Brinker International - Q1 2024
November 1, 2023
Transcript
Operator (participant)
Good day, and welcome to the Q1 FY 2024 earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Mika Ware, Vice President of Finance and Investor Relations. Ma'am, the floor is yours.
Mika Ware (VP of Finance and Investor Relations)
Thank you, Holly, and good morning, everyone, and thank you for joining us on today's call. Joining me today are Kevin Hochman, our Chief Executive Officer and President, and Joe Taylor, our Chief Financial Officer. Results for our first quarter were released earlier this morning and are available on our website at brinker.com. As usual, Kevin and Joe will first make prepared comments related to our strategic initiatives and operating performance. Then we will open the call for your questions. Before beginning our comments, I would like to remind everyone of our safe harbor regarding forward-looking statements. During our call, management may discuss certain items which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
All such statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such risk and uncertainties include factors more completely described in this morning's press release and the company's filing with the SEC. And of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations. And with that being said, I will turn the call over to Kevin.
Kevin Hochman (CEO and President)
Thanks, Mika, and good morning, everyone. Thank you for joining us as we recap another quarter of progress against our long-term strategy. For the first quarter, we delivered a 6% comp sales growth, which is Chili's fourth consecutive quarter of outperformance versus the casual dining industry. Our focus on improving the guest and team member experience while launching profitable and sustainable traffic-driving initiatives continue to increase momentum on our business. Importantly, our traffic gap versus the industry narrowed throughout the quarter, despite the discontinuation of Maggiano's Italian Classics virtual brand and cycling through the deep discounting on the remaining virtual brand, It's Just Wings. This traffic progress demonstrates the improving strength of our core Chili's business. Our investments, both in the guest experience and marketing, are working according to plan.
Our data shows we've steadily gained share of wallet over the past four quarters across all day parts, particularly dinner, and across all income groups, with higher income households growing the fastest. As we move further into the fiscal year, we anticipate delivering sustained traffic growth ahead of the industry. Currently, we're on air with our third wave of advertising since restarting campaigns in March, and we continue to be encouraged by the sales results. We're on air where people are watching, and consumers are responding well to our unbeatable $10.99 platform, which delivers a complete value that gives us a competitive edge in the current consumer environment. As we moved into October, we accelerated traffic growth versus the industry and delivered positive Chili's traffic for the month.
We believe advertising superior value, delivering an improved guest experience, and continuing simplification is the best plan to deal with any economic headwinds. We'll continue to monitor it closely and make sure we have the best possible plan to sustainably grow market share. Now, let's talk about menu progress. Last quarter, I gave you an early update on our Chicken Crispers relaunch, one of our Core Four platforms. Since then, we also introduced our national Hot Crisper, and with the new lineup in market for over a quarter, we have a better line of sight to its performance. Through recipe simplification, selling larger piece counts, and pricing behind improved sauce and side innovation, the average Crispers food cost as a percentage of sales has moved from 23% to 20%, and we are now selling 40% more Crispers.
A much bigger business with lower food costs and better margins is a great result. It shows what this business can do with a focus on core innovation, and this initiative is a big driver of our improved financial performance this quarter. Last quarter, we also gave you an update on the new bar menu launched in late August, which featured new premium margaritas and introduced our It's Just Wings brand to the Chili's bar and dining room. While it's still early, the results are promising. We're seeing mix move into the new premium margaritas, and we are seeing guests trade out of 3 For Me and into full-price wings and Crispers, which is improving both sales and margins. We're hard at work at the next wave of Core Four improvements, and we look forward to sharing more details in the coming quarters.
The momentum in our results doesn't happen without strong, stable leadership in our restaurants. Through our efforts to simplify the menu and operations, we've made significant progress making our operators' jobs easier and more rewarding. As a result, we've lowered our 12-month manager turnover now to 24%, which is 14 points better than the industry. When you improve manager turnover, you would expect hourly turnover to start to improve, too. And I'm pleased to report we are starting to see improvements in hourly turnover, which is now down 44% on an annual basis. Looking to the back half of the year, we have made the decision based on the results of the advertising campaign and a stronger base business in place, to add an additional four weeks of advertising during the third quarter.
This will increase our weeks on air from 21 to 25 during fiscal 2024, which will help us continue to accelerate sales and traffic growth throughout the fiscal year as we build a guide path to drive sustainable long-term sales and traffic growth over the next few years. This commercial plan, along with continued simplification, will continue to accelerate our business results. I'm pleased with the continued progress against our long-term strategy. It's clear the changes we are making to the service model, while increasing our voice with advertised value, is a winning plan. We are rebuilding the Chili's business the right way, and we're encouraged by the growth we are seeing in sales and traffic, as well as improvements to restaurant operating margins. Now I'll hand over the call to Joe to walk you through the numbers and share guidance for fiscal 2024. Go ahead, Joe.
Joe Taylor (CFO)
Hey, thank you, Kevin, and good morning, everyone. The results we reported this morning represent a solid start to our fiscal year and provide good indications our strategy to focus and simplify operations, improve the guest experience, and importantly, once again, speak with a louder voice about all Chili's has to offer is gaining traction. First half of the quarter benefited from an effective marketing window, supporting comp sales gains for the quarter above industry average. As we moved through the quarter, we realized improvement in key P&L areas, led by food and beverage costs, which on a combined basis nicely exceeded our expectations. Specific to the financial results reported, Brinker's consolidated revenues for the quarter totaled $1.012 billion, with consolidated comp sales growth of +5.8%.
Our Adjusted Diluted EPS for the quarter was $0.28, and our Adjusted EBITDA for the quarter was $72 million. At the brand level, Maggiano's reported fiscal first quarter comp sales of 2.6%, composed of 9.5% price, partially offset by negative mix in traffic of 1.2% and 5.7%, respectively. Chili's reported comp sales growth of 6.1% for the quarter, driven by price of 8.8% and positive mix of 3.1%, partially offset by negative traffic of 5.8%. To provide a little more insight into the quarterly traffic performance, our strategic decision last year to de-emphasize the virtual brands contributed approximately 4% of the overall traffic loss.
