Chris O’Cull: Thanks.
Operator: Our next question comes from the line of Alex Slagle with Jefferies. Please go ahead.
Alex Slagle: Hey, thanks. Wanted to ask a question on the operations side of things with the speed of service, which has always been a big driver, same-store sales for the brands, and you’ve made some good progress in recent quarters here. So, trying to figure out kind of where you think you stand now versus peers, where you think it can go, and where the biggest catalyst could be to make that happen. I’m not sure if it’s coming from lower tiers of stores where a bigger source of improvement could come from, or just broadly across the whole system.
Darin Harris: Yeah, I think things like performance at the Ops level. I think there’s two key areas that we have still opportunity to improve, and it’s with our staffing, which we’re now at pre-COVID levels at Jack, almost there on the franchise side of the business. It’s really an area of late night. Make sure we’re staffed appropriate at late night so that we can drive out, speed of service and at the right times. And then, it’s how we balance our labor scheduling. We’ve got a new way that we’re scheduling labor so that we can be most effective at the times where we need the labor so we can hit our speed of service numbers. And then what I would say from an alert standpoint, both speed of service and alerts are things that are indicative of same-store sales performance.
We have an opportunity in our third-party and our online orders to get better at execution of our business model. And so we’ll look to say how can we, now that we’re about 12% of sales in digital, four years ago, we were at 1%. So, we’ve got to figure out better ways that we can execute on that digital business. And those two are the key areas from a performance standpoint that we can improve on.
Alex Slagle: Great. Thank you.
Operator: Our next question comes from the line of Jeff Bernstein with Barclays. Please go ahead.
Jeff Bernstein: Great. Thank you very much. As we think about the initial fiscal ’24 guidance, specifically on the earnings side, I’m just wondering, you know, where you see the greatest uncertainty? Darin, I think you mentioned the California pricing is kind of a big unknown from an elasticity perspective, but I’m just wondering where you think you’re most conservative and maybe more aggressive, how you think about that guidance? And then, just to clarify, I think you mentioned, Darin, that your franchisee profitability has improved consistently over the past number of quarters. I’m wondering whether you ever share, now that we’re starting a new fiscal year, whether you would share the annual franchise level profitability at each of your two brands for this year versus — fiscal ’23 versus fiscal ’22, so we could have a gauge for expectations going into fiscal ’24. Thank you.
Darin Harris: Sure. I think, from our standpoint, I think the thing that we have to look at is really focused on, how do we support our franchisees in California during AB1228. And then, like Brian said is, that’s not only price, it’s operational direction and how do we help them take margin opportunities and improve on their business. And so that’s where I think, in our guidance that gives us the most, I would say, to your question, discomfort or not as knowledgeable about what’s truly the outcome. And then from a standpoint of margins, at Investor Day, we’ll consider exploring, communicating our margins and what’s happening with franchisees’ P&L and what we anticipate new store returns to be, especially after last year and ’22, having so much inflation and not fully recouping all of that yet, we’re still on pace to do that.
But, you know, at both brands, we have not fully recovered from all the margin loss in 2022. And so, you know, but our franchisees’ P&Ls have improved. They’re making the same dollars that they were making two years ago, just not the same percentage yet, we want to be able to do both and actually improve their margins.
Brian Scott: Yeah, I would agree. I’d just add, again, the top-line is the one, obviously, that we’ll continue to monitor in that price trends mix. Outside of that, we have really good line of sight on our G&A, got good controls there, and I feel like we’ve got a really good strategy as we continue to integrate Del Taco and gain more synergies in 2024. And on the commodity side, we’ve got good line of sight there and the same thing on the wage side, we have a good sense, an improving labor market. So, kind of outside of AB1228, we’re seeing improved ability to staff in the stores. And so I think we feel really good about our ability to control kind of everything, you know, below the top-line. And then we’re going to obviously do what we can to make sure we maximize our sales.
Operator: Our next question comes from the line of Jake Bartlett with Truist Securities. Please go ahead.
Jake Bartlett: Great. Thanks for taking the question. And mine is really a clarification on the guidance. And, you know, I believe — and just correct me if I’m wrong here, but I believe the guidance specifically says, excludes the impact of re-franchising, so it assumes no Del Taco re-franchising. But you do think there’s going to be some re-franchising? Darin, I think you mentioned a minimum of, 30 to 40. Just to make sure I got that right, you know, maybe if you could help us, in terms of G&A per store per, or D&A per store, how should we — if we were to kind of build in the re-franchising, any kind of, you know, guidelines or guideposts as we try to do that?
