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FRGI Fiesta Restaurant

Participants
Raphael Gross Managing Director-ICR
Rich Stockinger President & Chief Executive Officer
Dirk Montgomery Chief Financial Officer
Nicole Regan Piper Sandler
Brian Vaccaro Raymond James
Call transcript
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Operator

Good afternoon, and welcome to the Fiesta Restaurant Group, Inc.

Third Quarter 2020 Earnings Conference Call. Today's conference call is being recorded. At this time, all participants are in a listen-only mode.

Following our presentation, we will conduct a question-and-answer session. now Managing turn Director would to call I Gross, Raphael at Instructions] like the to over [Operator ICR.

Raphael Gross

market Thank quarter you. today. the XXXX third close earnings release Fiesta was issued Restaurant Group's after

already you website company's the accessed If under not it, can on www.frgi.com, be section. Relations it Investor the found have

regarding to those Please financial note, could reconciliation release. be its today's company's can the the will filings. evaluating cause SEC comparable be the useful Important the which costs a implied historical of inform without Before and make call, believes or certain give or will company's conference should that such materially are that be company found various materially and to during from budget, discussed, such statements GAAP company's and expressed in management information. prove information forward-looking call differ include, you projected be in Any the actual differ outcomes on statements can These in begin, no assurance statements that to measures factors position we expressed of like is forward-looking by available statements, measures earnings today, or in plans, financial can forecasted the for that Actual results considered a future for to performance. limitation, non-GAAP with company from statements operations. what statements business not may results and forward-looking such that of during operations, I'd accordance GAAP, discussion substitute and correct. the will future based results be and not is company results strategy, as forward-looking isolation in prepared in objectives the

call Rich Chief Stockinger, On the will the Officer, turn Officer, are Montgomery. And Chief call and Financial now, to and over Rich. Dirk me today Executive President I with

Rich Stockinger

call on today of and the priorities during an support highlights. for update. third for our the be key provide like on the quarter year, the sales thank Thank the all I'll update then their COVID-XX today, will the of financial our first a participants you, Ray. Dirk balance topics driving efforts other results of and crisis. continued investors to I'd status three covering

priority continue managing and members top been the Our the and a be well-being crisis will of effectively focus has with and through to our safety team our guests. COVID-XX on

Our primarily infection certain and began we decision selectively our our the September, and was patios rooms our hours close late limited increased driven In to concerns dining re-opening rooms rates temporarily with effective both dining about XX, July in by markets. brands. at capacity

to model will continue make to safely as operate. needed changes our operations We to

safety amount Our and member operations significant protocols COVID-XX customer leadership teams taking precautions. ensure time have through a of been and guest to team steps appropriate and and employee the spending

adapting regulator are changing We continually procedures those recommendations. to conditions and health

is liquidity. priority second Our maximizing

we the should and to quarter into the last third increased $XX.X last last adjusted improvements XX% benefits was the margin tax CARES improve million, adjustments fourth believe liquidity We $X.X We Act margin adjusted included continue year, afternoon, through million. sales quarter this in and $X.X improvement is rates of versus better restaurant-level G&A pre-tax in EBITDA primarily year's we details which to and allowance capital saw to the trends. quarter continued at that in restaurant-level published strong described release earnings second from operations. improved deferred growth benefits compared margin and third by We the more Net the efficiencies, valuation versus million. consolidated EBITDA year current Driven was income that the and quarter. for management, and generated from course margins working cash flow significant over profits the quarter both income from

was X, of the $XX.X XX, was and million. COVID total debt the on crisis was $X beginning debt $XX.X revolver the As million March was of our revolver million million. net November $XXX.X At debt net total debt

ultimately by debt our in earnings months. debt. owned be net XX remaining non-GAAP offers Please there fourth in sold that no properties the our We on and be although X.X million successfully assurance during the $XX.X more quarter, calculate have the properties see on the during balance another transactions can properties, our have contracts last those We sold quarter, revolver seven four the release reduced five details we will net completed. disclosure for how of or

