Ruth's Hospitality Group, Inc.
Q1 2013 Earnings Call Transcript

Published: 3 May 2013

[Operator:]

Hello. Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group, Inc. First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to your host, Mr. Arne Haak, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

[Arne G. Haak:]

Thank you, Allan, and good morning, everyone. I'd like to remind you that part of our discussion today will include forward-looking statements. These statements are not guarantees of our future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to today's earnings press release and our recent filings with the SEC for a more detailed discussion of the risks that could impact future operating results and financial conditions. Finally, I'd like to remind you that today's call may not be reproduced in any form without the expressed written consent of Ruth's Hospitality Group, Inc. I would now like to turn up over to Mike O'Donnell, Chief Executive Officer of Ruth's Hospitality Group.

[Michael P. O'Donnell:]

Thanks, Arne, and thanks, everyone -- to everyone for joining us today. We are pleased to see our operating momentum carry over from 2012 with a strong start to 2013. Both of our brands generated solid traffic growth during the first quarter on their way to positive comparable sales growth, including a 6.6% comp increase at Ruth's Chris Steak House and a 1.5% comp increase at Mitchell's Fish Market. We continue to manage our cost as well, expanding our operating income by 32% and growing our earnings per share to $0.22. Our team and our franchisees take good pride in caring for our guests every day, and their operational focus has contributed significantly to our strong competitive positioning and continues to drive the strength and consistency of our sales and profits. The stability of our results combined with strategic initiatives we have undertaken to improve our capital structure have resulted in increased financial flexibility to our business. Our solid free cash flow generation allowed us to pay down our debt by $34 million from a year ago. Today, we announced that our board has approved the initiation of a quarterly cash dividend of 4% -- $0.04 per share, as well as a $30 million share repurchase program. These new measures, facilitated by the strength of our balance sheet and the confidence we have in the ongoing health of our business, are rooted in the shareholder-focused initiatives we have undertaken over the last 5 years. The core of that work has been done at the restaurant level, where our hospitality-focused team has produced 12 consecutive quarters of traffic-driven same store sales growth and has led to numerous awards detailing our leadership in fine dining. Complementing these efforts, has been a focus on growing our cash flow and strengthening our balance sheet. Since 2008, we have rationalized our cost structure, raised capital, repaid over $175 million of debt and reinvested over $30 million of capital expenditures back into our business. With these major facets of our business in place, we are now adding a quarterly dividend and stock repurchase program that will allow us to return cash to our shareholders without limiting our ability for new restaurant development which will continue to be a key component of our growth strategy. Turning to our first quarter highlights by brand. As I noted, comparable restaurant sales at Ruth's Chris Steak House increased 6.6%, marking the 12th consecutive quarter of positive comparable sales for company-owned restaurants and our 13th straight quarter of traffic gains. When combined with last year's 34.7% increase, our first quarter comparable sales have grown over 10% from 2011. Our sales growth at our Ruth's Chris restaurants has been steady throughout the quarter and benefited from Easter, being on the last day of our first quarter. So far, this quarter, our comparable sales are currently up in the low single-digit year-over-year, in part, due to the shift in Easter into the first quarter. Entrées would serve as a proxy for traffic increased by 2.9% during the first quarter, and average check increased 3.6% for the period. In anticipation of continued beef inflation, we took a modest 1% price increase in February in anticipation of higher beef cost. When combined with last year's increases, this accounts for the majority of the increase in average check. We rolled over a 2012 increase since the beginning of April, so our menu at our Ruth's Chris Steak House restaurants currently reflects an approximate 2% increase. While we believe we have additional pricing power, we will continue to be thoughtful and prudent with respect to future increases. It is still our strategy to focus on growing sales primarily through traffic gains to maintain our value orientation. We believe this will continue -- contribute towards consistent comp and traffic growth going forward. Across the entire Ruth's Chris portfolio of company -- of comparable company-owned restaurants, 56 restaurants or 90% reported positive comp sales during the first quarter. Private dining sales at Ruth's Chris Steak House, which we view as a