Chuy's Holdings, Inc.
Q1 2014 Earnings Call Transcript

Published: 7 May 2014

[Operator:]

Good day, everyone, welcome to the Chuy’s Holdings Incorporated First Quarter 2014 Earnings Conference Call. Today’s conference is being recorded. 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 the conference over to Mr. Howie. Please go ahead sir.

[Jon Howie:]

Thank you, operator and good afternoon. By now everyone should have access to our first quarter 2014 earnings release, it can also be found at www.chuys.com in the Investor section. Before we begin our review of the 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 place 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 conditions. Also during today’s call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. And the reconciliation to comparable GAAP measures is available in our earnings release. With that out of the way, I’d like to turn the call over to Steve.

[Steve Hislop:]

Thank you, Jon and thank you all for joining us today on the call. We are very pleased to see our sales momentum continue into 2014. Our first quarter revenue growth of 19.8% was led by a comparable restaurant sales growth of 4.2% reflecting the quality of our made-from-scratch food prepared fresh everyday, our commitment to value and most importantly the hard work and dedication of our employees in consistently providing our guest with a fun energetic dining experience. We believe these attributes have helped us maintain our strong sales momentum. We did experience some challenges during the quarter, including commodity cost pressures that were higher than we anticipated and continued labor [pressures] related to some of our newer restaurants that we discussed on our last call. As laws have labor inefficiency (indiscernible) weather winter weather that affected six of the 13 weeks during the quarter. In the end, however, our strong comp growth allowed us to overcome these cost pressures resulting in a solid EPS of $0.15 per share which was consistent with our original expectations. As a result we will remain comfortable with our full year EPS guidance for 2014. Switching to development, during the first quarter we opened three new Chuy’s restaurants in Rogers, Arkansas, Orlando, Florida and Addison Texas part of the Dallas Metroplex. Additionally, subsequent to the end of the quarter, we opened our fourth new restaurant 2014 in Noble of Indiana near Indianapolis. While it was very early, we are very very pleased with our new class of restaurants today. As we have noted our development plans for 2014 call for 10 to 11 new Chuy’s restaurants with this year development consisting largely of backfilling into our newer developed trade areas which we believe will result in increased awareness for these markets as well as allow for greater training and local store marketing efficiencies. With that, I would like to turn the call over to our CFO Jon Howie, to review the details of our first quarter.

[Jon Howie:]

