Jake Bartlett: Great. I appreciate it.
Robert Verostek: Thanks Jake.
Operator: Thank you. Our next question is from Michael Tamas with Oppenheimer. Please proceed with your question.
Michael Tamas: Hi, thanks. Hope you all are doing well. The same-store sales guidance for 3% to 6% comps is pretty strong and just wondering if you can unpack your assumptions, maybe touch on a couple of things, like how much pricing or average check gains have you built into that? Are you also including any assumptions for the future price gains — future price increases that you’re thinking about taking over those next two windows? And then how much of that benefit from late night are you baking in? Are you giving yourself the full credit for that 2% to 3% lift? Just trying to understand the thought process there. Thanks.
Robert Verostek: Hey Mike, yes, thank you. Let’s try to unpack that. I hope you’re doing well also. So, I think the 2% pricing in January was fundamentally across the board. So, that will live through in that 3% to 6% guidance. Then you were trying to reconcile — I think it was for Eric a little bit trying to reconcile the impact to 24/7, particularly into the franchise base, again, building upon that, adding about 1% of the units a week at this point. I believe that would probably add in that two to three percentage points range to the franchise side, particularly. And then we have additional pricing windows, right? So, in March and September and to give you kind of the way that works, right? It doesn’t — if we took another 2% in that, it would add roughly 1% to the impact for the year.
So, again, we’re pretty — we’re really kind of — and that will all be based upon inflation, right? It’s not a foregone conclusion. We’ll read and understand that better because we don’t want to outprice this market. Clearly, there’s been some consequential pricing over the last 18 months, and we’re looking to mirror that against what we’re seeing there. So, that’s really kind of the build that we’re seeing. We also have some rollover effect. And I think what you have come to expect from us is that we put out guidance ranges that we are comfortable in achieving. So, it’s kind of a build back and kind of a philosophical add point there at the end.
Michael Tamas: Okay. Thanks for that. And then if I use sort of the presentation and the disclosure about your average weekly sales, it looks like in the fourth quarter, the average weekly sales were down maybe 4% or so relative to 2019 levels for the on-premise business. Is that purely just the late-night component? Or are there other parts of the business that you think you still have a big opportunity to recapture in addition to the late night?
Robert Verostek: Yes, I think that’s clearly still an opportunity to recapture with regard to that late-night daypart there, Mike. So, again, we’re really pleased that 2019 in totality — 2019 versus 2022 in totality was up to 7% on a 3 comp, and we still believe that there’s room to capture more of that as 24/7 comes back online.
Michael Tamas: Thanks so much.
Robert Verostek: Thank you.
Operator: Thank you. Our next question is from Todd Brooks with The Benchmark Company. Please proceed with your question.
Todd Brooks: Hey good evening everyone.
Robert Verostek: Hey Todd, how are you today?
Todd Brooks: I’m well. How are you doing Robert? First question, if I could. So, the incremental 2% pricing that you took at the start of the quarter here, can you walk through the waterfall of what rolls off in March and September that you’d be deciding about taking further pricing against or what would be a headwind?
Robert Verostek: Yes, I’m looking over at Curt to pull that out. So, we were seven points coming through this quarter. I would — trying to figure out exactly how to frame that for you. If they — do you want to grab your second question and as we give them a chance to look, and I’ll come back and answer that one for you?
Todd Brooks: Absolutely. Switching to Kiki’s, you talked about the FTD hitting hopefully this spring and starting to really ramp up some of that franchising growth with new partners. But a bridge here maybe with some corporate stores, especially seeding new markets. If you look at the guidance for the eight to 12 new Kiki’s, what do we see, if anything, in there for corporate units? What’s the mix of corporate franchise?
Robert Verostek: Yes, I would say, Todd, that a few — typically, that would be in the two to four range to get that done. And we do want from a corporate perspective to get to utilize our capital to get it outside of the State of Florida. We’re really still bullish upon the Kiki’s franchisees within Florida. And we will begin to utilize the Denny’s franchisees within Florida. That’s really not the rush to file all of the FTDs in the other states because we didn’t want to open it up to the balance of the Denny’s franchisees until we proved out the concept outside of Florida. Kelli spoke within her comments about the ethos work that we’re completing, we’re really excited about that. I would suggest that we’re halfway or so through that and getting bits and pieces fed to us along the way.
So, we’re really excited about what that will tell us and what optimizations that we will include in Kiki’s as we move outside of Florida. But we’re really excited to grow that. The 8% to 12%, as I mentioned to us, if you midpoint that at 10, that’s double what Kiki’s have been able to do on their own. And we won’t stop there, right? We know that, that pace even has to go well beyond that level. So, Curt’s drafting some notes up for me. So, in Q1 of 2022, we took 4% — or 0.4% pricing. And in Q1 of 2023, equals basically the 2% that we just took. So, that if I’m looking at them and interpreting that correctly, I think that’s what they’re telling me to say here.
Todd Brooks: Okay, perfect. And then a final one if I can slide it in. It sounds like Kelli, when you were talking about Heritage, sounds like a bit of a pause year and maybe as you’re tracking a little bit different customer base, you want to re-evaluate what’s in Heritage 2.0 before getting back to maybe a greater cadence of remodels in 2024. Just how big of a review is this? And is part of the review maybe getting the ticket cost of Heritage down for franchisees to speed the role going forward? Thanks.
