Chuy's Holdings, Inc.
Q1 2017 Earnings Call Transcript

Published: 5 May 2017

[Operator:]

Good day, everyone, and welcome to the Chuy's Holdings Incorporated First Quarter 2017 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode and the lines will be opened for your questions following the presentation. On today's call, we have Steve Hislop, President and Chief Executive Officer; and Jon Howie, Vice President and Chief Financial Officer of Chuy's Holdings, Incorporated. At this time, I'll turn over the conference over to Mr. Howie. Please go ahead, sir.

[Jon W. Howie:]

Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter 2017 earnings release. It can also be found on our website at www.chuys.com, in the Investors section. Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not guarantees of future performance and, therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. With that out of the way, I would like to turn the call over to Steve.

[Steven J. Hislop:]

Thank you, Jon, and thank you to everyone for joining us on the call today to review our first quarter earnings. For the quarter, revenues grew 11% compared to last year. Comparable restaurant sales in the first quarter decreased 0.7% as we were lapping a 3.2% comparable sales increase in the first quarter of 2016, the strongest quarterly comparison from last year. Our comparable sales were also negatively impacted by approximately 30 basis points related to calendar shifts and unfavorable weather, of which Jon will provide more info shortly. Restaurant-level operating profit improved 4.2% during the quarter, while our restaurant-level operating margin decreased to 19.1% from 20.4% as favorable cost of sales were offset by the continued wage rate pressures. Net income for the first quarter was $4.6 million or $0.27 per diluted share. By now, you are all well aware of the challenges that have impacted the industry at large during the past few quarters. We remain confident that by taking care of our guests, we will weather these near-term challenges. To that end, we will maintain our focus on delivering high-quality, made-from-scratch food offerings and handcrafted cocktails to our guests at a tremendous value in a unique and upbeat atmosphere. As we noted last quarter, we have been keeping track of a growing desire for convenience from our customers. We continue to make progress in adding delivery service to our restaurants, adding two more Chuy's locations during the first quarter. Currently 56 locations offer delivery as an option, and we will continue to evaluate additional restaurants where we can cost affectively add delivery service. We also continue to see strong growth in our to-go sales during the first quarter and expect this trend to continue during 2017. Additionally, we are regularly looking for ways to increase awareness of the Chuy's brand. To that end, we recently formed a new partnership with Dinova, a $6 billion marketplace that better connects business clientele with dining options. We believe this can help drive sales during the week and introduce our product to new guests as well as loyal business travelers. Turning to development, we opened two new Chuy's restaurants during the first quarter of 2017 in Cedar Park, Texas and Cumberland, Georgia. The new Chuy's in Cumberland marks our third restaurant in the Atlanta metro area. We continue to expect to open 12 to 14 new Chuy's restaurants during 2017. As mentioned on our last call, our 2017 openings will be somewhat backend loaded. We are currently planning to open three new restaurants in the second quarter, one of which recently opened in West Chester, Ohio. For the second half of the year, we expect to open between three to four restaurants in the third quarter, and four to five restaurants in the fourth quarter. Our development team has done a great job at identifying a healthy blend of new and existing markets, and we look forward to opening our first restaurants in Denver, Chicago and Miami this year. With that, I would like to now turn the call over to our CFO, Jon Howie, for a more detailed review of our first quarter results.

[Jon W. Howie:]