again, at potential this exploring although agreement, of we plans will in on time. liquidity our refinancing current completing any are the credit details make of his provide Dirk We cannot the assurances our update. also transactions refinancing additional

priority third sales key new and profitable finding ways better to is Our growth. drive

evolving had As clearly casual our fast our our for on more consumer business dining had been a dining-in historically occasion peers comfort the weighted towards status brands pandemic the reminder, The an of the levels mix compared to has with at approximately of heavily XX% impact revenue. experience. both

key has requirements, rooms currently Our for not XX location-by-location Tropical on be health Taco will criteria and team members generate and our approach and our two Pollo on dining on opening basis, open. a dining a has dining our environment dining a open, to safe ability sales ability staffing on based patios deteriorating our profit rooms room XX based XX rooms to guests, has while and to Cabana incremental margins. maintain

business. sales which dine-in should We units are for weekly determine trends open evaluating be do

We well counter, our ordering. continue online to delivery pickup, as as drive-thrus, and operate curbside our

digital customer platform in restaurant investments channels. We our enhance those experience also have been in continue the make and infrastructure to and will our to

business however the our progress to enjoy on model channels, during designed customers our third wherever to made very developing enable good safely all have they a quarter across We brands choose. better and

fully both experience. released curbside We a to for carryout apps launched During the quarter, create both much-improved at third we new brands brands. digital

speed to service. We experience enhancements continued invest of drive-thru customer in improved that

trends in show brands versus third continued growth the And second the quarter to at comp October both the led improvement quarter versus efforts comps. the those of sales All month-to-date third quarter.

innovation and recently. excited focused delivery. pressed drive-thru Pollo are channels that line an have of enchiladas very such return about and on been Cuban expanded with as menu Cabana, Our platforms both our new at sandwich launching new We're at offering Tropical attractive efforts growth items Taco the in

We driving are also potential margarita by the customers upside which encouraged average of Taco, the new our and bringing growth. is at brand platform to check

environment the with our highlight I'll brand. QX sales to results Starting initiatives of Now, changing Pollo each this Tropical. and in accelerate at status

Third comp XX.X%. minus sales quarter sales over third sequentially quarter restaurant quarter acceleration with strong comparable of showed the course of the

continued sales Driven Pollo negatively other challenges national quarter regions, impacting XX% menu our part impact XXXX very in The points, after impacted the basis in comps but drive-thru approximately grew that of per quarter compared October. despite brands. improvement to by week sales Third average impact. trend Dorian more state second came speed versus weather compared to quarter innovation showed by efficiency versus of last a Pollo were benefited XXX in XX% in year. improved all from sales the growth This negative even initiatives, third good Hurricane and COVID-related by of for into also Florida service improvement and by adjusting being the

will aggressively believe forward, continue channel continue can technology improvements to and drive-thru we model consumer going to this with We operating focus preferences. grow and on shifting

both Delivery the second with quarter the part XX.X% by last compared third quarter delivery per Average in and year. traffic tripled off-premise in than the to X.X% week in compared expansion to driven of traction sales from growing accelerated gaining are providers by initiatives sales to total third one year, third the last from off-premise to the the average sales more Our delivery sales with only service four weekly growth. last driven check year. XX% quarter penetration

live Pollo expect a Bottle to online in late Rocket, by much-improved design experience. grow sales went developed through app, significantly for we July. digital new Our this our developer leading And

sign-ups since app compared was increased prior Although live weekly app to app. the the new have loyalty to just XX% launched, rate went recently sign-up the average the club

the Chicken On a a test. launched Cuban, sandwiches, Pork five menu a of October The a front, Latin-inspired at new Roast successful after $X.XX. line and to sandwich, Grilled Cuban a in line our early and Mojo news of new of the our is $X.XX launch Crispy a price very pressed innovation including Classic sandwich, biggest was

transactions are doubled. the And roughly hand-pressed with and travel very delivery. and results well check are very day the average growth the brand per significant sandwiches drive-thru on in opportunity transactions these suggesting have launch well sales the average, sandwiches. Early with above of encouraging. for is All a for check Handheld category sandwiches check

the now the that will are social across new over. line sandwich Florida media and digital marketing be traditional, through elections We

during the staffing margin On improve side, a continues improvement. food did cost our efficiency to drive once again team great to The the sustainable management optimizing operations models and margin job quarter. team

restaurant basis from quarter year. and to XXX over points quarter level second XX.X% margins EBITDA Third grew adjusted last were the

strong for proud We are of this third team very Tropical quarter the performance. Pollo leadership

