Earnings Transcript for TAST - Q4 Fiscal Year 2021

Operator: Good morning. Welcome to the Carrols Restaurant Group Fourth Quarter 2021 Earnings Conference Call. I would like to remind everyone that this conference call is being recorded today, Thursday, February 24, 2022, at 8 a.m. Eastern Time and will be available for replay. I will now turn the conference over to Tony Hull, Chief Financial Officer. Please go ahead, sir.

Tony Hull: Actually, we're going to turn it over to Gretta Miles. Gretta, go ahead.

Gretta Miles: Thank you, Paul, and Tony, and good morning, everyone. By now, you should have access to our earnings announcement, released earlier this morning, and our earnings presentation that are both available on our website at www.carrols.com under the Investor Relations section. Before we begin our remarks, I would like to remind everyone that our discussion, including answers to questions posed to management, may include forward-looking statements or comments with respect to our strategies, intentions, or plans and the future direction of revenues, input costs, or other aspects pertaining to our business. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed on them. We also refer you to our filings with the SEC for more details, both with respect to forward-looking statements as well as risks that could impact our business and results, including, among other things, the impact of COVID-19. During today's call, we will discuss certain non-GAAP measures that we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles, and a reconciliation to comparable GAAP measures is available with our earnings release. With that, I will now turn the call over to our Chairman and CEO, Dan Accordino. Dan?

Dan Accordino: Thanks, Gretta, and good morning, everyone. Let me begin by addressing the elevated labor and commodity costs affecting us and the entire restaurant industry because these headwinds meaningfully impacted our adjusted EBITDA and margins during the fourth quarter of 2021. Later, I will discuss our top line trends and how we are using a combination of pricing, menu, and promotional activity optimization to offset a portion of the margin pressures we have been experiencing. During the fourth quarter, we worked diligently to keep our restaurants open from at least 6 a.m. until 11