proxy for business demand, grew 8% during the quarter, and we are encouraged to see it exceeded our comparable year-over-year store sales growth. Our Ruth's Chris franchise-owned domestic comparable restaurant sales increased 1.8% during the quarter, while international comparable franchise-owned restaurant sales decreased 2%, resulting in a blended increase of 1%. The decrease in international comparable sales is a result of stronger dollar and weakness in certain Canadian and Asian markets. In terms of our Ruth's Chris brand, our increased sales were driven by outstanding execution by the entire Ruth's team. We were recognized -- we were again recognized for the third straight year with awards from Nation's Restaurant News for the top fine dining brand and earned the highest overall score among all categories. Our Sizzle, Swizzle and Swirl happy hour premium bar menu, which we introduced last year continues to gain traction, delivering high-quality and accessible price point in a way that we believe does not compete with our dining in sales. This offering gives us an opportunity to not only drive incremental sales at the traditional happy hour but continues to turn many first-time, often younger guests guests into Ruth's Chris regulars, while contributing to our overall sales growth. Our Ruth's Seasonal Classics continue to be a key component of our many offerings, particularly to consumers who may be looking for value or price certainty. These prefixed selections comprised approximately 20% of sales in the first quarter, consistent with the trends that we saw on the fourth quarter. During the first quarter, customers who selected the Ruth's Seasonal Classics exhibited more balanced approach preference, between our 2 price tiers compared to preference-weighted towards the higher end of the tier in recent quarters. Our marketing efforts in the quarter included improved digital initiatives, increased public relations, social media efforts and expanding our strategic partnerships. Switching to Mitchell's Fish Market, we continue to be pleased with the ongoing improvement and growing consistency of our operating results. Comparable sales increased to 1.5% during the first quarter, comprised of 2.7% increase from traffic, partially offset by 1.2% decrease in average check. We have positive comparable sales at Mitchell's Fish Market in all 3 months of the quarter, and 74% of Mitchell's Fish Market restaurants reported positive comp store sales during the first quarter. Our sales efforts at Mitchell's continue to target specific underperforming days and day parts. We are currently testing a number of new products at Mitchell's that have lower price points but also higher return. We remain focused on increasing our value to guest, while increasing our traffic and profitability. Mitchell's is moving in the right direction, and we are increasingly encouraged by the results of our efforts and initiatives that we planned for 2013. Switching to real estate. One new restaurant opened during the first quarter in the heart of the strip at Harrah's Las Vegas Casino & Hotel under a licensing agreement. The sales performance to date has been extremely encouraging, and we are excited to expand our partnership with Harrah's. At the end of the first quarter, we closed our restaurant in Phoenix, whose lease had expired after 27 years. While the market has unfortunately changed in those 27 years, the commitment and hard work of our Phoenix team members was unwavering, and we want to thank them for the years of service and dedication to the company. During the last 2 years, we and our franchisees and licensing partners have opened an -- or relocated 13 new Ruth's Chris Steak House worldwide in a 2-year period. This represents a 10% increase in the system and an increasing important component of our long-term sales growth. We continue to be pleased with the performance of our newer restaurants in Portland, Cincinnati and Cherokee, which we believe validates our ongoing efforts to thoughtfully accelerate our new restaurant development. In addition, to our new Las Vegas restaurant, our current development plans for 2013 include the relocation of our Houston, Texas, restaurant in the third quarter, the opening of a new company-owned restaurant in Denver, Colorado, in the fourth quarter. Our franchise partners have opened a second restaurant in Puerto Rico in April and an additional 2 to 3 franchise restaurants are expected to open in the fourth quarter of 2013, for a total of 4 to 5 new franchise restaurants in '13. We remain active in our development efforts and are continuing to work on additional company and franchise restaurants for '14 and beyond. Overall, our franchise pipeline remains robust as we have commitments for 19 future franchise restaurants in the next 5 years. While we are encouraged by recent development activity, our approach to new restaurant development will remain disciplined and prudent with regard to capital deployment. We will continue to provide updates to you on our newly signed leases and on franchise growth in our future quarterly calls. I'd like now to turn the call back over to Arne.

