Fiesta Restaurant Group, Inc.
Q1 2013 Earnings Call Transcript

Published: 8 May 2013

[Operator:]

Good day everyone and welcome to the Fiesta Restaurant Group First Quarter 2013 Earnings Conference Call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Lynn Schweinfurth, Chief Financial Officer. Please go ahead.

[Lynn Schweinfurth:]

Thanks Anne. Good afternoon and thank you for joining our call. Our first quarter 2013 earnings release was issued after the market closed today. If you have not already seen it, it can be found on our website, www.frgi.com under the Investor Relations section. Before we begin, I must remind everyone that our call today may include statements that are not based on historical information. These forward-looking statements include, without limitation, statements regarding our future financial position and results of operations, business strategies, budgets, projected costs and plans, and objectives of management for future operations. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements can be found in our SEC filings. Please note that during today's call, we may discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance. Any discussion of such information should not be considered an isolation or as a substitute for results prepared in accordance with GAAP and a reconciliation to compatible GAAP measures is available in our earnings release. And now, I'd like to turn the call over to Tim Taft, Chief Executive Officer, to begin with some opening comments and a brief update on the state of the business.

[Tim Taft:]

Thank you, Lynn, and good afternoon everyone. Remarkably, today is the first anniversary of our spinoff from Carrols. We're extremely proud of the substantial progress we have made as an organization in a relatively short period of time, building of the team, culture, restaurant support structure to achieve considerable growth objectives in the years to come. Now turning to the quarter, despite some common headwinds the industry has been reporting, Fiesta got off to a solid start in 2013 and we have been closer towards achieving the outlook we have put forward for the full year. We generated positive comparable sales at both brands over the three-month period against the backdrop of the series of economic factors which limited consumer discretion on spending, tough comparisons from the first quarter a year ago, and wet and cold Texas weather that negatively affected trends at Taco Cabana. From a profitability standpoint, we leveraged the higher sales base over fixed costs and benefited from a positive impact of proactive initiatives to either reduce or mitigate cost increases, all contributing to the growth of our four-wall operating profitability. We also continue to make some important investments at corporate that will enable us to complete our transition from Carrols ahead of schedule and prepare Fiesta for new expansion opportunities. Let me briefly expand upon what we accomplished during the quarter itself and then turn your attention to our ongoing initiatives and future plans. Pollo Tropical extended its track record of positive comparable restaurant sales of 14 consecutive quarters with a 3.8% comp increase which also included a 1.2% increase in transactions. What makes this even more striking was that the year ago comparison was a rather owner's 9.4% which is also the most formidable lap the brand will face this year. Pollo also reached two other milestones during the first quarter. First, between late February and early March, the brand posted nine consecutive days of record sales volumes. Second, in March, the brand experienced the highest weekly sales volume on record. We realize that none of these achievements would be possible without the dedication and enthusiasm of our team and the strong brand loyalty of our guests. During the first quarter, we promoted our new Spicy Beef Create Your Own TropiChop with a drink and when we entered the (indiscernible) period, we focused on Shrimp Create Your Own TropiChop or wrap with a drink. Currently in the second quarter, we are featuring a new Tangy Pineapple Chicken offering that guests can order as part of a wrap or salad entree. Turning to Taco Cabana, Taco also generated positive comparable growth in the first quarter with a 2% increase, extending its track record of positive comps growth to 11 consecutive quarters. The brand's year ago comparison was 6.1%, which was the second-best quarterly result of 2012. So, it too exceeded its prior year comparison despite the weather issues that I touched upon earlier. Taco also reached some milestones in its first quarter. The brand exceeded record daily sales five times in March, and in February and March, the brand exceeded record weekly sales three times. I'd also like to thank the Taco Cabana team and our loyal guests for helping us attain these milestone achievements. In January, Taco Cabana promoted favorites on their $5 and our $3 Happy Hour with half price nachos and margaritas, while in February and March, we have featured Shrimp Tampico Quesadillas and taco. We attribute much of our success in sustaining comparable sales growth to our TV campaign which has been refined to highlight the brand's fresh ingredients, the kitchen preparation process, and our key points of differentiation, such as elevated service and enhanced facilities. On the operations side, we are in the process of retraining and recertifying all kitchen managers to ensure we are delivering great food quality with each and every order. We are also continuing to focus on basic execution steps to ensure a consistently excellent guest experience. One of the examples of this is we recently updated our in-restaurant procedures and rolled out a new training program to improve order accuracy with successful results. In fact, Pollo is going to roll out a similar program demonstrating our concerted effort to share best practices between our two brands. We are currently remodelling many of our Taco Cabana restaurants in San Antonio and Houston and we look forward to substantially completing our multi-year remodelling program in 2014. Remodels that we have completed in the past two years are averaging a first year incremental sales lift of approximately 2% to 5%, a solid improvement in volumes that more than justifies the expenditure. Now that we've discussed Pollo Tropical and Taco Cabana in some detail, let's turn our attention to strategies and initiatives that transformed the individual brands and affect our entire business. First, we are always working to strengthen the connection with our guests by serving the food they can feel good about eating and that our teams are proud to serve. Our menus feature fresh quality items that