Cheesecake Factory Inc

NASDAQ:CAKE

Good afternoon. My name is Christa and I'll be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions]I would now like to turn the conference over to Etienne Marcus, Vice President of Finance and Investor Relations. Etienne, you may begin your conference.

Good afternoon and welcome to our fourth quarter fiscal 2023 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer; and Matt Clark, our Executive Vice President and Chief Financial Officer; David Gordon, our President, is serving on jury duty and is unable to join us on today's call.Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at investors.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission. All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements.In addition, during this conference call, when discussing comparable sales, we will be referring to comparable sales on an operating week basis, unless specifically stated otherwise. We will also be presenting results on an adjusted basis, which exclude impairment of assets, and lease terminations and acquisition-related expenses. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release in our website as previously described.David Overton will begin today's call with some opening remarks, then Matt will provide a business update, review our fourth quarter results in detail and finish up with some commentary on our outlook for the first quarter and full-year 2024, before opening the call up to questions.With that, I'll turn the call over to David Overton.

Thank you, Etienne. We finished the year on a strong note with continued improvement across many facets of our business, resulting in solid financial performance, including revenues in line with expectations and better-than-anticipated profit margins. Fourth quarter revenues were $877 million, led by comparable sales at The Cheesecake Factory restaurants up 2.5% versus the prior year and 14% versus 2019, once again, meaningfully outpacing the casual dining industry and demonstrating the strength and consistency of our brand.To this point, Cheesecake Factory restaurants delivered the highest average weekly sales in the company's history in the last week of the fourth quarter. Our top line performance is a reflection of our steadfast focus on menu innovation, maintaining the contemporary design and decor of our restaurants and delivering exceptional food quality, service and hospitality. Further, building on the outstanding execution delivered by our operations team, we exceeded our expectations in labor productivity, food efficiency and wage management, contributing towards restaurant level profit margin of 16.1% at The Cheesecake Factory, not only exceeding our projections, but also surpassing fourth quarter 2019 margin levels.On the development front, we successfully opened 9 new restaurants during the fourth quarter, including 3 Cheesecake Factories, 3 North Italias and 3 FRC restaurants. Additionally, 2 Cheesecake Factory restaurants opened internationally under licensing agreements, one in China and our first location in Thailand. Subsequent to quarter end, we opened a North Italia restaurant in Houston, Flower Child in the Dallas market and 1 Cheesecake Factory restaurant internationally under our licensing agreement in Mexico. And lastly, this morning, we opened our newest culinary dropout in Atlanta.We are looking to build on this momentum. And while the development conditions have not been fully normalized, we are aiming to further accelerate our unit growth. At this time, we're planning to open as many as 22 new restaurants in 2024, including as many as 3 to 4 Cheesecake Factories, 6 to 7 North Italias, 6 to 7 Flower Child and 6 to 7 FRC restaurants. As we look ahead, we remain intently focused on leveraging our competitive strength, the scale of our business, our differentiated brands and the best-in-class operators to drive additional shareholder value and market share gains.With that, I'll now turn the call over to Matt.

