Chris Monroe: Hey Dennis, it’s Chris. Yes, I’ll start. I mean I think we were really encouraged in the fourth quarter. Our labor hours grew less than 50% of traffic growth, and that was – it’s been – that’s been difficult to achieve since the pandemic. And so there’s a focus by our operators on that line item and the fact that we have employees staying with us. Our turnover is at or better than it was pre-COVID, and all of those things provide some encouragement on that particular line item. But again, to have achieved it in the fourth quarter, we’re projecting that we can do it again in the first quarter. And so I think all that’s very positive.
Jerry Morgan: And I’ll speak to the digital kitchen, Mr. Jerry, we’ve open – we can – all of our new stores open with the digital kitchen this year, we converted 20. We’ve really been talking strategically about how to get the whole roadhouse concept on that digital kitchen format, because of the many benefits that we see not only for the commotion in the kitchen itself, but even the ability to track our cook times and so many features that we believe will enhance our experience for our employees in the back of the house. And it’ll impact in a positive manner the cook times for our front of the house table turn. So the digital kitchen is a huge commitment. The feedback from our operators has been incredible, and the demand and desire is there.
So we just – the number is a pretty big number for us, but we’ve got a great game plan, and I think strategically, we’re going to execute at a high level to do that. All of Jaggers and Bubba’s already on the digital kitchen format.
Dennis Geiger: Great. Thanks, guys, and congrats again on the results.
Jerry Morgan: Thank you so much.
Operator: Your next question comes from the line of Sara Senatore from Bank of America. Your line is open.
Sara Senatore: Great. Thank you. Two clarifications. The first is on the labor point, you made the point that you grow hours less than traffic. I guess, I was under the impression that maybe as we think about fiscal 2023, you were kind of getting to full staffing over the course of the year across most of the restaurants. So while your wage inflation maybe was highest in the first half, maybe your hours were not. And so I was just curious if there is sort of an opportunity in the second half of this year to maybe have more labor leverage from that perspective, even if wage inflation is perhaps more moderate and whether the technology may also contribute to that. So that was the first clarification, just sort of the staffing approach through 2023.
Michael Bailen: Yes. Hey, Sara, it’s Michael. Yes, I do think what Chris talked about that, those labor hours growing at less than traffic is something that could certainly continue into Q2 and into Q3 and into the fourth quarter as well. Our operators are focused on that productivity. People are staying around longer. So that is certainly an expectation or something that we are going to be working on all year long, getting that better productivity on the labor hours.
Sara Senatore: Great. Okay. Thank you. And then the question was about, your mix has been very consistent, very just modestly negative, even though, we seem to be keep hearing that the industry is getting more focused on value. So are you seeing anything that would suggest that your relative value proposition is that gap is narrowing or people are making different decisions just because it doesn’t appear to be showing up in your comps at all, but curious on your thoughts on that?
Jerry Morgan: Yes. I think just like, to your point, it’s not showing up glaringly for us either. I think our value has always been built into the menu, and the consumer feels very good about our offerings. And from that standpoint, whether it be our steak or our chicken or all of our offerings are country dinners. So we feel very good about where we’re placed, but we don’t see anything to indicate that there’s a lot of movement within that menu pricing.
Sara Senatore: Thank you.
Jerry Morgan: Thank you.
Operator: Your next question comes from the line of David Palmer from Evercore ISI. Your line is open.
David Palmer: Thank you. And amazing quarter-to-date comps, really amazing.
Jerry Morgan: Thank you so much.
David Palmer: I wanted to ask you about KDS, you just commented a little bit about some of the things that it does for you. And the good news, I guess, is that you’re not – you don’t have to be pioneers on KDS and you’ve seen it in some of your brands already. Can you maybe give us a sense of what it can do to the metrics that the Wall Street nerds would be following, comps, margins, things like that? Maybe even this is something that will help you on that labor leverage, where you might be able to add less hours because of table turns and you make the shift work better. I don’t know. But is there any metrics that you could share what it does for you?
