Operator: Your next question for today is coming from John Ivankoe with JP Morgan.
John Ivankoe: Hi, thank you so much. I wanted to talk about capital allocation and priorities. I mean, this is a business historically that’s obviously generated a lot of cash and obviously COVID and a number of different things kind of made that — maybe gave that some interruptions or maybe some changes in the priorities. But how are you guys thinking about maybe medium-term CapEx obviously this year at $170 million to $180 million was kind of at the higher end maybe of where we thought that was going to be. So what’s the direction of that going forward? Might that go up because of new units, might that go up because you really want to do more remodels and refits at the store level that benefit your customer and employees.
And if I can, Joe, I apologize for the way I’m asking this question as I’m asking it, but as we think about debt to EBITDA and other things, I mean are — do — should we get there through paying down debt or are you just going to basically let those ratios improve as your EBITDA grow? I just obviously I’m trying to catch the inflection point here to where a decent chunk of money can go back to shareholders. Thanks.
Joe Taylor: Yes, and let me kind of take them in reverse. I think we will continue to absolutely pay down debt. The ratio will also we anticipate improve from EBITDA growth as we move forward. So we’ll go at it from both of those. And again, as we’ve talked, we’d like to get the overall ratio down below 2.5x. So let’s just say 2x to 2.5x on a debt to EBITDA basis. And we see ourselves moving nicely in that direction as we kind of go through the rest of this fiscal year. The — as far as deploying incremental capital expenditures, I think yes, there’s going to be those opportunities and we’ll look at that, whether it’s new restaurant development, we want to make sure again, we’re effectively caught up as we kind of move forward with R&M investments.
So I think as Kevin indicated still work to do there. So we spent about 25% more in the R&M space this last quarter is if you look at the restaurant expense side of the equation, we’ll invest there. And there’s also some capital opportunities as we kind of move forward. So there’ll be a pacing of that. But also we’ll look at some new opportunities. There’s some nice kitchen equipment improvements we think that we’ll be bringing into the equation as we move through the next couple of years. So that could sequence it’s — we’ll determine those and obviously lay them out once we get what the actual numbers are going to be. But it wouldn’t surprise me at all to see a period of time where CapEx ticks up above where moves up above where it is right now.
But we’ll give you great line of sight as to the why’s and where that, that money’s going to go. As you indicate the business can generate a lot of cash and as we improve the base operations and again lots of rationale on why to do that, but one of the clear opportunities is to generate that incremental cash flow that then we have the optionality of looking at is that going back into the business directly from a return standpoint or is there an opportunity to return some to shareholders. And I think it’s just going to be a ongoing evolution, John, over probably the next 6 to 12 months as we think through all those different pieces of the equation.
John Ivankoe: That’s perfect. Thank you for unpacking the question. Good job. Thanks, Joe.
Operator: Your next question is coming from Eric Gonzalez with Citibank Capital Markets.