Thank you, Steve. For our first quarter ended March 30, 2014, revenue increased to 19.8% to $56 million from $46.7 million in last year’s first quarter. The increase was due primarily to an $8.6 million in incremental revenue from an additional 124 operating week provided by 12 new restaurants opened during and subsequent to the first quarter of 2013. The increase is partially offset by units opened prior to the first quarter of 2013 that are not yet in the comparable store sales base and are lacking the honeymoon period. Total operating weeks for the first quarter of 2014 were 644. As Steve noted, Comparable restaurant sales increased 4.2% in the quarter. The increase included a 1.9% increase in average check and a 2.3% increase in traffic. There were 35 restaurant included in the comparable store base during the first quarter of 2014, which included three new restaurants added to the base at the beginning of the quarter. We consider a restaurant to be comparable in the first quarter following its 18th month of operation. Switching over to expenses, cost of sales as a percent of revenue increased 90 basis point to 27.8%. The increase was driven by higher feed, dairy and product cost during the quarter. We’ve continued to experience food cost pressure into the second quarter and as a result now expect food cost inflation for the full year to increase to 3% to 4% compared to our original expectation of 2% to 3%, which would put our cost of sales as a percentage of revenue in the 27.7% to 27.9% range for the year. Specifically with regard to the second quarter, we would expect cost of sales as a percentage of revenue to be in the 28.2% to 28.5% range higher than our expected range for the full year before settling back down in the second half of the year. Labor cost as a percentage of revenue increased 130 basis points to 33.4%. Labor during the quarter was negatively affected by lower sales volumes on fixed labor and increased training and staffing level to some of our newer restaurants, as well as inefficiencies associated with the bad weather we experienced in the first quarter across the south and southeast. However, we continue to experience improved labor efficiency in our comparable restaurants. As we have mentioned in the past, with ongoing focus on local store marketing in our newer markets as well as backfilling these markets with additional stores and more focus training of the fundamental, we believe, we will see our labor cost as a percentage of sales return to normalized levels overtime. In the second quarter, we expect labor as a percentage of revenue to run somewhere in the range of 32.5% to 32.9%. Restaurant operating cost as a percentage of revenue decreased approximately 50 basis points to 13.5%. The improvement was largely attributed to the impact of the new Texas Liquor Tax Law which went into effect on January 1, 2014, partially offset by higher utility and insurance cost as a percentage of revenue. Occupancy cost as a percentage of revenue increased 20 basis points to 6.4% due to higher rent expense at certain new restaurants as we continue to move into new markets. General and administrative expenses in the first quarter increased slightly on the dollar basis $2.9 million from $2.8 million last year. However, as a percentage of revenue our G&A expenses improved approximately 80 basis point to 5.2%. We expect this to trend higher in the following quarters as our first grant under our new long term incentive program was made in March and therefore only have one month investing in the current quarter. Depreciation and amortization increased 348,000 on a $1 basis primarily driven by the increase in equipment and leasehold improvement cost associated with our newer restaurants offset by a change in our estimated economic lives of our signage and certain equipment items. As a percentage of revenue, depreciation and amortization decreased by 10% or 10 basis points to 4.1%. Interest expense was 22,000 in the quarter, and our total outstanding debt under our credit facility at the end of the first quarter was $8 million. Our effective tax rate for the first quarter of 2014 was 30% compared to 17% in the first quarter of last year. Last years effective rate included the favorable impact of the one time tax adjustment for incremental employment, tax credits from open tax years, offset by the unfavorable tax impact of non-deductible expenses related to the secondary offerings of stock. Net income in the first quarter of 2014 was $2.6 million or $0.16 per diluted share. Net income was also $2.6 million or $0.16 per diluted shares in the first quarter of 2013. Net income for the first quarter of 2013 included approximately 417,000 in cost associated with two separate secondary offerings of the company’s common stock as well as net favorable tax benefit of 527,000. Adjusting for these one time items, pro forma net income for the first quarter of 2013 was $2.05 million or $0.15 per diluted share. The tax to our press release is a reconciliation of GAAP results to our pro forma financial results. With respect to our 2014 outlook, we are providing the following annual guidance. We continue to expect fiscal 2014 diluted net income per share in the range of $0.81 to $0.84. This compares to pro forma diluted net income per share of $0.59 in 2013. Our net income guidance for the fiscal year 2014 is based in part on the following annual assumptions. Our revenue expectations include a comparable store sales increase for the full year ranging from 2.0% to 2.5%, which implies a 1.5% to 2% comparable sales growth during the last three quarters of 2014. Restaurant pre-opening expenses are expected to range between $3.8 million and $4.3 million. We expect G&A expenses to run between $12.5 million and $13 million which includes the approximately $1.4 million in incremental expense related to the company’s changes in this compensation and long term incentive programs. We expect our pro forma effective tax rate for the full-year to range between 29% and 31% and we expect annual weighted average diluted shares outstanding of 16.7 million to 16.8 million. Lastly, our development plans for 2014 called for ten to eleven new Chuy’s restaurants of which four have opened. Our capital expenditures net of tenant improvement allowances are projected to be approximately 27.5 million to 30 million. And now, I'll turn the call back over to Steve to wrap up.

[Steve Hislop:]

Thank you, Jon. With a solid start to 2014, we remain excited about the opportunities ahead, to continue to grow the Chuy’s brand and bring our distinct menu of authentic, freshly prepared Mexican and Tex-Mex inspired food to a wider audience, while enhancing long-term value for our stockholders. Before we got to question-and-answer portion of the call, I would like to thank all of our Chuy’s employees. Our success is a testament to their hard work and dedication to earn the dollar every single day. And with that said, we thank you for your interest in our company; we’ll be happy to any questions you might have. Operator, please open the lines for question.

[Operator:]

Thank you. (Operator Instructions) And our first question comes from (indiscernible) of Longbow Research.

[Unidentified Analyst:]

Hi, thank you. Good afternoon and good job on the quarter.

[Steve Hislop:]

Thank you, [Aldren].

[Unidentified Analyst:]

You know I guess a quick question. I was surprised to how the comp was at 4.2% in the first quarter, you know is there more color as to what you think drove that comp and then also that’s potential for your guidance after it calls for a sequential deceleration, any reason for that over the last few quarters of the year?