Tony Hull: Thank you, Dan. Total restaurant sales for the fourth quarter, a 13-week period, were $416.1 million compared to the 14-week period of $420.5 million in the prior year. The 2020 sales number included $28.4 million from the additional operating week. Adjusting out the extra week in 2020, restaurant revenue increased 6.1%. Our Burger King comparable restaurant sales increased 7.4% during the quarter. Average check growth came in at 12.1%, which reflects menu price increases taken during the year and lower promotional activity, partially offset by a traffic decline of 4.2%. Average weekly sales per Burger King restaurant were $29,812, representing an improvement of 6.6% from 2020 levels while exceeding 2019 levels by 5.6%. During 2021, we acquired 19 restaurants, opened 4 new restaurants, and closed 6 restaurants. Let's now discuss our Burger King quarterly performance by region, as we operated 1,026 restaurants at the year-end across 23 states. In the Northeast, representing 21% of our Burger King Restaurants, comparable sales were up 10.3%. In the Midwest, representing 29% of our Burger King Restaurants, comparable sales were up 8.4%. In the South Central, representing 24% of our Burger King Restaurants, comparable sales were up 8.3%. And finally, in our Southeast region, representing 26% of our Burger King restaurants, comparable sales were up 2.5%. Turning to our Popeyes restaurants, which represented 4.8% of total revenues in the fourth quarter, comparable restaurant sales increased 1% versus a decrease of 12.9% during the same period in the previous year. Staffing challenges during evening hours were particularly impactful on our Popeyes sales. Nevertheless, we outperformed the Popeyes U.S. system by 300 basis points in the fourth quarter of 2021. As a result of the inflation challenges experienced in the fourth quarter, adjusted EBITDA decreased $17.9 million to $13.9 million, while adjusted EBITDA margin decreased 430 basis points to 3.3% of restaurant sales. Cost of food, beverage, and packaging as a percentage of net sales increased 138 basis points, primarily because of higher beef, pork, and other commodity costs, and in contrast to the extremely favorable commodity conditions in the fourth quarter of 2020. In particular, beef costs during the most recent quarter were $2.71 per pound, compared to $2.04 in the year-ago period. They were also only slightly higher than the cost per pound in the third quarter, which was $2.68. Sequentially, cost of food, beverage, and packaging as a percentage of net sales improved 30 basis points between the third and fourth quarters of 2021. Restaurant labor expense rose 170 basis points as a percentage of restaurant sales in the fourth quarter of 2021 compared to the same quarter a year ago. Compared to the third quarter, labor expenses as a percentage of net sales only rose 50 basis points. Excluding the impact of the extra week of labor of 2021, labor costs increased -- excuse me, excluding the impact of the extra week of labor in 2020, labor costs increased $15.3 million -- or excuse me, 2021 labor cost decreased $15.3 million to $141.4 million in the fourth quarter of 2021. This increase was primarily due to the higher hourly wages, which, inclusive of overtime, increased $8.3 million, or about half the total increase this past quarter, compared to the same number of weeks last year. The remainder of the increase was due to the necessity of paying team members premiums to take on additional responsibilities, such as opening and closing our restaurants and higher management labor expense due to salary increases for our assistant managers, to improve retention. Restaurant rent expense in the fourth quarter increased 50 basis points as a percent of sales compared to the prior-year period, primarily due to the benefit from the extra week in 2020. Other restaurant operating expenses increased 45 basis points due to a number of factors, including higher recruiting spend and other employee-related incentives, as well as utility rate increases. We also now have smart safes in the majority of our Burger King locations that provide for labor efficiencies, faster cash collection, and greater security, but this initiative added to operating expenses. General and administrative expenses fell to $22.4 million in the fourth quarter of 2021 from $24.2 million last year and declined 40 basis points to 5.4% of restaurant sales. The decrease in dollar terms was due to lower incentive compensation accruals this year and was partially offset by higher regional administrative costs. Our net loss was $16.4 million in the fourth quarter of 2021, or $0.33 per diluted share. On an adjusted basis, excluding certain non-operating items, fourth quarter adjusted net loss was $7.5 million, or $0.15 per diluted share. In the prior-year period, adjusted net loss was $5,000, or $0.00 per diluted share. Free cash flow for the fourth quarter of 2021 was $8.8 million, compared to $9.4 million in the prior-year period. For the full year, we generated $22.9 million of free cash flow. We ended the fourth quarter with cash and cash equivalents of $29 million and long-term debt, including the current portion of debt and finance lease liabilities of $449 million. There were no borrowings drawn under our $215 million revolving credit facility, and we had $9 million of letters of credit issued under such a facility at the end of the year. This left $206 million of unused availability under our credit facility, and when added to our cash balance, provided us with $235 million in liquidity at that time. As of February 23, 2022, we had $25 million drawn on our credit facility, which we expect to repay as we get into our stronger seasonal period. As a reminder, our ability to utilize our revolver capacity requires compliance with one senior secured leverage ratio and is only in effect when more than 35% of the available capacity is being used. We are currently below that threshold and have no maintenance covenant requirement. When in effect, we need to stay under 5.75x senior secured net debt to covenant EBITDA. Our senior secured leverage ratio was 1.67x at the end of the fourth quarter, so we have headroom to use our current available revolver capacity. Our total net debt compared to covenant EBITDA was, as defined in the senior credit facility, stood at 5.02x at the end of the fourth quarter. We did not repurchase any shares of our common stock during the fourth quarter, as we were above the leverage guidelines set by our board. Once again, from an M&A perspective, we do not have any multi-restaurant transactions in the pipeline. We currently intend to use cash flow generated this year primarily to repay debt. Net capital expenditures for 2021 were $48 million, which included 7 completed remodels and 4 new restaurants. This total also includes $10 million that was used to commence work on a number of remodels and new restaurants that are scheduled to be completed in 2022. Our net capital expenditures have been under $50 million per year over the last 2 years. For 2022, we expect our net capital expenditures to come in at a similar level, which is reflective of the construction supply chain delays we have been experiencing. To conclude, while the ongoing cost headwinds affecting our business model are clearly evident and pronounced, we have made and are continuing to make adjustments to our pricing, menu, and promotional strategies that would enable us to regain a portion of the margin erosion we experienced in 2021. This should be particularly true in the back half of 2022, from a combination of continuing average check gains, along with potentially easing cost pressures on a year-over-year basis. And with that, Paul, let's go ahead and open the lines for questions.

Operator: We will now be conducting a question-and-answer session. Our first question is from Jake Bartlett with Truist Securities.

Jake Bartlett : My first is on menu pricing, and related to that, your comfort in taking pricing, given concerns about the lower-income consumer potentially being squeezed by inflationary pressures. So one question is, what was menu pricing? I'm sorry, if I missed it, if you've mentioned, but what was the total menu pricing in the fourth quarter? And how should we think about menu pricing progressing throughout 2022? And second, as part of that, are you seeing any signs -- it sounds like mix is still very positive, but are you seeing any signs of trade-down in the menu or maybe increased value mix? Anything that would address some of the concerns around the lower-income consumer.

