Mel Hope: In terms of — I guess, I would say the thing I would caution people who are modeling the Company about is our preopening costs in the fourth quarter, because we have so many projects that will be coming online so heavily weighted to the fourth quarter our preopening costs will be a substantial contribution to the adjusted EBITDA formula.
Andy Barish: Okay. Helpful. Thank you.
Operator: Thank you. And the next question comes from Ella Ji with Stifel.
Ella Ji: Good morning. This is Ella on for Chris. Mel, the company’s adjusted EBITDA guidance for the year implies $60 million to $70 million, EBITDA for the fourth quarter, which would be a year-over-year improvement, but more of a net rate of improvement compared to the third quarter and the year-to-date results and it also appears to imply a lower margin year-over-year, why would that be the case.
Mel Hope: So I just mentioned the fact that we’ve got — we’re heading up on preopening costs in the fourth quarter, which will be part of the story. And then we’ve mentioned during our scripted comments that we have about $1 billion of timing favorability on G&A in the third quarter that will slide into the fourth quarter and then aur fourth quarter generally has other higher cost as well for our National Conference and that sort of thing.
Ella Ji: Got it. Thank you.
Operator: Thank you. And the next question comes from Brian Vaccaro with Raymond James.
Brian Vaccaro: Hi, thanks and good morning. I wanted to circle back on the new unit performance if we could. Could you provide a little more color, just on the sales performance on the class of 2023? And then on the CapEx side, what is the average development costs settling out in 2023 and is that settling out or do you expect that to continue to rise in 2024?
Christopher Tomasso: So new restaurants that we’ve built this year, I think the average before tenant improvement dollars, landlords oftentimes give us support when we enter into a lease with them. So I think the average overall is maybe above $1.5 million and the net is in line with what we’ve said before, which is a $1.4 million or so, net of the TI dollars. And then our new restaurants in terms of sales, on average, I think they are performing in line with our previous expectations.
Brian Vaccaro: Okay. Thank you for that. And then just back to the commodity inflation. Mel, I think I heard you say you expect it to tick back into slightly inflationary territory here in fourth quarter, could you just walk through kind of what items are kind of moving on here, back into slightly inflationary territory.
Mel Hope: The one that sticks out to me right now is avocados are taking up, some of it’s just seasonal. But that’s — we use a lot of avocados. That’s the significant mover I think in the market basket.
Brian Vaccaro: Okay. Okay. And then you mentioned just on preopening costs obviously understand the dynamic there, but outside looking in, that’s a number that’s pretty difficult for us to estimate, given timing and it’s pretty sensitive, is there any way you could put a little bit of a sharper pencil on your expectation on pre-opening in the fourth quarter. Thank you.
Mel Hope: Sure. Well, I don’t know exactly what preopening costs right now for our fourth quarter plan, I think if you look at what the average has been and the average number of projects that we have built through three quarters, it’s probably not radically different from that.
Brian Vaccaro: Okay. Appreciate it. Thank you.
Operator: Thank you. And the next question comes from Brian Mullan with Piper Sandler.
Ashley Aloupis: Hi, this is Ashley on for Brian. You didn’t mention in your prepared remarks, but I believe the KDS system is fully rolled out or is about to be. Can you just talk through some of the benefits you’ve started to see flowing through the system and the expectations of that in 2024? Do they primarily come from traffic or do you see some benefits in labor as well?