Cabana. Taco to Turning

average through opportunity pre-COVID. innovations from our is realized into over compared in The delivery, contributor acquisition growth This XXXX The month. and building spicy million at compared such the platform. weekly also growth menu likes check excitement will to improved mango important year. X% revenue peaked more platform, September a continue Driven on a X.X% new has sales brand. promotion X% transactions. schedule the versus new a A penetration XXX% through great sales the over credit over third live as the XX showing which on second XXX% promotional Alcohol an impressions, that growth promotion. believe promotions. quarter media, The the with of The remainder $X are the to Delivery penetration X from third with improvement the success quarter we transaction Taco the the based brand developed growth is than is to calendar during this above non-alcohol example to in Off-premise grow four August, the strong. third average and last quarter research bringing this second Palooza the of app. last more to $X, new In also down last quarter is has in but seasonal and creative averaged card XXXX social sales strategy menu sales the we featured liquor XXX summer customers promotion event the has views, tripled a bringing post-COVID weekly for grew mix customers. was in platform increase customers comparable in average revenue of we growth is restaurant margarita sales flavors to basis around promotion comp trends. to promotion, page the quarter, that platform including in purchasing be and improvement social per customer points of third online events to leverage XX% acceleration the last and The in been momentum for September in compared drive-thru new driving significant by new X% the and quarter in sales increased sales XX% comps a in quarter, pricing, year, levels. much-improved innovation our A guava. engagements continued ran over month-to-date weeks revenue channel went compared Alcohol XXX% to X.X% We to increase increase flavors had bringing this quarter. improving trend MargaritaPalooza prior X.X% The rate app significantly the the averaging the XX.X%. very transactions and of compared second business margarita to in margarita weekly and October MargaritaPalooza The sales July significant margarita strawberry from acceleration first accretive, with and to expect reach, business media off-premise through in year. was during year. increasingly value our

higher in made well selection In culinary our quality has to recipes Late a in September, we of America. line heritage years culinary of the new who results. test in brand. to Institute the and true process. culinary the October, late flautas, out of of Culinary The was and exciting launched This very previously Finally, the by refocused criteria differentiated Tex-Mex that Director and and part an and ideas XX-year-old and out XX focus we we and that quarter, Sergio Remolina, began some third quarter, this late continued in of second chef, Latin to on possible line third Studies we our -- experience of has improved coming our in to QX are authentic menu was the show rolled at Cuisines enchilada expanded tested more of

adjusted to well driven the X.X% waste our outstanding XXXX%, to margin and optimizing second EBITDA quarter, significantly margin did year, basis in improvement above reduction. of part restaurant margins teams improving versus last points margins to to by adjusted restaurant and labor staffing Restaurant-level XX.X%. million, $X.X quarter from by grew of terms in last year's was significant an sales, XXXX. X.X% lower adjusted for Taco improving in job margin EBITDA efficiencies and operations XXX third over cost improved last costs third EBITDA lower from In the improvement, Cabana year commodity driven Taco the in above X% quarter. rate to model Taco from The

team Taco third encouraged We established foundation margin by quarter. and the in the growth are the sustainable very growth revenue

plan and we towards channels improvements in at investing important. to brands to more in most As operations dining convenient XXXX, we that experience the both customer-facing make technology look continue are forward the

plan implement automatically the the restaurant experience, During the to enhancements when including close pickup. a teams to customer is fleet curbside operations fourth customer for quarter, allow we to our to technology capability our to to improve geofencing

of We improving drive-thru. devices taking updating speed will order our POD service of and drive-thru to boards, for the drive-thru process quality menu and and marketing continue improve