[Steve Hislop:]

Yeah, I think the first section is what were the – basically why was 4.2 and it’s basically on top of a 3% from the fourth quarter, as I believe you know as I was mentioning every single time there is no silver bowl or somewhat we do at Chuy’s expect for obviously hiring the best people we can find them and then do a great job. And the key for us and why we drive sales is obviously our made-from-scratch food and obviously our price value or [latency] but I think this is good as anybodies in our market point. And I think that’s what drove it a little bit for us. We had, you know the three stores rolling for the quarter. I’d tell you as we move forward, we were pretty comfortable to the 1.5 to 2 simply because I’m not a – you know I don’t have a crystal ball, but more importantly, we still have stores that are going to roll in that opened up in 2011 for the rest of the year. And we’ve always mentioned that we have a between a 0.5% and 1.2% headwind when they roll in on our honeymoons. And we’re also for the second half of the year really going up against strong comps in the third and fourth quarter of 2013 over the highest that we’ve had in a few years. So, I think we’re feeling pretty pretty good announcing those types of expectations.

[Unidentified Analyst:]

Okay. Thanks Steve. And then this (indiscernible) for your guidance a little bit from what I think was up 2 or three previously. Is there any certain – if you drive that and then if you could talk it all about you know where you may or may not be covered on the commodities for the rest of the year?

[Steve Hislop:]

You’re talking of commodity cost.

[Unidentified Analyst:]

Yeah.

[Steve Hislop:]

So commodity is four for 2000 or for the first quarter were actually up about 5%. And we gave a 2% to 3% guidance for the year. We’re seeing the biggest thing on that is lines have been – impaired. The lines, the lines impact of loan for us has about a 70 to 80 basis point impact on overall cost of sales. We think from what we are hearing from our providers that lines will be coming back down to normality by the end of the June. We already saw a drop of about 20 bucks a case this week, so they will retire the $110 a case. And normally they are about 15 to 20 bucks a case.

[Jon Howie:]

And the key often just to let you know, the reason that is as we are just hand squeeze all lines, we don’t use any cartons or anything. I would never go to a carton with such high and low to find even though the expense of line somewhere so, that’s why we used so many lines in our company.

[Unidentified Analyst:]

Okay. Great. Thanks again, guys.

[Steve Hislop:]

Thank you.

[Operator:]

And our next question will come from Imran Ali of Wells Fargo.

[Imran Ali:]

Hey guys, thanks for taking my questions. Just talk about your developments as you continue to backfill different markets, have you seen any tailwinds from increasing brand orders you might have seen?

[Steve Hislop:]

Yeah well we have. If you look at – go back to 2009, but I think you are really specifically talking about ’13. Last year we went into eight new markets out of the nine new stores. We’re going to spend this year and next year really backfilling those markets. And that’s when we will expect the awareness, the tail winds to really start picking up probably more in 2015 on the 13 stores. But if you look at our company, our first store outside of Texas was our 16 store which we opened in 2009 which is National Tennessee. We currently now have filled that market with four restaurants and they have all the attributes of our Austin Market currently. So the more we fill on our markets the better off we do, just not only on the awareness of having more stores in the market that don’t [generalize] themselves or each other. And the second thing is extending our reach into our what we call our local store marketing from you know really about a 10-mile area to about a 30-minute drive time. It’s where we really are focused not only on our 13 stores but our 12 and 11.

[Imran Ali:]

Okay, great. And it’s really helpful. Actually you just touched on this a little bit just before – referring to those new restaurants that you opened in States like Tennessee or Kentucky four or five years ago, can you talk about or provide some color on how your sales volumes have trended in these industries?

[Steve Hislop:]

Oh we are not really looking at as a segment like that, but we are pleased. We are pleased with all of them you know where we are having some really, really strong increases in both those markets on our sales, specially the ones that we opened up in Kentucky and so forth, but we are pleased with the sales increases on all those stores.

[Imran Ali:]

Alright. Great. Thanks very much.

[Steve Hislop:]

Welcome.

[Operator:]

And we’ll hear next from David Tarantino of Robert W. Baird

[David Tarantino:]

Hi, good afternoon. Jon, a question on the earnings outlook for the year, you know still very healthy for the year. But based on some of the cost metrics you gave it looks like it’s very weighted to the second half. Could you just maybe at a high level talk about why the growth is so low in the first half relative to what you expect in the second half and what gives you confidence in that second half acceleration?

