Andy Barish: Got you. Helpful. And then Christine there was some early back in the previous regime discussion on operational efficiency opportunities through TAP systems. And I know a lot of other things have moved to the forefront. But where do you — where do you envision that at this point on you know in terms of from revisiting that that potential initiative down the road?
Christine Barone: Yes. What I would share on that as throughput is still really important to us. We know that our long lines can be an inhibitor sometimes to our customers visiting us more frequently. Specifically, as we look at TAPs we have rolled out to over 100 shops now on the TAP system. And so we are encouraged by the results that we’re continuing to see with the Tap system. We are also planning on investing in the TAP system to put it into a majority. We have our new shops as we roll out new shops as well.
Andy Barish: Great. Thank you very much.
Christine Barone: Thank you.
Operator: Our next question comes from Nick Setyan with Wedbush Securities. Please proceed with your question.
Nick Setyan: Thank you, and congrats on a great Q4. My question is, you mentioned sort of a margin impact from the labor investments. Does that before any pricing actions or does that actually contemplate the pricing actions within that guidance?
Paddy Warren: Yes, it does contemplate some pricing within the guidance. We did take price a little bit of price in January related to some of the minimum wage movers and legislated markets already. And then it does contemplate a level that will take through the through the year, the California situation and others as well. So that’s and that’s really the net impact.
Nick Setyan: Got it. And so, going into the call I had about 4% in Q1 and Q2 in terms of pricing. Is that correct, 4% in Q1 and Q2 in terms of menu pricing?
Paddy Warren: Roughly low single digit rollover is our — is in the ’24 come in from ’23. If you look at our price move and I think it’s also very important to note that we had been bolstering our margins throughout ’23 to help us to prepare to take off on what’s coming at us in ’24.
Nick Setyan: Okay, so low single-digit percentage in Q1 and Q4.
Paddy Warren: That’s the rollover. So that’s the rollover that’s in place already from 2023 pricing. And then there’s additional pricing that we’re clearly signaling that we’re going to take in 2024.
Christine Barone: And then we did take some pricing in Q1 in January in line with some wage increases in some of the western states including Arizona, California, Colorado and Washington.
Nick Setyan: Okay. Fair enough. And then you know you mentioned entering 2024 with a lot of comp momentum, any sort of incremental clarity around what quarter-to-date trends look like relative to Q4?
Christine Barone: No. I mean what we what we shared in our prepared remarks is kind of where we are is I think like everyone else, we saw some impacts of weather, but outside of the weather will really pleased with what we saw in January.
Nick Setyan: Got it. And then just on the COGS line sequentially a little bit of an uptick on the COGS line. Charlie, how are we thinking about sort of COGS in 2024? Could we actually see some leverage there?
Charley Jemley: So direct ingredient costs have moderated, but we also know that sugar is continuing to rise and that’s a that’s part of our basket and that our distribution costs are still pretty sticky given energy costs and wages involved in that given or a small drop business. So we think COGS is a pretty benign impact in ’24, we’re not expecting a lot of benefit there.
Nick Setyan: Fair enough. Thank you very much.
Operator: There are no further questions at this time. I’d now like to turn the floor back over to Christine Barone for closing comments.
Christine Barone: Thank you for your questions. As we conclude, I wanted to highlight our recently completed Dutch Bros gift pack. Each year, our shops, customers, franchisees and foundation work together to donate to local organizations working to end hunger in our communities. This year, we adjusted the gift pack back and pivoted from one day of giving to a campaign that allowed us to make a $1 donation for Dutch loved feature drink full from February 1st through the 18th. This campaign not only drove traffic and also gave our customers an opportunity to give each time they came to our window and it was a huge success. I look forward to announcing our results soon and I’m grateful for the opportunity to truly live up to our mission of making a massive difference one cup at a time.
In closing we are pleased with our strong results in Q4 and believe we are in a position of strength entering into 2024. I want to thank all of our teams to create this exceptional performance by connecting with our customers and communities every single day. Thank you.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
