Earnings Call: Q2 2020

Feb 25, 2020

Good day, and welcome to the Cracker Barrel Second Quarter Fiscal 2020 Conference Call. All participants will be in listen only After today's Please note this event is being recorded. I would now like to turn the conference over to Adam Hannon, Manager of Investor Relations. Please go ahead. Good morning, and welcome to Cracker Barrel's second quarter fiscal 2020 conference call and webcast. This morning, we issued a press release announcing our 2nd quarter results and our outlook for the 2020 fiscal year. On the call with me this morning are Cracker Barrel's President and CEO, Sandy Cochran Senior Vice President and CFO, Jill Golder and Vice President of FP And A And CFO of Emerging Brands, Jeff Wilson. Sandy will begin with a review of the us and Jill will review the financials and outlook. We will then open up the call for questions for Sandy, Jill, and Jeff. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward looking statements, which involve risks and uncertainties that in many cases are beyond management's control, and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward looking statements and information. Many of the factors that could results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our that we file with or furnished to the SEC. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Sandy Cochran. Sandy? Good morning, and thank you, Adam. I'm pleased with the results we announced this morning, which included positive comparable store restaurant sales that outperformed the industry, GAAP earnings per share of $2.55 and operating income growth of 3.2 percent Jill will review the financial results for the quarter as well as our updated full year expectations. But before she does, I want to speak to some highlights holidays are an important time for Cracker Barrel, and we believe this year, we further strengthened our reputation as a destination for both in store and off premise holiday dining occasions. Our second quarter menu promotion featured the return of our popular country fried Turkey offering, and it was supported by 7 weeks of national TV. Additionally, we built awareness of the brand throughout the holiday season, by featuring our vintage red truck and a Cracker Barrel tiny store and events throughout the country that earned media attention and built excitement for the completed updating the creative on our billboards, which continues to be a key channel for communicating with our guests. The new billboard messaging is balanced to highlight 2 of our differentiators, our everyday value and our heritage of serving breakfast all day. I was pleased with The second quarter is a key period for our off premise business, and we again saw strong growth across all three channels of this business. Which meaningfully contributed to our top line results. Our Thanksgiving and Christmas heat and serve offerings. In fact, this quarter, we sold a record number of heat and serve units even with an average price that guests have in Cracker Barrel to provide a convenient and delicious home cooked meal at a good value. The employee and guest experience remains a focus. We implemented several enhancements to drive an improved guest experience during this high volume quarter And while we still have room to improve, I believe we made progress and was encouraged by the results. Additionally, I was experience during this high While we saw short of our expectations. This year's seasonal assortments particularly our Christmas to core merchandise delivered strong sales growth in our gifting to review and refine our assortments and continuing to optimize the price value relationship of our offerings. But this will take some time and we've lowered our full year comparable store retail sales guidance given the underperformance in the first two quarters. Looking to the remainder of our fiscal 2020, we will continue to execute our business priorities which include driving top line growth through craveable signature food, accelerating our off premise business, enhancing the employee experience and guest social. And Dumplains, Country Fried Steak and Grandma sampler. In addition to reminding our guests of offerings that they know and love, featuring these core menu offerings will benefit our stores by reducing complexity, while we implement our menu evolution initiative. As a reminder, this initiative is targeted at strengthening the dinner daypart by introducing new signature craveable items while also simplifying our menu Earlier this month, we began implementing specification and process changes that improves the quality of several targeted offerings, In the coming months, we'll be introducing offerings such as a new and improved chicken pot pie and country fried pork chop, as well as value and variety. For off premise, we continue to be pleased with the demand for 3rd party delivery which, as a reminder, is available in approximately 600 stores. And we'll be testing several initiatives such as increased marketing support to help us further expand While this occasion is smaller than the Thanksgiving and Christmas occasions, we're optimistic about its sales growth over the prior year. Regarding our investment in Punchful Social, we continue to partner with them to leverage our expertise and experience. Jill will speak to the financial impact of this investment in Q2, but we were pleased with our holiday sales and are looking forward to the upcoming opening in Miami this weekend and in Phoenix in company integration, which includes the conversion of Holler and Dash into Maple Street. Our teams have been working diligently to execute our plans. Dott and his leadership team have done an excellent