Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide insights on the expected lift from the remodels and how it might impact same-store sales? A: Elizabeth Williams, CEO: We are excited about our remodel program and have seen positive returns historically. Although we don't have enough data from the recent remodels to provide specific numbers, the consumer reaction has been very positive, and the new design aligns well with a modern brand.
Q: How is the franchisee pipeline developing, especially with the push for growth outside California? A: Elizabeth Williams, CEO: Franchisee interest is growing, with more meetings and franchise days. Conversations with potential partners have resumed, driven by our growth in same-store sales, improved margins, and reduced build costs. While we aren't releasing pipeline data now, we are optimistic about future growth beyond the 10 units planned for this year.
Q: What factors are contributing to your confidence in further margin expansion in 2025? A: Elizabeth Williams, CEO: We are enhancing our cost of goods by optimizing our supply chain and product specifications. Additionally, we are improving labor productivity through new equipment and technology, such as kiosks, which help streamline operations and reduce costs.
Q: Can you explain the variance in the prototype build cost and its impact on franchisee demand? A: Elizabeth Williams, CEO: The $1.8 million build cost is our goal, achievable in markets with moderated construction costs. The prototype in California is slightly more expensive, but we are leaving room for potential cost increases in equipment. Converting existing restaurant locations offers a cost-effective alternative, enhancing returns.
Q: How has the mango habanero flavor been received, and what does it mean for future flavor innovations? A: Elizabeth Williams, CEO: The mango habanero flavor has driven trial among existing and new customers, marking a shift back to bone-in chicken. This success highlights the opportunity for continued flavor innovation, which excites consumers and is operationally simple for our team.
Q: What is driving the increased CapEx guidance, and how is it being allocated? A: Ira Fils, CFO: The increased CapEx is primarily due to our remodel program, with about half of the 60 to 80 planned remodels being company-operated. Each remodel costs around $400,000. We are also investing in digital assets, but the focus is on the remodel program.
Q: How are you balancing innovation and value in your product calendar for 2025? A: Elizabeth Williams, CEO: We are more planful with a robust pipeline and a team focused on innovation. We aim to balance new product introductions with operational consistency. Upcoming products like fresco wraps and quesadillas are designed to meet consumer demand for handheld, high-quality items.
Q: What was the impact of the LA wildfires on your operations? A: Ira Fils, CFO: Fortunately, all team members were safe, and no buildings were lost. There was a temporary impact with some restaurant closures due to power outages, but overall, there was minimal sales impact from the fires.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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