Jerry Morgan: Well, David, thanks for – I think that – it’s Jerry. I – the benefit for us is really about the efficiency of the overall kitchen. And the way that the digital kitchen organizes through the screens versus through the tickets creates a lot less chaos, I guess, you could say. There’s no doubt we can track our cook times. There’s some real positives from that side of it, as we’ve already seen. And again, we’re only 40 or 50 in, but we are very committed. Every indicator that we have. And Michael will talk to your Wall Street nerd thing, but I will just talk to you as a kitchen guy. What I see in those kitchens is communication, a consistency. It just organize it, so people don’t stress out when you got a whole bunch of tickets in front of you and all of that. And we can clearly monitor how long our cook times are. So that will be a big win for us going forward. And then I think Michael has a couple of comments.
Michael Bailen: Yes. Thanks, Jerry. Yes, I do think, again, that Comer kitchen does lead to a happier roadie, who has been less likely to seek other employment. So maybe your turnover improves because of that, and you’re keeping that efficient, productive employee for longer. But as far as what it may do to the front of the house, I think we have found that the digital kitchen does time the food out a little bit better. So maybe those salads get out as an appetizer to the guests a little bit quicker, and the entrees are getting out there a little bit quicker. So you couple that benefit with our roadhouse pay, our pay at the table system, which is speeding up the check and change portion of the dining experience. And then maybe at the guest discretion, you have shortened the table turn time, which allows you to quote a shorter wait time to that next guest.
So by the end of the night, maybe somebody who was previously being told they could be sat at 8:30 is now being told 8:10 or 8:15, and that may make all the difference in their willingness to stay and us getting another table turn in the restaurant.
David Palmer: And is this something that you’ll ramp the deployment of? I know, you wait for it to be pulled, but I would imagine at this point that it’s being pulled heavily. I mean, how fast can you roll these out? Can this be done by the end of 2025, for example? Any sense of that?
Jerry Morgan: Well, I think we’re going to try to get through this year and see how these 200 go, and then obviously, the intention is to get the whole concept done. I think it might take a little longer than that, but we want to do it strategically and we want to execute at a high level for our partners. So we’ll be as fast as we possibly can, because we’re committed to it and believe in it. But I don’t want to put a date on it yet.
David Palmer: Thank you very much.
Jerry Morgan: Thank you.
Operator: Your next question comes from a line of Jeff Farmer from Gordon Haskett. Your line is open.
Jeff Farmer: Thank you. Just some quick modeling follow-ups. Assuming the 2.2% menu pricing takes place in March, what would Q1 and Q2 menu pricing be?
Michael Bailen: Sure. Hey, Jeff, it’s Michael. And again, that pricing will go into effect our first day of our second quarter. So for the first quarter, you won’t get any benefit from it, but we’ll have between 4.8% and 4.9% pricing in Q1, and we’ll have basically the same thing in Q2 and Q3 about 4.8% to 4.9% for both those quarters. And obviously, if we didn’t do anything in the back half of the year, in the fourth quarter, we would only have the 2.2% in Q4. But we’ll reevaluate what’s appropriate as we get later into the year of what we may want to add on to that.
Jeff Farmer: Thank you. And then now, weather impact on the quarter-to-date, same store sales in the Q1. Did you share that?
Chris Monroe: Yes. That’s – this is Chris, Jeff. January, we had – we talked about that in the prepared remarks, but January had two really tough weeks, and it impacted the guest counts by about 2.5%. And so if you take that, extrapolate it into the first 50 days, we were down about 1%. So the 3% growth that Michael shared with you, if you take that weather out would have been 4%. So there was a lot to be proud of in those first 50 days. And our operators, they slogged through those two very difficult weeks and took care of the customers that were able to show up and serve them well. But it was a great first 50 days in spite of those two weeks.
Jeff Farmer: It was, definitely. And just last one for me. Q4 check I think you shared was 4.8%, but just some quick breakdown of pricing and mix for the Q4.
Chris Monroe: Jeff, we had 5.5% pricing in Q4, so therefore we had about 70 basis points of negative mix, giving us that checkup, 4.8%.
Jeff Farmer: All right, thank you. Pass it on.
Operator: Your next question comes from the line of Lauren Silberman from Deutsche Bank. Your line is open.
Lauren Silberman: Hi. Thanks and congrats on the results. I wanted to ask first, just on the other OpEx, it’s been growing pretty steadily. Even if you exclude some of the one-time items that you’ve talked about. Can you just help us understand how to think about OpEx growth or on the other OpEx side, in 2024?