Thank you, David. Let me first provide a high-level recap of our fourth quarter results versus our expectations I outlined last quarter. Total revenues of $877 million finished essentially at the midpoint of the range we provided. Adjusted net income margin of 4.5% exceeded the 4.25% guidance we provided, and we returned $22.9 million to our shareholders in the form of dividends and stock repurchases. For the year, we delivered total revenues of $3.44 billion, a 6.7% increase over 2022 after excluding the impact of the additional week in fiscal 2022 and adjusted earnings per share of $2.69, a significant improvement over fiscal 2022 and above 2019 adjusted EPS.Now turning to some specific details around the quarter. Fourth quarter total sales at The Cheesecake Factory restaurants were $658 million with comparable sales up 2.5% versus the prior year and 14% versus 2019, a slight increase from the third quarter. Importantly, the improvement was driven by better traffic and menu mix, as year-over-year menu pricing declined. Q4 on-premise incident rates remained above 2019 levels and by the same amount as in the third quarter, demonstrating stability even as we continue lapping the heightened spending from the last year, and off-premise sales totaled 22% of sales for the fourth quarter, in line with the full year percentage of sales.Total sales for North Italia were $67.2 million, with fourth quarter comparable sales increasing 7% from the prior year and 34% versus 2019, resulting in annualized AUVs of $7.9 million. Restaurant level profit margin for the adjusted mature North Italia locations was 15.8%, up 330 basis points from the previous quarter. The margin improvement was supported by a 3.7% menu price increase in October. Other FRC sales totaled $70.9 million and sales per operating week were $138,500. Flower Child sales totaled $30.4 million and sales per operating week were $75,500. And external bakery sales were $16.6 million during the fourth quarter of fiscal 2023.Now moving to year-over-year expense variance commentary. In the fourth quarter, we continued to realize measurable year-over-year improvement across several key line items in the P&L. Specifically, cost of sales decreased 170 basis points, primarily driven by higher menu pricing than commodity inflation. Labor decreased 50 basis points, supported by pricing leverage and improved staffing levels, partially offset by lapping lower medical insurance expenses. Other operating expenses increased 20 basis points, driven by higher marketing costs, which includes the rewards program.G&A decreased 10 basis points and depreciation decreased 20 basis points as a percent of sales. Preopening costs were $9.6 million in the quarter compared to $7.8 million in the prior year period. We opened 9 restaurants during the fourth quarter versus 8 restaurants in the fourth quarter of 2022. Higher preopening costs for the quarter was driven by the one more opening, delays in opening dates and the mix of concepts. And in the fourth quarter, we recorded a net expense of $35.6 million, primarily related to impairment of assets and lease termination expense and FRC acquisition-related expenses.Fourth quarter GAAP diluted net income per share was $0.26. Adjusted diluted net income per share was $0.80.Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of approximately $293 million, including a cash balance of about $56 million and approximately $236.5 million available on our revolving credit facility. Total debt outstanding was unchanged at $475 million in principal. CapEx totaled approximately $52 million during the fourth quarter for new unit development and maintenance. During the quarter, we completed approximately $9.8 million in share repurchases and returned $13.1 million to shareholders via our dividend.Before I move to our outlook, let me provide a brief update on our Cheesecake Rewards program. Early demand continues to exceed our internal expectations, and we remain encouraged by the level of member activity and engagement we are seeing. As we've said previously, we are taking a very deliberate approach as we develop the program and therefore, do not anticipate seeing a measurable impact to sales for at least the first year or so. We are continuing to test acquisition tactics and activation campaigns to better understand the key elements that are resonating with rewards members and most effectively increasing membership enrollment, engagement and driving frequency.Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q1 2024 and full-year 2024. For Q1 2024, assuming no material operating or consumer disruptions, we anticipate total revenues to be between $875 million and $895 million. This essentially assumes a continuation of fourth quarter trends as well as the impact from the inclement weather quarter-to-date.Next, at this time, we expect effective commodity inflation of low-single digits for Q1 as our broad market basket continues to stabilize. We are modeling net total labor inflation of mid-single digits when factoring the latest trends in wage rates and minimum wage increases as well as other components of labor.G&A is estimated to be between $57 million and $58 million. Depreciation is estimated to be between approximately $24 million and $25 million. Based on these assumptions, we would anticipate net income margin to be about 3.5% at the midpoint of the sales range. This includes higher preopening expense in the prior year period to support our planned restaurant openings, which we expect to be approximately $6 million.Now for the full year. Based on similar assumptions and no material operating or consumer disruptions, we would anticipate total revenues for fiscal 2024 to be approximately $3.6 billion. For sensitivity purposes, we are using a range of plus or minus 1%. We currently estimate total inflation across our commodity baskets, labor and other operating expenses to be in the low to mid-single digit range and fairly consistent across the quarters. We are estimating G&A to be about flat year-over-year as a percent of sales and depreciation to be about $100 million for the year.And given our unit growth expectations, we are estimating preopening expenses to be approximately $28 million, which includes support for some early 2025 openings. As we have said previously, our goal is to effectively offset inflation with menu pricing to support our margin objectives. Assuming we achieve this goal, input cost and consumer trends remain consistent, and there are no other material exogenous factors, we would expect full year net income margin of approximately 4.25% at the revenue level I provided.With regard to development, as David Overton highlighted earlier, we plan to open as many as 22 new restaurants this year across our portfolio of concepts, with approximately 3/4 of the openings occurring in the second half of the year. And we would anticipate approximately $180 million to $200 million in CapEx to support this year's and some of next year's unit development as well as required maintenance on our restaurants.In closing, our business remains healthy with top line trends substantially stabilizing, improving profit margins, normalizing input costs and solid operational execution. We are looking to build on this momentum and believe we are poised to once again generate our historically consistent operational and financial results and to make meaningful additional steps in 2024 towards our longer-term goals in the key areas of value creation, growing restaurant comparable sales, expanding restaurant operating margins and accelerating accretive unit growth.With that said, we'll take your questions.

