Q1 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$23.56Last close (May 9, 2024)
Post-Earnings Price$30.00Open (May 10, 2024)
Price Change
$6.44(+27.33%)
- Improved performance of new units and successful expansion into new markets, driven by adjustments in real estate targeting, increased brand awareness, enhanced operations, and adjusted marketing strategies. This has led to positive results in new stores and gives the company confidence to accelerate its expansion pipeline.
- Significant margin improvement from the Infinite Kitchen stores, which are achieving 28% margins—about 10 percentage points higher than the fleet average of 18%—and trending towards $2.6 million in Average Unit Volumes (AUVs). The company is bullish on this technology and plans to integrate it more widely, potentially enhancing future profitability.
- Product innovation, such as the introduction of Protein Plates, is driving transaction growth, especially at dinner and weekends, and is over-indexing in new markets, contributing to double-digit comps in newer markets. This demonstrates the company's ability to expand its customer base and extend into new dayparts.
- Management expressed uncertainty about the impact of holidays on business, noting that in prior years, the company saw "a lot of negative traffic particularly starting around Memorial Day and then through the summer," which could indicate potential seasonal weakness in sales.
- There are concerns about increasing labor costs, especially in California where wages increased by "mid to high single-digits" due to the California Wage Act effective April 1st. While the company implemented a 5% price increase on February 21st to offset this, continued labor pressure may impact margins if not fully offset by pricing actions.
- The company is still uncertain about the downtime, costs, and operational impact associated with retrofitting existing stores with Infinite Kitchen technology, with management stating "we haven't really like quantified exactly what that downtime might be," which may lead to disruptions and affect future financial performance.