We’re not going to promote, we’re not going to discount. But we are going to remind people of how delicious our food is and how craveable it is in a brand-enhancing way. The other lever for us to pull is excellent execution. One of the things that I don’t think people talk about, because it’s not a short-term fix, it’s a medium and long-term fix is when you give great experiences to guests every single day, that’s the number one reason why they choose to go back to a restaurant. It’s not because of a coupon or a discount or something, but it’s because when I went there I had a great experience and I want to go back. And so, that’s another way that you can differentiate yourself over the medium and long term and drive consistent traffic by just being operationally sound and that is our mantra internally.
We’re going to be the most operationally sound restaurant company we can be and that will drive performance.
Chris O’Cull: Okay, that’s fair. And then, the margin performance was clearly impressive this quarter. And I’m just wondering whether there’s — whether you think there may be an opportunity to give back some of that margin improvement to enhance the value proposition, either through changes to some of the menu items or —
Michael Osanloo: Yeah.
Chris O’Cull: — maybe something else that you think can maybe improve value?
Michael Osanloo: Yeah. I think that’s a great — another great question. It’s one of the reasons why we decided to forego any pricing for the remainder of this year. And that’s essentially where our pricing is coming down to 5.5% and that’s one way of giving value back. We did not engage in any shrinkflation, lowering quality, doing anything like that over the last couple of years. In fact, what we’ve done is we’ve added value, right? We spend more money on bacon. We have, I think, the best bacon in the in the restaurant industry that we’re selling right now. So, if you try our — bacon burgers are amazing and we’ve consistently done that. We’ve added quality and so that’s the other thing that we do is, I’d rather in terms of reducing prices, getting to some sort of lower value, lower cost meal, we’d rather just improve the other aspects of value.
We’d rather improve the quality of what you’re getting, we’d rather improve the quantity of what you’re getting, we’d rather improve your experience and then maintain prices as opposed to raising prices.
Chris O’Cull: Okay. Thank you.
Operator: Our next question comes from Dennis Geiger with UBS. Please go ahead.
Dennis Geiger: Great. Thanks. Good morning, guys. Wanted to ask if anything additional to highlight on the sort of observed customer behavior changes perhaps, whether it’s day parts, days of the week, off premise versus on, delivery, anything discernible over the last several months there, Michael or Michelle you would call out?
Michael Osanloo: I think we’re largely in some ways our channel mix is very stable. Unsurprisingly, our drive-thrus have a little bit of pressure on them given the promotional activity in QSR, and our dining rooms have a little bit of extra momentum given the pressures that casual dining is facing. And so, it’s — for us, it’s a really nice dynamic. The other thing that frankly surprises all of us every day we look at is that our third-party delivery partners are still doing a really good job with us. We continue to grow third-party delivery and that is great news. It’s also a little bit mystifying given consumer pressures out there. But we feel really confident with where we are right now.
Dennis Geiger: That’s great. Thanks, Michael. And then just one maybe two-part question. First, I guess maybe I missed this, but as it relates to cannibalization, anything there that you saw in the quarter, even if modest were some worth calling out. And then, the second sort of unrelated part of the question, I know we’re just spent a month, a month and a half ago spent some time on development, of course. But any kind of latest update on timing, permitting, etc., I assume it’s probably steady as you go since a month and a half ago. But any update there? A lot of folks have been shifting into next year, you guys obviously are going to get these open. So, just curious if anything has shifted with the open environment on some of that timing stuff.
Michelle Hook: Yeah. Dennis, I’ll take the cannibalization. There’s been no changes since we gave the impact last quarter, the 60 basis points to 80 basis points. We’re seeing roughly the same impact in Q3. So, continues to be fairly insignificant for us. So, we don’t expect that to be a significant headwind for us as we move forward. But it was roughly the same as it was in Q2.
Michael Osanloo: And then with regard to permitting and those things, I don’t want to sound too glib, but it’s sort of whatever that military acronym is for SNAFU, Situation Normal All Messed Up. We continue to face delays in all kinds of like last minute things with getting utilities hooked up, etc., etc. We’re just — I think we have reconciled ourselves to this is a new normal. And so, we continue to pad hours and weeks, actually months into the building cycle for us so that we can still control what we can control, build the restaurants as quickly and as adeptly as we can, and then the stuff that you can’t control just it build enough cushion so you’re not disappointed from budgeting, timelines, et cetera.
Dennis Geiger: Great. Thanks, guys. Appreciate it.
Michael Osanloo: You bet.
Michelle Hook: Thanks, Dennis.
Operator: Our next question comes from Sara Senatore with Bank of America. Please go ahead.
Sara Senatore: Thank you. Michelle, I wanted to ask you a little bit about the idea of like sort of what flow-through margins should look like. And I think in specifically, you took sort of a fair amount of price, most of the margin expansion seemed to come from food. So, as I think through like labor and occupancy, particularly or other operating, I should say, in the context of maybe additional drags from new units coming on in fourth quarter, do you have any sort of framework for like what’s the right comp number to get margin expansion on some of those six lines And similarly, in the same vein like G&A is creeping up a little bit, so, just trying to kind of calibrate incremental revenues or same-store sales versus flow-through margin on the restaurant line and also G&A. And then I’ll have one follow-up question.