The remaining negative traffic of less than 2% can be attributed to the base Chili's business, a level we feel is indicative of the progress we are making in improving traffic for the brand. Pricing levels for the quarter remain elevated above more historical norms, but are also contributing nicely to improving our restaurant economics and restoring operating margins. As we move through the rest of the fiscal year, we will take less price with planned menu launches, and we'll see year-over-year price levels drop further. While we believe we still have dry powder going forward, we plan to be more strategic in meeting the consumer where they're willing to spend. Now, turning to margins. We've seen significant year-over-year improvement in our restaurant operating margin, reaching 10.4% for the quarter, up from 6% last year.
Sales leverage from our improved price mix positioning, a continuing shift of guest traffic into dining rooms, improved commodity markets, and manager labor cost improvements all contributed to the quarterly gain. Our first quarter food and beverage expense was favorable 490 basis points when compared to last year. This key expense area recorded significant benefit from pricing actions during the past year. In addition, lower and more stable chicken prices and the increase in chicken mix from our successful crisper merchandising further improved year-over-year performance. Dairy and pork markets were also favorable and contributed to an overall deflationary market for our comparable commodity basket. Based on current market conditions and contract positioning, we expect the second quarter to also experience commodity basket deflation and then move to a lower single-digit inflationary environment for the second half of the fiscal year.
Labor expense as a percent of company sales was favorable 10 basis points compared to prior year. Manager turnover returning to lower industry-leading levels and sales leverage against fixed labor costs were the driving factors of the year-over-year improvement. Hourly labor was comparatively stable for the quarter, with the emergence of an improving trend in turnover. Wage rate inflation remains elevated relative to historical norms in the mid-single digit range, but appears to have stabilized. We believe our improved labor model is creating a more supportive environment for our hourly team members and helping to keep overall labor expenses in line with company sales growth. As expected, restaurant expense in the quarter was 60 basis points higher year-over-year, primarily due to our planned increases in advertising and repair and maintenance spend.
Again, we experienced a favorable impact of sales leverage against fixed restaurant expenses, as well as improvements in several other areas of restaurant expense line items, particularly off-premise-related expenses and utility costs, that helped offset some of the planned expense growth in this component of ROM. Moving further down the P&L, interest expense was $4.7 million higher year-over-year due to the current rate environment and the refinancing of one of our bond offerings earlier this year. G&A increased due to higher performance compensation expenses, greater 401(k) participation, and increased IT-related costs. The improvement in operating performance and subsequent stronger levels of cash flow further improved our leverage positioning with funded debt to EBITDA at the end of the quarter at 2.3x.
We continue to forecast further reductions in the leverage ratio, both from improved cash flow and the paydown of revolving credit borrowings, targeting year-end leverage ratio of 2x. This morning's press release included an increase in our guidance for fiscal year EPS and reiteration of the other points of guidance provided last earnings call. Based on our first quarter performance and improved restaurant economics, we are increasing full-year EPS guidance to a range of $3.35-$3.65. And finally, as it relates to our current second quarter, let me provide some insight for two important expense categories to help educate your quarterly sequencing of performance in your models. Now that we have a better line of sight into the timing of our F-
... 2024 marketing activities, we currently expect Q2 advertising expense to be elevated between $2 million and $3 million compared to an even spread of the expense throughout the year. Additionally, our Q2 G&A expense is anticipated to be similar to slightly above $42 million recorded in Q1, primarily driven by an increase in incentive compensation due to improved operating performance. Anticipated Q2 G&A expense also impacts full year G&A, now expected to increase $13 million to $15 million-- $13 million to $14 million compared to prior year. As I said at the beginning of my comments, we are off to a good start to the year and are gaining increasing confidence in the execution and possibilities afforded our brands from our strategies.
While cognizant of potential economic challenges, we encouraged as to how guests are responding to our messaging, the benefits we're seeing from improvements in the guest experience, and a return to improved restaurant operating margins. We look forward to sharing further progress as we move through our upcoming quarters. With my comments now complete, I'll turn the call back to Holly, to moderate questions. Holly, it's all yours.
Operator (participant)
Thank you. At this time, we will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone, to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is coming from Chris O'Cull with Stifel.
Chris O'Cull (Managing Director)
Hey, thanks. Good morning, guys. I guess my first question, Kevin, the company, you know, went back to the 3 For Me burger commercial this quarter, which I believe was the same spot earlier this year. Do you believe low price value messages will need to remain the hero, I guess, for the foreseeable future? And I'm just wondering how that affects Chili's ability to kind of feature these new Chicken Crispers as a hero in some of the spots.
Kevin Hochman (CEO and President)
Yeah. Good morning, Chris. Yeah, we did make the decision actually to pivot from away from Chicken Crisper advertising, where we didn't have a sharper price point on the everyday menu, and went to that $10.99 burger spot that you're referring to. We, you know, we saw, along with the industry, call it in early September, right around Labor Day, some softness, and so it made us rethink our advertising plans, and that's why we put that in the market. It appears that it, it's really worked. I mean, we've had by far our biggest lifts with this last round of advertising versus the other two slugs that we did both in July and then previously in March. And it tells us the consumer was definitely responding to that.
I will say, if you actually look at the mix within the box, 3 For Me mix overall is still down versus the previous couple of quarters. I think a big part of that is how much we've driven the crisper business. Many of those crisper 3 For Me bundles have moved to the full price menu, which we feel really good about. And even when we put the advertising on most recently, and we saw a couple of points of mix shift from the higher tiers of 3 For Me down to the $10.99, but nothing that was really significant.
So we feel like we're doing a really good job with our menu merchandising to be able to maintain that margin growth that you're seeing in the business results, and I don't anticipate that changing. You know, obviously, we're going to monitor it very closely, but for the foreseeable future, based on the results that we had with this past advertising campaign, I would expect to see more of that.
Chris O'Cull (Managing Director)
Great. And then, I know the company hired GALE to support Chili's with digital marketing. Can you describe what that might look like and when we might start to see programs or campaigns from that, from that group?
Kevin Hochman (CEO and President)
Yeah. So, they're on full-time now. You know, we're currently building back the kind of the infrastructure that's required to be a modern CRM marketer, which means the tokenization of our guests, meaning we can identify a guest no matter how they transact with us, and then be able to better target them with the right messaging and the right offers, if there is an offer. So that's gonna take about six months to fully complete. We would expect to see some significant changes that the customer would see by Q3, so that would be in January. And then over the next six months, past January, I think you'll see that ramp up even more. But it's gonna take some time to build that infrastructure.