have broad appeal and are complemented by promotions and limited time offers that showcase premium and/or value oriented items. Innovation is also important to our menu strategy and we have an active pipeline of products that can include extension of long-time favorites or can make consuming our food more convenient in the form of wraps, sandwiches, or salads versus our traditional platter based offerings. Second, we've taken methodical approach towards ensuring strict financial discipline so we could best manage our variable cost and realize the positive impact of sales increases on fixed costs. For example, our supply chain management efforts are positively affecting food cost, improving quality, consistency and yield that are helping to offset commodity inflation. We are also making good progress on our value engineering project with the goal of reducing the investment cost of our building prototype while maximizing the brand impact and optimizing operational flow. This includes pursuing an ergonomic time motion study to refine our labor model and reduce costs while managing menu mix to improve throughput. We are also reducing our packaging costs, establishing new equipment maintenance practices and processes, and renegotiating equipment procurement to achieve greater scale on multiple purchases. The common theme across all these items is that operational optimization is an ongoing and perpetual process and we are always looking to do what we do better and smarter. I'm pleased to report that we have already taken in-house several administrative functions that were previously provided by Carrols and are on track to substantially complete the transition by year-end, a year and a half earlier than the end of the original term of the agreement. Our corporate presence in Addison, Texas continues to grow with the addition of talented individuals as we build out these capabilities and is rapidly becoming a comprehensive support center to both brands. Turning to development, we opened two Pollo Tropical restaurants during the first quarter, one in Smyrna, our first restaurant in Tennessee, and another in Fort Myers, Florida. Taco Cabana also opened two restaurants in the first quarter, in Arlington and Richland Hills, Texas. We have a total of 14 to 17 Company owned and operated restaurants scheduled to open this year, of which 9 to 11 will be Pollo Tropical and the remaining 5 to 6 will be Taco Cabana. To date, we have opened six restaurants, four Taco, two Pollo, with eight Pollos and one Taco Cabana currently under construction. We continue to build our pipeline for 2014 and beyond and we believe we are making very good progress. Many of you are already familiar with our real estate strategy which is predicated on opening locations at high-profile areas with higher household incomes than we previously targeted in the past, as we position our concepts for mainstream audiences. In addition to enhanced site selection criteria, we also look at to cluster three to four stores within 24 months of entering a new market. This can be seen in Atlanta for example where we already have two restaurants on the ground and are planning to open as many as three locations in the market during the year, including one in Kennesaw that should be opened in two weeks. We'll also be operating or opening our second location in Nashville DMA, in the Cool Springs area of Franklin, Tennessee this summer. System-wide, we have opened eight new Pollo Tropical restaurants in the elevated format with promising results. Of these eight restaurants, five have been opened in the last five months. Our three restaurants in Jacksonville operate with an average unit volume of $2.5 million, and the two in Georgia with an average unit volume of $2.3 million. What is noteworthy is that we are achieving these impressive sales results prior to becoming media efficient, with limited marketing efforts. Once we can build out these markets and become media efficient, we believe we can substantially grow our top line. And while this is not specifically included in the 2013 guidance, we are pursuing the direction of brand coexistence and the synergies that it could provide our Fiesta business when Pollo Tropical were to move West and Taco Cabana were to head East. We believe that the inherent benefits of situating both brands in the same market included shared infrastructure, managerial oversight, a trained labor source, supply chain optimization. Clustering Pollo Tropical in places like Dallas, Houston or Austin, where Taco Cabana already has a meaningful presence, would also be extremely efficient from a marketing standpoint as it relates to TV, radio, and local store couponing jobs. We are actively looking for potential sites that could test out the strategy in bringing Pollo to Texas by early 2014. Likewise, Taco stands to benefit from co-developing markets of Pollo and we are pursuing an early 2014 opening for the first Taco site in Georgia. We are expecting at least 10 international franchise locations to open in 2013 and view this business as still in its early stages of development. There were no international franchise openings in the first quarter but we already have one opened in the second quarter in Panama and currently have seven other international restaurants under construction in various countries. Our first restaurant in India is scheduled to open any day now. Within the U.S., we've generally been passive in developing Pollo Tropical and Taco Cabana in what we call non-traditional venues, such as airports, transportation facilities, universities, sports arenas. This year, we have been stepping up our efforts to proactively market both brand food service operators who run these facilities and may be in a position to add to our modest presence. During the first quarter, we opened the Pollo Tropical franchise location at the University of South Florida and Tampa and are in discussion with other non-traditional venues. Before I turn the call over to Lynn, I also want to relay our long-term earnings model which we believe provides our shareholders with a deeper understanding and added layer of transparency as to how we do our business. Our objective is to grow EPS in excess of 20% annually by expanding our revenue base through development, sustainable comparable restaurant sales growth, and ensuring the strides we make on the top line are captured on the bottom line through leverage and economies of scale. We look forward to providing regular updates on our performance as it relates to this objective and are pleased to be able to frame our conversation through a more complete understanding of how we view our bright future. With that, let me turn the call back over to Lynn Schweinfurth.

