Earnings Call: Q3 2019

Jun 4, 2019

Good morning, and welcome to the Cracker Barrel Fiscal 2019 Third Quarter Earnings Conference Call. All participants After today's presentation, there will be an opportunity 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. Thank you, operator. Good morning and welcome to Cracker Barrel's third quarter fiscal 2019 call and webcast. This morning, we issued a press release announcing our third quarter results and our outlook for the 2019 fiscal year. In this press release and on this call, we will refer to non GAAP financial measures for fiscal 2018 exclude the impact of the 53rd week that occurred in our fourth quarter and a one time non cash revaluation of the company's net deferred tax liability that occurred in our second quarter. The company believes that excluding these tax effects from its financial results provides information that may be more indicative the company's ongoing operating performance, while improving comparability to prior periods. Considered in isolation or as a substitute for financial information prepared in accordance with GAAP. The reconciliation from the non GAAP information to the GAAP Financials. 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 and Principal Accounting Officer, Jeff Wilson. Sandy will begin with a review of the business 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, may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward looking statements and information. Any of the factors that could affect 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 reports that we file with or furnish 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 it, 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. This morning, we announced positive comparable store restaurant sales that outperformed the industry and we reported earnings per share of $2.09. I'm pleased with the quarter as a whole as we continue to make progress on key initiatives, driving performance through an increased focus on our menu, the employee and guest experience, and the continued expansion of our off premise business. We also announced an Over the last 8 years, we've increased our dividend 10 times, totaling nearly 490% growth. Additionally, we declared a $3 special dividend for up to $50,000,000 the declaration of a special dividend and the authorization of the new share repurchase program reflect our commitment to returning capital to our shareholders after we have appropriately invested in expectations, but before she does, I want to speak to some of our highlights for the quarter and provide an update on our plans for the remainder of the fiscal year. Our 3rd quarter menu promotion was centered around Cracker Barrel favorites and featured several popular ranks such as our chicken and dumplings, country fried steak, and Grandma sampler. This promotion was supported by national TV and the ad continued our strategy of more explicitly highlighting our food and value. I'm pleased with the menu promotion and marketing campaign which drove top line growth in line with expectations. Additionally, featuring core menu favorites further benefited our stores by simplifying operations and enabling a heightened focus on the introduction of our signature fried chicken platform. As a reminder, the initial offering from this new platform is our Southern Fried Chicken which is currently being featured in our summer menu promotion and includes a generous portion of four pieces of hand breaded bone in chicken with honey for drizzling, two sides and a choice of homemade biscuits or cornbread. The promotion also features summer sides, such as corn and the cob, and bacon baked beans as well as a banana pudding for dessert. To support this major initiative we have been and will continue to invest in training, hourly labor and advertising. We plan to air 12 weeks of national TV emphasizing the handmade preparation and abundance of this delicious craveable offering. We also recently completed updating the creative on our entire system of billboards with the majority of the new messaging featuring Southern Fried Chicken. I'm pleased with the rollout of this significant initiative and with our stores execution. To date, guest response to our Southern Fried Chicken has been strong, and we remain excited about this new platform. Moving to off premise, we continued to see growth in this business and it was a meaningful contributor to the top line results for the quarter. As a percent of sales, it increased 110 basis points compared to the prior year quarter. I was pleased the sales performance of the Easter Heat and Serve offering, which grew over 25% versus the prior year as we continue to build this holiday occasion. We've been expanding our and we plan to have it in over 100 additional stores by the end of the fiscal year. We've been pleased with the early results and believe this occasion is highly incremental. Family sized offering that includes twelve pieces of chicken, two quarts of sides, and biscuits or cornbread, all served in a fun picnic basket themed to GoBox that'll be available for both in store pickup and third party delivery. Our retail business underperformed versus the in recent quarters, we bought deeper in particular styles that unfortunately did not resonate as strongly as we had anticipated. Although our sales results were below expectations, we delivered an improvement in