Nick Setyan: Perfect. Thank you very much.
Steve Hislop: Thanks, Nick.
Operator: Thank you. The next question we have comes from Chris O’Cull from Stifel. Please go ahead.
Chris O’Cull: Just for taking the question, guys. Good afternoon. Steve, just given the recent traffic performance, I’m just curious if the company debated whether to spend more on advertising this year and maybe even use more paid media in markets where you have good density and it could help maybe improve top-of-mind awareness.
Steve Hislop: Yeah. Chris, we’re looking at that partly, and that’s always on. We’re very nimble on that approach within our marketing budgets, and we’ll look at that continuing. And as you know, the one thing about a lot of digital is you can pivot on a dime. So we’re constantly looking at that, and we’ll continue to look at that as we’re going on right now.
Chris O’Cull: Would you consider things like broadcast, like TV in certain markets?
Steve Hislop: And certain ones, but right now, as you heard me talk about programmatic TV currently. Right now, we’re doing a lot on ESPN and a lot of stuff around sports, especially as we were mentioning to you on the call about looking at it more so in — as we get into March Madness and so forth. But we’ll definitely look in probably more on the programmatic side of it, probably not major media.
Chris O’Cull: Okay. And then, Jon, can you describe the visibility you have into that low single-digit commodity inflation for this year?
Jon Howie: Sure. So I mean, the biggest component would be our beef. Our beef, we’ve got locked in through the third quarter of this year as far as fajita beef, those are at increased prices as well as our ground beef. We only have locked in through the Q1 we expect when we start buying that after Q1 that will be elevated compared to the prices of this year. And so those are the two big drivers as well as some of the — maybe the chicken coming back a little bit as well, since we had it — since it was down so much last year.
Chris O’Cull: Okay, great. Thanks, guys.
Steve Hislop: Thanks, Chris.
Operator: Thank you. [Operator Instructions] The next question we have comes from Todd Brooks of The Benchmark Company. Please go ahead.
Todd Brooks: Hey, thanks for squeezing me in. I only have a couple left here. One, I was just wondering, can we get an update on the stores that were kind of mothballed during the start of the pandemic. How many of those are you still kind of carrying? And the cost that we saw for — just the underperforming and discontinued performance in the quarter, is that against those stores fully? Or are you looking at anything in the base that you impaired? And do we need to think about any closures against the openings planned for this year?
Jon Howie: Well, I mean, as you know, the impairment is a fundamental kind of exercise from an accounting standpoint. So that particular impairment was one of our stores in Denver area. We don’t plan on closing anyone anytime soon, but that is a challenge store. So we’ll continue to look at that store. As far as the ones that we mothballed, we’ve gotten rid of most of them. I think we’re still working on three of them, and we’re pretty close to getting those out of here. And so again, that will just go back to — I think there’s like three of them are currently on subleases that there’s a little differential in the sublease. But other than that, we almost have them all done.
Todd Brooks: Great. And then, Steve, just a question. I know we’re working our way back to the 10% unit growth. In the past, you’ve talked about that being related to what you’re seeing in kind of traffic trends and the strength of your customer. With what you’re seeing now, is this the right time to accelerate from kind of the 6% to 8% this year? Or do you need to see a pickup in the consumer? Or just with the challenges in getting the real estate you want in your markets and the fact that you’re doing infills, are you comfortable with the 10% growth in ‘25?
Steve Hislop: Yeah. I’m comfortable for this year in that 6% to 8% range, because as I mentioned to you before, or I mentioned earlier, it’s just the initial cost of getting into these and while we’re retooling our building, even again, it’s at 40%. That’s huge. And then put the site cost on top of that. So that’s the big thing. Hopefully, we’ll see some reasonable in this happened throughout 2024 on that, that gets it and where it makes sense from a capital side to get to that 10% growth. But right now, for this year, I’m comfortable in that 6% to 8% range.
Todd Brooks: Okay, great. Thank you, both.
Steve Hislop: Thanks, Todd.
Operator: Thank you, sir. The last question we have comes from Andrew Wolf of CL King & Associates. Please go ahead.
Andrew Wolf: Okay, thank you. I just have a couple of follow-ups. First is on development. I mean, recently, you’ve talked about targeting a 30% cash-on-cash return. But you still — I mean, you called out how expensive it is to build the buildings, and you’ve kind of talked about buying the land and doing an eventual sale and leaseback. So could you just unpack for me is, one, is that 30% cash-on-cash return which is a strong return, still realistic? Or is it — is that going to change? And if you’re going to keep it, is it predicated on doing an eventual sale and leaseback just based on market rates to build out a restaurant?
Jon Howie: Well, there’s a lot to unpack there. So yes, I mean, our ultimate target is 30% cash-on-cash return with the cost the way they are, and that’s why we’re trying to do a lot of value engineering that we spoke of. We’ve actually hired two additional architects to kind of go through our whole current building and our prototype and all the layers that we have in it and suggest different ways to build it, different ways to design it, different layers and different alternative materials on the layers that we have in the restaurants as well as even looking at the equipment package that we have and totally — so we’re doing a soup to nuts, if you will, of kind of value engineering right now. Now initially, we’re getting some fairly good results.