[Arne G. Haak:]

Thanks, Mike. For the first quarter ended March 31, 2013, we generated total revenues of $107.4 million, which is an increase of $7.1 million or 7% compared to last year. Total company-owned restaurant sales increased to $102.8 million or 6.5% compared to $96.6 million in the first quarter of last year. Average weekly sales for all company-owned Ruth's Chris Steak House restaurants were approximately $101,400 in the first quarter, an increase of 6.3% compared to approximately $95,400 in the same period last year and exclude operating weeks from discontinued operations. Our comparable sales growth in the first quarter of this year was affected by the shift of Easter holiday. As a result of the shift, we experienced 2 additional Lenten Fridays in the first quarter of 2013, as well as the benefit of Easter Sunday falling on the last day of the quarter. We believe that this shift represented approximately a 1 percentage point increase in our first quarter comparable sales growth year-over-year. Restaurant operating weeks for company-owned Ruth's Chris Steak House restaurants was up 13 weeks year-over-year to 819 weeks through the addition of our Cincinnati restaurant. Average weekly sales at Mitchell's Fish Market were approximately $71,300 compared to approximately $70,200 in the first quarter of last year for an increase of 1.5%. Restaurant operating weeks at Mitchell's were flat year-over-year at 247. Franchise income increased 6% to $3.7 million from $3.5 million last year due to improved sales volumes. In terms of our cost structure, food and beverage costs, as a percentage of our restaurant sales, decreased approximately 80 basis points year-over-year in the first quarter, as pricing more than offset overall food cost inflation. During the first quarter, our beef costs were up approximately 1% year-over-year, and over a 2-year period are up over 17%. While we are pleased with the moderation we have seen in first quarter beef costs, we would caution that the overall supply fundamentals of the beef industry remain tenuous. We have contracted 40% of our beef needs for the remainder of the year at prices that average 4% to 6% above prior year levels. With the slowing of the rate of inflation in the first quarter, we now expect beef inflation to run in the high single digits for the full year. Restaurant operating expenses, as a percentage of restaurant sales, were 48.1%, a decrease of approximately 70 basis points compared to last year. The year-over-year improvement was driven by improved occupancy costs and a positive effect of higher sales on our fixed costs. Marketing and advertising costs, as a percentage of total revenue, increased approximately 20 basis points, largely due to timing differences and planned quarterly 2013 spending compared to last year. G&A expenditures increased to $7.3 million from $6.9 million a year ago, in large part, due to increases in performance-based compensation. As a percentage of revenues, G&A expense now represents 6.8% of total revenue, down from 6.9% in 2012. For the first quarter of 2013, we have reported net income of $7.7 million or $0.22 per diluted share on a base of approximately 35.5 million shares. This compares to a loss applicable to preferred and common shareholders of $30.3 million or a loss of $0.89 per diluted share in the first quarter of 2012. Net income in the first quarter of 2013 was reduced by a $1.1 million net of tax loss from discontinued operations associated with a subtenant ceasing operations and exiting the property they have subleased from us. Net income applicable to preferred and common shareholders in the first quarter of 2012 was reduced by $36.4 million due to the refinancing of our credit facility and subsequent retirement of the company's preferred shares. Excluding these charges and income from discontinued operations, non-GAAP diluted earnings per common share was approximately $0.25 in the first quarter of 2013, an increase of approximately 66% compared to $0.15 in the first quarter of 2012. At the end of the first quarter of 2013, the company had $43 million in debt outstanding under its senior credit agreement, down from $45 million at the end of the fourth quarter of 2012. Our net capital expenditures during the first quarter were approximately $1.2 million, which is comprised of approximately $2.3 million in acquisition of property and equipment and $1.1 million of proceeds from the sale of one of our restaurant locations. Based on our first quarter results, we are reiterating our guidelines for some of our key 2013 cost metrics. We expect our cost of goods sold to be within the range of 32.5% to 33.5% of restaurant sales for the year. We expect restaurant operating expenses to be between 50% and 51% of restaurant sales. Our marketing and advertising spend is projected to remain between 3% and 3.5% of total revenue for the full year. However, the allocation of the quarterly spend will change in 2013 compared to 2012. For the second quarter, we expect marketing and advertising costs to represent approximately 3.5% of total revenues. Our G&A expenses are expected to be between $27 million and $28 million. Our effective tax rate for the full year is expected to be between 28% and 32%. Our CapEx spending for 2013 is projected to be between $14 million and $16 million, which reflects reduced maintenance CapEx, but a higher number of new restaurants at the Ruth's Chris brand, as well as a significant investment in our IT infrastructure. Finally, we expect our fully diluted shares outstanding to be between 35.5 million and 36.5 million shares, which assumes no share repurchases in 2013. With that, I'd now like to return the call to Mike.