by profit, ways are improve In believe XX% margins in brands year. both improved investments excited catering. enhanced introduced and and margins new and over successfully, restaurant-level by prior-year needs a returns will in last programing sales. have sales meet on managing finding to In quarter the loyalty to initiatives second third provide versus progress for future. we consolidated EBITDA summary, the programs our COVID We that are being the we adjusted made have quarter, addition, customers' we quarter growth the We with our the crisis recently adjusted made the and growing and EBITDA grew at including compared

the with $X debt I over are million debt on in the not and financial million, our $XX stronger at at of detail. operations more reimagine our opportunities beyond rent leadership team, our In to team, for thank while to down to seizing meet and current Dirk landlords. by today during ready team than better crisis our addition, my be business of to began, this the the year, opportunity needs. I'll find our only stronger but net customers' that staying to will members we end to executive cover to we committee, beginning the net ways Thanks our tough highlights capitalize crisis, the await the persevering reduced COVID even now when to in over to on compared want the crisis. quarter, turn it to

Dirk Montgomery

Thank you, afternoon, good Rich, and everyone.

both period with restaurant which results COVID-XX brands, by Let quarter and XX.X% the me at update an million start our revenues Total our was Cabana. Pollo the then restaurants their decrease declines you sales Cabana a sales prior-year Both the improved on due from in closed principally provide to reviewing and and cash second liquidity. restaurant at with to comparable the of quarter sales from Taco to third because significantly quarter. decreased $XXX.X along third Taco the related to Tropical trends impact comparable of

to evolve grew our freshly-prepared quarter delicious to order sales during food consolidated operating versus the for trends. Pollo in total comp the the to quarter. they revenue third and in brands monthly sequential continued love. addition, sales third safer also during it perspective, third Both October improvement improved we make off-premise easier Tropical channel In From the comp as XX.X% of generated momentum our a model strong to guests showed sales quarter

the driver average per and successful menu such per which quarter, quarter Strong favorable $X.XX strong sales was increasingly included driven or primarily $XX.X diluted the $X.XX labor add-ons net the brands, from an by income we earnings quarter, rate details. adjusted At promotion the Consolidated charges basis, prior-year measure, important $X.X both or the closed Tostones diluted promotions diluted versus of weekly consolidated to EBITDA, in or reductions add-ons million. margin growth income second As XX% This sustainable showed third and share million in a changes of impairment diluted income goodwill charges, net led believe, versus versus are Rich $XX.X diluted improved revenue in This menu last indicated, an rent diluted non-GAAP included both more our is were share rate the MargaritaPalooza from per net per by year. diluted to in in brands $X.XX as of and reconciliation adjusted current adjustments to trends. table On in compared share at valuation non-GAAP year prior-year million of Tropical. drivers and XXXX. adjusted net net growth and or our of sales was and quarter at tax. business, Please major share Topped negative $X.X per impact food from going $X.XX of Pollo year federal an primarily asset a the offset compared the the $X.X $X.XX per restaurant improvement, growth negative $X.XX approximately quarter forward in million in release loss impact impact for impact increase this restaurant share to efficiency charges, Taco's margins see share cost million last at to for sales of third impairment $X.XX the primarily allowance, drive-thru and tax deferred income. $XX.X of tax the other million and per third share

sales decreased driven of transactions, restaurant XX.X% to last decrease decrease quarter in net brands. impact of in Tropical individual delivery of third quarter, This in lower. in restaurant Pollo in Dorian versus XX.X% have year points basis penetration year's grew in compared Hurricane decline for that for X.X%. comparable and penetration adjusting in by and over of mix average At drive-thru the XX.X% a net check, sales year. quarter of driven XX% impact, increase X% third impact tripled mix quarter partially sales comp to would to more in a offset approximately negative from penetration items pricing. this our X.X% After been third that at the a XX% primarily sales check XXX consisted of last check year. increase approximately sales benefited the increased year sales comp by to Delivery turning Now by and grew Drive-thru third drive-thru than comparable and average the and product/channel last menu pricing net third year, delivery by an was increase while increases order. dollars Pollo Tropical, quarter average last approximately increases of product/channel of The for Note per versus grew channel price and versus sales sales the the XX% by and XXXX. of

