on your touch-tone phones. Our next question is a follow-up from Jonathan Waite of McDonald Investments.

I was wondering, on some of your new stores, not all of them, but some of them seem to be in maybe second tier markets or not heavily populated metropolitan areas. I was wondering, is that part of the real-estate strategy or is that sort of where the either corporate or franchise found a good site?

Jonathan, we found good experience opening these restaurants in all parts of North America. Actually, the smaller communities serve us well. We've opened in Wenatchee, Washington. Some of our markets in Oklahoma, I guess you would be describing as second tier markets. So irrespective of whether it's a large metropolitan area, a large SMSA or a smaller one, it all just comes down to finding the great site where there are America's families. Remember our demographics of high income, women, teens, and tweens, wherever those folks are, that's where you're going to find Red Robin.

Are there other casual dining operators in those markets?

Yes. We have competition just about, well I would say everywhere we go. I think our real-estate team is doing a wonderful job at getting the great sites, perhaps a little bit earlier than -- or getting notified of the great sites a little bit earlier than we used to, so we do have a competitive edge there where the developers are noticing the synergy that we have and we're taking full advantage of that.

And is there any chain in particular that you find running up against in these second and third-tier markets?

Oh, Jonathan, next to all the great operators, the great ones like Chili's, Applebee's, some of the fast-food guys like Sonic, all those great operators are where we want to go.

But nothing in your thought process as far as going into the really small market of perhaps 25,000 or 30,000 people, something like that, or are you still kind of more of the 100,000 to 200,000 type of population center?

Yeah, right now with only about a little over 200 restaurants in the United States in the system, there's so many areas where you have a 200,000-plus population base that we aren't in yet, so we just haven't tested those very small markets, and we've got a long way to go, I think, before we even start thinking of that.

Okay. Thank you.

Yep.

Thank you. Our next question is a follow-up from Matt Difrisco of Harris Nesbitt.

Hi. In 2004 do you have -- it doesn't look like you do, but do you have any franchises planned in there to recruit or should we expect to you continue over the next few months to get a few more developers and parcel out a little more of the country?

Matt, we're certainly interviewing, doing the office interviews now, have an amount of additional franchise partners. We think we'll have, without any new additional franchise partners, we still think we'll have pretty good growth, going from 10 to 14 to 16, and we think a lot of that growth will be front-end loaded. So we'll see a lot of that growth in the first and second quarter of this year, of '04.

And how many franchisees are the developers behind that 14 to 16 number

That's a good question. I'm just guessing off the top of my head because I didn't count them when I saw the list but I'd probably say 12.

Okay. And then also just to be clear here, the guidance that you gave of 9% to 9.5% during the prepared remarks for G&A, that is obviously the way you're combining general administration with franchise development, correct?

That's correct, so that's comparable to first quarter of '03 of 9%.

Actually, I think first quarter of '03 was 9.2%. You had 7.7% and 1.5%, so it comes out to be about 9.2%. That's my next question. You said it was going to be higher than the 1Q, correct?

Well, no, what we meant to say is that 1Q is higher than the other three in our percentage basis. As it was in '03. And will be every year, quite frankly.

Okay. Now I understand.

That's the only point we were trying to make there.

Gotcha. Can you give us a little better detail on what is -- in 1Q you said there's a conference that's going to have much higher expense associated with it. What actually is behind that, and then is there something that we could see gaining leverage, or, I guess, just a big motivational speech where we're just going to see that 4% comp turn into 40% comp, maybe?

Yeah, Matt, every four or five years or so we pick, what can be deemed a more expensive place for our annual conference. So this January our conference will be in Hawaii, so look for a more expensive conference every four or five years. So, 2005, the conference cost should get back down to approximately what they were in 2003 except for just it might be increased a bit just because of the sheer numbers are getting larger. So the main difference is geographics.

Okay. You guys need an analyst conference soon, then also, I guess. Aside from the HR position, what other positions are unmanned, needing to be hired, specifically? Are you set for your real-estate team to get these 20 to 22 openings?

We are. I would say that in every department now we have in the third quarter made the decision, second and third quarter, made the decision where we've filled the number one or number two position. Most of them are number two's. So we're -- brought on another senior real-estate guy in the end of the third quarter. And really pleased with him. So we're in the best shape we've ever been, really, in that area.

Thanks.

Thank you. Our next question is coming from Mike Smith of Oppenheimer.

I might have missed it, but, Jim, can you go over capital expenditure plans for next year and what your current bank lines are?

You bet. Our bank lines, we took it from $40 to $85 million in May, and at the end of the third quarter, we're at $38 million.

No, 33.7.

33.7, I'm sorry. And so our CAPEX for next year remains at that $64 million that we talked about, I believe in the August call. Our funds from operations will generate about, our cash from operations generally about 73% of that. We'll continue to pick that percentage -- that percentage will continue to rise 2, 3, 4% each year, so we'll need -- so if you follow that, we have a continually improving leverage ratio with our banks, so we think at this point we don't need really to raise any additional funds for our liquidity or banking purposes.

Pretty picks.

Thank you. As a reminder, if you have a question you may press 1 followed by 4 on your touch-tone phones at this time. Our next is a follow up from Matt Difrisco from Harris Nesbitt.

Okay, I promise this is the last one. On the developers for the franchises, can you give us how many franchise commitments your latest round or your developers have signed and are committed to you over the next couple of years?

We don't do that, Matt. I know that's very popular in the fast casual and the quick service category, but we don't release the total commitments, because I don't want to have to explain them every quarter. We've got a good pipeline, and I think that's an area that we're optimistic in.

Okay. I understand. Thanks.

Gentlemen, there appear to be no further questions at this time. Would you like to add any closing remarks?

Mike Snyder. Thank you all for your support and continued support, and thank all the Red Robin team members out there for a great quarter. With that, good night.

Thank you. And thank you callers. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day.