Ruth's Hospitality Group Inc (RUTH) 2013 Q4 法說會逐字稿

Hello. Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group, Inc. fourth-quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue for questions. As a reminder, today's conference is being recorded.

I would now like to turn the conference over to Arne Haak, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Thank you, Vicki, and good morning, everyone. Joining me on the call today is Michael O'Donnell, Chairman and Chief Executive Officer of Ruth's Hospitality Group.

Before we begin, I'd like to remind you that part of our discussion today will include forward-looking statements. These statements are not guarantees of our future performance, and therefore, undue reliance should not be placed upon them. We would like to refer you to the Investor Relations section of our website at rhgi.com, as well as the SEC's website at sec.gov, for copies of today's earnings press release and our recent filings with the SEC, for a more detailed discussion of the risks that could impact our future operating and financial results.

Mike will start off the call today, after which I will provide you with the financial update on our fourth-quarter results, as well as our initial outlook on 2014. I'd now like to turn the call over to Mike.

Thank you, Arne. And thanks to everyone for joining us this morning. From both a sales and profitability standpoint, we're very pleased with our fourth-quarter results, which in turn capped off another strong year for Ruth's Hospitality Group. The strategic initiatives that we have implemented over the last two years, combined with our ongoing operational focus, have contributed significantly to our strong competitive position, and continue to drive the strengths and consistency of our sales and profits.

During 2013, our topline -- our solid topline growth was led by the passion, hospitality, and uncompromising service that our team members and franchisees provide to our guests day in and day out. Their ongoing dedication led to a 5.3% increase in comparable-store sales at Ruth's Chris Steak House for the year, driven largely by traffic growth, as well as positive sales growth at Mitchell's Fish Market. While we benefited from a moderation in beef inflation during 2013, we effectively managed our restaurant-level expenses and leverage to our infrastructure throughout the year, resulting in an increase in non-GAAP adjusted EPS of over 25%.

Given these strong results, we continued to reinvest in our business, strengthen our development pipeline, and further reduced our outstanding debt. On top of that, we were able to return excess capital to our shareholders through the initiation of a $0.04 quarterly dividend, which we just announced will be increased by 25% to $0.05 in the first quarter. So, all in all, we are very pleased to have delivered another year of healthy and consistent results.

Turning to our fourth-quarter highlights by brand, comparable sales at Ruth's Chris Steak House company-owned restaurants increased 5.5%. It's worth noting that the increase comes on top of a 5.4% increase last year, and since 2010, we've seen a three-year comparable cumulative sales increase of approximately 18.5% in the fourth quarter. Entrees which serve as proxy for traffic increased by 4.5% during the fourth quarter, while average check increased 1%. Our strategic initiatives continue to focus on driving sales growth largely through traffic, and we are pleased to report our 16th consecutive quarter of traffic growth.

Now a brief comment on sales in Q1 of this year. As you know, weather has been a factor during the first quarter. And like most restaurant companies, it's had an impact on our business as well. While our first-quarter comparable sales have slowed from our recent run rates, we are pleased to let you know that first-quarter comparable sales at Ruth's through early February have remained positive by about 80 basis points.

Back to the quarter, our Ruth's Chris franchise-owned domestic comparable restaurant sales increased 0.1% during the fourth quarter, while international comparable franchise-owned restaurant sales increased 0.9%, resulting in a blended increase of 0.3%. As I noted, we continue to focus on growing sales primarily through traffic across our three core segments, which consist of special occasion guests, corporate business, and our core regulars. We believe this strategy has contributed significantly towards our broad guest appeal and consistency of our sales growth.