job leading through this transition. During the second quarter, we rolled out an initiative to open all Maple Street locations on Sunday. We've been encouraged by the early results, and we believe this will help Maple Street improve its business model, increase AUVs to over $1,000,000 and deliver solid store level EBITDA of over 17%. We remain very excited about this acquisition are looking forward to growing the brand after we complete the integration and build a strong foundation Good morning, everyone, and thank you, Sandy. I would like to begin by discussing our financial performance for the second quarter of fiscal 2020 and then our outlook for the fiscal year. In this morning's release, we reported 2nd quarter net income of $61,200,000 and GAAP earnings per diluted share of $2.55 compared to prior year earnings per diluted share of $2.52 Our reported earnings per diluted share includes a $0.15 loss from the company's equity method investment in its unconsolidated subsidiary, punchable social. For the quarter, we reported total revenue of $846,100,000, an increase of 4.2% when compared to prior year revenue of $811,700,000. Our restaurant revenue increased 5 and our retail revenue increased 1.4 percent to $183,100,000. Our total revenue increase was primarily driven by positive comparable restaurant sales, the net opening of 4 new Cracker Barrel locations, and our acquisition of 28 company owned Maple Street locations. Cracker Barrel Comparable Store Restaurant Sales in the quarter increased 3 The increase in average check reflected core menu price increases of approximately and to favorable menu mix impact of 1.8%. The 2nd quarter mixed favorability was driven primarily by growth of our off premise business, off premise price increases and our signature fried chicken platform. 2nd quarter comparable store retail sales increased 1.3%. While we had strong sales growth in this year's seasonal assortments, Our overall retail sales performance was below expectations. We are working to address the underlying drivers but we believe retail will remain challenged in the back half of the fiscal year. Moving Total cost of goods sold in the quarter was 32.2 percent of total revenue versus 32.7 percent in the prior year quarter. Our restaurant cost of goods sold was 26 percent of restaurant sales, a 30 basis point decrease versus the prior year. This decrease was primarily due basis, our food commodity costs were approximately 1.4% higher in the quarter than in the prior year quarter. Driven primarily by increases in beef, dairy and pork. Our retail cost of goods sold was 54.4% of retail sales compared to 55% in the prior year quarter. This 60 basis point decrease was primarily a result of higher initial margin. Labor and related expenses were 284,800,000 dollars or 33.6 percent of revenue compared with $276,800,000 or 34.1 percent of revenue in the prior year quarter. This 50 basis point decrease was primarily due to productivity improvements. We were that we saw another quarter of strong execution and labor management from our operators, which has been a point of emphasis for our organization. Other store operating expenses were $171,600,000 in the quarter or 20.3 percent of revenue compared with other store operating expenses This 100 basis point increase was primarily driven by the following: 1st, higher advertising expense to support our menu promotion, 2nd, planned depreciation increases related to investments in our strategic initiatives and 3rd, costs associated with the growth in our off premise business. General and administrative expenses were $38,400,000 in the quarter or 4.5 percent of revenue compared to G and A expenses of $36,200,000 or 4.4 percent of revenue in the prior year quarter. GAAP compared with $76,700,000 or 9.5 percent of revenue in the prior year quarter. Net interest expense for the quarter This decrease was primarily driven by the benefit Our effective tax rate for in the prior year quarter. And the tax benefit of the retroactive reinstatement of the work opportunity tax credit. In the second quarter, we paid $31,300,000 in dividends and repurchased shares totaling $5,800,000, which resulted in us We ended the fiscal prior year quarter end. Our total debt With respect to our fiscal 2020 outlook everyone should be mindful of the risks and uncertainties associated with this outlook as described in today's earnings release and in our reports filed with continues to assume We now expect Cracker Barrel comparable store restaurant sales growth in the range of 2% to 2.5%. We now anticipate Cracker Barrel comparable store retail sales growth will be approximately flat. We continue to anticipate We continue to expect to As a reminder, conversions to be completed constant mix basis in the range of 1.5% to 2% for the fiscal year. This lower estimate is driven by updated expectations for the pork and poultry categories. We plan to reinvest a portion of these expected savings in various initiatives, including training to support the rollout of our menu initiatives and increased marketing support prior year. We have locked in our pricing on approximately 60 compared to tail margins as a percent of sales for the full year will be approximately flat to the prior year. We now project approximately $11,000,000 Taking these assumptions into account, we continue to expect full year operating income margin of approximately 9% of total revenue, We continue to project As a reminder, this includes the benefit We now anticipate an As a reminder, this guidance includes the expected tax benefit from the estimated loss from We now expect capital expenditures for This increase is primarily due to We now expect depreciation an