They're teaching us a lot about what it means to be a modern, direct marketer, and I think we're gonna be in a much better place coming out of that.
Chris O'Cull (Managing Director)
Great. Thanks, guys.
Operator (participant)
Your next question is coming from Andrew Strelzik with BMO Capital Markets.
Jared Luzinski (Managing Director)
Hi, guys. This is Jared Luzinski on for Andrew Strelzik. Thank you for taking the question. So I was hoping that you could expand a little bit more on the hourly turnover improvements and kind of some of the puts and takes of what you're going to be focusing on to try and drive that back to below pre-pandemic levels as we look forward in 2024.
Kevin Hochman (CEO and President)
Yeah. So, so we've made incredible progress on managerial turnover, and we feel like it's where it needs to be. It's well ahead of the industry. Hourly turnover is improving, but it's still behind the industry. The number that I quoted on the call was, improvement of 44%, so that was from 188% turnover to 144%. So it's an improvement, but, we still have a long way to go. There's a couple of things that we're focused on. One is the labor model. Now, it doesn't mean putting investment in the labor model, but what we're, we're finding is that there's so many different, elements of the job that are shared, and we're thinking that we need to get more focused on having individual, jobs for folks.
So for example, adding back the busser position, so that it's not shared across multiple team members. We're also looking at making sure that we continue the simplification, that we really focus more on the heart of house, which is our kitchen, and bringing that to the front of house, which is our servers, our host position, and our bartenders. So that's really the primary focus. We're actually meeting with all of our regional vice presidents of operations in two weeks, where basically, most of that meeting is going to be about creating action plans against hourlies to continue the progress, because while it's been good, we need to get a whole lot better to get to where we want.
Eventually, if, you know, if we get to the place where we have stabilized hourly turnover too, you know, we're going to continue to see those guest metrics improve. So, the net of it is good improvement. We're still behind where we want to be, and I think we're going to have a really good action plan to share at the next earnings call, post these vice president meetings, that I think is going to be very exciting.
Jared Luzinski (Managing Director)
Great. Thank you for that. And then just one follow-up. So I believe you called out the emphasis of the virtual brands, contributing 4% of the overall 5.8% traffic decline. I'm just curious how we should be thinking about that headwind as we move forward in 2024. Thank you.
Joe Taylor (CFO)
Yeah, this is Joe. We'll start to see it taper off primarily in the second half of the year, when you look at where the lapse took place, particularly the removal lapse of Maggiano's Italian Classics. So second quarter, it'll be impacted slightly less, but fairly similar amount, and then you will start to see it run off towards the end of the fiscal year. We kind of did the final removals of MIC as you really moved into that last end of the last quarter of last year. So, it'll all be gone by obviously end of fiscal year, but more and more less of an impact in the second half.
Jared Luzinski (Managing Director)
Great. Thank you.
Operator (participant)
Your next question is coming from David Palmer with Evercore ISI.
David Palmer (Senior Managing Director)
Thanks. Good morning. Trying to think about how I can be helpful here, in sort of disentangling what is clearly some really positive stuff that you're getting from the marketing, and the. And obviously, there was timing benefits to October from the advertising. So the advertising is clearly working. You might be doing $10.99, but they're having the crispers, which is doing a good job for your margins. So I guess maybe a first question is, you know, how do you disentangle maybe what are some benefits you're having from some of the customer satisfaction, driving long-term stuff versus the advertising? And, you know, how do you think about what your traffic might be for this quarter when you're starting off so strongly?
You know, what is a good all-in traffic expectation we should be having in the near and medium term from Chili's?
Kevin Hochman (CEO and President)
Well, let me start off with the first part of the question on what do we think we're getting from the guest experience improvements. You know, we can do some theoretical calculations, and in fact, we have, and to understand, like, every point reduction in what we call guests with a problem, we call GWAP, what does that mean to annual sales? And so, I, you know, I'm really hesitant to quote that because it's, you know, it's a multivariate regression, and who knows, you know, how, you know, how accurate it could be. But, you know, so we do have some internal estimates that we look at to say, this is what we think the size of prize is. I think everybody knows in the restaurant industry, that you need to have a great and consistent guest experience.
That's exactly what I shared, and our team shared, during Investor Day, and that the brand that we want to be is one that, you know, regardless of what Chili's you go into, what time of day you go, you know, what you order, you're always going to have a consistent, amazing, friendly experience. And that's the journey that we're on. And if you look at the guest metrics and how they continue to improve, we feel like every quarter we're making progress. So we're talking about things like intent to return, food grade scores, guests with a problem, GWAP, which I talked about earlier, server attentiveness. You know, they're all continuing to head in the right direction.
And so we believe that over time, if we continue to do that, that we're going to get even better returns from our advertising because when guests come to try us for the first time or if they haven't been in a long time, they get an improved experience versus the last time they were there or versus the competitors, right? So, it's very hard to, you know, to tease out, you know, to use your word, David, untangle, you know, the benefits of the advertising versus the experience. But the reality is they're going to travel together, going forward, as long as we continue to make improvements on the guest experience.
Joe Taylor (CFO)
And then, David, I think as it relates to the traffic piece of the question, yeah, we definitely are going to get outsized traffic performance from the marketing window as we go in. That's one of the reasons we're adding a marketing window into January because of the benefits we're seeing not only from traffic, but just from the entire business model. Yeah, the work we have to do is how do we create the improved traffic connectivity between our marketing windows? It's not to say that October's results will replicate themselves as you kind of go forward the rest of the quarter because obviously, you won't be on air during that period of time. But we're going to be looking continuing to look to, you know, to improve traffic.
Again, our first, you know, goalpost here is to move steadily above the industry and, and, and remain above the industry from a traffic perception. And then we'll work on how do you get, you know, consistently back above positive traffic going forward. I think all the different initiatives, you know, will start to come together to move us in that direction. Not promising for the current fiscal year from an absolute level of traffic, but we will look to continue to improve our traffic situation on a quarterly basis as we move forward.
David Palmer (Senior Managing Director)
... And just looking back at that, well, the last quarter, the September quarter, if the same-store sales growth gap to the industry narrowed a bit, I think it narrowed by a couple points in the quarter, so sequentially, why do you think that was? Is there any insight to be gained from that as we look forward?
