Kelli Valade: Well, you’ve got it. So, great question. Thank you for the question. It is absolutely not. So, as we look at, these are really strong returns that we were able to show with the Heritage 2.0 remodel of the gate that has changed, right? So, that has changed given the inflationary environment and the cost of supplies, labor, all that, right? So, as we look at that and just try to be really good stewards of our business and great partners to our franchisees, it gave us a chance to just step back a bit, look at our research. We see an opportunity to lean even more of those strong research, strong results and returns initially. It’s a chance to look at the approach to rethink diner a tad more lean into our unique positioning.
We continue to say we uniquely own that as America’s diner. So, we see an opportunity to kind of tweak from there. We will still do. We’ve got partners still investing in their business in light touches and making sure we continue to update our assets. So I don’t think it’s a long process, but we are going to just pull back our hair to be smarter about the investment and getting as strong as returns as we were getting before the prices escalated to the pace that they did.
Todd Brooks: Okay, great. Thanks everybody.
Robert Verostek: Thanks Todd.
Operator: Thank you. Our next question is from Jon Tower with Citi. Please proceed with your question.
Jon Tower: Great. Thanks. I guess maybe starting following up that last question and bring it back to CapEx and your thinking for fiscal 2023. I don’t think that was part of the guidance. Maybe I missed it if it was there. But obviously, remodels, which are not really on the corporate side slowing, but you’re also potentially going to be investing a little bit more in Kiki’s. Can you help us think about the CapEx spend for fiscal 2023?
Robert Verostek: Yes, kind of a good reconciling question there, Jon. Good to hear you. So I think in the current year, we were between $12 million and $13 million in our CapEx spend. So that — kind of using that as a jumping off point. There wasn’t a ton of remodel capital in those numbers either. So if you — these Kiki’s builds were — we anticipate being in that $1.1 million area. So, if you think about where we are with regard to the number I just quoted there, kind of that few being in that $2 million to $4 million range. You would expect that to be in the kind of the $3 million range. Without specific number guidance, I would suggest that’s a mid-teens kind of number that we would be at with regard to CapEx?
Jon Tower: Got it. Thank you. And then just taking a step back on the net closures for the year. First, can you parse out whether or not that’s all domestic or a mix of international and domestic? And then more importantly, can you help frame the health of the franchise base? I know the guidance obviously calls 15 to 25 net closures, but maybe you can provide some guardrails about how many more stores in the system or franchisees out there, maybe near that — getting close to that break of closure, should say the economy soften or inflationary pressures back up again? I’m just — I want to understand how are we coming back to this in six to nine months and saying 15 to 25 should have been more like 25 to 50, or maybe it’s the other way, maybe you’re being conservative?
Robert Verostek: Yes, that’s a really good question. So, let’s piece that apart a little bit. So, the guidance range for the openings was 35 to 45. So, midpoints for each, that would suggest 30 Denny’s and 10 Kiki’s, if you put that at the midpoint of each of those, which puts the Denny’s growth back to pre-pandemic levels. It’s basically at that 2% level. So, what’s different is this kind of this 4% closure rate that we experienced in 2022. And really, for 15 to 25 closures, you would need somewhat of a similar closure rate in 2023. I think a couple of things to note. The reality is, given the inflationary environment over the — particularly the last year, but the last two years in aggregate. The volume at which a Denny’s is really kind of profitable has risen.
It used to be we would quote some in the air that you need about $1 million to be a profitable Denny. Now, again, that was all a function of your geography and your lease there. There are a lot of other components in that. So, that’s kind of a broad average. That’s really kind of grown to about $1.1 million to $1.2 million. So in our — that guidance range of 15 to 25, we’ve kind of taken that all into account. So if the — if we get back to24/7, like we know we will, if the inflationary environment stays in that, labor of 5% and commodities in the4% to 6% range, I think we’re very comfortable with that range that we provided. And in fact, if those — if that settles more quickly than we may have an opportunity with that. We believe — and we fully expect that longer term, right, the 2024 and beyond period that we will get back to that kind of that normal kind of attrition rate.
We will always have some level of closures within the brand, which is historically, if you look back over a long period of time, about 2%. We do believe that that’s where we will get to, although we may be experiencing about one more year in that 4% range, given everything we see. I can tell you that these are primarily at this point, domestic closures.
Jon Tower: Got it. Thank you for all the color. And last from me. I know it’s a little early in the year and perhaps you don’t have this level of data, but I’m curious if there’s any way you’ve been able to see whether or not some of the, I guess, older demographic have made their way back to stores, given some of the shifts in social security payments? And whether or not you’ve actually seen it early in 2023 in the form of greater frequency or perhaps higher check within that kind of older cohort of customers?