[Jon Howie:]

Well David, I think the biggest thing is the cost of sales. I mean, it was a lot higher in the first half. We do think it’s going to go down from what we’ve been discussing. So I think there is some margin improvement there and also labor. I think, we’re seeing some improvement in the labor area on some of the new stores with some of the initiatives that we have going and but it’s just taking some time. So we are projecting a little more in the back half and normal but I think more of it is other than labor is you know beyond our control with the cost of sales.

[David Tarantino:]

Got it. And then I guess back to the question I think it was asked, but it does look like the guidance for the rest of the year on comps is at least has a conservative bends to it so, I guess why shouldn’t we view it as conservative, like and what why I guess that’s differently, why not continue the momentum that you are seeing in the business and as part of your retirement as you think you are and as you go through the next several quarters?

[Steve Hislop:]

Well at the end of the day, David, this is Steve. You know we’ve always built our model off about 1.5 to 2 and I had a nice sort of run here, but it’s so predicated on all the stores that we’ve opened up, rolling quarter to quarter to quarter as you know. Well we’ve always talked about the 0.5% to 1.2% headwind. We are pleased with our start of the second quarter, but again, it’s all predicated on our rolling and since specifically as I mentioned to you, the two strongest quarters we had in same store sales increased over the last three years was the third and fourth quarter of 2013.

[David Tarantino:]

Got it. And just you mentioned that your employees with higher start ends, this quarter have you seen a change in this trend line as a business here positively or negatively so far in the quarter?

[Steve Hislop:]

Well we are just pleased. I think it’s too early to really give a lot of light on that Dave as it sits right now, but you know we’re moving in and not – we’re moving forward in a nice [way].

[David Tarantino:]

Great. Thank you very much.

[Steve Hislop:]

You’re welcome.

[Operator:]

(indiscernible) Chris has the next question.

[Unidentified Analyst:]

Thanks. Good afternoon guys.

[Steve Hislop:]

Good afternoon.

[Unidentified Analyst:]

Hey Jon, I just had a follow up on the previous question regarding the guidance. It looks like and I was trying to write it down, your line item guidance and do the math, but it looks like you are expecting the second quarter earnings to be relatively flat year-over-year. Is that true?

[Jon Howie:]

The second quarter earnings is a little up but not significant yes.

[Unidentified Analyst:]

Okay, so the back half would imply earnings of at least 35% to get to the low end of the guided range. And I know you gave cost of sales assumption, help me understand where are some of the other lines, the back half that need to show some improvement year-over-year to really get to that type of earnings growth?

[Jon Howie:]

Just one second here. I think for the most part.

[Steve Hislop:]

For the most part, I’m going to answer a couple of quick ones. We are expecting as we said previously that the commodities have really moved up in the second quarter higher than the first and we expect that to normalize in the second half of the year to get closer to the projections we talked about for the year on the commodities but that will be the big player for us as the commodity number in the second half of the year.

[Unidentified Analyst:]

Okay. Is there any additional pricing plan Steve for the back…

[Steve Hislop:]

No sir, not at this point of time. Chris, it’s a good question. Right now, we took our price to increase as we usually do it once a year which is in the beginning of our third period, our second period of the year. Chris very rarely, I won’t look at anything you know on a quarterly basis on a spike for a quarterly basis that I might do anything with our price value relationship as far as the price increase. I think what we’ve always told everybody we are kind of feel pretty comfortable on our menu and our menu (indiscernible) bearing of somewhere in that 27 to 28 to cost of sales area long term. So once it gets about that for much longer than a quarter would I look at anything on a price point avenue.

[Unidentified Analyst:]

And then lastly, and I’m not sure if you guys look at it this way, but the stores that are in the comp base, did they see – I mean they had a nice comp list obviously in the first quarter and the--- inflation with the commodities. But did they see a profit dollar increase year-over-year?

[Jon Howie:]

For the quarter.

[Unidentified Analyst:]

Yeah, for the quarter year-over-year did they see a profit dollar increase?

[Jon Howie:]

Yes.

[Unidentified Analyst:]

Okay. Great, good thanks.

[Jon Howie:]

Thank you, Chris.