Joe Taylor (CFO)
Yeah, David, you know, again, I think you're gonna have ebbs and flows depending on what people are doing from a marketing standpoint at any given time. The databases can give you some different results, too, depending on which database you're looking at. We've seen in one broad database, it continued to remain stable and actually got a little bit better as we moved towards the end. So I think there's some different, you know, different results coming, depending on what the database is that you're looking at. But, you know, again, we're trying to do this for the long haul over multiple quarters, and as I said, we've now seen four straight quarters of Chili's, you know, exceed the industry. So we're gonna keep building that streak as we kind of go forward.
David Palmer (Senior Managing Director)
Thanks.
Operator (participant)
Your next question is coming from John Ivanko with JPMorgan.
John Ivankoe (Managing Director and Equity Research Analyst)
Hi, thank you. The question is also on advertising. And, you know, historically, presidential election years, of which, you know, obviously, we should have a doozy next year, you know, really can and oftentimes do, you know, crowd out attention in media, and actually, in some cases, can actually pull customers out of restaurants. So I wonder if there is a change or a pivot as we kind of think about the success that you've had, you know, so far in fiscal 2024, largely calendar 2023, as we think about, you know, calendar 2024. Just, you know, even if it's tactically, you know, how your approach to getting mind share might change in an increasingly crowded type of intention environment.
Kevin Hochman (CEO and President)
Yeah, John, I mean, you're a lot closer to the marketing than I think most are, because you're right, an election year tends to get more competitive for TRPs. TRP costs can go up. You know, I think there's a lot of different ways that we can go-to-market and to get those TRPs. So, you know, I'm gonna leave it up to the marketers to figure out how to best deploy the dollars. I think we'll probably change during an election year in terms of rates, and we've got to be a little bit smarter about that. But, like, I don't even see-- I don't see, like, an election year changing our commercial strategy in any way. So that's just the candid answer.
John Ivankoe (Managing Director and Equity Research Analyst)
Okay. All right. Candid is good. And secondly, you know, the Core Four that you're focusing on, you know, do you think that, you know, it's... I mean, I understand that the four are kind of right. But, you know, do you think, you know, the amount of customization variety that you currently have is kind of appropriate, you know, for the customer? I understand that you've basically are kind of rebuilding the Chili's brand of what you're kind of focused on, but, you know, do the operations of the brand maybe allow a little bit more, you know, complexity to come in that just, you know, gives consumers more options to dine, excuse me, more often?
Kevin Hochman (CEO and President)
Well, the answer is yes. I mean, I think we need to make sure we have the variety to meet, you know, the modern customer's needs. And the first thing that we're doing on the Core Four is just making sure that the core of the business is strong. So, we've done margaritas, we're done crispers. Hopefully, I'll have some news to share with you at the next quarter on burgers, which I think could take us to a whole another level there. And then the last one will be in the beginning of 2025, fiscal 2025, is the relaunch of the fajita business, which is improvement in protein, improvement in tortilla, improvement in sides.
And, you know, I think once we get there, then it's like: Where, where do we want to go next? And the teams are already working through the Stage Gate Process on ideation for what's next in burgers, what's next in crispers, what's next in fajitas. Because ultimately, we got to continue to, we got to continue to innovate so that we stay relevant to today's guests, right? So, just because we talk about Core Four, doesn't mean you can't innovate in the new spaces with the Core Four. But the first, the first job is to make sure that each of those, well, number one, are as good at products as they can possibly be, and that we're really competitive in the marketplace. And two, that we have our Barbell Strategy covered within those four, right? Which is good, better, best.
Making sure that we have the lower priced tiers figured out, as well as allow guests to trade up and have premium. So, we're, you know, we're probably about 12-15 months away from really completing that. And then I think you'll see more of the variety that I think that you're hinting at, that will, that will, innovate off of the Core Four.
John Ivankoe (Managing Director and Equity Research Analyst)
That's perfect. Thank you.
Operator (participant)
Your next question for today is coming from Brian Vaccaro with Raymond James.
Brian Vaccaro (Managing Director)
Hi, thanks, and good morning. I was hoping we could circle back on Chili's relative traffic performance. And could you be a little more specific on how that gap trended through the fiscal first quarter? And then I think you said traffic was positive year-over-year in October. Just curious what that gap looks like in October.
Mika Ware (VP of Finance and Investor Relations)
Hi, Brian, it's Mika. So, our traffic gap has continued to narrow and actually is positive in October versus industry.
Brian Vaccaro (Managing Director)
Okay, so your traffic was positive year-over-year, and it was also a positive gap versus the industry.
Mika Ware (VP of Finance and Investor Relations)
Yes.
Brian Vaccaro (Managing Director)
in October?
Mika Ware (VP of Finance and Investor Relations)
Yes, it was.
Brian Vaccaro (Managing Director)
Okay. Okay, thank you. And then, just on the brand awareness, Kevin, I, I think back at the June Analyst Day, you showed a noticeable gap versus large chain competitors. I, I think it might have been Applebee's and Olive Garden, if memory serves. But, I'm not sure how, how often you get those, those type of metrics or statistics, but do you have any update on, on if and by how much?... that awareness gap has narrowed, in recent months?
Kevin Hochman (CEO and President)
Yeah, so we won't get, like, the current advertising campaign's impact on awareness until a few months after. So, I don't have anything to, like, most recently report. I mean, I would assume based on, I think you guys probably see Chili's everywhere too. I would assume that metric has significantly improved in the last couple of months. I will say in the previous – the July advertising flight, we really didn't see much movement in awareness. Now, that was very low TRP weights versus the March window and the current window that we have today. So, it's not like we saw any kind of, you know, significant regression or anything. It was basically flat.
But I would expect that to continue to close the gap versus our key competitors that spend more during this quarter, just based on the sales results and the fact that the quality of the buy.
Brian Vaccaro (Managing Director)
Okay, thank you. And then also, just I wanted to ask about average check at Chili's. And Joe, what, what's a reasonable cadence to expect pricing to moderate over the next few quarters? And then I think the lap of reduced discounts happens pretty soon versus, you know, versus late calendar 2022. Just curious where you see mix settling out?