[Michael P. O'Donnell:]

Thanks, Arne. In closing, we remain very excited about our business. Not only have we maintained our sales momentum at Ruth's, but we continue to be pleased by the recent success of Mitchell's. Our development pipeline continues to strengthen, and with a healthy capital structure, we are well positioned for earnings leverage. Furthermore, our management and board remain focused on the increasing total shareholder returns. We have put our company in a position where our growing free cash flow affords us the opportunity to reinvest in our existing business and continue to invest in new restaurant development, which we are accelerating again this year, while simultaneously returning a share of our excess cash to shareholders through the new quarterly dividend payments and opportunistically buying back our stock. This is an exciting time to be at Ruth's, and we believe an exciting time for our shareholders as well. Before closing, I would once again like to recognize our franchise partners as the heart and soul of the brand. They are key contributors to our success through the pride they take and the quality of their operations and the faith they demonstrate in the Ruth's Chris brand through their reinvested and invested capital. Allan, operator, I'd now like to turn the call over to you for any questions.

[Operator:]

[Operator Instructions] We'll take our first question from Jason West with Deutsche Bank.

[Jason West:]

Several things I had. Just first of all, on the Easter shift, if you guys could quantify how much that would have been in the first quarter, and maybe the second quarter impact to comps?

[Michael P. O'Donnell:]

Sure, Jason. As we said in our prepared comments, it's about 1 percentage point of comp shift..

[Jason West:]

Oh, you did, sorry I missed that.

[Michael P. O'Donnell:]

Out of that -- so that went into the first and comes out of the second. And that's one of the reasons we wanted to highlight for low single digits so far in the second quarter.

[Jason West:]

Okay. But away from that, would you say you've seen a bit of a down shift in the second quarter? I mean, I don't know, anything jumps out there, or is it really just that?

[Michael P. O'Donnell:]

I think we talked about a little bit. We have a calendar shift because of the 53rd week. So our weeks don't necessarily align up. So you have an Easter shift, you have a calendar shift. When we strip all that away, I think -- the overall trend for the year has been fairly consistent. There are inflations for shifts in the holidays -- the day of the week of a holiday, things like that, like Valentine's Day. But I don't think we've seen anything that is a marked slowdown.

[Jason West:]

Okay, I think your compare's a little bit tougher as well in the second quarter.

[Michael P. O'Donnell:]

Yes.

[Jason West:]

And then on the franchise side, I think you said the franchise comp in the -- domestically, was like 1/8, I believe? Just what are your thoughts on why that was such a big gap between the franchise comp and the company comp?

[Michael P. O'Donnell:]

I think the biggest reason, probably is the shift to the Super Bowl. Last year, the Super Bowl was in Indianapolis. And this year, it was in New Orleans. So it went from a franchise location back to a company location. So that is the single biggest contributor to what's going on with the franchise growth domestically.

[Jason West:]

Okay, okay.

[Michael P. O'Donnell:]

Yes, it's big. It's hundreds of thousand of dollars of sales.

[Jason West:]

Right, okay, got you. And then on the balance sheet, the -- you've announced a dividend today. Just wondering on the buy back -- I'm sorry, on the debt pay down, are you kind of happy leaving the debt where it is and we should we expect free cash flow to go to the other uses such as dividends and buy backs and CapEx? Or would you take down some more debt over time? And then could you talk about what the right to run in cash balance is for the business?

[Arne G. Haak:]

Well, Jason, I think one of the key things, when we refinanced our credit facility last year, which is kind of the start of this journey is the design of our credit facility, and that is that it's a revolver. So we can pay down, draw, we can go up and down and use the $100 million facility how we wish. We will continue -- our first priority is going to be the existing business. Our second priority will be if we can find high-quality sites to build new restaurants. We'd like to do that. Mike had talked quite a bit about that, but we're going to be disciplined about it. After that, we've committed to a dividend, and I think that signifies, if you look at last year's 52-week earnings, we're committing to about 30% of last year's earnings to pay back to our shareholders in a dividend. Then, I think we can go -- continue to go down the path with capital, and we can pay down the debt, if there's an opportunity to buy back our stock, that our board believes is an appropriate price. We can do that, and the 2 will probably compete with each other. But should an opportunity present itself? We have the ability to draw down more debt. And I think we're very comfortable with where we are in terms of our leverage and the amount of flexibility that we have.

[Jason West:]

Okay. And then the last thing, just on the COGS, you didn't change the guidance there, and you had a pretty significant improvement in the first quarter. Sounds like beef cost not quite as bad as you thought. Just wondering the thinking on not lowering that COGS outlook.

