So when it takes four or five months to build the restaurant, we’re having noncash rent expense hit our books. And because of the accelerated openings, that’s why you see our occupancy line a little bit higher than I think some people expected it to be this quarter as well, but it’s a good thing. We’re opening restaurants and they’re going to start pushing through revenue and make profits, and we’re excited to see this happening.
Todd Brooks: That’s very helpful. Thanks, Jeff, and agree that if it’s tied to accelerated unit openings, that’s a great thing. Just one follow-up there and then I’ll hop back in the queue. Within the other expense, you talked about marketing costs being up, is this just preopening marketing for new units or is there something that you’re doing additionally on the marketing side that would bump that cost line up?
Hajime Jimmy Uba: [Foreign Language] [Interpreted] So as in context, last year in December, we started investing in targeted marketing search engine optimization with Google across its channels. It’s been [indiscernible] it’s been very cost-effective. We’re very happy with it, which is why, we’ve kept it as part of our marketing suite. And so this is really just a year-over-year comparison given that we started in December, this was the first and last Q1 where we didn’t have that cost last year. As of Q2, we’re going to be doing an apples-to-apples flat comparison. So it’s not like we started something new in Q1. This is really just the tail of a year-over-year comparison.
Todd Brooks: Perfect. Thank you, both.
Hajime Jimmy Uba: Thank you.
Jeff Uttz: Thank you, Todd.
Benjamin Porten: Thanks, Todd.
Operator: Thank you. Our next question comes from the line of George Kelly with ROTH Capital Partners. Please proceed with your question.
George Kelly: Hey, everyone. Thanks for taking my question here. So most of my stuff’s been asked, but just one last one for you related to CapEx. And I was curious, what’s a good sort of percent of sales to use just generally for maintenance CapEx? I know it’s $2.5 million per restaurant, but wondering about maintenance CapEx. And if we look back over the last year or two, has there been kind of a post-COVID catch-up on some maintenance CapEx, just curious if there’s been anything sort of not normal in the more recent periods.
Jeff Uttz: So a couple of things. George, hi. So for maintenance CapEx, we’ve said in the past, it runs about $100,000 per restaurant. Once a restaurant is opened, your ongoing maintenance stuff that we’re capitalizing. And in terms of catch-up, there’s not necessarily so much of a catch-up. But when you look at our depreciation line on the P&L [Technical Difficulty] what you’re seeing is a lot of accelerated depreciation in there, because we’ve done several remodels. We changed our logo sometime before I joined the company, but we haven’t changed the signage yet, so we’re changing a lot of our signage to the new logo. And when we make that decision, we have a date for when that sign is coming down. We have to accelerate the depreciation.
We also have a lot of protective equipment that we had in the restaurants for COVID that we kept on the books, just so we made sure the COVID emergency was over. And now that it’s over, we have to write those off as well. So there are some — several unusual things hitting our depreciation line. But that’s kind of how I think you should look at it. Like I said, 100 grand or so for us — for me was CapEx.
George Kelly: Okay. Sounds good. That’s all I had. Thank you.
Benjamin Porten: Thanks, George.
Jeff Uttz: You’re welcome.
Operator: Thank you. Our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.
Mark Smith: Hi, guys. Similarly, I think most questions have been asked here, but just one for me. As we look at G&A, there’s a little bit of litigation accrual. Did that fall in there? And was there anything else that was kind of one-time-ish? It looks like you’re expecting some pretty good leverage there. I just wanted to see if there was anything else that was maybe one-time-ish in nature.
Jeff Uttz: Yeah. The litigation accrual $205,000 was the biggest one-time fees. And if you back that out, the number seem to almost exactly where we expected it to come out for the quarter. Then you’re going to see going forward for the rest of the year and if you look at our guidance, we’re projecting about 50 basis points of leverage when we had 80 basis points last year. And the reason we’re not expecting as much leverage this year is, this is our first year because this is our sixth year as a public company, which means that we now have to be 404(b) compliant which has created quite a bit of additional auditor costs and some consulting costs to make sure that we are completely 404(b) compliant when we need to be. So the additional public company costs create a little bit of a headwind there. But you know what, 80 last year plus 50 this year, 130 bps over two years is pretty good.
Mark Smith: Excellent. Thank you.
Jeff Uttz: Thank you.
Benjamin Porten: Thank you, Mark.
Mark Smith: Thank you.
Operator: Thank you. We have reached the end of our question-and-answer session. And with that, this will conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