Tony Hull: Dan, I could take that, if you want me to.

Dan Accordino : Yes, go ahead, Tony.

Tony Hull: The 8% -- Jake, 8% was the menu price increase in the fourth quarter. The remainder was lower promotions and discounts. We improved our promotions and discounts by about 4%. We're looking at price increases for this year, and we think that we're in -- given what the competitors are doing, we're in a mode, which is probably something we couldn't have said for sure in 2019 or 2018, but we're in a mode and the industry is in a mode where we think we can take price without affecting traffic that dramatically. And we expect to continue to do that during the year as we lap some of the price increases we put in place last year. And we're not seeing any traffic indicators that would say that we're going too fast on price increases, on menu price increases.

Jake Bartlett : Okay. And for the 8% that you saw in the fourth quarter, just considering what you're lapping, do you expect that to go up? I think the comment in the press release was that maybe pricing would help more in the back half of the year, so I think the implication is that it would be higher than we're seeing now. But is that the -- just so we understand how that progresses throughout the year?

Tony Hull: Yes, we expect to take pricing in 2022, so that will -- on a cumulative basis, that will get the average check above the, whatever it is $9.40. It will continue to grow next year. So, when we get -- on a cumulative basis, when we get to the back half of 2022, we should see a continuous steady growth of the average check.

Jake Bartlett : Okay. And then the other question I had was on some of the other offsets to the inflationary pressures that you're seeing. You mentioned operating efficiencies. And my impression is that Carrols runs a very tight ship, probably -- I mean, I think better than most in the system. So, can you talk about the opportunity there that you have to support margins through better operations, maybe what some of those more efficient operations, what some of those are? And maybe, if there's any way you can kind of quantify what kind of benefit you think that there is to be had on that front.

Tony Hull: Yes, I think the point on the operating efficiencies is that in the first half of this year, we'll see the same -- we expect to see the same kind of increases for labor year-over-year and for commodities year-over-year that we saw in the third and fourth quarter of last year. And then, in the back half, when we start to lap those higher levels, we think the increases of those 2 categories will be less. At the same time, we're seeing comps going up because of average check going up. So that's -- I think that's where we think we'll get some leveraging on cost of sales and labor costs in the back half of the year. I think the -- in terms of efficiencies, we would agree that we run the business pretty effectively. I think some of those efficiencies are really coming through the price increases that our franchisor is allowing us to do on -- like the value menu went from $1 to $1.29, like last week, or I think on the 10th of February or so. The 2 for $5 -- the 2 for $6 became 2 for $5, but the Whopper came out. So that, on a -- that's very valuable to us to have the Whopper come out of the combo meal -- or not of the combo meal, but the value menu. So those types of things that our franchisor is doing is really helping us offset some of those -- the higher costs we're seeing, the higher input costs we're seeing.

Jake Bartlett : Got it. And just to be clear, you didn't mention anything you're going to be doing differently operationally, and I'm thinking maybe of how much a slimmed-down late-night menu might impact. But are there any changes to operations that you're kind of proactively doing? Or is there really no opportunity there, because you already run such a great ship?

Dan Accordino : No, we're not -- this is Dan. We're not doing anything differently, from an efficiency standpoint. In that respect, you're right; I think we're pretty efficient. We've looked at hours of operation and which hours make the most sense to stay open in which restaurants, and we've adjusted for that. But as Tony said, the efficiencies are going to come from various promotional activities from Burger King, as well as the opportunities that we have to take price.

Jake Bartlett : Okay. Great. And then last question is on G&A. It was -- G&A increased pretty sharply in the fourth quarter from the third, and I guess the highest of the year. Is that the fourth quarter G&A the right run rate as we think about 2022? Or was there anything abnormal in the fourth quarter G&A that wouldn't be recurring going forward?

Tony Hull: Yes. You have to adjust out some of the -- I mean, the biggest thing in G&A last year was we had lower merit -- lower bonus compensation, so that actually got us to a pretty low number as a percentage of sales. So I think the kind of level -- I don't think the level of G&A, excluding the bonus, is really going to change between this year and next year, i.e., '21 versus 22. The big difference in G&A in '22 is going to be restoration of the bonus, which is about a $5 million headwind on G&A.

