Steve Hislop: Yeah. We didn’t know so much to increase the ad spend. We just reallocated it a little bit because our normal cash spend percentage-wise on marketing is roughly in that 1.45%, 1.5% range, and we’re anticipating that throughout 2024. But we did reallocate it a lot. And as I mentioned in the call, it will mostly be a lot of social with Google, YouTube, programmatic TV and Yelp and so forth on what I mentioned earlier. But just a reallocation for what we really were excited about in 2023 and do more of that and most of the things we weren’t excited about, but we’ll still stay on those major channels and the spend will be very consistent from a year ago.
Aisling Grueninger: That’s great. You mentioned I know at ICR that you were confident in your ability to return to a 10% unit growth in 2025. Just what have you seen or is your real estate team done so far this year to support this goal and just the confidence in reaching that?
Steve Hislop: Yeah. We’re very confident as far as what we’re doing on the ground with our master broker system. And so we got there. But probably our pipeline is as good with sites over the next couple of years as it’s ever been. So we’re pretty, pretty excited about that. The thing we’re not excited about is the cost. They’re up 35% to 40%. They’ve moderated, but they have not started coming down yet. Also the developers aren’t doing anymore the site cost, which is $1 million on top of that development cost. So that’s the thing that we’re working the hardest with our people on. Also on a daily basis going in to make sure we’re value engineering and everything we’re doing inside our four walls and going with it. But that’s the disappointment I think when you’re looking at your cash on cash, you’re going to be looking at that dollars and 40% increase.
Aisling Grueninger: Thank you. That’s very helpful. I’ll pass it back.
Steve Hislop: Thank you.
Operator: Thank you, ma’am. The next question we have comes from Nick Setyan from Wedbush Securities. Please go ahead.
Nick Setyan: Hi. Thanks, Jon. So just kind of the margin, I guess, trajectory, given the sort of the context you already gave us. It sounds like COGS 10, 20 bps of leverage, maybe slightly more, labor maybe 70 to 80 bps of deleverage and operating the deleverage as well. Is that kind of the right way to think about the various buckets?
Jon Howie: Yeah. I think the only thing I would add is, we’re looking at probably flat from a cost of sales standpoint as far as being in kind of the low-single digits, which are with our — which we’re thinking 2% to 3%. And so basically, our pricing would cover that. So probably not much leverage there, but the other items that you said as far as operating expenses, deleveraging and the labor deleveraging, yes.
Nick Setyan: Okay. And then I mean understanding sort of the period 1, period 2 challenges, we do have to kind of come over to Uber, Lyft. Maybe just walk us through some of the other comp drivers for the rest of the year?
Steve Hislop: Yeah. The comp drivers for us is, again, what I’ve already mentioned, the marketing and the one thing that we’re pushing on everything that we have out there is our value within our menu. I mean I know you’ve been out there seeing a lot of our competitor have said, are going back to the 2019 ways of doing all their promotion and their price offs. And obviously, they haven’t done that for three years. So when they pop back in the market in the third and fourth quarter of last year, people are trying that out. We don’t think we need to do that, obviously, because you can eat in our menu all day long for $20. So we’re pretty excited about really pushing our value message again. And then also the increases in what we’re doing with our CKOs and keeping things new and fresh.
And as I mentioned earlier, that we had a little bit — we added a few different items back on the menu, whether it be the Burrito Bowls and so forth. And the key for all — everything that we do is we’re turtles and what we approach. And what we want to do right now is, this is when we want to tuck in to our four walls and execute, execute every single day, every single shift, every single hour. And that’s the thing that we believe, while everybody is out there looking for a silver bullet, we believe that’s what’s really going to drive demand into our restaurants short and long-term.
Jon Howie: And on that, Nick, I might add, we look at the sentiment scores that we get from Black Box and you don’t necessarily compare it with others, but we compare it with ourselves and make sure those are increasing. We’ve seen a significant betterment of those sentiment scores over the last six months. So I think those will turn into sales as we continue to increase in the sentiment scores towards the back half of the year.