increase in fiscal 2020 Taking these assumptions into account, we now expect to report GAAP earnings per share between $8.55 and $8.65. I want to remind everyone that this estimate includes the following: 1st, an expected loss from our equity method investment in punchable social of approximately $0.80 And second, transaction and integration expenses related to the acquisition of Maple Street of approximately $0.15. Lastly, I would like to note such as expected delays in some shipments of retail products. However, if the situation worsens Our future results could be negatively impacted by higher retail cost of goods sold and or missed retail sales due to further delays in receiving products. We will now begin The first question today comes from John Tower of Wells Fargo. Please go ahead. Great, thanks. Just a quick clarification on that question. What was the off premise growth in the quarter And then I guess the question stems from that is how can you just talk about the traffic growth in the period in store versus off premise and how that played out throughout the quarter? Great. Good morning, John. This is Jill. We were really pleased both with our in store and off premise performance this quarter. So off premise grew 210 basis points versus the prior year quarter. We saw growth across all three channels. So individual to go occasion and catering, and all three of those channels were up double digit. So we're very pleased with that. As we look at the, in store and I'm sure you've seen some of this from an industry standpoint, we, as well as the industry, benefited from some weather favorability primarily in January. For us, it's really difficult to pinpoint exactly what that favorable weather impact is, just given our travel consumer. So if had to give you a number. I'd say it was approximately 60 basis points. I'd give the range around that number. But overall, we were pleased with both our in store performance as well as off premise. Okay. Thank you. And then just looking at the balance of the year for guidance. And I think you hit on this a little bit earlier, but I just want to confirm. It suggests that some of the I guess the guidance suggests the back half of the year growth is going to decelerate from a EBITDA and EPS standpoint. And just want to confirm that the majority of that is coming from the reinvestment that you're suggesting. I think talking about taking some of the commodity cost savings and pouring it back into some of the initiatives and training. But if you wouldn't mind clarifying, that would be great. Yes. So you're exactly right, John. We had a solid second quarter performance. We, for the year, we modestly raised our same restaurant sale guidance and modestly lowered our retail same restaurant sales guidance. The favorability in commodities, we chose to reinvest much of that in marketing primarily in fourth quarter, given the fact that we were wrapping on our chicken launch last year in fourth quarter. Now that said, our marketing will still be below prior year's 4th quarter. And then we're also investing in training and support of our menu initiative that Sandy discussed in her prepared remarks. And we'll also be adding some additional points of sale in the fourth quarter. We're still working through those plans, but we've included some training there. So year to date, we've got about 100 and 70 stores that have our new point of sale, which we call Max, and we'll add, a few more to those in the back half in the fourth quarter. Great. Thank you. I appreciate it. The next question comes from Gregory Francfort of Bank of America. Please go ahead. Hey, I just had a couple of questions. Thank you. The first is, Sandy, the dinner daypart initiatives that you're, that you're doing, can you just remind me maybe where SKUs are today and where you're trying to get them to kind of as you get through this program? Good morning. I'm not sure what you mean by SKUs. Well, I think you talked about menu simplification, kind of through this process and just kind of where you envision it to get to versus where it is today? So, first, maybe I'll start by reiterating that the initiative is targeted at strengthening the day part from a consumer standpoint first, which was the day part that we'd seen, under the most pressure and it's sort of introducing when we finish new signature craveable items, while also simplifying the menu to increase consistency and ease of execution. So the purpose in simplification, wasn't necessarily to reduce the number of SKUs, although that may be an outcome when we've, when we finished it all, it it will allow us reducing some SKUs in the short term, some deletes will allow us to introduce as we roll through the initiative, which will go into next fiscal year new items and sort of allow our field leaders to be able to execute at a high level against that. But we're in test right now with with various phases of the initiative. I think we've got a little over 100 stores on it and we'll be rolling as we go through the next few months stop as we get into the fourth quarter and then begin again in the first quarter of next year. Got it. Got it. Thank you. And then just in terms of labor this quarter, it was a lot better than we'd expected. And Can you maybe talk about some of the productivity improvements and kind of maybe some specifics around what you're doing out of that front? What's really driving the improvements on the labor line? Thanks. Yes. Good morning, Greg. We were pleased with our labor and related decrease. Of about 50 basis points in the quarter versus prior year. So we do have productivity improvements for several cost savings initiatives in there. I think we've talked about, what