[Operator Instructions] Your first question comes from the line of Brian Harbour from Morgan Stanley.

Matt, can you just maybe comment on the -- kind of the updated annual guidance compared to what you laid out last quarter. Is this more just about kind of recent weather trends or anything else changed within your view?

Hey, Brian, this is Matt. Certainly. I would say nothing has changed. Obviously, there was a lot of challenging weather in the first part of the year. You've seen it in the industry numbers. I can tell you that we're still performing equal or better than the gap to the industry that we hit in the fourth quarter. There's 10.5 months to go for the year. We want to put out numbers that we feel very good about, and we feel good about this. And it would represent a meaningful improvement in restaurant level margins going into this year. It represents continuation of overall positive comparable sales.If you think about the first quarter only, I think what the math is really in the industry around January, which is a little bit of tougher comps, too. And it's probably -- it's probably 1.5% to 2% of impact on the quarter in total revenues. The good news is we are able to see that very clearly. We're able to parse out the weather impacts. We've seen very good stable trends in February. So we feel good about the overall guidance. We feel like it's prudent to be sitting in a range that we feel good about this early in the year.

Can you also maybe comment on the labor side. You've seen some favorability year-over-year, although more so on the food costs side. But is there opportunity to drive better labor leverage as you think about 2024 from productivity or anything like that?

This is Matt again. I think that one of the harbingers of labor productivity is retention. And we continue to see quarter after quarter after quarter last year of improvements in that key metric, both at the hourly and at the manager levels. And we saw tremendous results in January and so far this year. That, for sure, is going to lead itself towards productivity, right? We run the most complicated restaurants in the business. The more tenure that we have, the more efficient our teams will be, the less overtime there is, the less training there is. So we feel very good. I believe we saw some pretty good productivity gains in the fourth quarter, and we are expecting that to be able to continue into the remainder of 2024 as well.

Your next question comes from the line of Mary Hodes from Baird.

I just want to clarify, one, how you're running maybe quarter-to-date. Is the full quarter-to-date period running near that level seen in Q4? Or is that the level that you bounced back to in February after you saw some unfavorable weather in January? Just trying to better understand what you're anticipating for the second half of the quarter here.

I think we're not giving specific quarter-to-date metrics, but the impact in January is, like I said, 1.5% to 2% on the total quarter. But what we've been able to do is really see that, that was isolated to some specific events. And so when we take that into consideration and what our sort of normalized trends are, it's the combination of those 2 that give us the full quarter outlook. Hopefully, that answers the question.

Yes. That's helpful. And then one more on the Cheesecake Factory business. Could you break out the check and traffic components for the backward booking quarter for Q4? And then I guess I was maybe just wondering if you could walk us through your thoughts on how you're thinking about the components heading into 2024. I think you previously talked about around 4% pricing. And just wondering if that anything has changed and maybe what you're focused on in terms of driving traffic for 2024.

Sure. I think this is an important question and kind of relates a little bit to even Brian's question. I mean, for us, things only got better, right, last year, quarter-to-quarter. So in Q4, the traffic was flat, which represented a 1% improvement over the Q3 metrics and was clearly ahead of the industry. The negative mix was still there, but it got better. It was negative 0.9% versus the 6.1% in the third quarter, so about 1.2% better. As we anticipated, that negative mix would continue into Q4, Q1 and part of Q2, really stabilizing in the back half of the year. And so that met our expectations and the guidance that we provided. And then obviously, pricing came down as we exited that one-time extra pricing we did in the prior year December. So on a weighted average, the fourth quarter pricing was 7.3% for Cheesecake, which was down from 9.5% in the third quarter.So our comps were slightly better, but really with a lot less pricing as the other metrics improved. When we think about the balance of 2024, as I just noted, we do anticipate that the negative mix will continue, but it really stabilized Q3 to Q4. So with that sort of underlying stability, we do believe that we can maintain that low-single digit positive comps, absent the January weather events for the balance of the year.