Jake Bartlett : So to be clear, there was -- the bonus did not dictate, so all else equal, at the very least, we should see G&A up $5 million in '22. Is that what you're saying?

Tony Hull: Mm-hmm.

Operator: Our next question is from Jeremy Hamblin with Craig-Hallum Capital.

Jeremy Hamblin : And first, I just wanted to ask about beef prices, as you noted, 25% of COGS. So I think, Tony, the math is like about $2.70, $2.71 a pound in Q4. And I just wanted to get a sense of where the current run rate was.

Tony Hull: It's at about that level. It hasn't really moved.

Jeremy Hamblin : Okay. And in terms of thinking about restaurant-level margins for the year, carrying quite a bit of menu pricing, which seems to be helping to some degree, but obviously pretty hard to cover the labor numbers, the hourly wages that you're talking about. But in terms of thinking about for the year, where menu pricing needs to be for restaurant-level margins to be up -- you're 9.5% for the year in '21. Are your expectations, given the current conditions and the expectations, at least for the first half of the year, do you think that restaurant-level margins can be up in '22? And if so, what's the menu pricing that you need for that to happen?

Tony Hull: Well, we have a budgeted number for venue price increases, but obviously, we're going to be testing and looking pretty hard to make sure that putting it into effect doesn't hurt traffic. And we're also going to take advantage of the things that the franchisor is doing for our menu pricing. So that's going to have an interplay as the year progresses. But I guess on a big-picture level, I think the first half, our expectation is the first half, restaurant-level margins are going to look a lot like the third and fourth quarter of last year. And then, when you have that cumulative effect of the average check going up by the end of the year, plus moderating input cost increases, that's when we would expect to see restaurant-level margins start to improve.

Jeremy Hamblin : Okay. Got it. That's helpful. And then, just thinking about the geographic performance, notable callout on the Southeast as a laggard. Is that more of, you think, a reflection of kind of COVID impacts, or more a reflection in Q4 of weather impacts? Because the 3 regions, I think, averaged close to 9% or maybe even a little over Northeast, Midwest, South Central, and your Southeast was quite a bit behind that. But any color you might be able to share on that?

Tony Hull: Sure. Our sense is that the weakness in that region, or the softness in that region, is across the board for the Burger King system. It's not just our restaurants in that region. And there's been a lot of building of, introduction of new competition in that region, and we think that's been the biggest -- that was the biggest drag in the -- that was sort of the adjustment we saw in Q4. After we get through that, we think we should see improvement in those comps as we start to lap that digestion of the new competitors in that market.

Jeremy Hamblin : Okay. Got it. And then last one for me. In terms of -- there's just so much going on here, as Dan mentioned in his decades, maybe the most challenging headwinds in terms of inflationary pressures. When you look at what parent is doing to help manage that, is the focus more on adjusting the items on the value menu and pricing thoughts, as opposed to kind of new product pipeline? Is that something where we should be thinking for the BK brand that this is going to be less about new products this year as opposed to kind of reimagining the menu to fit the current operating environment?

Dan Accordino : This is Dan, Jeremy. You're going to see both. There are some new products in the pipeline. I think that the major change, promotionally, is going to be a focus on the core menu, the Whopper and variations of the Whopper and burger focus as opposed to 2021, which the primary focus was . So there will be some modifications in the chicken lineup, but the primary focus is going to be around burgers. And yes, there is going to be variability in the menu, as well as at breakfast, there's some new product introductions there as well, in conjunction with, as Tony said, the modifications to some of the pricing on the value menu caps and that sort of thing. So I think it's going to be a balance of the 2.

Operator: Our next question comes from William Reuter with Bank of America.

William Reuter : My first is, you mentioned that price for the fourth quarter was up 8%, and it sounds like margins in the first half of next year are expected to be relatively in line with the back half of this year. Is there any pricing actions that were taking during the fourth quarter that might lead to modest sequential improvements?

Tony Hull: No. But we are looking at a price increase for next month of this year. But in the fourth quarter, I think all the price increases were sort of -- that we took in 2021 were before the fourth quarter, so that you saw the impact of those in the fourth quarter.

William Reuter : Got it.