[Arne G. Haak:]

Well, I think we're still in that range. We probably moved lower in that range. And what really drove -- I think the reason that we're not moving it is -- what drove the prices lower in the first quarter, was largely changes in retail demand. And what concerns us is the supply. That's been well documented how constrained the supply is, and we can't predict whether retail demand is going to come back. We think it likely will, with grilling season and as beef narrows its gap to other proteins, the retail component will pick up again. As evidenced by the fact that we're -- we had 1% beef inflation in the first quarter, and we committed 40% of our beef to being, on average, for the 3 quarters, up 4% to 6%. So it's hard for us to, I guess, get excited and commit to a component of the pricing, which is driven by demand that we don't control.

[Operator:]

And we'll take our next question from Andy Barish with Jefferies.

[Andrew M. Barish:]

Can you, first, just give us the Mitchell's Fish Market, kind of the holiday shift impact there and how 2Q started there?

[Arne G. Haak:]

Andy, this is Arne. The shift at Mitchell's isn't quite as big as what the Ruth's Chris shift was. So I would say it's less than a point. We did get a little bit of a bump on the Lenten shift, but I think we're -- we don't expect as big of an impact as we do on the Ruth's Chris business in terms of the shift from Q2 to Q1.

[Andrew M. Barish:]

And has Q2 started out positive still?

[Arne G. Haak:]

I would, yes, say, it's flattish to a little positive. But again, with the calendar shift and everything else, I mean, I think we're comfortable with the direction it's going in.

[Andrew M. Barish:]

Got you. And on the development side, I guess we could characterize it as starting to pick up. I'm wondering if the -- if there's a shift in focus. Last couple of units in Denver, certainly, city center, urban, as we hear about more sort of lifestyle centers kind of starting to come out of the ground. Is that the type of real estate you want to look at? Or are you going to stay focused on sort of the Portlands, and the Cincinnati, Denver types of locations?

[Michael P. O'Donnell:]

Andy, let me just add something to your first question. And I'd said in the prepared remarks, we're pleased with the fact that Mitchell's has shown -- throughout the first quarter showed positive comps in all 3 months. Just to highlight that, I think you were asking about whether or not we got a bigger shift from Easter. And I think Arne's comments are absolutely correct, but it's consistent growth throughout the first quarter. In terms of our real estate selection, and we're very focused on what we think will exceed our average unit volumes. We have an outside group that we work with on the modeling side of things that it's been proving to work very well for us in terms of the restaurants that we build over the last couple of years. So yes, and lifestyle centers are coming out of the ground. We look at a lot of things, and we really evaluate every opportunity on the merits of its individual -- on the individual merits of each opportunity. So I don't think that there's a specific -- we really like the urban markets. They've typically been higher volumes for us, but there are also some great opportunities that are sort of developing markets that are outside of the urban areas. So I think it's not fair to characterize, and we don't -- we say no to certain economics, and we say no, the demographics don't work, because if demographics and the economics are favorable, we do a lot of work around sites, whether they're in town or out of town.

[Andrew M. Barish:]

Okay, helpful. And then on the average check increase at Ruth's, so you had about 3.5 of price in -- for all or parts of the first quarter, is that....

[Michael P. O'Donnell:]

Andy, we had a little bit over 2% of price on the menu. Our check moved up as people were consuming more but the price on the menu was a little bit over too.

[Andrew M. Barish:]

Okay. Where did you get the mix shift? I guess, that's where that question was heading, because you saw classics kind of actually shift lower. I think you mentioned. And how does Sizzle, Swizzle, Swirl -- that was tough to say at 6

[Arne G. Haak:]

Correct, Andy. Most of Sizzle, Swizzle Swirl does not count in the entree so that does drive it. But I would tell you, one of the places that we are seeing a pickup is in the sale of alcohol, and particularly, in the area of liquor.

[Arne G. Haak:]

And the other thing, Andy -- I'm sorry, Arne, but other thing it takes place is when we're see an increase in our private dining business, that's typically got a higher guest check average, and sometimes substantially higher guest check average than our a la carte business.

[Andrew M. Barish:]

Okay. And one last one. Any -- are there any major remodels on tap for this year?