shrink reduction. During the fourth quarter, we're focused on strengthening our retail position with our travel guests who historically has spent more per visit on retail merchandise compared to our local guests. Our journey to better highlight merchandise targeted at our traveling guests. We remain focused on our employee experience and our guest experience. In the third quarter, we continued to make enhancements to our power program as we seek to better leverage our powerful employees as leaders and mentors, we are continuing to implement several initiatives designed to drive higher employee engagement, I'm encouraged by the improvements we saw across several key guest experience we will continue to build on I'm pleased with the quarter overall and we remain confident in our plans and focused on driving top line growth through the execution of Good morning, everyone, and thank you, Sandy. I would like to begin by discussing our financial performance for the third quarter of fiscal 2019 and then our outlook for the 2019 fiscal year. In this morning's release, we reported third quarter net income of $50,400,000 or $2.09 per diluted share compared to prior year earnings per diluted share of $2.03. For the quarter, we reported total revenue an increase of 2.5 percent when compared to prior year revenue of $721,400,000. Our restaurant revenue increased 2.9percentto610.1000000 and our retail revenue increased 0.6 percent to $129,500,000. Our total revenue increase was driven by positive comparable restaurant sales and the net opening of 7 new Cracker Barrel locations. Cracker Barrel comparable store restaurant sales in the quarter increased 1.3% as average check increased 3.1% and traffic decreased 1.8%. We estimate that unfavorable weather impacted comparable store restaurant traffic by approximately 30 basis points. The increase in average check reflected menu price increases of approximately 1 point The 3rd quarter mix favorability was driven primarily by our menu promotion and the growth of our off premise business. We were again pleased with and contributed to our comparable store sales results. 3rd quarter comparable store retail sales decreased 2.6% with decreases coming primarily within our women's apparel, accessories and decor categories. Moving on to expenses, total cost of goods sold in the quarter was 29.3% of total revenue versus 30.2% in the prior year quarter. Our restaurant cost of goods sold was 25.2 percent of restaurant sales, a 40 basis point decrease versus the prior year. This decrease was primarily due to flat food commodity inflation and menu price increases. Our retail cost of goods sold was 48.8 percent of retail sales compared to 51.1% in the prior year quarter. This decrease was primarily a result of reduction in markdowns and improved shrink. Labor and related expenses were $167,600,000 or 36.2 percent of revenue compared to $257,400,000 or 35.7 percent of revenue 0.3% on a constant mix basis and investments to support the guest experience, our fried chicken initiative, and our off premise business. Other store operating expenses in the quarter were $152,700,000 or 20.7 percent of revenue, compared to other store operating expenses of 147.6 This 30 basis point increase was primarily the result of planned depreciation increases related to capital expenditures. Door operating income was $102,200,000 in the 3rd quarter or 13.8 percent of revenue compared to store operating income of $98,700,000 or 13.7 percent of revenue in the prior year quarter. General and administrative expenses in the quarter were $37,100,000 or 5 percent of revenue compared to $35,400,000 or 4.9 percent of revenue in the prior year quarter. Operating income was $65,100,000, an increase of 2.8% compared to operating income of $63,300,000. As a percentage of total revenue, operating income was 8.8 percent, which was equal to the prior year quarter. Our EBITDA for the quarter was $92,500,000 an increase of 6 $4,100,000 compared to $3,600,000 in the prior year quarter. Our effective tax rate for the third quarter was 17.3% compared to an effective tax We ended the fiscal quarter with $167,600,000 prior year quarter end. Our total debt was $400,000,000 at quarter end. With respect to our associated with this outlook as described in today's earnings release and in our reports filed with the We continue to expect total comparable store restaurant sales growth for the full fiscal year of approximately 2%. Our retail outlook is now more cautious and we currently expect comparable store retail sales growth to be We have opened 8 new Cracker Barrel stores in fiscal 2019 with the final opening for the fiscal year having occurred in May. We continue to expect increased food commodity costs on a constant mix basis of approximately 2% for the fiscal year. We have locked in our pricing on approximately 65 compared to 70 of approximately $110,000,000 We continue to expect We continue to anticipate capital expenditures for the We continue to project approximately $10,000,000 in business model improvements resulting in sustainable cost savings. We continue to monitor food commodity inflation and wage inflation, which represent potential headwinds in the fourth quarter. We plan to continue investing And while we believe we have made much progress in addressing the top line challenges from our fourth quarter in fiscal 2018, We remain cautious with regard to visit