Our Ruth's seasonal classics are a key component of our menu offerings, particularly to our special occasion guests, who may be looking for with price certainty. These price-fixed selections comprised approximately 22% of preference in the fourth quarter, consistent with recent trends. During the fourth quarter, roughly 2/3 of the customers who selected the Ruth's seasonal classics exhibited a preference for the higher-tiered offering. Our Sizzle Swizzle and Swirl Happy Hour Premium Bar Menu continues to be an important part of our business. We believe our great guests appreciate the quality and variety of options, as well as the incredible value that the menu offers. It creates another opportunity for our guests to enjoy Ruth's Chris Steak House, while not competing with our dining room sales.

Private dining at Ruth's Chris Steak House, which we view as a proxy for business demand, grew 3.2% in the fourth quarter. While this trend is slower than previous quarters in 2013, we believe it was affected by capacity constraints during the December holiday period. For the full year, our private dining sales increased 9%.

From a marketing standpoint, we continue to target our promotions around special events and holidays. During the quarter, we focused on special menu offerings with great appeal for guests. We also launched e-card capabilities, which appear to resonate well with an increasingly tech-savvy audience. More recently, we launched a new wine and cocktail menu, and updated our Sizzle Swizzle and Swirl offerings, to rave reviews from our guests. We were pleased with our fourth-quarter television flights and other promotional activity in the quarter to support holidays in the celebratory season.

With regard to Mitchell's Fish Market, our comparable sales increased 2.6% during the fourth quarter on top of a 3.4% growth in the fourth quarter of last year. Traffic decreased 1.6%, which was offset by a 4.3% increase in average check. The sales performance at Mitchell's Fish Market was driven by strong Thanksgiving and Christmas holidays, and helped to drive the brands to positive comp sales for the year.

A brief comment here on Q1 of this year for MFM on sales, for Mitchell's Fish Market on the sales side -- the Midwest region has been among the hardest hit by weather so far this year. And as a result, Mitchell's comparable sales have also been more severely affected by January and February's weather. To date in the first quarter, our comparable sales are down in the mid to high-single digits. At Mitchell's, we have employed new initiatives around private dining that were well-received in the holiday season.

We have successfully benefited from the best practices at Ruth's, and this area of business will be developed throughout the year with a focus on six additional special event dinners, along with corporate business events. Similar to Ruth's, we believe these special event dinners can help raise the profile of Mitchell's, and through engaging educational interactive experiences, attract new guests and increase frequency for our regulars. We also moved into retail sales for the first time of our gift card for Mitchell's in surrounding markets, and look forward to expanding this program in 2014.

Switching to real estate, the efforts we have put into strengthening our new unit pipeline continue to produce results. During the fourth quarter, our franchisee opened a new Ruth's Chris restaurant in Shanghai, China, our 16th international franchise restaurant, and part of the growing Asian presence of our Ruth's Chris brand. Subsequent to the end of the fourth quarter, we opened a company-owned Ruth's Chris Steak House in Denver during January. And this month, our franchisee opened a new Ruth's Chris location in Boise, Idaho.

Over the last two years, we and our franchise and licensed partners have opened or relocated 12 new Ruth's Chris Steak House's worldwide. Over this time period, our Ruth's Chris Steak House unit count has increased by 6%, and this is becoming an important component of our long-term revenue growth. We continue to be pleased with the performance of our newer restaurants, which we believe validates our ongoing efforts -- thoughtfully accelerate our new restaurant growth.

Looking specifically at 2014, our development schedule is shaping up very nicely. Including our new Denver location, we expect to open a total of four company-owned Ruth's Chris Steak House restaurants this year. Gaithersburg, Maryland is currently scheduled for a third-quarter opening, while Marina del Rey, California and Dallas, Texas are scheduled for the fourth quarter. In addition to the recent opening in Boise, we expect one franchise opening in the third quarter and two in the fourth quarter. Our franchise pipeline remains solid, as we have commitments for 10 future franchise restaurants in the next three years.

We remain active in our development efforts, and are continuing to work on additional Company and franchise restaurants for 2014 and beyond. While we are encouraged by recent development activity, our approach to new restaurant development will remain disciplined and prudent with regard to capital deployment. We will continue to provide updates to you on our newly signed leases and on franchise growth in our future quarterly calls.