Your next question comes from the line of Katherine Griffin from Bank of America.

I wanted to maybe just unpack the negative mix in the quarter. Just curious kind of where you're seeing that show up? I know in the past, you've talked about not really seeing much in the way of like active check management or less alcohol attached. Just curious if you can help us understand where you saw the source of negative mix and how that plays into your expectations in terms of the cadence throughout the year?

What we saw is in '21 and '22 was significantly outsized purchasing behaviors. So I think this has been pretty well documented. And so the preponderance of the mix negativity is really associated with kind of what we consider to be a return to normal. I would say we are still running slightly above 2019 levels. So it's actually pretty historically relevant. It was the same basic proportion to 2019 in both Q3 and Q4. So it's stable. We saw really that shift happen materially in the middle of Q2 and then in the back half of last year. So we would anticipate continuing to run in this negative 4% to 5% range for the first quarter, maybe 3% to 4% negative in the second quarter. And then hard to say for sure, but relatively stable in the back half of the year. So we've seen very stable consumer behavior over the past 6 to 9 months, is just slightly different than it was the year before when we saw some outsized purchasing behaviors.

And then I think on the last call, I mean, yes, you've been pretty clear about kind of laying out the expectations for comp. But just on pricing, I think, in the past, the expectation was like 1.5% to 2%. Is that still kind of what you're thinking in terms of the environment you're seeing?

Yes, we will look at that. Obviously, multiple times a year and adjust as necessary. I think as a placeholder for everybody using 4% for the year at this point in time is a pretty good estimate. And that could change, it could go down if costs get even better. But right now, that's sort of a good placeholder.

Your next question comes from the line of Jeffrey Bernstein from Barclays Capital.

This is Anisha Datt on for Jeffrey Bernstein. I wanted to ask how you're thinking about recapturing restaurant margins. And as we think to 2024, what are you embedding for the restaurant margin?

Yes. We made great progress in 2023 on that trajectory. And then actually, in Q4, Cheesecake Factories, specifically, restaurant-level margins exceeded 2019. So we feel pretty good about accomplishing the goal that we had set out there. The -- there's still seasonality, so you're going to see differences in Q1, Q2, Q3 and Q4 from each other. But overall, we feel like we have the trajectory right now to continue to expand restaurant-level margins in '24 by 50 to 75 basis points. So predominantly driven by productivity and efficiency gains. So -- and a little bit of lapping some outsized commodities inflation, particularly in the first half of the year. So we feel like that's -- that would be great progress that would really put us back on the footing that we had pre-pandemic across both Cheesecake Factory and the total company.

Your next question comes from the line of Aisling Grueninger from Piper Sandler.

My question is kind of a follow-up on Brian's. The revenue guidance for the quarter on the last earnings call, I believe you guided slightly higher to $3.7 billion at the high end of the range. I was just wondering your thoughts on guiding it slightly lower. Are you just kind of baking in a little more conservatism with this new guide because with the tough macro environment.

I would say, look, so the midpoint probably came down about 1% to 1.5%. A piece of that is certainly just the January component. And I would just say, look, we have 10.5 months to go. We feel the business is on a great pace. Everything is going well. There are things that sometimes we can't control. For example, timing of openings. Obviously, the last couple of years outside of our control, there's been a pretty big impact. We thought it was really prudent this time to maybe take a little bit more conservatism at the outset and just put numbers up that would be achievable even with some disruption.

My second question is, I'm sure one of your favorites is on the California FAST Act legislation. Even though it's primarily intended to impact QSR, there will be some spillover into wage inflation across the board in California. I was just wanting to know your updated thoughts on the impact to Cheesecake Factory specifically and what your thoughts around pricing is? And just any way to combat any kind of inflation you're seeing.