to adjusted $XX.X to SEC a last Tropical Turning to year. profitability XX.X% by EBITDA, from Pollo Restaurant-level third brand in but million as measure quarter. our as the non-GAAP XX.X% million, for $X.X decreased at sales of filings, quarter of in a percentage third defined the restaurant the improved

year's basis labor operating adjusted partially compared and driven last XX% increases costs X.X%, for XXXX. alcohol exceptional restaurant offset X.X%. Cabana, last and penetration, sales. of third-party part due of net higher Management Pollo were discounts, of great quarantine during Pollo sales by cost over lower million lower restaurant -- an a to the efficiencies partially comparable restaurant-level the to higher decreased in in million initiatives. to pricing of Tropical decreased representing related a and managing higher was costs. sales higher experienced $X.X of As this decreased Taco hourly to offset restaurant quarter lower last in part We considering to a Adjusted by sales, in Pollo increases by related percentage check unit At net outcome quarter sales and margins in restaurant third decline XX.X% We by promotions rebates decline other X.X% transactions offset roughly channel due promotions. offset increase pay, offset a mix year, the check These rent Lower $XX.X expenses, EBITDA masks increase sales and XX.X% fees. to sales, of costs. to and delivery discounts, by quarter price lower grew view partially compared million as by percentage primarily driven lower COVID-XX comp including per delivery of mix by costs in last by revenue product drive-thru roughly decrease versus mix, a efficiencies, related of channel commodity decrease as drive-thru consisted partially last food pricing. costs job bonus by XX.X% increase XX.X% efficiency year, operating in partially of comparable with Tropical drive-thru cost Taco by channel due net in labor This menu of wage in XX.X% expenses the and points and by to alcohol in and impact year, third and of sales driven third incentive average to and Tropical XX an a increased part and compared driven the did and year advertising expenses last to and product were year. which average labor of sales in incremental sanitizer. X.X% transactions, and for an restaurant in Despite The to increase year. EBITDA included compared improve sales, incurred wages orders $X.X

in defined prior increased Taco from $X.X SEC or Restaurant-level third brand's $X.X million sales non-GAAP million restaurant or Cabana at of EBITDA, $X.X of the sales, million to filings, XX.X% by a as restaurant profitability. to X.X% Turning our year. quarter adjusted measure

related initiatives, by sales. negative and costs XX.X% partially and EBITDA expenses delivery Cabana Adjusted Driven discounts restaurant offset lower higher menu to to partially Taco increases, in and rebates allowed costs, impact by million XXX sanitizer ability by costs fees lower percentage XXXX. third by million Outstanding decreased including a Taco Pollo, and discounts. sales mix, masks, of partially increases the last pay and comparable expenses, promotions quarantine and lower basis Taco to to of has million Cabana and year operating rent lower sales, in and hourly and points lower taxes, due year. compared incurred cost offset decreased commodity to sales discounts, third Taco due the as of expenses. -- Cabana COVID related of in price points. -- to restaurant sales labor COVID-XX restaurant versus $X.X As efficiencies, percentage lower wage incremental food and third-party work rebates testing. cost basis third net to efficiencies lower other labor EBITDA Similar a by team's manage our there. quarter Lower were operating of were adjusted to partially management and offset Cabana bonus incentive related increased advertising to and improve margins quarter and lower addition by wages the for included offset of at higher restaurant-level which quarter costs payroll to last taxes efficiency These the $X by XXX to higher $X.X

prior as result study a income by from benefit CARES segregation a changes had we permitted primarily quarter of and XXXX. accelerating periods taxes, those depreciation completed a income cost and assets. a million allowed to was related return. valuation taxes filing net third $X.X tax of higher of This This Act These in the net third tax tax income from tax discrete the with to in were federal our rate to XXXX the prior deferred quarter. benefit back assets reduction income additional in acceleration a us the resulted operating tax against in items allowance carry deferred losses Regarding and