Dan Accordino : The pricing that was referenced in terms of 8%, that pricing is anticipated to be the pricing through 2022. The pricing that Tony is talking about is what we are attempting to do, or what the company is attempting to do, is to simply have price increases at the same time and same levels as what we experienced in 2021, which will keep the price increase roughly at the same level. It's not incremental to the 8% that we had last year.

William Reuter : Okay. So, to make sure I understand, I think it sounds like you're saying you've taken this pricing and as -- you're not really anticipating additional price increases on top of that at this point? Is that kind of the takeaway there?

Dan Accordino : You're going to lap the price increases that occurred the prior year. Therefore, you will have an increase in the average check.

William Reuter : I understand, but you -- yes. Okay. Right. It won't be sequential. It will be year-over-year changes because you've pushed through the price increases in the back half of '21, basically. Okay. And then, there was commentary about rising wages, and there was also some commentary about, hey, a lot remains to be seen. Some of the data that we have about restaurant staffing kind of implies that we're actually seeing sequential improvements, and I was a little surprised to hear that we would still see sequential increases in wages through the year, even though we will have year-over-year increases. I guess, what are you seeing there?

Dan Accordino : Our wages are up about 1% over where they were in the fourth quarter. And I would expect that you'll see some increases, just due to normal merit increasing and that sort of thing. But the year-over-year impact certainly will diminish as the year goes on, because we had more significant increases in 2021 towards the second half of the year.

William Reuter : Okay.

Tony Hull: But sequentially, yes, it slowed down dramatically from where we were. Yes.

William Reuter : Yes. Okay. And then, there were obviously many portions of 2021 that were challenged due to operational restrictions and lack of labor availability. Excluding kind of the storms that we saw in January, thinking about this year, is there any way to think about with the tailwind of just incremental operational hours will be on comps?

Tony Hull: I mean, I don't think -- in the first and second quarter -- well, the first quarter we had in February of the first quarter last year, we had severe, very severe weather. So I think the February comps are looking -- we're seeing in our current -- the first couple of weeks of February, we're seeing pretty dramatic increases in our comp sales. But a lot of that is that we got whacked so hard a year ago in February. The one thing that -- the one indicator I'm looking at that I think is pretty interesting is last year, we were comping about -- especially in the fourth quarter, we were comping about 15% traffic decline versus 2 years prior, the pre-COVID period, and that has improved to be down 10%. So that sort of takes the weather out of the equation if you look 2 years before, because there wasn't a weather event. We had COVID, but we did not have a weather event in February of 2020. So I think the fact that we're seeing this 2-year increase -- improvement in traffic from down 15% to down 10% is very encouraging, so we think that's a strong indicator for the balance of the year, even though it's just 1 month. And it's really noisy just to compare the 2 years and then January has looked a lot -- looked worse than, obviously, January of 2020 because of -- if you looked at those 3 snowstorms that hit in January, they line up perfectly with our store footprint. So I think feeling pretty good, though, about what we're seeing in February about the traffic improvement versus 2 years ago.

William Reuter : Okay. And then, just one last one. When you speak about new competition in the Southeast, is this just additional store openings from traditional QSR competitors?

Tony Hull: Yes.

William Reuter : Or are you seeing new concepts? Okay. It's kind of more traditional competition.

Tony Hull: Yes, exactly. A lot of --

Operator: Our next question comes from Jake Bartlett with Truist Securities.

Jake Bartlett : Mine was about abnormal costs in labor. You mentioned maybe retention bonuses, hiring bonuses, recruiting costs over time. How much of the costs you're seeing in labor are kind of abnormal, that might wane as the year goes on, that you saw in the fourth quarter, maybe some in the first?

Tony Hull: I think it's going to be pretty similar in the first quarter. We haven't -- I'm not -- because most of that incremental pay is due to having team members open and close stores because there's not an assistant manager available, that sort of thing. And we haven't seen -- I'd say in terms of hiring trends, it hasn't gotten worse than it was in the fourth quarter, but it hasn't materially improved either. So, I think until you see the manager -- the assistant manager ranks, sort of those vacancies fill in, and we don't have to use the team members to do that, those activities, I think you'll see some -- you'll probably see some improvement. But we haven't seen it yet, and we're not sort of forecasting -- we're forecasting a pretty tight labor market for the year.

Jake Bartlett : Got it. And then, in terms of that tight labor market, do you -- I mean, maybe if you can help us understand kind of where you are now with staffing and where you'd like to be, maybe what percentage down you are from optimal staffing levels. And do you think that staffing is going to be a headwind to the sales recovery. Is it still kind of a gating factor towards a more material improvement in traffic?

