Jeff Farmer: That’s helpful. And just one follow-up on the October comp, which was 3.5%. You guys touched on it. You were rolling off some pricing at some point in October, but not entirely clear to me when. So the October comp was 3.5%. What level of pricing was captured in that 3.5% comp?
Katie Fogertey: Yes. We had I would say that blended to a kind of a mid-single-digit range. We rolled off of that high-single-digit in the middle of the quarter. We’re going to be exiting December at about 3.5% price, so as to think about that.
Randy Garutti: And the October comp was roughly flat on traffic, which was an improvement, as we had seen some of those negative traffic periods toward the end of the third quarter, as we said. So I think that was the encouraging thing, driving some good sales in October and looking ahead.
Operator: Our next question comes from Brian Harper with Morgan Stanley. Please go ahead.
Brian Harper: Yes. Thank you. Good morning. Can I just ask about the kind of the comments you made on staffing model. What we should observe there and what you think kind of the timeline for rolling that out is?
Katie Fogertey: Yes. So I would say we’re early days here on this. I think it’s a natural evolution of just the company as we have layered in some added efficiencies here with Kiosk. We have new formats here, like much larger drive-throughs. We also have smaller formats like food courts. And then we have our traditional kind of core expression. There’s just more differentiated factors that we want to take into account with how we’re thinking about staffing. Not only just to get more precise on hours used for a number of variables, including menu mix, channel mix and format, but also to make sure that we are maximizing peaks as well. So I would say it’s still early days. We’re looking to roll out some tests by the end of this year into next year. We’re going to keep you updated on how that goes, but nothing really more to share on this front today.
Brian Harper: Okay. Thanks. Just a smaller question maybe, Randy, you made some comments just about Asia, maybe some uncertainty there, how that affects the licensed business? Is that – are you kind of referring to just sales at those units? Are you referring to how you think about kind of the mix of openings as you go into next year? What were you kind of suggesting there?
Randy Garutti: Both of those, I think it obviously leads with China. We’ve got a significant part of our business there. Goes without saying, there’s macroeconomic uncertainty in the region there and that’ll decide ultimate pace of our openings as well as where our Shacks align to for sales. So that’s really the region you’re looking at. Obviously, what happens in China also spills out into our other Asian businesses through Korea, Japan, through various travel and economic indications. So that’ll be something. I think that’s probably the biggest uncertainty as we look at our license business. Obviously the Middle East has fair amount of uncertainty as well right now and will. But that’s what my comments were really looking at. I think it’s a little bit of an unknown as to how that part of our business will grow in this next coming year.
Operator: Our next question comes from Sharon Zackfia with William Blair. Please go ahead.
Sharon Zackfia: Hi. Good morning. I guess, labor has been tough right across the entire space. I think you’re kind of within 150 bps of where you were pre-pandemic, which is great just considering all the inflation that you’ve had to digest there. With Kiosks and it sounds like much better tenure at the employee level and now a new staffing system that will be going into place. Do you think kind of achieving pre-pandemic labor is a bogey that you can shoot for? Or is this just all kind of trying to battle what might be ongoing labor inflation going forward?
Randy Garutti: Well, I think it’s hard to say, Sharon. We’re not going to guide specifically to any new labor percentage. We’ve got a lot that we are really looking at there in terms of just being more effective and efficient with how we scale. The good tailwinds happening we’ve mentioned as retention and turnover has improved. But you can’t deny the continued increase in labor costs that’s not going down. We will have $20 an hour in California in April. That’s a significant part of our business. And we will have, I expect, continued wage increases over time and that’s not going to settle anytime soon. That’ll be part of our pricing structure and how much we choose to offset with that. But again, our commitment here is to being as efficient as we possibly can.
But we’ve also got to pay a great rate to sustain. If you look at our profitability improvements, a lot of it has had to do with our ability to keep, retain and find great people as that happens better like any company and certainly like us, we’ll get better at that. So, look, we’re committed to trying to improve it, but we’re not going to give guidance specifically pass today.
Sharon Zackfia: And Randy, I know you said that tenure was up for, I think, frontline and management staff at the unit level. Can you kind of give any comparisons of kind of like what average tenure is now at the manager level or hourly level relative to 2019?
Randy Garutti: We have never broken that out, Sharon. I’d say this, as we look at the industry just kind of traditionally, look, we work in a high turnover section of the industry, right? The industry general and our section of the industry generally has quite high turnover. I’d say we probably track similarly in our hourly team members turnover and retention across the industry. But from also what we’ve seen, we track much better on our management at all levels. And our managers tend to grow with us, stay with us and continue to earn. Our GMs, we’ve said this before, can generally all in make over six figures, right? Many make a lot more than that. We give stock to every GM every year. This is a significant part of our ability to retain people.
So, now as we’re growing as fast as we are, we got to keep developing that, right? And we got to balance growth and we do invest. We’ve talked a lot about this in previous calls. So much time and effort, our people team into developing people at all levels. And the other part of that we got to do and continue to do better, you heard a lot of that on today’s call is how can we keep simplifying our operations, so our leaders have an easier time coming up the ladder. And that’s the stuff we – look, I think that’s our sweet spot as a company. It’ll never be easy and we’re going to keep investing there. But we’re real proud of how the teams continue to build.
Operator: Our next question comes from Jake Bartlett with Truist Securities. Please go ahead.
Jake Bartlett: Great. Thanks for taking the question. Mine was about the opportunity to expand margins going forward. And I know you talked about a few things you’re looking into and you’re executing on with labor scheduling, supply chain. Randy, you mentioned margins being up in 2024. I wasn’t sure if that was just a comment on restaurant margins specifically. But I’m wondering whether you can help us dimensionalize any of these initiatives. What the scale of the potential improvement is? Any metrics that you found that you think you can improve upon and any way to quantify the opportunity in the line items?