Let of our third on our we debt, touch and amended The in borrowings in me and the senior reduction under the quarter, lease liquidity. and outstanding including million million $XX.X cash At million facility a beginning extended $XX.X non-GAAP had million the $XX $X.X payments cash from our in quickly XXXX nine of in capital credit obligations. in defined operations, debt, and to November our company-owned of sale the $X properties. of SEC as vendor in filings, revolver funded million by flow $XX.X million at the X, net was as measure including crisis, cash or COVID sale-leaseback from end

pay in had owned sale XX have properties for sold all seven for previously, November. indicated we or been enable close We that marketing sale-leaseback, through we've currently or sale-leaseback remaining which outright remainder of the we transactions offers As further nine early contracts year, sale the the additional with of being to or properties marketed place to expected of company-owned down. debt have

during can assurances be no or quarter such completed that transactions there However, will fourth all. be at the

this the time. uncertainty of exploring refinancing potential at We are or agreement, the timing of also completing any make current our refinancing transactions credit although we cannot any assurance of

Turning third million $X.X were $X.X of which included expenditures in primarily the for million technology maintenance million, quarter Total investments. for and corporate $X.X capital to expenditures. capital XXXX and

In safe expenditures they also expected work has time are efficiency. our not to keep to As only million. capital reminder, job as this not our but operating guests done tremendous a summary, a XXXX our $XX challenging team during tirelessly improve exceed

financial we our that growth questions. have subsided. now the position Thank put and to up believe Fiesta the is actually already we we open you with to sales, channel now, at emerge will the pandemic apps the call positioned Operator? delivery believe was we has better capabilities, new once including and for listening, we've onset stronger addition, in initiatives place than In pandemic. curbside it of Combined

Operator

ahead. Instructions] [Operator first Nicole from comes Please question Our Sandler. go Miller of Piper

Nicole Regan

happy first A question in cycle Frankly, the earnings but lot this your this follow-up October improvement. for peers. not update then Hi, on a of hearing question on afternoon. drive-thru, just comp and we've been see so thanks from what to much the comps. that's a Very

some numbers so, by looking wondering I more in actually us something of for XXX Maybe different points And October the context. basis And Can give XXX by year. and comparisons basis through prior was just difficult get at context? if a points. Taco, quarter. give is the actually little you get see comparisons could the there in that just Tropical I I look Pollo easier you

going wanted or you. is something model else there you to Thank if on? that So just improvement,

Dirk Montgomery

Sure. Thanks, Nicole.

So on of the Pollo continue third as accelerate to about drivers the we into benefits the side, quarter think the head seeing we growth I some think in we're fourth the of talked that quarter. I

as side, On year. the fourth the we Taco of had in last comps a deceleration you in quarter noted,

the and early as we combined the we're initiatives So drivers on fourth margarita I as heading growth think are what new that continued into see effective promotions with product quarter. our platform, really here

Nicole Regan

and try Could us me do more maybe way. commentary? XQ you Let rate XQ give what with to-date to we could understand then of exit that one

Dirk Montgomery

Sure.

we month. -- rate we press disclose exit comps So, release, the in the by

to have of Pollo down for tail recap, quarter. down third We give the -- that comps Taco monthly from X.X%, comp for end were the the as were of XX.X%. on specifics improved at the don't at, we in-quarter don't in past, just kind in rate September So trends trends, but the we they the

Nicole Regan

overall you through talk maybe the days almost it's drive-thru? I And going drive-thru think and the said metrics? performance what measuring speed, of of guest we XX%. in you was about around what terms still satisfaction percent up accuracy right. then then All Can everything, and And are frankly, these sales,

Dirk Montgomery

Yes.

first. So, question we can answer second the

in So about -- think I drive-thru? -- are you talking terms around and specific of you're metrics

Nicole Regan

Yes.

