Tom Houdek: Welcome.
Operator: The next question comes from Todd Brooks with The Benchmark Company. Please go ahead.
Todd Brooks: Thanks for taking the question. I’ve got a few for you guys here. Tom, if I could start off with you, very encouraging news on the further cost saves. I know you talked about $30 million and that’s not an end point. If we take this out to a longer term opportunity as we’re looking into what could be harvested maybe going into 2025 what’s the magnitude of this opportunity versus the $25 million that you guys thought was originally there to harvest?
Tom Houdek: We’re still vetting the new opportunities that are coming in. We’re not saying yes to everything, but we are increasing the scope every time we’re meeting as a team to find more and more opportunities. So as we said it’s $30 million now that have been accepted and are rolling in. There’s still more that’s either waiting to be rolled out, or still in some term of, some form of vetting. So we don’t have that number to share in terms of what it could be in 2025 but that $30 million we’re at now is going to be higher. So we’re going to continue to keep rolling them out and we’ll keep everybody updated as we keep adding to it. But yeah we’re encouraged by even some of the new ideas that keep coming in. It’s great when you have a cross functional team that are all focused on costs and growing margins and doing it the right way. And we’re continuing to get some really good ideas coming out of this initiative that we’ll continue executing against.
Greg Levin: Hey, Todd. This is Greg to add to that. We’re even looking at how we continue to cook items in the kitchen. We’ve got obviously our peak starts and we run some great things through that. It’s one of the reasons we have such consistency. Can we move more items to that versus using a different other area versus maybe a flat top or the grill? And just looking at other areas in that perspective that can continue to help us. So I think as we go down this process not only as Tom talked about it that we’ll have more than the $30 million but it’s something that we’ve got to continue with. We’ve got to continue with that creativity in our business to continue to figure out ways to make us more efficient, more productive and at the same time reduce costs.
Todd Brooks: Okay. Great. And then Greg one for you. With the new streamlined menu I think going back to what you said in tests you hadn’t seen much of a same-store sales impact from constructing some of the items taking them off the menu. Once the menu launched did that experience hold, or was there some sort of same-store sales headwind in actually moving across the full fleet to the new streamlined menu?
Greg Levin: So it looked like it held. And we didn’t do a holdout restaurant just to see how things played out because of how we did it in the test. But as we went into July and forgetting some of the seasonality but looking at all of our restaurants, it didn’t look like there was any significant changes from one area to the other. So what we tried to do seemed to work in regards to driving operational efficiencies streamlining the fact that we didn’t need 10 burgers or we didn’t need 10 salads and so forth. As we moved down we saw guests shift into what we’d expected them to shift into. At the same time, as we put things on like a filet or we put the pretzel on we saw guests move into that within those different categories. But overall it seems like things have held as we expected.
Todd Brooks: That’s great. And then just two quick follow-up additional questions. One, can you update us on where we are on returning the full fleet to late-night operations? And then secondly, you touched on this with California exposure, and I know you guys won’t use weather as an excuse but I was wondering is there a way to tease out the impact? I mean you don’t get a lot of tropical storms/hurricanes in the California market. And just wondering, what impact that may have had on the business with it hitting in August. Thanks.
Greg Levin: I’ll let — I’ll give you some of my anecdotes, because I forget because it’s been a while. It obviously did hit us. But us in California that aren’t used to a tropical storm, I think we like literally went recluse for like the entire weekend. It was a tough weekend. I forget what our comps were down. I think people were just not going to get out of their house even though honestly like we’ve seen bigger storms in the middle of the winter time. We’d have to come back to you because it’s just been so far and it didn’t seem like that in and of itself made that much difference. Obviously, we had that and then we had the Florida hurricane that came through and both of those did impact the quarter. Late-night we are rolling out all of our restaurants. I don’t know, Tom, if everybody is there yet or if we’re still rolling through on that.
Tom Houdek: So in late-night to take you back to where we were pre-COVID, the place we have not added the hours back are really on the Fridays and Saturdays when we were open until 1:00 in the morning. We’re still thinking if that makes sense and we’re going to be able to drive the right type of sales and margin make sure that’s dollar margin accretive. So that’s the one area we have not done yet. But for the most part getting the — outside of that Friday and Saturday, the Sundays through the Thursdays most of our restaurants are now back to midnight. And that’s been a very great success not just for the sales but actually seeing dollars as well as percent margin from those extra sales. You do get it in that last hour that 11:00 to midnight but it also builds in that 9:00 to 10:00 and 10:00 to 11:00 hour.
So we’ve seen some really nice return there. There’s just a few restaurants that haven’t added that back yet. But for the most part that midweek we’re back to midnight. And still exploring and analyzing, if it makes sense in at least some restaurants to go back to that 1:00 on the Friday and Saturday. But that we have not determined yet.
Operator: The next question comes from Sharon Zackfia with William Blair. Please go ahead.
Sharon Zackfia: Hi. Good afternoon. I guess, I wanted to go back to the California fast food wage hike that’s happening next year. And I know, you’re not directly impacted but obviously wages going up impacts everybody and you alluded to that. I guess, I’m wondering is there any way that you could paint this as a favorable scenario for full-service where the order of magnitude price increase that you would have to take to cover labor inflation would be much less than your limited-service peers? I mean, is there any market where you’ve seen a test case of this where maybe the gap between full-service and limited-service narrows somewhat in terms of price points?
Greg Levin: Sharon it’s a great question. And obviously with the dining room team members or the front of the house you’ve got tips coming in. So those tips put people significantly over the $20-an-hour range there. And then most of our kitchen is already close to that if not over that in California. And we’ve even said we can be driving down the street and see a fast food or another restaurant with a sign outside saying, Starting Wages at $22; and really not necessarily impact our restaurant in that general area. So I do think we’ve got an inherent benefit there. I also think to your point that because of this you’re going to see fast food which already is and fast casual raising their prices and getting their prices closer to casual dining.
I still think that it’s a different experience at times in that regard and we’re trying to drive guests into our restaurants that want that more experiential dining from that experience I guess. We will always want to obviously make sure we can continue to drive off-premise and be close to them if off-premise is not with them if not the same price if not better on off-premise. But ultimately, what we’re trying to do is have a differentiated food profile trying to make sure we’re driving guests that are wanting Brewhouse Theater want that differentiation of a sit-down experience. And it’s still an $80 billion-plus industry that we’re going after. Now that being said, I’m not sure there is a market that we can compare to where we are today. Even if I had to look at certain cities that already have minimum wages in the $18 $19 range and look at our business and how we’re comping versus again trying to look at it versus fast food, I don’t know, if I’ve got that comparison.