[Arne G. Haak:]

We have probably 8 restaurants that are -- would be slightly above -- well, I mean, we are -- it's ongoing for us. I mean, so one of the reasons that we're able to reduce our capital expenditures as we talked about in the remarks is that we've done a boatload over the last 4 years, but we still have -- we have our store in Metairie, Louisiana that's undergoing a significant remodel. We've got a number of others that, some of them have significant back-of-the-house remodels. We just reinvested a substantial amount of more money in New York City that you won't see, because it's back-of-the-house stuff. So we'd already done the front of the house there, so we've got -- we have an ongoing list of restaurants and next year, we'll do another 5 or 6 significant remodels and keep going in that direction.

[Operator:]

[Operator Instructions] We'll take our next question from James Fronda with Sidoti & Company.

[James Fronda:]

Are there any other initiatives you can tell us about in the pipeline that, I guess, are similar to the Sizzle, Swizzle, Swirl or seasonal offerings that, I guess, can help you continue to drive sales growth going forward? Or you're just going to stick with those 2 for now?

[Michael P. O'Donnell:]

One of the things that I think that people value from us is the sort of consistent delivery. And our significant focus has always been on the execution of the base business. Now, Sizzle, Swizzle and Swirl is intended to create another dining or another visit -- reason to visit the restaurant, and we've seen some healthy skews towards younger people, which we think become somewhat of a feeding opportunity for other events. So that continues to be a strong focus. And the Classics is really a value proposition for us. And we rotate the Seasonal Classics, so that those menu items change up. We rotate the items that are on the Sizzle, Swizzle and Swirl, but we really -- at the end of the day, what we're trying to at Ruth's -- the purpose at what we are about is really creating memories on 500-degree sizzling plates and to the extent that we execute against that, we do well.

[James Fronda:]

Okay. And, I guess, that was the other question I have, do you have any details on the demographic of your customers in the restaurants? I guess, you're obviously seeing a benefit of the younger generation, right?

[Michael P. O'Donnell:]

Well, we are working -- and continue to work on attracting first-time customers, generally, and we're happy to have them at any age. But the notion that we can skew to younger is something that we think is very important for us.

[Operator:]

And we will take our next question from Nicole Miller with Piper Jaffray.

[Nicole Miller Regan:]

You talked about 2% price at Ruth's. What was the menu price increase at Mitchell's please?

[Michael P. O'Donnell:]

There was -- there's not a menu price increase. And in fact, there's been a decrease.

[Nicole Miller Regan:]

Okay, so not just a mix shift but also in price?

[Michael P. O'Donnell:]

Pardon me?

[Nicole Miller Regan:]

Not just in mix shift but also price for Mitchell's?

[Arne G. Haak:]

Correct.

[Nicole Miller Regan:]

Okay. And then I've been catching a lot of new commercials lately for Ruth's. And I'm just wondering if you could talk about if it's new advertising, or just a new commercial? And if you're getting more impressions year-over-year?

[Michael P. O'Donnell:]

Nicole, we elected to run advertising -- television advertising in the spring for the first time. And we felt like we wanted to look to see whether advertising there was -- and this was a 5-week flight, and we're actually in it and we did that because [indiscernible] we recognized in the last few years [indiscernible] advertising is actually the same, that brand-based advertising that we've run in the fall for the last 3 years. And again, we're getting equally a lot of comments on like you just described from people that actually think they're seeing it for the first time. So we're very pleased with the fact that, that's been running.

[Nicole Miller Regan:]

And is there anything strategic about that, I guess, there is -- not having it run in once a year just in the file, but also, as Mother's Day coming up, is there a component of private dining that you can do that can also lift transaction and check coming out of the end of the second quarter?

[Michael P. O'Donnell:]

Nicole, what we -- our strategy there really is to be advertising, particularly, in the fall in advance of the holiday season, when we believe that people -- there's natural tendency for people to be going out or propensity for people that are going out, and we want that -- and we want share. And so similarly, as we go into graduation, we go into Mother's Day, we go into Father's Day, we'd be making some brand impressions and would influence people to come into our direction.

[Operator:]

And it appears there are no more further questions at this time. Mr. O'Donnell, I'd like to the turn the conference back over to you for any additional or closing remarks, sir.

[Michael P. O'Donnell:]

All right. Thank you very much. I want to thank everybody for joining us today. And as always, this is a great time to go out. Have steak or eat fish. Thanks a bunch.

[Operator:]

And that does conclude today's conference. Ladies and gentlemen, we'd like to thank you for your participation. You may now disconnect.