Joe Taylor (CFO)
Yeah, so from a cadence standpoint, again, we're, we would expect to see price, you know, moderate. You know, right now, we just lapped over one of the bigger pricing, increases, from last year. So we're now down... You know, we'll exit the current quarter in the mid-fives. Now, if you look at the back half of the fiscal year, we have a menu that will come in February, and then one right at the end of the fiscal year. So some will depend on the pricing decisions we make. If we, the pricing, if we make any pricing decisions there, is going to be at a very low level. I mean, so you're probably looking at pricing that is in the low single-digit ranges, you know, if we move on those two menus.
So that will help to continue to moderate as we kind of go through the laps. We'll be down in that mid—for the year, we'll be down in that mid, you know, single digit range by year-end, most of which is influenced by prior year actions. So you'll, if you think through the, the sequencing of that those pricing moves, they'll start to bring pricing even further down as we kind of go into FY 2025 and lap through earlier actions of this year. So that would be how I'd anticipate pricing to move. You know, from a mix standpoint, it's going to depend a lot on what we do, the decisions we make around marketing and some of the, the merchandising.
We, you know, we still feel like we can, you know, maintain a low level of mix, you know, positivity as we go through. But if we have opportunities to grab traffic, and as you think about the effectiveness of the marketing campaigns we've been doing, you know, we'll take that, you know, we'll take traffic, too. So I expect, again, mix to stay in that neutral to slightly positive range, but kind of bounce around that neutral level as we kind of move forward.
Brian Vaccaro (Managing Director)
Okay. And just to clarify, I think you said 5.5%. Was that exiting the second quarter? I assume you're higher than that. So effective pricing in this current quarter we're about to go into, or that we're in, would be maybe somewhere in the sevens?
Joe Taylor (CFO)
It'll be a little bit below that. It'll be between 6% and 7%. Again, we lapped really as we very recently, so you have a higher level of price impacting in October, and a more moderate level in the rest of the quarter. But you're gonna, for the quarter, you'll come out in that mid-six range.
Brian Vaccaro (Managing Director)
Okay, great. And then just last one for me, the advertising spend. What was that in dollars in the current quarter? Just to make sure we're on the same page there.
Mika Ware (VP of Finance and Investor Relations)
Yeah. So for the first quarter, Brian, that was just over $28 million, and that's where Joe was trying to clarify in his script, that instead in the past where we split that or we evenly spread it, our advertising expense is now gonna be more reflective of our actual spend. So the second quarter will be closer, a little over $32 million.
Brian Vaccaro (Managing Director)
All right. Very helpful. I'll pass it along. Thank you.
Mika Ware (VP of Finance and Investor Relations)
Thank you.
Operator (participant)
Your next question for today is coming from Brian Mullan with Piper Sandler.
Brian Mullan (Director and Senior Research Analyst)
Thank you. Just a question on Maggiano's. You know, wondering if you can provide some early thoughts on the upcoming holiday season, maybe if you have any early indicators you could speak to. And then remind us, like, how did last year go around the holidays? Is there anything unusual you might be lapping, either positive or negative? Would be helpful, too.
Kevin Hochman (CEO and President)
Yeah, I mean, there's no like, there's no like, big swings that we expect in the holidays. We see, you know, we see continued growth, and recovery of the banquets. You know, the bookings have looked fine. So, I mean, there's no outlier, you know, one way or the other that we're seeing. Feel good about where we are. We're prepared for the holiday season. Obviously, it's a really important quarter for Maggiano's, based on the amount of sales and profits that we generate, but we feel very good about heading into the holiday season.
Brian Mullan (Director and Senior Research Analyst)
Okay, thanks. And just to follow balance sheet capital allocation, you know, once you get to 2 turns, traditional net leverage by the end of the fiscal year, you know, what's the plan for beyond that? Would you look to de-lever further, or conversely, should we be looking for maybe more capital return while you maintain that 2 turns of leverage? Just any color on your current thinking would be great.
Joe Taylor (CFO)
Yeah, Brian, that's obviously a discussion we'll continue to have with the board. Don't have anything specific to say on any changes. I think the good news is we'll have optionality around that, based on the improved cash flow generating, you know, capabilities of the company. So, it's a point that we think is the right time to have some of those discussions, and then we'll come back to you with any updates as to where, what we'll be doing from a capital allocation standpoint.
Brian Mullan (Director and Senior Research Analyst)
Okay, thank you.
Operator (participant)
Your next question is coming from Jeff Farmer with Gordon Haskett.
Jeff Farmer (Senior Analyst)
Greg, good morning, and thanks. Just following up on a handful of the earlier traffic questions. So Chili's did see that positive traffic in October, but what can you share with us as it relates to what that implies for Chili's October same-store sales number?
Joe Taylor (CFO)
It's gonna, from an October standpoint, it's gonna be very strong comp sales, you know, and I think you're gonna see growth positivity coming on all three components. Again, and I've already talked a little bit about the pricing dynamics. When you shift the positive traffic into the equation, it's going to be a strong, strong period for comp sales.
Jeff Farmer (Senior Analyst)
Okay. And then, as it relates to that October traffic result, did that meet or exceed your internal expectations that you had set sort of going into that new round of advertising?
Joe Taylor (CFO)
I think we've exceeded our expectations. We were expecting, you know, based on the level of the buy, the quality of the buy, the fact that we're on the shows that people watching for a good result, and it performed above that.
Kevin Hochman (CEO and President)
We basically modeled the March window because they were similar weights, and we got a better result in the March window. And the, there's two—we think there's two potential drivers. One is the service levels continue to improve, which is great. And then the second is the consumer more open to this message today than they were six months ago? Probably a little bit of both.
Jeff Farmer (Senior Analyst)
Okay, just one other quick one on the labor line. So that was, a favorable year-over-year, but I think even sort of more, outstanding was the fact that it was 40 basis points better than what we, the Street, were looking for. So in terms of thinking about labor as a % of revenue and just favorability year-over-year, do you expect that to continue in coming quarters or sort of that, that favorability you saw in, in the first quarter, maybe as good as it gets?
Mika Ware (VP of Finance and Investor Relations)
Yeah. Jeff, this is Mika. So in the first quarter, we really had some things moving our way with a favorable price and mix, really helped to offset those investments into the hourly labor model. As we move and we also saw some favorability in overtime because, as Kevin said, our turnover continues to decrease. As we move into the second quarter, and Joe just talked about the cadence of our price, so it may not we may not be able to have a year-over-year improvement. So especially because that second quarter is gonna have the it's the last quarter that we have those investments to the hourly model in there. So I think you might see some deleverage next quarter.