frequency with our lighter users who disproportionately visit us in the fourth quarter. Taking these assumptions into account, we continue to expect full year operating income margin in the range of 9% to 9.3%. We continue to expect to report full And with that, I will turn the call over to the operator so that we can take your questions. We will now begin And our first question will come from Jeff Farmer of Gordon Haskett. Please go ahead. Great, thank you. You did provide some details, but I'm just looking for a little bit more. So, again, you touched on it, but what is your commodity basket exposure to how are you contracted for that protein moving into FY 2020? And what is your outlook for pork prices heading into next year? Great. Good morning, Jeff. This is Jill. Thanks for that question. So, we talked about our current guidance for commodities for the fiscal year. Overall, it's 2% within our commodity basket, approximately 10% is pork with approximately 5% of that. Bacon. For the remainder of this fiscal year, we continue to have a We believe we've got good visibility to that. So we've got some locked in and we've got good visibility. So there's some risk there, but not as much. As we look out to fiscal 2020, we're not ready to give, longer term guidance, but We certainly believe that commodities in general will be a little bit more of a headwind a little bit more volatile next fiscal year and, pork in particular. And then just two quick follow ups, again, things that you mentioned on in the prepared remarks, but percent of the retail inventory could be impacted by the tariffs on the the the Chinese imports? So from a retail standpoint, we import approximately 1 third the majority of that coming from, China. So our teams have really been working diligently to mitigate the impact of some tariffs how they're doing that. They're looking for alternative sourcing with different countries. They're partnering with vendors to help share costs. We're looking at product assortments, potentially adjusting pricing in certain circumstances We've had some impact from the tariffs in this fiscal year, which is fully baked into our guidance for this year. Those categories that have been affected so far are around stationery, furniture, and decor. So again, as we'll give more guidance in September, as to fiscal 2020, but that remains a concern for us. And then just last quick question, looks like you guys had 2 unit openings in the quarter. But despite that, the new unit productivity looked pretty strong with the average weekly sales growth, outpacing same store sales growth for the first time in at least 10 quarters, at least according to our model. Anything to comment on there in terms of the strength of again, just those couple of units that opened in the quarter? Yeah. Thanks, Jeff. Yeah, we did open a couple of units we've been pleased with the initial sales from those units. Many of them are in the West Coast, so they have a higher price tier, which is helpful. But We have been pleased Our next question comes from Steven Anderson of Maxim Group. Please go ahead. Just wanted to go a little bit more into the special dividend. I noticed that for the first time last few years, we're actually seeing a retreat or actually decline in that special dividend, but actually increasing that the actually implementing a new share buyback program, can you give any specifics on the program itself, whether you expect to whether you see it diluting some of the options are out there or you see maybe getting a little bit ahead and maybe seeing any kind of a share maybe reduction in the overall share count. Okay. So this is Jill. I'll start with just kind of discussion of our capital allocation strategy just overall. So as you know, our board is very thoughtful and they continue to have a balanced approach to capital allocation. So as we look at that, our first priority remains to reinvest in the business to drive sales and earnings Secondly, we remain committed to from $1.25 to $1.30. After that, we have different options for returning excess capital. For excess cash, which we consider on a case by case basis. So in that basket, you have share repurchase as well as a special dividend. The board just authorized the $50,000,000, share repurchase and buyback, and we declared a $3 special, which was our 5th. So as the board contemplated this, we had discussion with some shareholders and we believe that the board continues to be thoughtful on how we manage the return of this excess capital to shareholders. At this time, any add, Sandy? I think the only thing I'd add is that at at that kind of authorization, that would more than cover the dilution. I think that was part of your questions even whether this was just to offset dilution, which, or would be additional. And right now, we would assume it couldn't it would be additional share repurchase. So it would reduce the shares outstanding. Our next question comes from Robert Derrington of TESley Advisory. Please go ahead. That's close enough. Sandy, typically, you all do a pretty good job about planning, especially as you look forward. And some of the headwinds especially as it relates to both the retail COGS and the restaurant COGS, I don't think we've seen kind of a headwind like this come together in quite some while as we look out towards the new fiscal year. Are there things that you can do within the business