Jim Sanderson: All right, I’ll pass it on. Thank you very much.
Jerry Morgan: Thank you.
Operator: Your next question comes from the line of Lauren Silberman with Deutsche Bank. Your line is open.
Lauren Silberman: Thank you very much. I just want to clarify on the October trends. To what extent did you benefit from price taking — being taken earlier this year? Is it about the 200 basis points? Just as we think about underlying trends and extrapolate it?
Jerry Morgan: I mean, I think that certainly we got the benefit of that pricing for three more weeks. So instead of having — where we’ll have 4.9% the rest of the quarter, there’s a 60 basis point benefit on our overall pricing for the quarter.
Lauren Silberman: Okay. And it looks like compared ease through the quarter with December, the easiest lap year-over-year. Is there anything we should consider in terms of cadence in the fourth quarter as we think about the lap?
Jerry Morgan: Yes, I mean, nothing too much to really point out. We did talk about last year that late in December — our December period last year, there was that cold weather that impacted much of the U.S. and that caused things to slow down. So depending upon what happens this year that could be an opportunity for us. And there is also maybe a slight benefit coming at the end of the year from Christmas moving from Saturday, Sunday to Sunday Monday. You could get a little bit of a benefit of that. And December shouldn’t be a huge benefit, but it is a positive.
Lauren Silberman: Okay, great. And then just another follow up on the restaurant margin expectations for 2024. It sounds like the base case all else equal is for margin expansion in 2024. Can you just talk a little bit more about the puts and takes across the P&L just a 5% to 6% commodity inflation. Where are you seeing the opportunity for leverage?
Jerry Morgan: Again, I think it goes to — when you talk about the level of pricing we have and guiding to 4% to 5% wage inflation and maybe hours don’t grow as dramatically. Maybe there’s some opportunity and labor and then the other operating. I think always again, you get some benefit from that menu pricing and an environment where a lot of those costs and they are service based costs. And it seems like a lot of those have plateaued, so you can get some leverage there as well. So labor and then rent always seems to give us a little bit of leverage as well. So pretty much in all areas, I think that cost of sales is a little bit of the X factor.
Lauren Silberman: Great. Thank you so much.
Operator: Your next question comes from the line of Jake Bartlett with Truist. Your line is open.
Jake Bartlett: Hello. Thank you so much for taking the question. Mine was about your labor and your approach to labor. And this built on an earlier question as well about your focus on kind of traffic over efficiencies and driving margins. But labor per operating week has been growing a little bit less than traffic, but still growing really, really strong. Is there a point where you feel like you’re going to have caught up have to have the staffing levels that you need, so that you can get more leverage, maybe leverage the incremental sales a little bit more going forward. And should we think of the labor performance over the last year and even two years as being more of a catch up on the number of people in the stores and we should get more labor leverage going forward?
Chris Monroe: Yes, I think, this is Chris. I do think that Michael’s kind of addressed that a couple of times that we think there’s an opportunity there and our turnover is down. It’s to pre-pandemic levels and so we feel good about that. We’re staffing up. We have the right staff levels and we should be able to get some opportunity there.
Jake Bartlett: Okay. And then, as I look at your inflation your guidance for 2024 4% to 5% I try to marry that with the uncertain macro background and maybe even I’m sorry I jumped on the call a little bit late. But does that imply — it seems to me it would imply a pretty strong macro environment in 2024. Is that kind of how you’re thinking about, I mean, what’s the kind of the macro backdrop that you’re kind of presenting this guidance from?
Chris Monroe: This is Chris again. I think Jerry spoke to that just in his comments. So you may have missed that. But basically, yes, we’re not calling for a recession. We’re not seeing anything like that in the future. This would be a rather benign situation and people are still coming out in spite of whatever has been in front of them. The consumer has come out and enjoyed our food and our experience and we’re expecting that to continue. And Michael, you may add some.
Michael Bailen: Yes. Jake it’s Michael. So we did say 1% of that is state mandated increases, but also keep in mind any wage increases that have occurred that occur throughout 2023. We do have to lap those for a full 12 months. You, you do feel an impact in the next year in 2024 from things that you’ve done this year. So maybe the rate of sequential growth continues to decline in wage rates, but you do still feel raises that you’re giving today for the next 12 months.
Jake Bartlett: Okay. And last question and I’m sorry that were answered as my first two were, but it really is more about the early 2024. And as we think about the comparison, I think investors are trying to kind of figure out the impact of one year versus looking for a longer time period to get an underlying trend. But obviously the first half of 2023 was very strong, specifically the first quarter boosted by lapping Omicron. But in terms of how you view your early 2024 lapping what was going on in early 2023. How do you view that as a difficult compare or not? I guess there’s some kind of concern that trends could be much lower than expected in the first quarter, just because of what you’re lapping against?
Michael Bailen: Hey Jake, its a hard one to fully answer. I mean, our operators are going to take the mindset of continuing to serve more guests. They’re going to be well staffed. They’re going to have the product they need to serve their guests and we will do everything we can to continue to grow. And that’s the mindset we go into any year with and we will see what happens as that happens.
Chris Monroe: And we’re getting store weeks to from the stores that are opening in the fourth quarter. And then we talked about a number of stores opening in the first quarter.
Jake Bartlett: Great. Thank you so much.
Chris Monroe: Thank you.
Operator: This concludes our Q&A session for today. I would like to turn the call back to Jerry Morgan.
Jerry Morgan: Thank you all for joining us tonight. We appreciate your time and have a great evening.
Operator: This concludes today’s conference call. Thank you for attending. You may now disconnect.