I'd now like to turn the call back over to Arne.

Thanks, Mike. For the fourth quarter ended December 29, 2013, we reported net income of $4.2 million or $0.12 per diluted share on a base of 35.9 million diluted shares. This compares to net income of $3.7 million or $0.10 per diluted share on a base of 35.3 million diluted shares in the fourth quarter of 2012. As reminder, the fourth quarter of 2012 consisted of 14 weeks compared to 13 weeks in the most recent fourth quarter of 2013. And we estimate that approximately $0.02 of earnings in the prior-year can be attributed to the extra week.

Our net income in the fourth quarter of 2013 included a $2.5 million non-cash charge for the impairment of restaurant assets and a $750,000 pretax charge related to a fee for an early termination of a lease. Additionally, in the fourth quarter, the Company changed from the delayed method to the preferable redemption method for recognizing unused gift card breakage revenue. This resulted in a change in accounting estimates affected by a change in accounting principles. The cumulative impact of the change in estimate and the change of principle was recorded in the fourth quarter, and resulted in a $2 million non-cash reduction in other operating income.

During last year's fourth quarter, we recognized the $683,000 pretax gain on the settlement of unclaimed liabilities, and a $5 million net charge relating to the relocation of a company-owned restaurant, the impairment of assets at two units, and a gain on the disposable property and equipment. Excluding these items and income from discontinued operations, our non-GAAP diluted earnings per common share was $0.21 in the fourth quarter of 2013 compared to $0.18 in the prior-year fourth quarter. We have included a schedule in our press release that reconciles our GAAP diluted earnings per common share to this non-GAAP EPS.

During the fourth quarter of 2013, we generated total revenues of $108.9 million compared to $114.3 million last year. We estimate that last year's revenues were positively impacted by approximately $9.2 million as a result of the previously mentioned extra week in the quarter. Average weekly sales for all company-owned Ruth's Chris Steak House restaurants was approximately $106,000 in the fourth quarter, an increase of 4.1% compared to [$101,800] in the fourth quarter of last year.

Restaurant operating weeks for company-owned Ruth's Chris Steakhouse restaurants were 819 in the fourth quarter of 2013 compared to 879 last year, which included 60 additional operating weeks, largely as a result of last year's 14th week. I would like to highlight that our average weekly sales calculations and our restaurant operating weeks exclude discontinued operations.

At Mitchell's Fish Market, average weekly sales increased 0.8% to $68,000 from $67,400 in the fourth quarter of last year. Restaurant operating weeks at Mitchell's were 247 in the fourth quarter of 2013 compared to 266 last year. Last year's total included 19 additional operating weeks as a result of last year's 14th week.

Franchise income in the fourth quarter increased to $4.2 million from $3.9 million last year, due to a combination of improved sales volumes and new franchise unit development. In terms of our cost structure, food and beverage costs as a percentage of our restaurant sales increased approximately 20 basis points year-over-year in the fourth quarter. During the fourth quarter, our beef costs were up 3.1%. As Mike mentioned earlier, we benefited from an unexpected moderation of beef inflation during 2013, and we expect beef inflation to run up 4% to 8% for the full-year 2014. Restaurant operating expenses as a percentage of restaurant sales were largely flat at 47.8%.

Marketing and advertising costs as a percentage of total revenue decreased approximately 50 basis points to 3.7%, largely due to timing differences in planned quarterly spending compared to last year. Our G&A expenditures increased to $8.6 million from $9.2 million a year ago, largely due to one less operating week during the quarter. As a percentage of revenues, G&A improved approximately 20 basis points to 7.9%.

