Jake Bartlett: Great. Thank you so much for taking the question. Jack, I had a question on commodity inflation. I was wondering whether you could kind of handicap the likelihood of deflation in the back half. It feels like there’s some big chunks of poultry dairy seem to be likely solidly deflationary. Just kind of wondering what the moving pieces are in your mind, how much visibility you have? And just what do you think the chances of deflation are in the back half?
John Hartung: Yes. It’s not our — it’s a good question. It’s not our base case. Our base case is to see modest inflation in the back half of the year. We’re predicting somewhere in the low to mid-single-digits. We’ve been really pleasantly surprised by what’s happened so far. We have had a number of miscellaneous items where we’ve seen inflation like some of our oils tortilla, some of our sauces and things like that, but even offset by lower-than-expected avocado cost. So that’s why our food cost has been steady for two quarters in a row. And it’s been a number of quarters that that’s happened where we haven’t seen any net inflation. So I do think it’s a possibility. It depends on what the Fed does. It depends on what happens to inflation broadly.
The wildcard there is if inflation disappears, you have to also then wonder, okay, what’s happened with the macro economy, what’s happening with unemployment and consumer demand as well. So right now, we kind of like the environment we’re in right now, where consumers have jobs. They have money. They’re visiting restaurants, and the inflation that we’re seeing is pretty modest. So that base case that we put together and how we plan the rest of the year feels pretty good to us. We wouldn’t mind inflation going down, but we’d love it if it didn’t. Also be accompanied with a softness in demand.
Jake Bartlett: Great. And that answer kind of flows into my next question, which was I think as you talked about the annual guidance for same-store sales, you talked about the macro environment staying as it is now. So I just wanted to kind of make sure I understood what your kind of base case is for the macro environment in the back half of the year. And should we think of the range kind of slight recession on the low end? How should we think about the macro outlook in your guidance? And maybe how you think you’re positioned if we do see a deceleration in the consumer?
John Hartung: So first of all, in our prepared comments, we did say our guidance assumes that there’s not a meaningful change in the macro environment, okay? Because obviously, all bets are off that happens. But in terms of our outlook, our outlook does not — our base case does not include a recession or certainly not a meaningful recession. Again, it looks like unemployment is holding up really well. It looks like consumer spending is strong right now. I mean, Brian mentioned our — we saw softness in the second-half of last year, especially the fourth quarter in lower income consumer. We saw those consumers come back almost at the same rate as our higher income consumers. And so we see that as a positive in a positive macro sign.
So we’re cautiously optimistic about what’s going to happen in the second half of the year. Now if there is a recession, we feel like we’re really well prepared. We have — we own all of our restaurants. We don’t have any debt. So we don’t have the possibility of franchisees under pressure if they have debt payments and that there is a softening of demand. And we don’t feel like we have to run the business based on a quarter-by-quarter and tally. So if we need to write a couple of tough quarters here or there, we certainly think we have the financial wherewithal and we have the long-term view to do that. But again, we’re cost optimistic that the economy will hold up.