Jeff Farmer (Senior Analyst)
All right. Thank you, everyone.
Operator (participant)
Your next question is coming from Jeffrey Bernstein with Barclays.
Jeffrey Bernstein (Equity Research Analyst)
Great. Thank you very much. Two questions. The first one, just broader industry thoughts. And Kevin, it seems like the industry maybe, or casual dining industry, is seeing a slowdown of late. Just wondering as you size it up, and obviously, you know, you're just one piece within that, so congratulations on moving counter to that. But just wondering, as you think about the industry, and how much of it do you think is just consumer headwinds finally taking hold versus some have talked about a return to seasonality, and obviously, we talk about lapping pricing. So it seems like there's three components within there. I'm just wondering how you think about it for the broader industry that you compete.
Kevin Hochman (CEO and President)
Yeah, you know, the seasonality thing I think was probably real, if we look in hindsight, so that the return to back-to-school seasonality that we typically saw as a casual dining segment, pre-pandemic. So I think that was real. It's probably what we saw in, you know, late August, early September. As far as, like, why do we think we're reversing the trend versus what we're seeing in the industry? You know, I do think that the value is helping, right? Like, we have a very, you know, we've been talking about it for a year now, and about having unbeatable value regardless of the channel of restaurant that you compete in.
I saw a tweet the other day, they were comparing us versus the big guys in QSR and their combo meals versus our number, our $10.99, and that's kind of what we've been talking about the last year. And so maybe the improved performance of the advertising, part of that's driven by where the customer is. You know, we, you never know for sure. We certainly have not seen it in our data that the customer's tailed off. We've seen just the opposite, but that could be a function of what we have in market. And the, you know, we had talked about if there was a downturn, what are the things that we're gonna do?
It's the same things that we're gonna do, whether there's a downturn or not, which is continue to improve the customer experience, improve the Core Four, and then get back on air with advertising, with outstanding value. And I still believe, regardless of whether there's a continued macro headwinds or not, that's gonna be the course of action for us if we wanna, if we wanna continue to complete our resurgence as a brand. So, you know, it's hard for me to, like, comment about what they're doing versus what we're doing. What I do know is what we're doing, regardless of what the macro is, is the right thing to do, and I think it, over the last, you know, couple of months, has really paid some dividends for our business.
Jeffrey Bernstein (Equity Research Analyst)
Got it. As we think about profitability for the business, you know, you had 400 or so basis points of restaurant margin expansion in the first quarter. I'm assuming that's an anomaly based on comparisons and whatnot, but ... What are you thinking for full year 2024? I think last quarter you said, you know, you're gonna see margin expansion beyond the normal target you would have would be 20 basis points-30 basis points. So I'm wondering how you think about that, or what's being implied within your, your fiscal 2024 guidance? I know you mentioned you might be willing to take incremental pricing, in your next couple of menu rollouts later this fiscal year. So just wondering how you think about the, the connectivity between the, the margin and your willingness to take price.
Joe Taylor (CFO)
Yeah, I think that, one, we do continue to expect the year-over-year ROM number to exceed that expectations we kind of gave you from a long-term factor. Obviously, the first quarter impacts that nicely, but I would expect to see year-over-year gains in ROM in each of the quarters as we kind of move forward-
Jeffrey Bernstein (Equity Research Analyst)
Okay.
Joe Taylor (CFO)
From here. Price is a factor in that, but obviously, as we continue to improve our traffic, you know, scenarios, we think that will, you know, also contribute to some sales leverage as we move through. And the reason, you know, we raised guidance today was really a middle-of-the-P&L improvement story as much as anything. The ability to sustain some of our improved economics, I think, is real and a credit to our benefit as we kind of move through the year. You know, from a pricing standpoint, we're just gonna get better and more educated at how to price.
We've actually been spending a lot of time with Deloitte Consulting, working on our revenue growth management, and a big piece of that is how do we do pricing at a more refined and restaurant-level basis. And I think that's, you know, understanding elasticities on a restaurant-level basis, understanding where you have those opportunities to price and where you can be a little bit more judicious. So as opposed to approaching price from kind of spread the peanut butter across the bread, it's going to be very granular and very tactical. And I think that's gonna give us some real opportunities. So, you know, we're cognizant of being careful on pricing as we kind of move forward, particularly depending on economic environments.
But if we see opportunities at very low elasticity, to gain price in certain markets, I think we'll take that, and we'll just see how that plays out from a combined basis as we kind of go forward. Again, I don't expect anything above low single-digit levels, but I think that's there for the, you know, for the taking of, and we'll look at it closely.
Jeffrey Bernstein (Equity Research Analyst)
Got it. And Joe, just to clarify, I know you mentioned that your guidance raise was, for the most part, in response to the middle of the P&L success, presumably in the first quarter. Just curious, because looking from the outside, looks like you raised your earnings guidance by $0.15 at the midpoint. I know this first quarter, you beat the street by $0.20+, but I realize the street is irrelevant, and it's more about what you were thinking the first quarter was gonna be. So I'm just wondering, you know, how did the first quarter compare to what your initial target was? You know, was your fiscal 2024 purely the one Q flow-through, or are you assuming further upside the rest of the year versus the initial guidance? Thank you.
Joe Taylor (CFO)
Yeah, we probably, and Jeff, great question. We had obviously a little bit more insight as to where we saw that quarter going, particularly as it progressed. So, it did exceed our expectations, without a doubt. I think we got more traction faster in some of the areas on the expense items. They were all areas we were focused on and working on to get that traction, and we got to brighten in several areas a little bit faster than we would've anticipated. But yeah, we had a higher level of belief around the quarter probably than you all. So you're seeing a little bit of trade-off.
And again, at this point, you know, we're one quarter into the year, you know, I wanna be a little cautious, and again, understanding of, you know, the noise that you hear about... Even though we're not seeing it in our own numbers, obviously, there's a lot out there about economic conditions. So we're gonna take it one step at a time as we kind of move through the fiscal year.
Jeffrey Bernstein (Equity Research Analyst)
Understood. Thank you.
Operator (participant)
Your next question is coming from Eric Gonzalez with KeyBanc.