have we talked about from a labor standpoint? We haven't given a lot of detail on those. But they're fairly simple. Like, we talked about Panliners, I think, in the past, So how that impacts the dish area. But the team's also done a really nice job doing better forecasting, better labor scheduling. And so we are managing our labor, and it's not just making sure that we have lower labor dollars, but making sure that we have the right labor at the right place at the right time. So the team continues to do a good job there. And then within the quarter, we also leverage the growth in our overall sales that you saw. The sales growth helped us. Leverage labor. So the team is doing a really nice job there. As we look at the back half, I guess we expect it to be a little bit higher from an inflation standpoint half, we expect it to be closer to the mid-three percent inflation growth on wage rate. So hopefully that's helpful. That's helpful. Maybe I'm going to sneak one last one in here. Sandy, you talked a little bit about the coronavirus impact on your sourcing out of China. Can you maybe just help us understand, as you look to the next holiday season, when do you need product to ship buy this year to kind of have that in stores? Is that the next couple of months? Is that sort of more like the summer just as we kind of try to frame that up? Thank you. It starts in the next couple of months. It starts now. We have productions probably we hope, going on right now for the Christmas ornaments and the decor, which is sort of how we roll out the Christmas season. And then as we get into the more gifting part, which sets a little bit later. So the issue is we're currently focused on, where we are in terms of our inventory and we will continue to be until until we believe we're really out of the woods with this, but this will go on for months. The next question comes from Brett Levy of MKM Partners. Please go ahead. Great, thank you. If I could, a few questions. First, would you care to share any more detail on just how the quarter, how the quarterly cadence went, what you're seeing across regions or even any incremental color since quarter end? Given what we've seen out there in the landscape? And then a couple of operational questions. So, we don't want to get into monthly cadence, except to the degree that we talked about, the fact that weather was more favorable in January. So as we look at the dayparts, week ports, performance, our breakfast daypart was the strongest daypart specifically weekday breakfast, lunch and dinner were comparable performance probably weekend dinner continues to be the most challenged given the competitive environment. Beyond that, from a region standpoint, performance was broad in similar in our outperformance versus the industry. Now that you have about 107 units with the Max POS, what are you seeing in terms of potential savings, productivity, how does that differ from what you're able to do on the other scheduling items that you called out as? Drivers for this quarter? I'll start and maybe turn it over to Jill. The POS system was really allowed us to do a variety of things. It's really a platform that we would use to then add additional functionality. So tablets is probably one of the ones that'll be the, the soonest. And we're pleased with the, the testing and the results we've gotten from that. We continue to work through some technology issues making sure that the battery lives match the rhythm of the business, making sure that the tablets can withstand the kind of volume that they get in a cracker barrel and so on. That will help both speed, into the kitchen, as well as server labor hours. We then will be able with the new phone to add our PCM, our food and labor systems, which we're excited about the operator's ability to use these more sophisticated systems to manage food fixed costs and to allocate labor. To Jill's point, it's, to some degree, the benefit is not just reducing labor, it's making sure that you've got the labor allocated in the right place. It does give us the ability to do a little bit more functionality in our retail store around promotional activity, but that's probably sort of on the lower end of the where we're excited about. Yes, Brett. And I think Sandy covered it. I just want to make sure. So we now are in 170. I just want to make sure that you heard me correctly. I wasn't sure if you said 107 So we're in 170 today. This time, I actually got it right, but thank you. And if I could just steal one last question. Do you have any measure on what level of incrementality you're seeing from off premise? And then I'll go back into the queue. Well, there isn't any field question. Do you want to start or? No, I'll let you. Awesome. We believe it's a great question. And hard to tease out. Certainly, as we've gotten into 3rd party delivery, we've that was easier to measure kind of early on. We believe that is, very incremental. But it's hard to tease that out overall incrementality. Certainly within the second quarter, we felt like a fair amount was incremental because we thought improving both in the dine in as well as the off premise. And of course, the special occasions support a different meal occasion The next question comes from Jake Bartlett of SunTrust. Please go ahead. Great. Thanks for taking the question. Your mind was about the same store sales guidance for the year. And it looks like The implied in the back half of the year is about 1% to 2% given what you did in the first half. And just trying to understand why the potentially more conservative view for the back half? I know you're have a difficult compare in the fourth quarter, but easier in the third, but what are some of