Thanks, Steve. Revenues increased 11.3% year-over-year to $86.9 million for the first quarter ended March 26, 2017. The increase included $11.7 million in incremental revenues from an additional 157 operating weeks produced by 14 new restaurants opened during and subsequent to the first quarter of last year. We had a total of approximately 1,052 operating weeks during the first quarter of 2017. As Steve noted, comparable restaurant sales decreased 0.7% during the first quarter, a combination of a 2.2% decrease in traffic, combined with a 1.5% increase in average check. Comparable restaurant sales were negatively affected by approximately 60 basis points due to unfavorable weather and the timing of Valentine's Day within the week. This was partially offset by approximately 30 basis points due to Easter falling in the second quarter this year compared to the first quarter in 2016. Effective pricing in the first quarter was approximately 1.5%. There were 62 restaurants in our comparable base at the end of the first quarter of 2017. We consider restaurants to be comparable in the first full quarter following 18 months of operation. Turning to a discussion of selected expense line items, cost of sales as a percentage of revenue improved 50 basis points year-over-year to 25.1%, driven largely by lower beef prices and produce costs, offset by higher grocery and dairy costs. In terms of cadence, we have seen sequential increases in certain commodity prices early in the second quarter, particularly with regard to produce and chicken. We expect cost of sales to slowly increase as the year progresses and we are still anticipating an inflation rate of between 0% and 2% for the full year of 2017, with cost of sales in the low 26% range during the second quarter. Labor cost as a percentage of revenue increased 130 basis points to 34.2%, driven by ongoing wage rate pressures, operating inefficiencies from new unit development, and the deleverage of management labor, particularly our managers-in-training as a result of the backend-loaded nature of our 2017 new restaurant opening schedule. Given the inflation in our hourly rates, we continue to expect labor pressure for the balance of the year. Restaurant operating cost as a percentage of revenue increased 30 basis points to 13.9%, primarily due to higher utility costs during the quarter. Occupancy cost as a percentage of revenue increased approximately 20 basis points year-over-year to 7%, driven by higher rental expense as a percentage of sales in our newer locations. General and administrative expenses increased approximately $339,000 to $4.9 million in the first quarter. The increase was primarily driven by an increase in management salaries and equity compensation due to additional head count to support our growth, offset by a decrease in performance-based bonuses. As a percentage of revenue, G&A decreased approximately 20 basis points year-over-year to 5.6%. Preopening expenses during the first quarter of 2017 decreased approximately $331,000 to $1.1 million, resulting from the timing of expenses related to our new restaurant opening schedule. In summary, net income for the first quarter of 2017 was generally unchanged at $4.6 million or $0.27 per diluted share compared to the first quarter of 2016. We ended the quarter with $14.2 million of cash on the balance sheet and we currently have no debt. I would now like to turn to our 2017 outlook. As a reminder, 2017 is a 53-week year and our guidance includes an extra week, which will occur in our fourth quarter. We continue to expect annual diluted net income per share of $1.11 to $1.15. Included in our EPS expectations is a positive $0.05 per diluted share impact from the extra week in the fourth quarter. Our annual diluted net income per share guidance for 2017 includes the following assumptions

[Steven J. Hislop:]

Thanks, Jon. In closing, our 2017 development plan is off to a great start and our team is already working on our 2018 plan. Despite the external environment, we continue to be excited about our opportunities ahead to grow the Chuy's brand and bring our broad appeal of authentic, freshly prepared, Tex-Mex inspired food to both new and returning guests. Before I turn the call over to the operator for questions, I'd like to thank all of our Chuy's employees for their hard work and dedication to earning the dollar every single day. With that, we're happy to answer any and all questions. Thank you.

[Operator:]

And thank you, Mr. Hislop. And our first question is from Chris O'Cull with KeyBanc.

[Christopher O'Cull:]

Thanks. Good afternoon, guys.

[Steven J. Hislop:]

Hey, Chris.

[Christopher O'Cull:]

Steve, can you describe where you're seeing the traffic decline? Is it in certain geographies? Maybe day parts or days of the week? If you could just give us some color on that, that'd be great.

[Steven J. Hislop:]

On big ones, well, Chris, I'd say a little bit more at lunch than at dinner. We'd definitely gotten a little bit hurt in the second half of the year in the oil markets in Texas. And then the rest of Texas is acting like the rest of the company. But it's pretty overall, Chris. And those were the big, big changes, right there.

[Christopher O'Cull:]

Okay. Okay. And then you talked about wage pressure, Steve. But if you look at the labor dollars spent per week or per store week, they were actually down year over year. What are you doing to find savings at the store level?

[Steven J. Hislop:]

The big thing for us right now, Chris, is always as you know just looking at the productivity. But the key thing for us, it might be down a little bit, but so is our sales a little bit. So that's the key. And it should be measurable that way. But at the end of the day, we've been working on productivity. At the end of the day, Chris, I've been actually adding into the front of the house and being more productive in the back.

[Christopher O'Cull:]

Okay. Okay. Thanks. I'll get back in the queue.

[Steven J. Hislop:]

Thank you.

[Operator:]

Our next question comes from Andrew Strelzik with BMO Capital Markets.

[Andrew Strelzik:]

Hey. Good afternoon.

[Steven J. Hislop:]

Good afternoon, Andrew.