[Lynn Schweinfurth:]

Thanks, Tim. I too am pleased with our first quarter results. In particular, our sales improved through the quarter despite a challenging start to the year for our industry. We continue to see the benefit of our focus on growing profitable sales and expanding restaurant operating margins and we are thoughtfully building our infrastructure and capabilities to meet our outlook for 2013 and beyond. During the first quarter, which ended on March 31, 2013, total revenues grew 5.9% to $133.6 million from $126.1 million driven by new restaurant development and considerable restaurant sales increases. In addition to what Tim already covered regarding considerable sales and traffic drivers, average check increased year-over-year driven by menu price increases of 2.3% at Pollo and 2.5% at Taco in the first quarter. We also rolled off a net 80 basis points in pricing taken at Taco during the first quarter in 2013, which will take pricing down by approximately 80 basis points in the second quarter for Taco. To offset cost increases, we will continue the balanced pricing actions with other cost-saving initiatives to retain the strong value proposition we enjoy at both brands, which we believe gives us the competitive advantage. Cost of sales as a percent of restaurant sales was 60 basis points better than the prior year as a result of modest year-over-year pricing and aforementioned supply-chain initiatives that have taken hold more than offset higher commodity cost. While cost of sales as a percent of restaurant sales were lower in the first quarter versus the prior year period, we currently anticipate the benefit to be offset during the balance of the year due to a combination of our promotional calendar, seasonal and variable impacts, and new contracts being negotiated, resulting in higher commodity cost increases in the latter part of the year. Overall, we currently expect cost of sales as a percent of restaurant sales for full-year 2013 to be similar to that of 2012. Restaurant wages and related costs improved 50 basis points year-over-year, primarily due to sales leverage and lower medical claims and other benefit costs. These benefits were partially offset by increases in workers compensation claims that developed from claims from previous years. Other operating expenses improved as a percent of restaurant sales, primarily due to lower repair and maintenance costs. This improvement was driven by efficiencies gained through the implementation of a centrally controlled and supervised repair process, preferred vendors, and a preventative maintenance program that was rolled out last year. We also saw a benefit associated with the timing of work being performed year-over-year. Starting this first quarter of 2013, we have isolated pre-opening expense on our income statement, given the increasingly important impact of new restaurant development on our results. Pre-opening expenses include costs incurred prior to opening a restaurant, such as wages and related expenses, travel, training, rents and promotional costs. Pre-opening costs begin to be incurred four to six months prior to the restaurant opening. Please refer to our Investor Relations section of our website where we have disclosed 2012 quarterly pre-opening expenses. Our P&L year-over-year comparison continues to be impacted by the qualification of certain leasing transactions for sale leaseback accounting treatment upon the date of the spin-off. The good news is that the year-over-year impact of this accounting treatment change triggered by the spin-off will conclude in the second quarter of this year as we lap today's anniversary of the spin-off. In summary, rent expense was negatively impacted by $1.9 million while depreciation and amortization expense and interest expense were positively impacted by $0.5 million and $2.7 million respectively. General and administrative expenses were $1.2 million higher than the prior year at $12.2 million because of Company management and team addition as well as infrastructure implementation costs associated with transitioning administrative functions from Carrols and costs associated with our acceleration of new restaurant development. As Tim mentioned, we are making steady progress building our corporate infrastructure and the Transition Services Agreement allows us to establish an orderly transition of both people and systems to a fully functioning back-office, thereby minimizing disruption to the business. Also affecting general and administrative expenses were costs incurred of approximately $0.4 million in expenses associated with the successful secondary equity offering that was completed during the quarter. As you are likely aware, the Company did not receive any proceeds associated with the sale of shares from this offering. We recognized a gain of $0.5 million during the quarter from the sale of an excess property. Our annual estimated effective tax rate is 35.8% in 2013 compared to a rate of 42.6% in 2012 excluding discrete items. In the first quarter, we've recognized a discrete item related to the retroactive reinstatement of the 2012 Work Opportunity Tax Credit of $0.6 million, which reduced our provision for income taxes in the first quarter of 2013. Net income increased $6.7 million to $4.8 million in the first quarter of 2013 or $0.20 per diluted share from a net loss of $1.9 million or a diluted share decline of $0.08 in the first quarter of 2012. We generated $1.7 million from the sale of an excess property in the first quarter of 2013 and also completed the sale leaseback transaction that generated proceeds of $2.5 million. We also purchased a property for $1.3 million in the first quarter of 2013 with the intention of selling it in a future sale-leaseback transaction. We continue to proactively pursue opportunities to monetize our owned properties either through selling excess properties or through completing sale-leaseback transactions for operating Company restaurants with attractive pricing and terms. At the quartet end, we had a cash balance of $6.5 million. There were no outstanding borrowings under the senior credit facility and we were in compliance with all covenants related to our indenture in senior credit facility. After reserving $8.4 million for letters of credit guaranteed by the senior credit facility, $15.6 million remain available for borrowings at the end of the quarter. We continue to believe cash generated from our operations, availability under our senior credit facility, and proceeds from any sale-leaseback transactions we may choose to do, will provide sufficient cash to cover our anticipated working capital needs, capital expenditures, and debt service requirements in 2013. Finally, we are excited about our prospects for financial growth and believe we can achieve EPS growth in excess of 20% in 2013 and beyond. Our basis for comparison in 2012 is the adjusted EPS we disclosed in our fourth quarter earnings release of $0.60. To confirm the key components that make up our long-term business model, we plan to build key revenue growth of 10% to 12%, which is made up of net restaurant growth of 8% to 10%, comparable restaurant sales growth of at least 2% to 3%, and franchise development. We believe financial discipline will allow us to invest in the growth platforms of our business while achieving operating and fixed leverage to deliver annual EPS growth in excess of 20%. So with that, let's open up the line for questions.

[Operator:]

(Operator Instructions) We'll take our first question from Will Slabaugh from Stephens.

[Will Slabaugh:]

Congrats on the quarter. What I wanted to ask you is to talk a little bit more about the sales trends that you saw, it sounds like March is a fantastic month, so wondering if you could talk just a little bit more about you were seeing in the restaurants around that time, if you think you will go out of internal leverage just contributing to that, that should carry over, or if you distribute a lot of those gains to its snapback from a softer February? And then also any commentary on April would be great.

[Tim Taft:]

First, I'd say that the March was better, we saw in both brands a general softness in January and early February and then a more normalization in March. And it wasn't really anything that we were doing, it was more of just a snapback. If you remember, we had very strong momentum coming out of fourth quarter in 2012, Taco was up 6.8% and Pollo was up 8.3%. So when we ran into some of those macroeconomic issues, it did softened things. Again, March was more normalized, April is, Taco is still flat because Taco is in Texas where really unprecedented cold weather that's affecting our patio business, but Pollo is up 6.7% versus the April a year before.

[Will Slabaugh:]

Great, thanks. And then just also wondered if you could talk just a little bit more about your immediate openings. I appreciate the color you gave us around Jacksonville and Georgia, but just in general, how you would think the more recent new unit openings are trending relative to expectations around those transactions and check?