Well, I think it's still to be determined. I don't know that I can give you a great new perspective. We're obviously well aware. We're reading and seeing dynamics play out on a regular basis. The government in California continues to even modify the FAST Act and carve out even more different types of restaurants that may not have to comply with that. So it is definitely an uncertain situation. As we noted before, given our pay circumstances, we are very competitive in the marketplace already. Many of the California QSR urban locations are already paying $19 and $20. We believe that's partly why they agreed to do it in the first place. And so those options already exist for most of the people we're recruiting and certainly, all of our tipped positions make much more than that.We feel like we have sufficient pricing power in California if need be, we're a tremendous value for guests here with our portion sizes and great service. So I think we can defend our California margins. However, that needs to be lots to be determined. But certainly, we don't believe that it's going to be the same impact in full service as it is in the QSR [ realm ].

Your next question comes from the line of Brian Vaccaro from Raymond James.

Matt, can we just circle back on the fourth quarter Cheesecake comps? And can you help us with on the mix component specifically, how much of that negative mix is due to the off-premise mix coming down versus actual sort of changes in order behavior in-store sort of the beverage and app incidents? And if you adjust for the off-premise or isolate for off-premise, what did dine-in traffic look like in the fourth quarter year-on-year?

So on the mix, Brian, this is Matt. Most of that is purchase behavior, maybe [ as of ] 1% on the off-prem mix, right? So -- but I think it's important to think about it more sequentially than year-over-year. So that was the same mix that we saw in the third quarter. And we knew that there was going to be this because we had seen throughout the 2023 calendar year, people buying just 1 less drink than they did in '22 and '21. But they're still also importantly buying as much, if not a little bit more than in 2019. I think it's just sort of more of a return to normal behaviors in that regard. So that was well within our expectations and I think baked in appropriately to all of our expectations going forward.With respect to the on-premise, I don't think it's changed much. I mean, certainly, traffic overall at flat. We feel good about year-over-year. I think that, in fact, the off-premise percent versus prior year was about the same, is really close. So I don't have the data in front of me, but that would just basically substantiate the year-over-year on-premise traffic was basically flat.

And sorry, if I missed it earlier, the pricing, can you level set what do you have in the menu right now? And I believe you lapped 3.25% sometime soon. What do you intend to replace it with? Maybe just level set us where effective pricing could be here in the first quarter and how you're thinking about that?

Yes. We're going to be at about 4.5% for the quarter with a little bit of the weighting coming in higher. But we would anticipate for the year about 4%. So a little bit higher in the first quarter, but kind of 4% for the year.

And Brian, this is Etienne. We're dropping off 3.5%, replacing that with a 2.5% price increase here in the middle of the quarter.

Your next question comes from Lauren Silberman from Deutsche Bank.

I want to ask about the fourth quarter. Can you just give a little bit more color on the cadence of trends throughout the quarter? And if there's any way to quantify the benefit from the holiday shift as we think through underlying trends?

Lauren, this is Matt. It was a really strong quarter from start to finish, to be honest. I mean, we saw pretty consistent comps month-to-month. And then I would say, interestingly, the holiday shift wasn't too material. Maybe it was 50 basis points, but it wasn't a big driver. But interestingly, December was the strongest overall month and it had much less pricing because we dropped off that 3%. So the underlying business, I think, just got better and better. But I would say the operators were in full control throughout the quarter, driving sales, managing costs. It was very predictable and overall right on track.

And then just a question on restaurant margin, nice improvement this quarter. You spoke to the 50 to 75 basis points of expansion this year. Is that fairly consistent in terms of year-over-year expansion throughout the year? Are there any moving pieces per quarter we should be thinking about?

Yes. I mean, give or take, 25 basis points because anything can happen, I think it's fairly consistent. There's not -- I mean we saw last year pretty stable overall. So relatively speaking, we would think that would be true as well.

Your next question comes from the line of Jim Sanderson from Northcoast Research.

I wanted to go back to the unit growth plan for 2024. Are there any closures baked into that that would reduce the benefit of that new unit growth in 2024?