[Steve Hislop:]

And Chris, the other thing to add to that too is we think we have a better mix of going inside our existing markets. And so from a incremental sales standpoint in the new stores layering north, I think the margins are going to be better in the second half than they were in the third and fourth quarter last year.

[Jon Howie:]

Our backfilling in the markets, Chris.

[Unidentified Analyst:]

Great. Thanks guys.

[Operator:]

(Operator Instructions) Our next question comes from Will Slabaugh of Stephens, Incorporated

[Will Slabaugh -Stephens Incorporated:]

Yeah thanks guys, congrats on another great quarter.

[Steve Hislop:]

Thank you, Will.

[Will Slabaugh -Stephens Incorporated:]

Whenever you look at the different pieces of earnings obviously if the sales were great in the quarter, will you think about earnings in the quarter on the pieces that may have hurt you? Can you help us know what the relative impact do you think maybe the lack of labor and other productivity around weather impact may have had in the quarter, is there any inefficiencies in new store openings?

[Steve Hislop:]

Well I’ll answer the first part because I’ll talk in general and let Jon talk a little bit more specific. You know at the end of the day sales increased you know you have a nice little flow through that around 35% to 40%. I might tell you when you expected higher and then you don’t get the sales, you loose a lot more than you thought much more than the 35 to 40 on the negative side. So that on a general basis as far as our planning and budgeting definitely affected us a little bit. The first quarter was also affected on weather not so much like the northeast with the snow but really with ice and the closing of Atlanta for a couple of days, definitely affected us on the negative side.

[Jon Howie:]

And to add to that, I guess with the sales volume increase that we had during the quarter I guess you would expect a little more leverage on the labor and like Steve said you had a little inefficiencies with regard to the weather. So they kind of counter reacted each other if you, because I think we gave a range of 33 4 on the labor to it was unlike 33 7 and we got the low end to that, general. Had we not had the sales increase, I think it would have been significantly higher than that given the weather.

[Will Slabaugh -Stephens Incorporated:]

Got you. That makes sense. And then the hit on the pipeline could you give us an update there as far as how far out in time you are in terms of signing up signs for next year. And then just a quick follow up there to check the box and the unit opening side, if you could speak to the strength in Arkansas, Orlando, Addison how well those went in this quarter?

[Steve Hislop:]

I think the last one first. We’re very very pleased with the initial results going into these new markets. Not new markets backfilling into these markets. So we are very pleased with our store openings, obviously it’s very early to tell, but we’ve been pleased with those markets. Arkansas being (indiscernible) and so is Noble store so we are very excited about all of them. As far as our pipeline, we are very very good. We have all through ’15 really all the NOIs are all fit obviously ’14 set, ’15 all NOIs are done and we are really worked in more now on the following year. So we are very very well set. It’s also important to note as we mentioned in the past that 2014, 2015 at least 80% of our new units will be in backfilling markets or our new markets that we entered in ’13, they will be the same throughout’14 and ’15 and then as we continue you will never have more than 50% in any new market as we continue to grow for the foreseeable future.

[Will Slabaugh -Stephens Incorporated:]

Perfect. Thanks guys.

[Steve Hislop:]

Welcome.

[Operator:]

And our next question will come from Nick Setyan of Wedbush Securities.

[Colin Radke:]

Hi guys, this is Colin Radke on for Nick. I was just wondering if you guys quantified what the weather impact was in Q1. I think in Q4 you talked about it being sort of that in that $500,000 range?

[Steve Hislop:]

Yes, the impact on comparable sales were about 1%.

[Colin Radke:]

Okay. Great. And then just on the labor guidance for the year. Any updates there given some of the inefficiencies you might have seen in Q1?

[Steve Hislop:]

No, because like I said, I think the comp sales kind of counter acted the weather, so I think we are still on track for the guidance for the year.

[Colin Radke:]

Okay. Great. Thanks a lot.

[Steve Hislop:]

Thank you.

[Operator:]

And the next question comes from Brian Elliott of Raymond James.

[Brian Elliott:]

Hey, thanks. A couple sort of clarifications, first Jon just thinking about spreading the rest of the new openings, how many do you expect here in Q2, two or another three total for the quarter, new units?

[Jon Howie:]

We got three in the quarter.

[Steve Hislop:]

Yeah, we’ve already opened one; we have another couple this quarter, Brian.