[Tim Taft:]

I think that as we mentioned in our comments, that we are very pleased with all of the results of the new elevated restaurants that have been opened. Again the thing that is really noteworthy as we mentioned is the fact that these restaurants are operating on their own in DMAs without any kind of media coverage, and really it's local store marketing and occasional coupon drop. So, the kind of volumes that they are achieving without any kind of media is really encouraging. We are happy with the performance of those restaurants.

[Operator:]

We'll take our next question from Alexander Slagle from Jefferies.

[Alexander Slagle:]

Question on Pollo Tropical, just kind of looks like the menu mix are turning more positive relative to prior quarters, wondered if there is anything with that in terms of the promotional calendar and whatnot.

[Tim Taft:]

Alex, the message that we have been delivering really has been around the TropiChops and the freshness message and value. What our media really are creative is just around the different toppings that you can put on the TropiChops. We've got a new campaign that is with new food photography, it really reinforces the atmosphere and the kind of decor and the flavor and feel and identity of the restaurant, which we think is really resonating with our customers. It's not that we are discounting, it's we have an ongoing strategy of talking about value for both brands, and I think it's just an indication of a little bit of a snapback from January and February and Pollo was, the product mix was essentially the same, it's just more of it.

[Alexander Slagle:]

Great. And a question on the Easter calendar shift, was there any kind of drag in the first quarter results on that, any kind of impact?

[Lynn Schweinfurth:]

Yes, we did have a little bit of a drag in the first quarter. We quantified it in the area of 10 to 20 basis points at Taco and 20 to 30 basis points at Pollo.

[Operator:]

We'll go next to Bryan Hunt from Wells Fargo Securities.

[Bryan Hunt:]

I was wondering if you could make some comments about what type of food inflation you anticipate for the year on the cost side, and then with regards to growth opportunities, I know you have got some domestic franchisees, you spoke a lot about international franchise growth and opportunities, are you all considering opening up domestically to accelerate growth with domestic franchisees over and above what you have done so far?

[Tim Taft:]

Bryan, very briefly I think, and I'll let Lynn finish it out, but our inflation or our food cost is going to be, we believe it's going to be the same as it was in 2012. Our supply-chain management has done a really good job of not only making better buys but also very efficient buys and is improving not only the quality but also the yield, which is having a positive impact on our costs of goods sold. We obviously mentioned the international franchise, we do have non-domestic franchises that we opened up, one as we mentioned in Tampa, and we are in discussions with a couple of more non-traditional locations. But domestically, our position is that we've got a lot of work to do with our own economic model as good as it is, it can be better, and before we consider bringing on any franchising, we want to make sure that that model is as sharp as it possibly can be.

[Lynn Schweinfurth:]

And I would just add, specific to our inflationary expectations for the year, as I reiterated in my opening comments, we do expect cost of sales as a percent of sales to be about the same as last year. Now obviously pricing and initiatives are offset in cost increases and we're expecting cost increases at Taco between 1% and 2% and at Pollo 2% to 3%.

[Operator:]

We'll take our next question from Nicole Miller Regan from Piper Jaffray.

[Joshua Long:]

This is Josh on for Nicole. My question was on Taco Cabana and the remodel schedule there, if you could provide more of an expected timeline over the course of the year as you go back and retouch your San Antonio and Houston markets? And then I wanted to also confirm that that 2% to 5% lift that you're talking about, is there an opportunity for upside to that given that San Antonio and Houston are some of your older markets?

[Lynn Schweinfurth:]

What I will tell you is I think we have adopted about 30 stores to complete this year and we'll complete the balance of San Antonio and we've worked a few of our Houston stores and we'll complete the Houston stores in 2014. Certainly we're expecting on the high end of that range for these older markets as we've been seeing today. And I think that said, Josh, that answered the questions you posed.

[Joshua Long:]

I have one more for you. As you bring Pollo Tropical into Texas, how would you expect to use or utilize media to raise brand awareness for that, given that Pollo would be new to the stage and/or how would you be thinking about taking Taco to other markets where Pollo Tropicals are currently?