[Andrew Strelzik:]

First question I wanted to ask on the comp outlook, by my math for the remainder of the year, you're kind of still in that 1% to 2% range. Obviously, the quarter was a little softer than you thought it would be. We've heard some of your peers talking about maybe the industry outlook being a little softer than they originally thought it would be. Can you just talk about what gives you the confidence to maintain kind of that remainder of the year component of the comp outlook?

[Steven J. Hislop:]

The key for us is while everybody – we're sticking to our knitting and really knuckling under in the operations side of our business and making sure we're getting better every single day. The big thing for us, as we mentioned in my script, that we just lapped our biggest quarter last year; we were up 3.2% I believe in the first quarter a year ago. We have easier comps really in the second and third – I mean the third and fourth quarter this year than obviously that. So we're pretty comfortable if we continue to do what we're doing that we will have a better second half of the year.

[Andrew Strelzik:]

Okay. And then given the long-term unit growth profile of the company and the challenges within the labor market, just wondering what you're seeing from a staffing perspective? Are you having trouble? I know your wage rates are going up, but are you pleased with the caliber of people that you're able to hire, management level, those different types of pieces? And maybe if you can comment on turnover as well?

[Steven J. Hislop:]

Sure. As far as on the management level, we're very, very good on that level. It's always been tough on an hourly level, and it still is, but we've been able to get that done, and that's good. As far as the over – I mean management turnover, we're right around that 20%, 21%, which is good. And at an hourly level, we're at 96%, 97%, which also is very good.

[Andrew Strelzik:]

And then if I could squeeze one more in if I may, seemed like given the quarterly commentary that you provided on last quarter's earnings call, March was the worst month despite Easter. I know for the industry, the industry that we have says it was the best month of the quarter for the industry. So is that when you really started to see the cannibalization from the Texas unit opening? Is there something else that was going on there? If you could just give us a little color on that, that'd be helpful. Thanks.

[Steven J. Hislop:]

Yes. I think from us, our standpoint, February was the tough month for us and that was the beginning of that period. We also opened Cedar Park, which is the store in Texas that cannibalized a little bit of the other two stores. So that started in the second period for us. We came back a little bit in the third period, but we had some better comps in there. But that's where we stand right now.

[Andrew Strelzik:]

Great. Thank you very much.

[Steven J. Hislop:]

You're welcome.

[Operator:]

Our next question comes from Andy Barish with Jefferies.

[Jon W. Howie:]

Hey, Andy.

[Steven J. Hislop:]

Hey, Andy.

[Andrew Marc Barish:]

Hey, guys. What is the labor wage inflation running approximately right now?

[Jon W. Howie:]

It's approximately 3%, Andy, right now for the quarter.

[Steven J. Hislop:]

And I think we've said, Andy, for the year, we mentioned it last year – what our inflation rate last year was about 4%, and I think we mentioned anywhere from about 2.5% to 3% this year, because I think we jumped in front of it a little bit. And right now, we still believe it's going to be in that trend of 2.5% to 3% for the year.

[Andrew Marc Barish:]

Let me – I guess I'm grappling a little bit with why some of the new restaurant inefficiencies are showing up a little bit more on the margin, and how does the move into some of the bigger markets in the back half of the year, more expensive markets I believe, particularly Chicago and South Florida, kind of factor into your margin thinking in terms of new restaurant inefficiencies for the rest of 2017?

[Jon W. Howie:]

As far as that, Andy, as you know, we have different tiered menus for these more expensive markets. Just like when we went up to DC, and DC has been working out pretty well for us. But we have a different tiered menu for definitely Chicago and Denver, and Miami. So that's how we'll be dealing with the labor pressures and specifically the wage rates. Obviously we already have stores in Florida, so we understand the tip credit issues over there. And that will help us as we move over into Denver also.

[Andrew Marc Barish:]

Okay. And what is – what's off-premise sales approximately throughout the system or in the subset of stores where you're looking at delivery maybe?

[Jon W. Howie:]

It's about $10.74 million for the quarter, Andy.

[Steven J. Hislop:]

And that's for the whole company, Andy. And as we're adding...

[Jon W. Howie:]

That's for the comp.