the puts and takes as to why you think, comps might decelerate? No, that's a great question, Jake. So what we would say is as we look at, the back half, we we still are assuming that the industry will be soft, although we have forecasted some modest improvement on the industry performance kind of taking out any weather impact. But also, as you said, that we are wrapping on the rollout of our very successful platform for the bone in fried chicken. So we'll have that to wrap on in the fourth quarter, and we'll have modestly lower marketing support against that initiative. And then, versus our current performance, off premise is very big for us in the second quarter, and we continue to expect it to grow but occasions are not as, you know, the occasion, for off premise, you can't see me doing that in quotes of a special occasions for off premise is a smaller part of the business in the back half. Okay. And then you mentioned cake and that the weekend dinner is the most challenging. How would you, characterize the competitive environment in terms of, of value orientation? And do you think that that's getting more challenging or less challenging And then also just how you'd expect to react to that? I know in the past you did the daily delights and kind of had promoted that. Is that something that you might work more into your marketing plan in the back half of the year? Well, Jacob remains very competitive out there. And it does feel to us like it has become more promotional. We continue to believe that we're well positioned in the environment because we offer the everyday value they focused on the value and then breakfast all day, which we thought was a differentiator and it reinforced that in an environment where we thought guests were looking at it. The work we're doing around the dinner initiative, we do believe is in that way we've redesigned the menu We are seeking to ensure that we continue to first have great value. And to highlight it, make it easy for our guests to find the value. And so that, the easier than the daily delights was in our opinion. And so, I think that we'll be well positioned for an environment that we're a assuming going forward is going to remain very competitive and very promotional. Got it. Got it. And then last question, this is more of a modeling question for Jill, but other expenses, you mentioned were up, other restaurants are store level expenses were up, about 100 basis points in the second quarter, but also in the first. I just want to just make sure I understood what is what is driving that? I think you mentioned some greater marketing, in the second quarter, but it seems like it's been pretty consistent for the whole first half of the year. Should we expect, maybe in 3rd or in 4th operating is less on a year over year basis? Yes, no, Jake, that's a great question. So within the second quarter, other operating expenses was higher by approximately 50 basis points, driven by the higher marketing. And so we expect in the back half marketing, albeit slightly less, than it was in the first half. So that won't be as much of a headwind in that line item, but the items that will continue is, as we talked about, a number of our initiatives like, the platform for the bone in fried chicken, as well as our new POS that we call Max, we've had increased spending in our capital expense, which will result in higher depreciation. We expect to continue. Also, another operating expense is where we capture supplies associated with our off premise sales we would expect that The next question comes from Jeff Farmer of Gordon Haskett. Please go ahead. Thanks. A handful of follow ups, but I'll start with or begin with what Jake just asked and that's, depreciation was what I'm focused on. So I think the accelerated depreciation that you've seen over the last several quarters does have a lot to do with some of the investments that you guys have made in this business. So do those fall off as we get into FY21 or can we expect to see accelerated depreciation and the depreciation line continue to increase year over year as we get into FY 2021? So at this point, we're not guiding to 'twenty one. Okay. But even taking a step back. So in terms of thinking about the accelerated depreciation, when did the lion's share of that begin? Quarter to the lion's share of that beginning? Are we almost four quarters through it more to come? So we're really in our 2nd year of that spending. Okay. I'll move on from that. So talking about the top line, beyond weather, which a lot of your casualty dining peers have pointed out as a driver for the January same store sales. Did you see anything else that you believed to be driving the strength in January casual dining segment and same store sales trends? And if yes, is there something out there that you think is sustainable that potentially rolls into February, March, April? Jeff, what we're saying is that, January was surprisingly good. Certainly, some of it is, the weather, you'll try to quantify for us how much is very noisy And the question that is whether the improvement is sustainable, I think we're being cautious about that. Okay. And then final unrelated question as it relates to off premise, I might have missed this, but I think did say year over year it's up 210 basis points, but where does off premise stand as a percent of sales currently? And did you you have a chance to get beyond that 10% of sales mix target that you laid out, I think, a couple of years ago? So for the second quarter, our off premise was 13.2 percent of sales. And what I'd say is we are on track to deliver at least the 10% of sales. The next question today comes from Todd Brooks of CL King. Please go ahead. Hey, good