[Brian Elliott:]

Okay. And then the back to the same store sales of course its still kicking a little bit haven’t killed it yet. So with a 100 bips of weather impact the underlying was 5.2, was that concentrated or maybe could you just segregate that a bit and just maybe just talk without quantifying but you know older store stronger, stores maybe here plus in the comp base, coming out of there, well out of their honeymoon period. You know that’s the spirit, you got a very strong number and given industry etcetera really is an outwire and then to have you know guidance fee for a material slowdown is confusing a bit frankly

[Steve Hislop:]

Yeah, it’s not a material slowdown though. I understand what you are saying though. It’s a across the board obviously since all the way through 2012 stores by the way. But, at the end of the day, we’ve been looking at it and we have the weather and actually you have some honeymoon from the weather when it pops back in. The biggest thing is the crystal ball and not knowing what’s going out with some commodities issues and the pressures, the regular consumer is going have you and in the grocery store. But again, the big thing is really rolling over the highest two quarters that we had for the last three or four years in quarter three and quarter four.

[Brian Elliott:]

Alright, fair enough. When I think about new unit performance, Jon you’ve talked about the backfills being less inefficient and I assume that you would expect the sales of backfilled restaurants to come out of the box a little stronger that excuse me, than some of the pioneer markets. So given that, should we expect same store sales versus average weekly sales gap to narrow as we move through this year?

[Steve Hislop:]

Not as you moved through this year. I’m specifically talking about the stores in 2013 when we entered so many new markets. And as you know, we don’t really go into same stores sales until 18 months first four quarter out, so that’s really important to know this. So you know the stores that you know are – they are not going to really go into the same store sales until lets say and the bulk of (indiscernible) through 2015 through 2015 into ’16. So that’s when you might hear us talk a little bit of our reversion of the sales starting around the end of ’15 early ’16.

[Brian Elliott:]

I misunderstood that, Steve sorry. So you were talking about comps or were you talking about average unit volumes?

[Steve Hislop:]

I was talking about comps.

[Brian Elliott:]

Okay. I was asking actually the average unit volumes.

[Jon Howie:]

Okay, I’m sorry, Jon Brian. Well overall the average unit volumes as we’ve talked in the past are going to continue to go down until you know we’ve got the comp to sales that meet kind of the new sales projection that ---- so they may narrow it a little bit, but I would still see that weekly volume going down and in the near future.

[Steve Hislop:]

And this might coincide right around that 2016 rate, when we are talking about same store sales; it’s kind of the same time track.

[Brian Elliott:]

That’s when you met -- that convergence. Okay, alright. Thanks a lot.

[Steve Hislop:]

You’re welcome

[Operator:]

(Operator Instructions) And our next question will come from Andrew Mannik of Mount Kamet Partners

[Andrew Mannik:]

Hi, I just had a question about the performance of your new units. You indicated that new units in the quarter generated 8.6 million in revenue on 124 operating weeks of those 69,000 per week. While Q1 of last year the new units generated [9.4] in revenue on a one time week, so 85,000 per week. And I’m just wondering what the accounts for the 19% decline in revenue per week here, are there any differences in the store characteristics from one year to the next or do you need batches stores which is performing to the…

[Steve Hislop:]

Well if you go back to the transcript in Q4, it was really a batches stores in 2013 that we opened. We opened in the six new states, eight new markets out in the nine stores that we opened. So they were lower in 2013. If you were to look at that average for Q4, that average was about 64,000 a little over 64,000. Sequentially, up to Q1 we are now at the 69,000 which is that rate of increase is actually larger than the rate increase in our existing store base. So we have seen some improvement in increasing that and we are continuing to work on that.

[Jon Howie:]

And the key thing as we just bid off a lot in 2013 as very important to notice that from 2014 as I have mentioned and ’15 80% will be in those existing markets and backfilled markets. And only 20% new while last year predominantly all new – see all those new markets for us with our growth over the next five years.

[Unidentified Analyst:]

Okay. Thanks.

[Jon Howie:]

You’re welcome.

[Operator:]

And gentlemen, it does appear there are no further questions at this time. I’ll turn the conference back over to you for any additional or closing comments.

[Steve Hislop:]

Well everybody. Thank you so much. Jon and I appreciate your interest in Chuy’s. We always will be available to answer any and all questions. Again, thank you and have a good evening.

[Operator:]

And that does conclude today’s teleconference. We thank you all for your participation.