Eric Gonzalez (Senior Research Analyst of US Restaurants)
Hi, good morning. Just wondering about the advertising strategy, specifically the additional four weeks of marketing that you're adding this year. If you tie that back to your revenue guide, it looks like you don't expect to see much of a jump in sales. So am I reading that the right way, or do you still expect mid-single digit comps for the year? Maybe you're being a bit too conservative based on the consumer environment. And then relatedly, is the baseline assumption for industry traffic still down about 4%-5% for the year?
Joe Taylor (CFO)
So we do expect, you know, revenue benefit, you know, from that incremental, you know, four weeks. It's, again, it's a smaller window. It's four weeks. It's not, it's not gonna be comparable to, to the October window we're in from a buy standpoint, but I think it will be added to the equation. We gave you a pretty large, you know, range for revenue, you know. So yes, do I expect the revenues to move up higher in the range? Yes, as we kind of move through those windows. That's you know, we're adding the window from an opportunistic standpoint, not a defensive standpoint, if I could put it in that way.
Eric Gonzalez (Senior Research Analyst of US Restaurants)
Got it. And then just if I can ask about the off-premise business, I apologize if I missed it, but did you provide the off-premise mix? And maybe you could speak to how that channel fared during the quarter, specifically whether you're seeing the delivery channel fall off as it is the more expensive way to access the brand.
Mika Ware (VP of Finance and Investor Relations)
Hi, Eric, it's Mika. Our off-premise business at Chili's and Maggiano's was really relatively stable quarter to quarter. So it was 28% off-premise at Chili's and 25% off-premise at Maggiano's. So we're seeing them hold in there.
Eric Gonzalez (Senior Research Analyst of US Restaurants)
Anything to call out on the delivery versus carryout breakdown?
Kevin Hochman (CEO and President)
... not really. No, I think it was all pretty steady.
Eric Gonzalez (Senior Research Analyst of US Restaurants)
Great. Thank you.
Operator (participant)
Your next question for today is coming from Alex Slagle with Jefferies.
Alex Slagle (SVP and Equity Research Analyst)
Hey, thanks, and congrats on the momentum. So, along the lines of playing smart on price, your, your cost of goods was down pretty substantially, 25.8% of sales, and they have to go back to 2017 to see anything that low and expected leverage, but it seems like the dynamics here were more powerful. So just trying to get a sense of how much of this is concentrated in the 1Q and the, the relative pricing and mix dynamics of that specific quarter. I mean, it would seem 1Q marks the low for cost of goods, and maybe expect it to tick up a little bit higher into the, you know, 26%+ , mid-26s or so for the rest of the year, but any color there would be great.
Joe Taylor (CFO)
Hey, Alex, thanks. And, yeah, there was definitely going to be year-over-year an outsized improvement in the first quarter coming off of last year. But I actually expect it to be a fairly stable environment, you know, from a percentage of company sales as we kind of move through the year. So, you'll continue to get, you know, some of the pricing benefits, you know, that price moves slowly down as you kind of move through the year. You know, so the price, you know, mix benefit, you know, will continue to accrue throughout, and I expect a fairly stable margin.
Alex Slagle (SVP and Equity Research Analyst)
Great. And repair and maintenance stuff, how far along are we on sort of getting all the new equipment into the restaurants, fixing broken things and refreshes, and you think you're sort of getting close to where you want to be with the assets?
Joe Taylor (CFO)
I think we're getting close to where we want to be with the ongoing spend level. We still have a lot in the pipeline. We've made great progress on the equipment side of the equation, so I'm not as concerned as you would have been a year ago or 18 months ago on equipment. The supply chain is making equipment available to us, and obviously, you update that as quickly as you possibly can. We've done a lot of work around the fleet and understanding where the opportunities lie. We have a great plan in place, and our teams are executing against it. It's going to be a progress over really an extended period of time, 18 months, 20, you know, to 24 months.
But I like the spend levels we've built into the plan and the ongoing progress we're making against it, and we're really, you know, you're capturing the real high net need areas quickly, and we'll continue to do that.
Alex Slagle (SVP and Equity Research Analyst)
Got it. Thank you.
Operator (participant)
Your next question is coming from Jon Tower with Citi.
Jon Tower (Director of Equity Research)
Great. Thanks for taking the question, run through quite a bit already. But, maybe, I guess, to start going back to the advertising conversation, I appreciate the color, around moving to 25 weeks from 21 previously. And just, can you maybe help us think through a reasonable range of outcomes in terms of where that could go over time? Meaning, is 25 weeks the level you feel is kind of optimal for this brand, or do you see that potentially flexing higher as we move into out years, depending upon consumer response, et cetera?
Kevin Hochman (CEO and President)
Yeah, you know, the real bigger question is how do we sustain traffic over time? That's what we're laser focused on as a leadership team, and it starts with continuing to improve the guest experience, you know, while we do these traffic-driving initiatives like advertising or CRM. So, you know, we're looking at all three of those things as potential investments to make into creating sustainable traffic for Chili's in the long term. I do think in the advertising, to answer your question more directly on the advertising component, I would see adding weeks over the next few years being the likelihood of one component of increasing traffic over time.
You know, another big component is when we get the CRM, the new CRM program up and running. I think that is going to be a avenue for sustainable traffic growth over time. And obviously, as we continue to improve the guest experience, that will become a more meaningful traffic builder over time, like you see in some other concepts that don't advertise as much, right? So, for sure, we would see that 25 weeks is not our final number. And really, you know, how fast will we build on top of that, really will depend on the returns that we're getting, as well as the alternative investments that we can make in CRM and the experience.
Jon Tower (Director of Equity Research)
Got it. Okay. Thank you. I appreciate that. And then maybe, Joe, just to follow up on, on the value conversation earlier. Can you provide where that settled out as a percentage mix for Chili's during the period?
Joe Taylor (CFO)
Value is again very stable. It's in that 28%-30% of total check, and have a value component to it. The 3 For Me, again, also remain very stable in that, you know, that 16%-17% range. So, you know, we're seeing responsiveness from the guests, but we're seeing very good stability in the levels of value we have in the mix.
Jon Tower (Director of Equity Research)
Great. Awesome. All for me. Thank you.
Operator (participant)
Your next question is coming from Chris Carril with RBC Capital Markets.
Chris Carril (Senior Equity Research Analyst of Restaurants)
Hi, good morning. Thanks for the question. I guess following up on mix, can you maybe expand a bit more on what you could potentially do to drive that sustainable benefit, from that component of the comp? It seems like there's a lot in your control around price and traffic, but, you know, curious how you could potentially further drive mix, just like you have with Crispers.