Dan Accordino : Our staffing is better than it was throughout any of 2021, Jake. We're down -- and again, it's -- there are pockets where they're more problematic than others. But we're down 2 or 3 employees per restaurant, which is not a big deal. And in terms of the staffing negatively affecting our sales, as you can see, we increased -- our sales were pretty formidable in Q4, and we continue to outperform the Burger King system, as well as other competitors, in terms of our continual sales increase year-over-year, and I would expect that to continue. So we make pretty certain that our stores are adequately staffed and our hours of operation are similar to what they ought to be, in order to make sure that we continue with those sales dynamics.

Jake Bartlett : Great. And then my last question is on promotions and new product innovation. And the first is on the -- I believe you're testing or you were testing the toasted breakfast sandwich in a number of stores or markets. Maybe if -- any update there on, is that a material potential new product launch for -- as we think about as a sales driver? And then the second question is, recently, the system launched the 2 for $5 with the Big King taking out the Whopper from the 2 for $6. What was the net impact of that? Is that neutral to sales and margins, beneficial? How should we think about how that promotion might be contributing to the February results?

Dan Accordino : It's a positive. The quarter-pound King increased by about 20 units per store, and the Whopper decreased by about 20 units per store. But the Whoppers that decreased by 20 units per store, all the Whoppers that we sell now are at full price, so it was a positive. In terms of breakfast, yes, we're testing a lot of different things for breakfast, Jake. And in terms of the testing that you referenced, it's still in the test phase, and RBI has to decide whether or not it's going to be a wide-scale rollout, and if so, when. But there will be a breakfast focus, and there are other new products that are anticipated to be launched midyear.

Jake Bartlett : Great.

Tony Hull: Can I just -- I do want to add one point to what Dan said. It's less about product innovation and more just sort of the environment is that we talked about how strong the breakfast day-part was in the fourth quarter. In February, post-Omicron or whatever is causing this, we're seeing this continued strength in breakfast. So, whether that's people starting to go to the office again because we're sort of in a more relaxed environment, or just people are out and about more in general, we're just -- that is one day-part that continues to -- even without the product innovations that we have in the pipeline, continues to get better and better.

Jake Bartlett : Got it. And then maybe last question, and this is for Dan. You've been around the -- obviously, the system for a long time and the brand, and through good times and bad. But I think a key investor question now is that lower-income consumer. And you're taking 8% price, reducing the -- really the value kind of proposition in terms of the value items by increasing the prices there, maybe reducing the number of items. I mean, how comfortable are you that the Burger King consumer specifically is not going to push back on that, that you might reach a point where that -- both those 2 things together are going to really negatively impact traffic? How confident are you that the system might not be overstepping there with the lower-income consumer?

Dan Accordino : Well, I can't speak to the system. I can speak to Carrols, and we're mindful of that, Jake. And all of the pricing that we take is based upon competitive surveys that we do with our 2 major competitors, McDonald's and Wendy's. And our pricing relationship has been pretty consistent relative to pricing that they take in each of the geographies. So, we have various pricing levels by region and by DMA, and we make certain that we maintain our pricing on a relative basis to what they're doing as well. So, to the extent that the entire industry, perhaps, is stretching the consumer, that's something that the industry will have to evaluate. But I think as it relates to Carrols, we're very mindful of our lower-income consumer, and we're making certain that our pricing is done in a very systematic manner.

Jake Bartlett : Great. I appreciate it. And Dan, is this your last earnings call? I was just trying to make sure --

Dan Accordino : Well, I…

Jake Bartlett : I want to just wish you the best and congratulate you on a great, long career. And hopefully, you'll have a lot of fun in the sun.

Dan Accordino : Thanks, Jake.

Operator: Thank you. There are no further questions at this time. I would like to turn the floor back over to Dan Accordino for any closing remarks.

Dan Accordino : Thanks, operator. And as Jake said, before signing off, I wanted to take this opportunity to say goodbye and thank you to all of our investors and analysts who cover the company, as well as our great Syracuse team and our dedicated employees that at our over 1,100 restaurants, who serve hundreds of thousands of guests every day. I have greatly enjoyed my career at Carrols. And now, as we welcome our new incoming CEO, Paulo Pena, I wish both Paulo and Carrols the very best in the future. And with that, thank you, and have a good rest of your day.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.