Dirk Montgomery

okay. Yes,

trending in we're drive-thru the our improvements brands. definitely fact range, quick-serve. X low-X in the speed a are they -- of different, at in we both Both bit little service the brands is year-over-year actually, of both minutes are but seeing which drive-thru, on is are proud So benchmark that

customer quarter. around Taco. where you can actually part third they've have been service think the significantly, -- repeat measures particularly at I Nicole? service improved I'm sorry. Taco's customer the improved, sorry, dramatically that of year-over-year other into question, customer metrics, first I'm

Nicole Regan

Sure. these I -- them the XX%, just sales it guess could just if all but you think of was -- of said curious all I it, drive-thru? almost I days. be what percentage And are up of

Dirk Montgomery

Yes.

we mix comments. drive-thru I in the prepared for think commented relative the on

back go just me those. Let to

me with -- then and Pollo in range. here. total -- Taco, is XX% bear of for So, the penetration the is penetration Pollo XX% That's we XX% revenue. as was for commented, just

Nicole Regan

you Thank much. so right. All

Rich Stockinger

Nicole. Thanks,

Dirk Montgomery

You're welcome. Thanks, Nicole.

Operator

Raymond question next ahead. Vaccaro comes James. you. The Brian Please go from Thank of

Brian Vaccaro

to of you're we've to make the experience. the Good further and in some on wanted I evening. drive-thru investments Thanks. circle planning back made around

and I existing takers menu average question you've like? or could And handheld suggested it'd do of seen, some be what I have whether in selling guess help it? is, boards. and via order these think place you in to And drive-thru you perhaps the digital tested have you sales you benefits the speeds, the or benefits quantify extent or check mentioned units,

Dirk Montgomery

Sure.

So, we've on -- progress -- done the the work just more more on more PODs had and PODs reinvestments.

POD We yet, essentially the haven't in an we're completed the is program the but is, we're POD doing device. payment the -- -- well, updating but what a order-taking

the line. working what upgrade advance in is we're distance process be and which to so to also orders we're take will signal more doing those We're our allow And to in capability, connectivity devices actually payments faster. working able to us on

the we're really updated to the just many speed. implemented that deep say signal what and of So if to the cars that and specific cars the imagine, benefit, you the can orders payments. And improvement XX got processing our PODs if have a as you can with so only getting signal is extending those technology deep, goes Frankly, that benefit as far peers in our go payment. six you've of

really order. seeing is And actually metrics we from so about in in terms we're speed of that speed cycles. of the line the turnaround service definitely improvements talk The order

also a do compress to investments time. way prior that car to payment the to really in in is us allow -- going line POD an your you're and placing you're and what technology are So is order, and to there when in

good -- to So improvement all it's in improvements in is it's handle -- flow-through. -- order we've news going about reduction. increasing our The really that really to -- capacity the kitchens order actually order have our speed speed proven that significant

right a constraint modular So for kitchen not results, that's reengineered speed in of add, process -- now, that going there actually And more good line might we're in -- the I assembling in for orders. is of with the faster not allows components we're create we're terms testing to kitchen. a

think and question. sorry. about was speed. order really -- I there Brian, the kitchen were side, it's to that as two both, -- repeat And the working side well the all you we're there efficiency So I'm can parts as

think answered only one. I I

Brian Vaccaro

what check, sales you of average -- yes, if to of any [indiscernible] of seen the sort had just was related terms I you if or in Yes. you've quantification boards, benefit digital this menu at point?

Dirk Montgomery

Yes.

to -- update, go really set, huge -- in -- but the opportunity in we're increases it's there. very an frankly, there. menu in We're check We've of to answer got and average us going benchmarked we've That competitive should the due selecting to process technology we've big that opportunity for our is create platform the with, early got a a add-on no. sales. board our digital stages against in which the So, we're resolve

Brian Vaccaro

cost not some thinking through walk reduced near-term waste each I months, how of to that's an at reverse maybe XX both maybe hopefully margins COVID? about reduced how efficiency on reductions right, gains guess I'm and other or of could out Obviously, like, things great. you that have you there, sort brand? advertising. the efficiency if side All patterns but whatever And some six, could, the through across or menus nine, line. budgets, maintenance as and and like significant you environment playing brands shifted, of normalizes I see the obviously quarter-by-quarter, could underlying streamline order repair might margins, shifting And guess gains multiple you anything for of walk we see

see you of and kind ebbing this as we environment? through Just how flowing move the