Kevin Hochman (CEO and President)
... Yeah, you know, the biggest opportunity is with innovation, so that could be either premiumitizing the Core Four or or just creating, you know, bigger benefit spaces that consumers are willing to pay more for. So, you know, fajita is really the next big one where I can see us doing, like, a Crisper type of innovation. So, innovation on the protein, both the quality of the protein as well as the volume of protein that you can get. Innovation on different proteins that we have today that could drive more premiumization, similar to what you might see in other Mexican concepts that you guys track.
That could provide a source of mix, as well as just overall driving fajitas, because, you know, once we have a new thing to talk about with fajitas and we're gonna go on air with that, that is gonna drive more mix into fajitas than other parts of the business, and that's a considerably higher both sales and profit driver for the business than, you know, call it crispers or burgers. So, that's the big obvious one. There's some other things that we can do with menu merchandising, as we bring new benefit spaces into apps, desserts, drinks, right? That-
Add-ons.
So, for example, if you looked at our menu today and compared to a year ago, the first page of our menu today, the cover, is all premium margaritas, like Casamigos and Teremana Blanco. And that's why we're seeing alcohol PPA continue to grow, simply because we're just driving that from a merchandising standpoint. So I think that's gonna be a thing that we're gonna continue to do going forward. It's not really a tool that we looked at in the past, but it's an obvious thing, especially if you're innovating. It's gonna be a lot easier to potentially drive to move that mix needle than if you weren't innovating. And to give customers things that they actually wanna buy, right? So, and trade up for.
So that to me, that's that's probably the biggest couple things. You know, there's probably some literal things, like as we get the CRM program up and running, like, do we have to do with the level of discounting that we're doing today? We've already removed some of it. The what we removed actually, you know, hurt traffic, which we talked about in the previous 12 months. But going forward, as we get really smarter and know more about our guests and tokenize the guest, likelihood of the level of discounting that we do is we're probably going to pull back some of that. And that would, that would show up in mix also, not price. So hope that answers your question.
Chris Carril (Senior Equity Research Analyst of Restaurants)
Yeah. No, that was very helpful. And then, I guess for my follow-up, you mentioned gaining wallet share across income cohorts, I think with the fastest growth with higher income households. Can you expand maybe a bit more on this and specifically what you're seeing with middle and lower income guests?
Kevin Hochman (CEO and President)
Yeah, you know, we see continued spending across across all the households. So all households we've grown wallet share in. The higher income household, we certainly have grown faster. And, you know, the way I explain it to my team, and one of the really good things about getting out of, like, kind of the deep discount game, is that over time, your guest becomes a little bit more affluent and, and a little bit less elastic to price, right? So you look at the brands that have kind of reversed some of that discounting trend, and really, really went to more of an everyday low price strategy or an everyday value strategy.
You typically tend to see the, the guests, the guests move to more middle income and higher income, and over time, you, you become a little bit less reliant on deep discounting because those guests, that doesn't matter as much to them, right? So, it should, over time, make us a stronger brand, and be able to weather when if we have to take pricing because of wage rates or cost inflation in the future. To have a more affluent customer base is always gonna give you a little bit more insurance than one that's not. And, and I think we're seeing that a little bit now.
I mean, we're a year into removing a lot of the big needles out of the business, the discount needles, and some of those guests are leaving, and that's why you saw that traffic headwind that we talked about. But what ends up, what you end up having at the end of that is a stronger guest base that is a little bit less price elastic that can handle some of these things.
Chris Carril (Senior Equity Research Analyst of Restaurants)
Great. Thanks so much.
Operator (participant)
Your next question for today is coming from Katherine Griffin with Bank of America.
Katherine Griffin (VP and Equity Research Analyst)
Hi, thank you. I was wondering if you could help just frame how much the restaurant margin was helped by the de-emphasis of the virtual brands, you know, the lower packaging and delivery costs?
Joe Taylor (CFO)
There was some benefit. It wasn't an oversized benefit to the overall, you know, ROM expense. I don't have a dollar figure for you. The off-premise savings, you know, you know, coming from, you know, less, less packaging costs, less bad debt, things of that nature, was real. So it was, it was a contributory factor. I think it's one of those areas that will continue to contribute it as, as we kind of go forward. Again, it wasn't as oversized as you would've seen from the price mix dynamics, the improvement in, in, in food and beverage and things of that nature. So it's, it's down the pecking order, but it was there.
Katherine Griffin (VP and Equity Research Analyst)
Okay, thank you.
Kevin Hochman (CEO and President)
Yeah, you just have to re-
Katherine Griffin (VP and Equity Research Analyst)
Yeah, go ahead.
Kevin Hochman (CEO and President)
You just have to remember, Katherine, it's a very small amount of mix to begin with.
Katherine Griffin (VP and Equity Research Analyst)
Mm-hmm.
Kevin Hochman (CEO and President)
So even though there is improvements in margin versus or we see improvements when we drive the dine-in business at Chili's versus, like, Maggiano's virtual brand, if you're starting at such a low mix, it's, you know, it's not gonna have a huge impact on the overall restaurant operating margin.
Katherine Griffin (VP and Equity Research Analyst)
Okay, thank you. I'm also just curious if you're seeing anything at Maggiano's that would suggest any pullback among higher income consumers, whether that's, like, check management through alcohol mix?
Kevin Hochman (CEO and President)
No, I mean, maybe just a tad, but the bigger... There's two big, not big challenges, but the two challenges that we saw in Maggiano's this quarter, one was we removed IJW out of its business, too, which was about 40% of what you saw in the numbers, versus I think what the street was expecting on traffic. And then the delta was, you know, we've reduced the focus of the $6 cost of the go, as a to try to focus more on the experience. And that's had a little bit of a impact on the business that I know that the team is working on right now to figure out.
So, but there was no, like, gigantic macro thing that we were that has concerned us, at least at this point, that would say there's some big pullback.
Katherine Griffin (VP and Equity Research Analyst)
Okay. Thanks, Kevin.
Mika Ware (VP of Finance and Investor Relations)
All right. So, that concludes our call for the day. We appreciate everyone's questions. Goodbye!
Joe Taylor (CFO)
Thanks, everybody.
Operator (participant)
Thank you. This concludes today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.