[Steven J. Hislop:]

Yes, that's for the comp. But as far as stores that we'd be adding to-go, our delivery programs, you're going to be looking at that 6% to 7% range where we think if we go with the delivery, it can pop it a good 4% to 5%. And that makes sense with the cost of it.

[Andrew Marc Barish:]

Okay. Thank you very much.

[Steven J. Hislop:]

Thank you.

[Operator:]

Our next question comes from Brian Vaccaro with Raymond James.

[Steven J. Hislop:]

Brian.

[Brian M. Vaccaro:]

Thanks, and good evening. Just wanted to follow up on the comps discussion. Would you be willing to give an update on what you're seeing quarter to date?

[Steven J. Hislop:]

What we're seeing is a continuation. Take all the noise of the weather and the different dates, we're sitting there with about 0.3%, 0.4% down, and we're seeing that continue in the fourth. The big thing for us that's coming up is the switch in the fifth period on Cinco de Mayo which is this Friday. Last year, it was a Thursday. And we actually doubled our sales last year on a Thursday and obviously, we won't have that opportunity on a Friday to be able to do that.

[Jon W. Howie:]

Yeah, let me clarity though, that's without the noise. We've got Easter that impacted that about 95 basis points, so tacking that back on, you're over 1% down.

[Steven J. Hislop:]

Yeah.

[Brian M. Vaccaro:]

Okay. And that Cinco de Mayo shift, Jon, is it worth calling that out in terms of quantifying? Did that impact on the second quarter?

[Jon W. Howie:]

Yeah, it's definitely worth calling out. We're thinking it's going to be anywhere from 50 basis points to 70 basis points. We haven't had in our short life a time when Cinco de Mayo fell on a Friday, but going back and comparing it to maybe a comparable weekend, it's looking like it could be anywhere from 50 basis points to 70 basis points on the quarter.

[Brian M. Vaccaro:]

Okay. That sounds cool. Circling back on to-go, you said it was strong in Q1. Could you quantify the year-on-year increase that you saw on off-premise in the quarter?

[Jon W. Howie:]

Sure. It was about $10.74 million and it's up about 9% over last year.

[Brian M. Vaccaro:]

Okay. All right. Great. And then last one, I just wanted to sort of high-level the annual guidance. I understand you lowered the comp guidance a little bit, but you maintained the EPS guidance. Sounds like your food cost expectation hasn't really changed but we've got some pressure to deal with in the second quarter. Can you maybe provide some color on what some of the offsets were to those factors that would allow you to keep the EPS guidance unchanged?

[Jon W. Howie:]

Well, I mean, right now, we still see us in that range. It could be at the lower end of that range. But really the offset – we are seeing some pressure in cost of sales right now. We think it'll continue at that level for the rest of the year, but that's kind of where it was last year. So from a comparable standpoint, it's pretty close to last year. And then, as far as the labor, we're down about 130 basis points. We don't see us being down that much compared to last year during the rest of the year.

[Brian M. Vaccaro:]

Sure. Okay. Thank you.

[Steven J. Hislop:]

Thank you.

[Operator:]

And we'll take our next question from Will Slabaugh with Stephens.

[William E. Slabaugh:]

Thanks, guys. Now that we're able to see at least a few months of all of your 2016 stores, I'm curious on your take on their productivity. First, initial expectations and how that stacks up relative to your more recent years.

[Jon W. Howie:]

You mean year 2017 stores? Or 2016?

[William E. Slabaugh:]

Year 2016, the most recent year stores.

[Jon W. Howie:]

They're hitting our expectations, Will. If you're looking at our end expectation is $3.8 million. If you're looking at what they're doing right now, they're doing a little over $4 million on a trailing 12-month basis. So we're happy with them. Could they be doing better? Yes. But still they're hitting the numbers and we're happy with them so far.

[William E. Slabaugh:]

And any color on the 2017 stores as well would be helpful.

[Steven J. Hislop:]

It's real early. But obviously, opening one in Austin where we had the strategic cannibalization of two of our units there. We're very pleased with that store. We just opened in Cumberland which is our third store over in Atlanta. It's getting out. It's doing fine right now. And then we're a little bit of an upward surprise in West Chester in Ohio. We're very happy with that opening. So they're going well.

[William E. Slabaugh:]

Great. And lastly for me, as you're going into these three larger markets later on this year, curious how those sites are coming together and how you would characterize the site that you're finding there versus somewhere that you might go in a little bit of a smaller market.

