Jeremy Hamblin : You highlighted a little bit around the premium menu options even $20 increase option there. Also, I think you noted in your comments that you are looking at making some changes on your drink mix or in your alcohol mix. Was hoping that you might be able to share a little bit more color on that initiative?
David Kim : We’ve rolled out a new initiative. It’s a mixed drink with a product called Soju. And that’s doing very well. New restaurant openings, we have decided to roll all of them out except Boston with liquor licenses, because the footprint of the Boston of how small it is and not having a bar and the cost to get a liquor license is around $300,00 to $500,000. We can’t make those numbers pencil out but the rest of them going forward as a company, we will have liquor licenses. We’ve rolled out some liquor licensed restaurants that don’t have bars with new products. And we’re seeing not a lot but small incremental sales increase in the liquor side of the business.
Jeremy Hamblin : And then just in terms of thinking about your the mix of business. So, I think you have menu very limited menu pricing at this point in time, maybe 1%. But wanted to just understand in terms of the composition of what you are seeing in your kind of your check versus traffic and whether or not there’s consideration for the existing or the legacy locations to take any menu pricing here in 2024.
David Kim: We’re still very — we’re concerned that if there is a downturn in the economic situation, we at GEN don’t want to be priced out in terms of our guest experience and their perceived value proposition that we give to our guests. Going forward with new restaurants in new locations, they are substantially higher than the 50% of our restaurants that we have in California. So, for example, if Seattle, we are opening that — we’ve opened that store with a dinner price at $34.95 compared to $29.95. So we have pricing strength in other markets, and we will continue that trend as we are opening majority of our restaurants outside of California. The guest check average by default will go up because we’re charging more in other states.
Jeremy Hamblin : And then just last one here for me. On California specifically, there are some changes in terms of labor laws really regarding targeted, I think more chain restaurants. But just wanted to get an understanding as you looked at labor performed better than we expected in Q4, that was nice. But in terms of what our expectations should be here, as we get into kind of that April date where there’s going to be some change in the California labor laws, what should we be expecting in terms of impact to your P&L here throughout the remainder of 2024?
David Kim: Because we’re still very steadfast in not pricing ourselves out because our competitors are very, apart from our pricing, meaning they’re probably anywhere from probably anywhere from 10% to 20% higher than our pricing structure. This April increase in minimum wage doesn’t legally impact us but the market, the labor market are saying if I’m getting $20 from a fast food restaurant, why would I compromise at getting paid the minimum wage of $17, $18 plus. So there is pressure because of the surrounding labor — the labor dollars that are required by the fast food industry, it will impact us. We’ve thought about perhaps maybe raising prices in very regional store by store bases, because a lot of this are different regions.
They’re not all throughout the same areas. So we’re looking at it, but we still believe in continuously tightening our belts to find more efficient ways to bring our labor costs down. And yes, there’s going to be a breaking point at one point, but we still are looking and we’re finding small areas to continuously cut.
Operator: Our next question comes from the line of Todd Brooks with Benchmark Company.
Todd Brooks : Congrats on first year under the belt here. Well done. Wanted to kick off on the real estate side and it was good to hear that ‘22 and early ‘23 opening class, you’re hitting those $5 million AUVs and the payback period is kind of below that two and a half year hurdle that you had set out and that’s even in some higher cost locations. I guess, David, can you talk to the mix of the openings in ‘24 as far as totally new markets versus densifying markets where you’re getting some scale like the Texases of the world or backfilling in Florida or Hawaii? And then are you getting to enough scale in those markets where you have multiple units now that the economics and how fast those stores mature is likely to improve going forward?
David Kim: We are opening new stores in existing markets, especially the ones that are doing well. So let’s just take an example like Texas, where we’ll be growing a lot of restaurants there. Our margins are great, our sales are great. So we will fill in all those markets that we’re very comfortable that we like the labor cost structure, we like the sales structure. So the areas are Arizona, Texas, Florida, New York, Hawaii. We will be filling those in aggressively, and we have staffing that we’ve got to ready to take those on comfortably. New areas we have to be ahead of the curve here. So we are testing and going in where we just signed North Carolina. We will go into Tennessee. We’re in the works of that and Seattle, we just opened, we are going to start construction in Oregon, and most likely in 2025 opening, it will start — we’ll start going into Colorado.
We are filling in our good markets for sure. Meaning we will open those markets and we will start opening the other outskirts and see how that works. But with the improvement of personnel, the investment that we put in to bring in people in construction, in real estate selection has dramatically improved so much that the issues that we faced right after COVID of the hardships that we had in the site selection and the process to push the construction out quicker has improved dramatically. That is why we’re getting more comfortable right now in the expansion phase as of today.
Todd Brooks : And obviously the talent and resources that you’ve brought in are a big part of that, but the environment itself, when you get to permitting and landlord works and things like that, are those getting better just because of the talent that you’ve brought on staff or is that environment itself loosening up to and making you constructive on maybe shorter lead times to get units open as you get to ‘25, ‘26?
