Operator: Thank you. [Operator Instructions] Our next question comes from the line of Bonnie Herzog with Goldman Sachs. Your line is now open.
Bonnie Herzog: Thank you. Good morning. I had a question on your grocery and general merchandise. First, your same-store sales were a bit soft. So hoping for a little bit more color on the drivers of this? And more color on CIG sales in the quarter, Darren, I know you called that out, but just curious to hear if your CIG business decelerated versus Q1 and wondering if you’re making any changes to your nicotine category or possibly pricing on CIGs to mitigate some of these pressures.
Darren Rebelez: Yes. Sure, Bonnie. I think on the CIG category itself, just combustible cigarettes were down about 4% in the quarter. And typically, what we’ve been able to do is pass on price and have that price flow through and with the unit decline offset and still stay relatively positive on the dollars and the category. That was not the case in this last quarter. I think to a large extent, that’s a reflection of where the consumer is right now. As you know, the cigarette consumer tends to be a lower income consumer generally. And so what we’ve seen is a bit of trade down from that consumer into either not buying cigarettes as frequently or trading down to lower-tier brands. And so our team is assessing where to go from here on the cigarette category.
But also that’s not as significant a category for us as it is for others. So we don’t feel the need to knee-jerk react. I mean, we still had a strong quarter. We were still constructive on margin. Our gross profit dollars are growing at an accelerated rate relative to our peers. And so we don’t feel any sort of undue pressure to do something different. We’ll have to see how things play out with that category over time.
Bonnie Herzog: Yes. That makes sense. And then curious to hear your color on the consumer and maybe how things have changed in the last few months and maybe your outlook and also just in the context of that color on your dayparts, maybe where stronger or weaker than expected, especially the morning daypart. Thanks.
Darren Rebelez: Yes. I guess if I step back and I look at our consumer base, I’d just remind everybody that about 3/4 of our consumers make over $50,000 a year. And given our geographic footprint, we are in a very low cost of living geography. In fact, the most expensive state we operate in is ranked 27th in cost of living. So that $50,000 tends go a long way. So with that cohort of guests, 75% or so, we’re really not seeing any change in consumption behavior. The changes we’re seeing is on the other 25%, which are lower income consumers. And so we’ve seen a couple of things there. They’re gravitating more towards our private label. Their cigarette purchases have been impacted, both in unit velocity and in just what they are buying when they do buy, like we were just mentioning.
They’re pulling back on premium fuels and opting more towards ethanol-blended fuels. But generally speaking, that’s for that cohort of guests. So as we look forward, we still feel really good about the value proposition that we offer. 80% of our guests believe that we offer a good value for the money. And our traffic was flat over the quarter inside the store and our gallons were flat outside of the store. And so we’re not suffering from a lack of traffic and we’re seeing people gravitate more towards the prepared foods as a relative value proposition. So we think as we look forward to the balance of the year, we still feel really good about the resilience of the consumers in our geography.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Bobby Griffin with Raymond James. Your line is now open.
Bobby Griffin: Good morning, buddy. Thanks for taking my questions. I guess the question for me is, is it possible for you to size what the tobacco drag was on the grocery segment, just so we can get a little bit of a better flavor of how kind of the business performed ex tobacco?
Steve Bramlage: Yes, Bobby, we would have been about 100 basis points higher top line growth ex tobacco and grocery.
Bobby Griffin: Perfect. That’s very helpful. And then, I guess, secondly for me is just on the labor hours reduction and other great performance this quarter. Is the team finding new task and opportunities inside the store, and those are kind of the reduction? Or is this a function of kind of the lower overtime that we’ve discussed in the past, given that turnover continues to move in the right direction as well? Or is it a combo of both, I guess?
Darren Rebelez: Yes, Bob, I’d say it’s a combination of both really, it’s primarily driven, though, by the continuous improvement team, identifying non-value-added work that we can take out of the stores. That would be the primary impact. So that’s a 2% reduction in labor hours. The overtime and training year-over-year has actually flattened out in terms of dollars, but we’re using less hours when you factor in the wage rate. So if you think about flat dollars, but our average wage year-over-year is up about 3.5%. So that over time came down a bit, training was about flat. So we think it is a combination, not as dramatic as it was last year when we were really taking big swaths of overtime and training out with the reduced turnover. The turnover continues to reduce, but just not at the same rate as it was last year.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Chuck Cerankosky with Northcoast Research. Your line is now open.
Chuck Cerankosky: Good morning, everyone. Great quarter. I’ve got another question about the labor hours. What are you still able to do around fine-tuning the store hours and the number of stores that are doing pizza delivery and the number of days they’re doing pizza delivery. How much of that is still available to help the store labor hour calculation?
Darren Rebelez: Yes, Chuck. I would say that there’s probably limited upside on that front as we sit here today. Our team constantly evaluates operating hours overall to determine whether we need to make adjustments there. But I would say that, that process is pretty dialed in at this point. So to be just fine-tuning here and there. In terms of labor relative to delivery, we have a small number of stores that are still doing delivery. I think it’s a couple of hundred at this point.
Steve Bramlage: About 10% of our stores we deliver ourselves.