At the end of the fourth quarter, the Company had $19 million in debt outstanding under its senior credit agreement, down from $37 million at the end of the third quarter of 2013. Overall, we reduced our debt outstanding by $26 million during 2013. Our capital expenditures during the fourth quarter were approximately $4.4 million, and we did not repurchase any shares during the fourth quarter. Also, as Mike noted previously, our Board of Directors recently approved a payment of a quarterly cash dividend to shareholders of $0.05 per share. This dividend will be paid to shareholders on March 27, 2014, to common shareholders of record as of the close of business on March 13, 2014.

Now looking ahead to 2014, we would like to provide you with the following guidelines for some of our key cost metrics. Overall, we expect our cost of goods sold to be within a range of 31% to 33% of restaurant sales for the year. We expect restaurant operating expenses to range between 49% and 51% of restaurant sales. Our marketing and advertising spend is projected to be between 3% and 3.2% of total revenue for the year. Our G&A expenses are expected to be between $27.5 million and $28.5 million for the full year. And we expect our effective tax rate for the full year to be between 29% and 33%.

Our CapEx spending for 2014 is projected to grow to be between $20 million and $22 million, which is reflective of three additional company-owned restaurant openings in 2014. Finally, we expect our fully diluted shares outstanding to be between 36 million and 37 million shares, which does not assume potential share repurchases in 2014.

And, finally, I'd like to make a few comments regarding our first-quarter sales expectations and the effect of the change in accounting method for unused gift cards. As Mike noted, like many, we have experienced severe winter weather over a large part of the country, and we have shared with you the effect on our first-quarter sales to date. In addition, we will also experience in Easter and Lent a shift between the first and second quarter, as Easter is three weeks later this year than it was in 2013. We anticipate that the shift will negatively impact first-quarter comparable sales by approximately 100 basis points.

At this point in time, we believe that the cumulative effect of the Easter shift, weaker January and February sales due to weather, and higher beef prices, will result in a year-over-year decline in first-quarter earnings. The change in accounting method for unused gift cards will affect our other operating income line in 2014. While we believe that the annual impact on the other operating income is immaterial, the seasonality of how we record other operating income will change. Specifically, the recognition of other operating income will be smoother in each quarter, which will result in a significant reduction in our 2014 second-quarter other operating income when compared to 2013, and will increase our other operating income in quarters one, three and four.

With that, I'd now like to return the call to Mike.

Thanks, Arne. To reiterate, we remain very excited about the overall health of our business as we begin 2014, and our ability to execute against a well-balanced, shareholder-focused plan, anchored by our Ruth's Chris business. While our 2014 initial sales growth is disappointing, we believe that this is a temporary weather-related phenomenon. We believe that our strong team efforts on execution has allowed us to make significant progress over the last few years, leading to a consistent award-winning dining experience that resonates with existing and new customers.

We will continue to include high-quality development opportunities for both company and franchise locations in our strategic plans. Our franchise partners remain the heart and soul of the brand. And our mix of company-owned and franchised restaurants is both unique and a distinct competitive advantage as we strategically expand.

Finally, while our first priority will be to evaluate opportunities to grow and reinvest in our business, we are also focused on making wise long-term capital decisions that include a mix of dividends, debt reductions, and share repurchase. We believe this approach is working, and can continue as we execute over the coming years.

Vicki, I'd now like to open the call -- turn the call over to you to open it for questions.

(Operator Instructions) Nicole Miller, Piper Jaffray.

Thanks for the update. I'm wondering specifically what can or might you do to address the capacity issues that you talked about at holiday for large parties, especially as you come up on Mother's Day in the spring as an opportunity to then host large parties?

Yes. Nicole, Mother's Day and that season is not as difficult for us. The issue around the holiday season this year -- as you know, it was shortened, the time between Thanksgiving and Christmas, which created actually less days for people to have private parties and company celebrations, et cetera. So we shifted as many people as we could to all open dates. We also shifted people into lunchtime opportunities. But as you know, as we said, we've continued to grow that business through the holidays. And we literally run up against we like this date, and so does four other people. So, I really think that that's a good thing for us.