Dirk Montgomery

a of Sure. those let take kind at time. so, one That's -- me

general levels. there back we because leverage this -- prime other for the sales, historic we think XXXX. Florida, sustainable. I'm cost us, component and seeing head toward still fixed high. felt -- the in we for officially last versus or improvement which in of is on G&A OpEx a certainly cost price but and kind I is labor would maintain for given that to should you beyond that, as wage labor, we for -- item ability we you the but increases largely on there not better XXXX being XXXX, -- pointing $XX. passed, difficult with reduce to do but cost on increase last -- are expect we far state on That's a we ability food food going the That's be breakdown, But we're there. the so climbs year lines our you and the We Obviously, very as in category, to maintain generally think haven't sure margins a the front minimum there I margin maintain in not if they're OpEx was grow -- largely seeing to aggressive if like G&A cost that speaking, year. there been passed, be that our we about think it -- we're negotiations big next expense, those in -- I those legislation pay to -- of the -- see our we know it's we In to a costs versus year ballot that stable we that I into the side completed the say, price good do revenue to a feel can easily historically. through accommodate expect, lot And but item, of as

Brian Vaccaro

what any accomplished front, savings versus incremental you already G&A have you've sort year-to-date? the of identified On opportunities

Dirk Montgomery

looking -- efficiency, that No always this improve activities. front news time. at news to particularly No to on try new -- nothing yet. the in We're no non-guest-facing

Brian Vaccaro

out going Okay. demand the you wage labor mentioned not when income see be it on sure of to you I $XX the of you then to what think last, And the there, by the segmentation study going ask And both I'm income you, was the and in have customer bucks, might customer the of I but perspective? bands? was, do briefly I your minimum last guess percent a how and completed and state Florida XXXX. you time cost I sense increase think that do the playing a average question sort lower-middle the base

Dirk Montgomery

the So, let that first Brian. answer me question of part first,

not is it, phone everybody be see September time-based. the So on enacted by for the who didn't required XX. legislation, -- It's just is to

have we the that So, phase time in to increase.

So, there -- the sorry, legislation? and around around that, -- was another question I'm what

Brian Vaccaro

have will was could Not through if legislation certain the I that seeing obviously growth their trying customer what really percentage income a be benefit through base your think to wages. itself. of

different on or average what have a you if that income or sense was, asking So might what sort came of of of I traffic share? data bands? guest be was you to You your percentage sales from any had the of income your able

Dirk Montgomery

benefited we have likely customer would -- a but say of specifics, our don't We by legislation. wage service Yes. any large kind of be employees any percentage that base are that would positively

-- well, So, I expect going that to our it's significant be think a percentage certainly customers. for think I we of benefit a

Brian Vaccaro

bit? the hourly the average at employee us today a wage Tropical? help you cost for can And What's frame Pollo an little Okay.

Dirk Montgomery

Yes.

the in wage our the now average right $X.XX employees So is for range.

the the -- straight-up pricing, -- be annualized roughly would no impact impact $X.X So just cost cost basis, cost the an for us million. to with if on

Brian Vaccaro

you. Thank great. That's

Dirk Montgomery

Right.

basis roughly So price point XX increase. that represents

if With given that's we offset taken doesn't the we to aggressively increase, be that remind, offset that by just XX. way, our at some a like, the would -- partially to haven't to in couple increase level until which hopefully September to not could be feel the not it basis something of on last XX fact a like price really that be feel take commodity price price negotiations going start any enough increase challenge, we we cost. increase to luck, costs choose of that we that years, needed to feel will if So we point. big that Price like

Brian Vaccaro

That's very helpful. Thank you.

Operator

Thank you. concludes today's call. session and This conference the question-and-answer

participating, your have for and disconnect lines. Thank you pleasant evening. You may a