We do have 2 relocations, Jim. This is Matt in that. So I think on a net basis, that will be impacted in terms of the revenue contribution. We believe those will be pretty seamless, essentially very similar trade areas with some lease expirations that were just moving sites.

And can you walk through the price mix for North Italia for the quarter as well?

Yes, pricing is 8%.

I don't think we should track mix the same way as we do with Cheesecake Factory, but it's slightly negative and traffic was slightly positive.

The net of traffic index is just slightly negative.

And last question for me. I just wanted to better understand the sequential improvement store margin in North Italia. I think you called out Cheesecake, but there was a meaningful improvement there as well. Is that primarily the utilities or --

Yes. We rolled out pricing in the middle of the quarter. And so in the fourth quarter, we were able to capture the full benefit of that. That's the predominant driver of the improvement in margins.

Jim, essentially, for North, they were one cycle behind Cheesecake Factory. And so this was kind of our last catch-up there, if you will, from all of the pandemic inflation to kind of get back to a more normalized level.

Your next question comes from the line of Jon Tower from Citigroup.

Couple, if I may. First curious, so it's encouraging to see unit growth [ tick ] higher? I'm just curious in terms of what you're seeing with landlords and developers. I know for the past several years, there's been a lot of delays in terms of getting stores opened because of things outside of your control. Has that improved at all? Such that, and I know your outlook for this year is 3 quarters or so of the development in the back half of the year, but has this kind of stickiness gotten less sticky and therefore you have greater visibility into those coming into the year than maybe years past?

Jon, this is Matt. I think there's 2 things. One, it's maybe incrementally better, right. It's definitely the long tail of all of this, but incrementally. But I think more importantly, we just took control of the situation a little bit more, right. We made a very definitive strategic move to push some of the locations into the first quarter. We've opened up those restaurants already. So that just enabled us to have better predictability over the remainder of our pipeline. I think it was just an important shift for us to really reset that and understand so that we can assure ourselves and our investors that we can get those restaurants open this year. So we feel really good about where we're sitting there. We have a much bigger pipeline than we're committing to, to give ourselves even more breathing room. And so I think mostly it's just that we took more definitive action to kind of realign that, slightly augmented by a better scenario.

In terms of -- I'm assuming many of these stores are already concrete [indiscernible] et cetera. Are you guys putting the final touches, or I guess better said, of the 22 or so stores that you're targeting this year, how many of them have already got broke and kind of ready to rock?

Well, we opened 3 already, not including the 1 international. I think we'll have another one this quarter that will open, and the preponderance of the rest of them are moving along. So we're right on track.

And then just on the marketing plans for this year, I know obviously you're spending decent amount of time getting customer acquisition into the rewards program. But outside of that, given some of the noise that's taking place with the consumer right now, certainly in the lower income cohort, which you guys don't necessarily have great exposure to, but how are you thinking about marketing spend for 2024 or the tactics that you're using in terms of communicating with your consumers versus years past?

We are centrally focused on the rewards program. That said, we did shift a little bit of the spend towards off-premise, doing some promotions with delivery and [indiscernible] and so we're focusing a little bit on that end, a little bit more than we have in the past.

Your next question comes from the line of Brian Vaccaro from Raymond James.

I just wanted to go back to the labor cost line for a second, if we could, and you noted some improvements in labor productivity and wage management. And I understand the natural benefits of lower turnover, hiring and training, et cetera. But could you just elaborate on some of the other dynamics that are benefiting that line, changes you've made, et cetera?

Yeah, Brian, this is Matt. I think one, fundamentally, the labor environment has just been much more stable. So with lower turnover and lower asking wages for new hires relatively, has created an inflationary rate that has just reduced over time to even slightly below pre-pandemic. Right. So that's another benefit of retention and it's also driving. We just -- we brought basically the overtime and training much closer to historical levels. We've also been able to take the opportunity to, as an example, bring a 1 star cook up to a 2 star to a 3 star because of that retention. So the longer that we're keeping people, the more that we can train them on multiple stations, the more that they can handle big volume of the Cheesecake Factory restaurants.So a lot of it is driven by that initial retention piece and then our ability to leverage that operationally once we're there.

And we have no further questions in our queue at this time. And with that, that does conclude today's conference call. Thank you for your participation. And you may now disconnect.