We have also expanded our catering opportunities. So, we continue to look at other outside venues that we can go cater for companies where we don't have the capacity. So, I think we're doing the right things there and I don't think we'll see that as a problem on Mother's Day.

Okay, got you. And on the weather impact, can you -- is there any way you can parse out and say that stores that didn't have as severe weather, are they still outperforming the way you would expect in terms of comps?

Yes, I would. Our two largest markets are Florida and California, and those markets continue to perform at the level that is where our run rate has been. So, we really do -- you know, this is -- I mean, we're going to hear about weather now from everybody, but so -- I don't want to whine; it snows. But this was -- and it gets cold. But this polar vortex thing that I never knew about has created not only days of snow and weather, but days of negative-degree weather and negative temperatures. So, it's had an impact across there. But where we have had weeks where we have not had the weather impact, and in our California and Florida markets, we continued to do well, in the neighborhood of where we've had our run rates before.

And just a quick one for you, Arne, and I'll hop off. For the company-open -- company-owned store development this year, what quarters should we put those in, approximately?

Sure. So Denver opened here in the first quarter in (multiple speakers). Gaithersburg, Maryland will be in the third quarter. And right now, Marina del Rey and Dallas are fourth-quarter openings.

Thank you.

Hey, Nicole, thanks for being first again.

You bet.

James Fronda, Sidoti & Company.

Are there any new initiatives in the pipeline you can talk about, other than what you have been doing with seasonal classics and the Sizzle Swizzle Swirl?

Well, I mean, on a culinary basis, and on a wine and liquor basis, we were very comfortable with what we have been doing on national wine dinners; we're very comfortable with what we've been doing classic cocktails. We're very comfortable with what we were doing in Sizzle Swizzle and Swirl, although we update all of those things, so they became new ideas.

So, our Ruth's Classics continue to resonate, but it also gives us an opportunity to make culinary changes in the sides and the things that we offer there. So we are very pleased with the consistency of our execution, which I think people really count on. We want to be creative to the extent that we can execute still at a superior level.

Okay. And I guess, could you just go a little more into the e-card capabilities, what that entails?

Well, I mean, what we are attempting is that we -- what we've doing, I mean, where they can go on our website, you can buy an e-card that then transfers to you, you get a print-out; you get the opportunity to use that. So that you don't actually have to go buy the physical piece of paper.

Okay.

I mean, it's really (multiple speakers) --

(multiple speakers) And I guess just --

Go ahead.

Okay. No, that's fine. And I guess just in terms of the franchise locations, where are you looking to expand?

Well, we've got development opportunities going on around the country, so we -- and internationally. So, the specific locations -- Arne, you might want to speak to the specific locations that we're doing in 2014.

Now, the -- in terms of, James, the franchise, we have both domestic and international. I would say that mix is probably more international right now. That's clearly -- when we grow internationally, we wanted that to be the franchise model. Growing domestically, we look at both from a franchise perspective and from a company perspective. So, and that's really kind of a question around the returns, and does the geography makes sense for us or does it make more sense for a franchisee.

Okay. All right, thank you, guys.

Andy Barish, Jefferies.

Can you give us an update on beef contracting? And prices continue to remain high, I guess. How are you looking at that range, given what you contract and what pricing you have for 2014 at this point?

Sure, Andy. This is Arne. Good morning. You know, beef is kind of back. We did benefit in the fourth quarter here from our contracts that we had in place from last year. Our beef costs, including contracts, is up about 3%. I think if we hadn't contracted, our costs would have been up in the high-single digits in the fourth quarter, because that is the time when it's seasonally strongest, the demand is seasonally strongest.

Looking at this year, we currently do not have any contracts for 2014. Beef prices for prime product have been tracking kind of within our range. They've been kind of low to mid-single digits here so far this year. We continue to look for opportunities to put a contract into place. But at the same standpoint, we want it to be at a price that makes sense for us. So, last year, that opportunity came in the second quarter. We will continue to talk to our suppliers and look for these opportunities, but to date, we haven't found anything yet.