[Steven J. Hislop:]

Again, we're not going downtown in any of them. So again, they are – obviously, part of the plan was to go into more densely populated markets. We're going to a market that has some real good competition and the propensity to eat Mexican food is great. So it hit those three things. And then all of the rest will be a little bit of the stronger population-based. As we're going into Chicago, you'll see us going into the Naperville – see us going into the Naperville and the Schaumburg areas in this upcoming year. Then may be Woodland Park at the beginning of next year, or even at the end of this year. Over in Denver, same thing that we're saying there. The first one is Westminster, then Lakewood I think is the second one over there. And again, good communities there. And as you get down, we'll only open one in Miami Greater Area down there, and that will be over in Doral area which is very densely, densely, densely populated. So again, we're pleased and we're following the femoral demographic guidelines that we've always used, except a little bit more densely populated.

[William E. Slabaugh:]

Great. Thanks, guys.

[Steven J. Hislop:]

Thank you.

[Operator:]

Our next question is from David Tarantino with Baird.

[David E. Tarantino:]

Hi. Good afternoon.

[Steven J. Hislop:]

Hi, David.

[David E. Tarantino:]

How're you doing? Just wanted to go back to the question on new unit performance. So if I do the calculation, looking at the revenue from the new units divided by the number of weeks and seasonally adjust that, I do get somewhere approaching $4 million. But, I assume there must be some honeymoon in that number, given that some of these are new locations. So where do you think those will settle, Jon? Is it typical that they would settle 6% or 7% and hit that target that you have? Or do they typically settle more than that?

[Jon W. Howie:]

On average in the second year, they'll settle about 7% down. So I'm looking, if they're currently over that $4 million, that they'd settle right around the $3.7 million.

[David E. Tarantino:]

Okay. Great. That's helpful. And then on the comp outlook, I guess it sounds like Q2 is going to be a bit of a tough quarter, similar to Q1. I guess what's giving you the confidence other than the comparisons of the second half? Is it just strictly the comparisons? Or is it something else you have planned to drive better trends on the same-store sales?

[Steven J. Hislop:]

Well, there's a few things. The initiatives from a standpoint of online ordering or anything that's a to-go is really a 2018 initiative for us that we're looking at. The thing that we just introduced today, Dinova, is something that we're expecting in the second half of the year to get some – little bit of a bang and some awareness out. Also starting in June we're entering into really our first campaign on the social media out of our first introduction from a year ago. And we're pretty excited about that. It's 'Chuy's

[David E. Tarantino:]

Great. And on the Dinova partnership, can you explain what that is? And maybe how that's going to work for you?

[Jon W. Howie:]

Sure. Like Steve said, it's about a $6 billion marketplace for restaurants and they market it to all businesses. So you can look at it like a frequent flyer program, except for restaurants. So a lot of restaurants sign up for this thing and the corporation will go out, advertise all the restaurants in your group, in the group. And if you eat at that restaurant, they get a rebate back similar to like I say a frequent flyer program. But they've got enough restaurants in their algorithms to project a pretty accurate increase in your sales. And it also increases the ticket average, because most of it is all business travelers and it generally increase revenues between your Monday and Friday timeframe, not so much on the weekends, which is where you kind of want it. So that's what it is.

[David E. Tarantino:]

And is that going...

[Steven J. Hislop:]

That would get up and running either at the middle of this month or by the end of the month.

[Jon W. Howie:]

Yes.

[David E. Tarantino:]

And is that in all of your restaurants? Or does that cover all of your restaurants?

[Jon W. Howie:]

It will cover all the restaurants. So some of the restaurants in some places where we're looking to build brand awareness, we think they will help with that. There's also some dual marketing that we can do with the organization as well, and we're looking into those opportunities.

[David E. Tarantino:]

And what do they tell you the typical list is when you hit all the buttons with their program?

[Jon W. Howie:]

What do you mean a typical list?

[David E. Tarantino:]

Lift.

[Jon W. Howie:]

Oh, typical lift?

[David E. Tarantino:]

Yes.

[Jon W. Howie:]

You know like Steve said, we're putting it in. I've talked with others that have put it in. We're pretty excited about it, but until we have it in and operating, I don't want to go into what we think it's going to be.

[David E. Tarantino:]

Okay. Fair enough. All right. Thank you very much.

