William James

Inquired about CapEx figures, the potential for a consistent $2 million quarterly EBITDA, the distinction between maintenance and investment CapEx, and the expected rate of return on investments in existing restaurants.

Answer

The CEO clarified that the quarter's $2.2M EBITDA is among the highest for the year and not a baseline. Maintenance CapEx is budgeted at about 1% of sales, while the company is conserving cash and being reserved on special project CapEx. Future projects in FY2026 include finishing remodels, a POS system upgrade, and potential new units, with a target IRR of over 20% for new builds. The priority is cash accumulation for optionality.

William James from Merit inquired about the company's capital expenditure, seeking clarification on reported figures and the split between maintenance and investment CapEx. He also asked about the run-rate for Adjusted EBITDA and the expected rate of return on internal investment projects at existing restaurants.

Answer

President, CEO & Director Ryan Zink clarified that maintenance CapEx is budgeted around 1% of sales and advised using last-twelve-months EBITDA for modeling. He explained that the company is preserving cash for optionality, including debt paydown, share repurchases, and potential new unit development. Zink noted that while new units have a hurdle rate of over 20% IRR, some special projects like a necessary POS system upgrade do not have a specific IRR threshold.