And where did the full-year beef inflation wind up for 2013?

Up low-single digits. It was like up 1% to 2%.

Okay. And then just two others. What was the marketing shift in the fourth quarter? How did that play out or how will it play out as we look to 2014?

So, that's a good question, Andy. Last year, we had a fairly dramatic shift around -- from our normal seasonality of marketing spend, which was heavy on Q4 advertising. And we did advertising in 2013, television advertising in both the second quarter and the fourth quarter. So we kind of called that out to you.

This year, there will be a little bit of change. We'll refine that, but there won't be any dramatic changes like we had last year. I mean, I think last year in the second quarter, it was like 100 basis point change between 2012 and 2013. As we stand today -- and obviously this is a changing backdrop of the economy and what kind of tactics we want to use -- we think it will play out fairly close to the trend that we saw in 2013. Nothing dramatic like we saw last year of 100 basis point move from -- on a quarter basis year-over-year.

Got you. And finally, where would you put the potential to look at a franchise acquisition in terms of your uses in your capital allocation thoughts?

(multiple speakers) But --

(multiple speakers) I'll answer, Mike. Andy, you know, we do continue to evaluate that. We did not call it out in this quarter, but subsequent to the end of the year, we have acquired our franchise location in Austin, Texas. It's one restaurant, so it's not particularly material. But we think it is an opportunity for us, and an opportunity for our franchisees. So when they come to the point where they no longer want to operate their franchise, or they come to a point in their life, they have someone that they can sell it to.

And so we're very excited about Austin. It's been extremely well-run for a long time. And we're excited to welcome those people into the Company as Company employees now. So, we have done it. There hasn't been anything big on this front, but I think, as you look at the levers, we are working towards all of our levers in terms of adding shareholder value, including franchise act decisions.

And Andy, in this particular acquisition, we do think there's an opportunity, the potential for an opportunity for a second location, which is one of the criteria we had for acquiring the restaurants. So we are very pleased at having done that. We just had an all-franchise meeting here in the last couple of days. I would say that the morale is high. Their commitment to the brand is as strong as ever, and we're very pleased with our long-term franchise relations.

Some of them have actually been around, so they were awarded their franchises from Ruth. And so, without some of those that don't have successful planning, it will be logical for them to look to us as a possible acquirer.

Thanks, guys.

All right, thanks, Andy.

Thanks, Andy.

(Operator Instructions) Brett Levy, Deutsche Bank.

My questions are, first, I just wanted a little bit of clarity on why we are going to see lower G&A in 2014 versus 2013? Then just a thought and just another one on, aside from beef, what else are you seeing in the commodity basket? And then after that, I'll touch on Mitchell's.

Okay. So, first of all, on G&A, if you look at our guidance, it was $28.5 million to $29.5 million. It's actually about $500,000 higher than our initial guidance was for 2013 a year ago. So, it is moving up in our base plan. The reason we came in higher than our initial guidance is because there's a fairly significant piece of performance-based compensation. So, to the extent that the Company outperforms its business plan in terms of EBITDA or EPS, you can have growth in G&A, which is performance-based compensation.

So, as we stand today, we believe that our G&A looks to be between $28 million -- it looks to be within that range. If you look at last year, if we start going higher, if we think we're trending higher, you'll see us top that guidance. But the actual initial guidance range is actually $500,000 higher than it was last year.

In terms of the commodity basket, probably two big things stand out. One is beef, just because it's such a big part of the basket. The other part is seafood. In terms of our percentage increase, that area is seeing the biggest percentage increase year-over-year. We've worked hard to contract it, and contract it in a way that gives us some certainty. But we probably, when we look at the pressures from beef and the pressures from seafood, we think the overall commodity basket is probably up mid-single digits.