[Jon W. Howie:]

Thanks.

[Steven J. Hislop:]

Thank you.

[Operator:]

And our next question comes from Nick Setyan with Wedbush.

[Steven J. Hislop:]

Hey, Nick.

[Colin Radke:]

Hey, guys. This is Colin Radke on for Nick. Just a question in terms of the cannibalization you're seeing. I think you called out 50 basis points as of Q4. Just wondering if that had changed at all, given that you have a few months of sales there? And if you expect any changes or any moderation as the year progresses?

[Jon W. Howie:]

At the present time, it's right around our expectation. We'll call it out in the future if it gets materially off of that.

[Steven J. Hislop:]

And we expect it to continue for the whole first year. We expect some relaxation of that in the second year.

[Colin Radke:]

Got it. And then maybe just in terms of the comp trends you're seeing, you had sort of called out the oil geographies being a little weaker. Is there anything you're seeing in terms of the other geographies? Or maybe by class of openings? Or any other differences that you'd call out in terms of the comp trends by geography?

[Jon W. Howie:]

Not really. I think they're comparable throughout. I think we've talked about in the past where Texas was a little stronger than the rest of the company. I think it's come right in line with the rest of the U.S. or the rest of geographies. So they were all pretty consistent. The oil markets were down a little more obviously this quarter than last, but the spread between our overall comps and the oil markets without – or the comps without the oil markets has shortened, the gap has shortened a little bit. I think with and without that, it was about 80-basis point spread last quarter and it's about 50-basis point spread this quarter. So it's getting – it's improving or it's improving from a comp standpoint as far as what the impact is. But really, we've seen softness kind of throughout all of our geographies.

[Colin Radke:]

Got it. Okay. Thank you.

[Operator:]

Our next question is from Chris O'Cull with KeyBanc.

[Christopher O'Cull:]

Yes. Thanks. I just had a follow-up. Jon, when you look at the performance gap in changes in average weekly sales versus same-store sales, it has been fairly wide here in the last couple of quarters. But, shouldn't it narrow as you open stores with these higher-priced menu tiers?

[Jon W. Howie:]

Well, it should theoretically, because we're looking at obviously a little higher volumes with those menu tiers, if you're looking at comparable entrees. We haven't really opened many in those tiers currently, and we will in the back half.

[Steven J. Hislop:]

Second half of the year.

[Jon W. Howie:]

Second half of the year. So I would expect it to decrease a little bit if the comp sales come back and the economy starts lifting a little bit. I think what...

[Christopher O'Cull:]

All right.

[Jon W. Howie:]

...you're seeing in the widening is really just kind of the overall sluggishness.

[Christopher O'Cull:]

Are the newer stores that you're opening in Denver and Chicago and Miami, are you expecting or can you talk a little bit about the type of sales volume you're expecting in those types of locations? I know $3.7 million, $3.8 million is the average you're expecting for all new stores, but what about these more densely populated areas? Can you give us some color on what you're expecting in those markets?

[Steven J. Hislop:]

Yeah. Remember part of the reason we wanted to go to densely populated areas is as we moved outside of Texas, we're finding out that although we're a little higher on visits, but customers are using us like casual dining as far as number of visits a month. So, Chris, when we go to the markets, we'd like to see that $3.75 million number, but with what percent the menu mix on the new price tier is. So to answer your question generically, that we expect to be higher than the $3.75 million when we go into these markets by the percentage difference between a Tier 1 and a Tier 4 per se. But again, we'll be doing some backfills into some markets that might be a tad bit lower than the $3.7 million until we get awareness as we continue to grow the market.

[Christopher O'Cull:]

Okay. And the difference in those tiers is the 12%, 15%, something like that?

[Steven J. Hislop:]

Difference between Tier 1 and Tier 4 is right around 13%.

[Christopher O'Cull:]

Okay. Great. Thanks.

[Steven J. Hislop:]

Thank you, Chris.

[Operator:]

That does conclude our question-and-answer session. I would now like to turn the call back to Steve Hislop for closing comments.

[Steven J. Hislop:]

Thank you. Thank you so much. Jon and I appreciate your continued interest in Chuy's. And we will always be available to answer any and all questions. Again, thank you, and have a good evening.

[Operator:]

Once again, that does conclude today's call and we appreciate your participation.