First Watch Restaurant Group, Inc. (NASDAQ:FWRG) Q3 2023 Earnings Call Transcript

Christopher Tomasso: There’s a number of benefits from the KDS system starting with opening up the hiring pool for us and reducing training time and one of the biggest benefits of it is visibility into our ticket times that we didn’t have before. So as I’ve said, we’ve been establishing benchmarks. We have dashboards and other evaluation tools now that we’re using to really measure ticket times at peak times, and that’s been the goal all along is to improve our performance during peak sales hours an increase those peak sales hours, so we haven’t reported on the impact of that yet. As I’ve said in the past, the rollout and implementation of that is inning number one, as it relates to KDS and we’re continuing to learn a lot about it in and tweak and refine the system and perfect it and — but we are seeing some data that shows us that we’re getting much better ticket times during those peak sales hours.

Ashley Aloupis: That’s great. Thank you. Also, I was just wondering what commodity inflation was in this past quarter?

Christopher Tomasso: Commodity deflation was about 200 basis points, 220 basis points, something like that.

Ashley Aloupis: Great. Thank you. I’ll pass it back.

Operator: Thank you. [Operator Instructions] And the next question comes from John McNamara with Guggenheim.

John McNamara: Hi, thanks for the question. I’m just wondering if you guys have any update on the labor market and turnover and how turnovers evolved over the last couple of quarters?

Christopher Tomasso: I would say, our staffing has continued to improve. Mel mentioned, we’re 3.1 managers per restaurant, where previously we were at 2.8, so we feel good about where we are there. I think overall inflation — or excuse me, turnover is held pretty steady for us and we’re in a good place from a staffing perspective, specifically with the bench strength that we think we need to support our growth and obviously our continued operations.

Mel Hope: Turnover, I mean, you asked specifically about that. It’s actually been ticking down for us through the year. I think our teams are doing a really, really good job of training and working with the crew, so as we’ve seen throughout this year, the whole industry dealt with a lot of turnover, right after the worst and first big waves of COVID through the first couple of years and we weren’t an exception. I think we stayed — I think we stayed better than the industry throughout that time, but it was still higher than we like, and we’ve seen it all year long, we’ve worked to try and slow the turnover and it has — it slowed considerably since 2021, it’s kind of been stepping down gradually. So we’ve seen some improvement, we got — I like the momentum there for us.

John McNamara: Thanks. And then just one more. This might have already been asked, but I think I missed it. I know unit growth is heavier in the fourth quarter, any possibility of any slippage into 1Q of 2024 for that.

Christopher Tomasso: Sure. There’s always some possibility of that. Once you get, kind of close to the holidays, we don’t want our trainers to be away from home during holiday times, but if we do have slippage, there might be a couple of projects that would slide, but for the most part, you would expect them to open within a couple of weeks of the first new year, they’re not going to impact the overall performance next year or contribution next year. I would say this that every project that we have — that we expect to open this year is under construction today. So there’s definitely a — there is definitely a race on to the finish line on all of them.