morning, everybody. Nice sales results in the quarter. I just wanted to follow-up and maybe dig in a little bit on, it's another 3 months of experience with punch ball social here across kind of your 1st holiday. Of involvement with the brand. I guess, what are you finding as you dig in further on the brand? Are you finding anything you can kind of share on more or less consistency around unit performance. And I know there's been some talk about other ways to extend the brand, whether it's, kind of reusing some anchor real estate in some of the malls or maybe a lodging play, just your thoughts on this brand being where you want from a consistent return standpoint before extending it into kind of new use occasions? Thanks. So I'll give you just a couple of comments. I won't speak to some of the questions you have, I'll let the folks at Punchbowl, we learn every day, both things go at Cracker Barrel, Maple Street and Punchable. As we said, we're pleased with the holiday performance. And we're pleased with the work that the team is doing there on a number of fronts, attacking things like site selection and how to improve that. Middle of the P and L with labor or attacking capital. So they have work streams against a number of areas and, and are making progress against it. I won't speak to what, the views are of the brand going forward. Jill, do you wanna add anymore? Yes. I mean, I guess on the financials, we don't want to get into much detail, but, you know, Todd, as you said, it's a young brands So we continue to learn, every day as that team is learning. And Sandy talked about it's the site collection. And then what does the honeymoon period look like? There's just all kinds of great learning and partnership with that team. Okay, great. Thank you. And then just a follow-up on Maple Street. Sounds like the testing around the Sunday openings has gone well, rolling it out to all the units. And it sounds like getting the AUVs where you wanted I know it's still early, but when should we be looking and maybe at the Analyst Day in June? For kind of guidance on the growth trajectory of that business, assuming that, with this fix about around opening schedule, has proven out the return model for you? Is the first we'll hear about it at the June meeting? We, just to be clear, we were happy with the model even before they were open on Sunday. And so the successful initiative to open Sunday has even strengthened it more. And I think the leadership team at Maple Street did a phenomenal job of leading that organization through all of the different elements to do that successfully in terms of hiring and messaging and all of that. Now that we're through that, we've gotten the team, sort of stabilized. We're putting together the foundation for growth will be, I think, rolling out the growth plans probably at our Analyst Day, which will be in the summer. Okay, great. Thanks for the questions. The next question today comes from Bob Garrington of Telsey. Please go ahead. Yes, thank you. Quick question on the to follow-up on Maple Street, the this past quarter, you opened store, you closed the store. Just specifically, were those both old country stores? Was one hauler and DASH? Good morning, Bob. This is Jill. Yeah, we opened 1 cracker barrel store, and we closed 1 hauler and dash. Okay. All right. And then you have a total of 6, I believe, all country stores planned for the year. You've got one to date So I assume, how do we think about the next couple of quarters? 2 to 3 each quarter? So, yes, we actually have 2 opening this quarter. And I think we've opened. 2 already opened. Yes. And we've already opened 2. Okay. All right. Got you. As we think about, punch ball, just trying to model out, obvious, as best we can, the losses that flow from the business currently. What's the timing on new store openings? I know, Sandy, you mentioned 2 coming up. Is it just 2 more for this fiscal year for the company? Yes, we're going to open 2 in this fiscal year, one opens in a week or so. And that's those will be the openings, less for this fiscal year. And then we're not talking beyond that. Okay. All right. That's fine. And then last question, Jill, you gave us some color on the the commodity situation and your contract, how is that? I assume those comments were related to the fiscal year specifically. Is there any coverage So yes, whenever I talk about the commodities, it's always talking to this fiscal year. So right now, we've got 60% kind of locked in. Okay. And any color for the balance of the calendar year? So, no, I mean, I think as you look at the guidance, we brought the commodities guidance down modestly from what we had before. We brought it down primarily due to, the pork favorability due to the near term concerns about African swine fever a little less, although we've kept in some, protection in our forecast We also entered into a good, negotiations on poultry, so that's included in there. So versus the first half, you'll see that we do expect some increase in the commodities inflation in the back half. And some of that is because we're wrapping on low inflation a year ago. Got you. Very good. Super. Thanks for the color. I appreciate it. You're welcome. This concludes our question and answer session. I would like to turn the conference back over to Sandy Cochran for any closing remarks. Well, thank you for joining us today. Cracker Barrel continues to be one of the strongest and most differentiated brands in the industry. And we remain confident that our strategy and business initiatives will drive performance. The conference is now concluded. Thank you for attending today's presentation. 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