Where are you seeing the most pull-back?

The most pull-back? Oh, you know, I think some of the beverage categories are the flattest. I mean, so it's not really a pull-back; it's just kind of flat.

Okay. Now, with respect to Mitchell's, what do you attribute the -- what are we seeing in terms of menu pricing? Because, obviously, you said the check was up 4.5%. How much of that was price, how much was mix? And what do you expect to see over the course of next year?

So, in terms of Mitchell's, there's a couple things going on. Some of it is a little bit more dinner over lunch, which is a higher check average. Another -- one of the things we've done in terms of our limited time offerings, we've had a very heavy focus on higher-priced offerings, frequently including lobster, that have resonated with the customer. So they come with a higher average check price. So right now, in terms of our menu, I think we have less than a 1% price increase year-over-year. The rest of it is really mix between offerings and lunch and dinner.

And what's your price plan for the Ruth's chain over the rest of the year?

Right now, we have just under 2% in price. There's a fall-off in the third quarter, is when the next piece of pricing would fall off. And we'll revisit, depending on how the commodity basket goes. For the last three years, we're probably averaging about 1.5% on price.

Great. Thank you very much.

At this time, we have one question remaining in queue. (Operator Instructions) And we'll go next to Brian Vaccaro with Raymond James.

On that pricing at Ruth's Chris, could you remind us what that price factor was in the fourth quarter? And also discuss maybe or provide some more color on the -- what would appear to be a slightly negative mix component at Ruth's Chris, and if that's expected to continue heading into 2014?

First of all, I could barely hear the second part of your question, Brian. But the first part of the question was what was the price in the fourth quarter? And it was right around 2%, in the menu for the fourth quarter. Could you repeat the second part of your question about (multiple speakers) the mix?

The second part was just around mix. And I think it's been running slightly negative the last two quarters. And kind of color on that, I guess it would just be a shift to the lower-priced menus, the classics, et cetera, but if you expect that to continue going into 2014?

I don't think we see anything negative happening in terms of our mix. I think we're very pleased. If I look at just kind of the sales growth, if that's kind of where the question may be coming and how much of it is coming from check, what was interesting about the fourth quarter was kind of the seasonality of the sales growth. You kind of forget we had all the government shutdown and all that noise back in October. We had very slow sales growth in October. November picked right back up, had a very strong Thanksgiving. And December was the strongest quarter -- strongest month in the quarter for us.

The only thing I could possibly think that might affect, give the optics externally of a negative mix, would be we had very, very strong Thanksgiving and Christmas performance. We had a little bit of a lower-priced menu offering at Thanksgiving, which might play into the overall quarter mix. But we couldn't be happier with the sales performance that our operation teams have been turning in.

Okay, great. That's helpful. Thank you.

This is Mike. Just James, if you're still on the line, you asked a very specific question about franchise development for 2014. And I will tell you that we've got Boise, Idaho is already open. We talked about that before. We've got possibilities that we could open in the second quarter in Panama, in the fourth quarter Taipei, in the fourth quarter in the Mideast, in the fourth quarter another opportunity in China. We look to be relocating the Sandy Springs restaurant in Atlanta and Indianapolis North for the franchisee may possibly -- will be relocated.

Some of these are a little bit of a moving target. Some of them could move into 2015. But essentially, we really kind of talk about what our commitments are on a longer-term basis. But specifically, since you asked the question, those are the things that are in the pipeline to date. It could slip some.

That concludes today's question-and-answer session. I now turn the call back to Mike O'Donnell for any additional or closing remarks.

Thank you all very much for joining us here early Friday morning. We're very pleased with the results. We're very pleased with our teammates in the field, our franchisees. We're very fortunate to work with such talented people. We thank you for joining us on the call. And as always, it's a great day to go out and eat either steak or fish. Thank you very much.

That does conclude today's conference. We thank you for your participation.