[Tim Taft:]

It works the same way both ways. I mean with the exception of when Pollo comes to Texas, specifically Dallas. Dallas is already media efficient with Taco Cabana, so the opportunity to use split 30, split 60s on broadcast to the coupons drops, even directional outdoor billboards. Likewise, when Taco goes to Atlanta, now we don't have just one brand developing the DMA for some kind of market penetration, Taco Cabana will develop alongside of Pollo Tropical and so their media efficiency, they can get to a media efficient position in the quarter.

[Joshua Long:]

That's helpful. And then last one for me, I think you mentioned, Tim, the Cabana Cares program at Taco Cabana and kind of re-engaging the guests and really focusing on that execution side. Is that a new program or is that something more of a renaissance or re-visit to that and a refocus alongside the remodel program?

[Tim Taft:]

Josh, it's one of many, many initiatives that our really brand made to the Company, really focusing on eliminating the accuracy problems. The great thing about having a 35 year old company is that in each kitchen you have a lot of folks that have been there a long time, take a great deal of pride in making their own version of what the beans or rice should taste like. We're going out and recertifying all the kitchens and all the cooks and making sure that we have a consistent initiative or presentation from restaurant to restaurant is critical. As far as Cabana Cares, one of the things that both brands are now 100% on is the 1-800 number, it's a (indiscernible) line that allows the customer to get in touch with a human and we look at that modeling as a reporting opportunity for a view inside of our operations that should really begin if there was an issue to begin the guest retention immediately.

[Operator:]

We'll go next to Nick Setyan from Wedbush Securities.

[Nick Setyan:]

Congratulations on a great quarter. In terms of some of the newer Taco store openings, how are they performing relative to the rest of the Taco system in terms of any color around the economics will be particularly helpful? And then I think I may have not heard but I think you said 6.7% for April for Pollo, did you say a number for Taco as well for April?

[Tim Taft:]

Let's say right now, Taco is flat given all the cold wet weather we are having. The answer to your question about how the new Tacos opening, they are not all built in exactly the same kind of locations. For instance, one is built in kind of a mature area, (indiscernible), that opened up 10 days ago to really record sales. So, the timing of your question is perfect for us. And other areas where we are looking at areas where the city is growing outwards, so may be a little bit green in that area, but we have also been advanced because we know that a year from now, we want to be there. And I would say that they are all operating to an expectation that we had.

[Nick Setyan:]

Got it. And then I think you mentioned there's going to be about 80 basis point drop in pricing for Taco in Q2.

[Lynn Schweinfurth:]

Yes.

[Nick Setyan:]

Can you maybe talk about the timing of some more menu pricing throughout the year and whether we should expect that sort of 2% to 2.5% for both brands to kind of be the range which you would think about for the year?

[Lynn Schweinfurth:]

I think you will see the Pollo pricing remained fairly steady since the last pricing increases, essentially what we are seeing today, and it was taken in the middle part of December. So we'll see that through the balance of the year. On the Taco, we will be lapping over a price increase I believe we took in October of last year in the arena of 1.2%. So that would be the other event that you want to think about as we go out further in the year.

[Operator:]

(Operator Instructions) We'll take our next question from Hale Holden from Barclays.

[Hale Holden:]

I had two quick ones. More broadly, when you think about international markets, if you could kind of walk us through what you're looking for as an ideal market, geographic density, household income, where we should start to think about like longer-term where you want to be? And as a follow-up, I thought you have made six promotions on breakfasts, and I was wondering if you could break out the percentage of breakfasts as a percent of sales and talk about what opportunity there was on that?

[Tim Taft:]

First, on international franchising, primarily what we have done is map the entire globe. I've said where on this planet do our potential customers exist, and that is where is a desire for non-fried chicken. So, we map out and say, okay, certainly India is that opportunity, you know United Britain, we're looking clearly to fill out the infill strategy with the Caribbean markets, southern South America, we're opening up restaurants in Guatemala, but the quick answer to your question is, we look for where is non-fried chicken popular. As breakfast as a percentage of sales, taco is about 18%. So it's a significant part of the menu mix, and a lot of that business is done through the drive-thru, people on the way to work picking up a bunch of tacos. And the promotion recently was just to reinforce the fact that we have breakfast tacos and have a little bit of fun with why people might begin ordering.

[Hale Holden:]

No, it's cute, I liked it. Thank you, I appreciate it.

[Operator:]

With no further questions in the phone queue, this does conclude today's conference. We thank you for your participation.