to help mitigate some of those risk factors, whether it's additional menu pricing or other other ways of handling those things? Well, we certainly look at each of the cost components of the P and L. And and Jill mentioned, and you've just mentioned a few of them that we are certainly monitoring closely. On the retail COGS, the potential impacts of tariffs. I think Jill's already mentioned the things that we're doing, whether it's diversifying our sourcing strategies, looking at our assortment, considering how to partner with vendors to set it in some cases to raise pricing. I mean, all of those are strategies that we, we're thinking about. The commodity environment is we've already talked about that in the context of pork and that's going to be one. We're going to have to just navigate through wage inflation. Of course, that's one of those double edged. On the one hand, it is an immediate increase in the pricing us, what we hope is that that translates to higher disposable income to our guests and that, that will help us in some cases. So we're looking at all of those issues. I would say that where we don't talk as much about, but but is certainly an issue for us is to the degree that things like the tariffs result in consumers, that's going to have potentially a negative effect on consumer disposable income. And so we were looking at that and the potential impact on our top line. Thank you for that. As it relates to labor costs and some of the pushes and pulls within the business, As you look at the new fiscal year, are there other cost saving measures that you've talked about before that I'm just not remembering? I know you've talked in the past about the POS plan, but that is, I guess, still developing anything on the horizon as far as cost savings and labor costs, I don't believe that there are things that Jill wants to talk about on this call. I can tell you that addressing, labor expense is a important conversation that we're having here and finding ways that we can deliver the guest experience, deliver the brand, continue to reflect the scratch cookie, you know, the things in the kitchen that have made this brand, what it is, and control our labor expense is, is an important subject you hit on probably the biggest one, which is the tablets that are associated with the POS system. Jill, is there any other ones that you wanna talk about? No, I think that, Sandy highlighted the big ones. So, Bob, as we're looking at it, we're on track to deliver the $10,000,000 in savings. This fiscal year, we're committed to continuing to focus on taking out low value added costs from the business especially places, where we also think it'll help improve the guest experience in regards to the POS and tablets in particular as you recall, when we pulled the chicken initiative forward, we purposely slowed down some initiatives, including our POS initiative. We're currently in about 90 stores. We'll add about 20 within this quarter. As we put together, our final plans for next fiscal year, we'll look at what that rollout schedule looks like that, that investment allows us to leverage the tablets and then some other technology that we believe will not only improve the guest and employee experience, but also help reduce some other costs. Terrific. I'll get back in the queue. Thank you. Our next question comes from Gregory Francfort of Bank of America. Please go ahead. Hey, thanks for the question. I just had a couple of questions. The first, Sandy, you talked a little bit about the difference between your frequent guest and your infrequent guest. I think you've been talking about it for a little while, but I'm wondering if you could quantify what's happening there and maybe offer any thoughts on kind of how that's impacting your business? We, we have a lot of guests. One of the great things about the brand is the breadth of the appeal but many of our guests visit us infrequently. So for example, they might only visit us when they're on their summer vacation to the beach and traveling down I-ninety 5 or on the holidays when they go to visit their family or some things. So for the 2nd quarter 4th quarter in particular, which tend to have a higher percentage of those travel guests, It is always important that we capture that guest and the kind of things that, that get in the way of that are, 1st of all, whether they do their trips. So whether consumers this summer will be making their trips, whether they'll believe that they have the disposable income to stop. And then when they stop, will they buy retail, and so we've been focused on ensuring that we can drive trial with things like the craveable food like our fried chicken platform that we clearly message it. We converted a significant portion of billboards to our fried chicken message, partly to capture those guests who maybe were traveling over the summer, and to remind them, about why they might want to stop at Cracker Barrel. So our marketing and media is focused on capturing the travel guest. And then in ensuring that when they do stop with us, that the hospitality they receive in what is often a very busy time is, meets their expectations. So that's something that our operators are very focused on ensuring that we deliver as we head into this busy season. Understood. And then I think, going back to, I can't remember whose question it was on the pork contracting into next year. I think about a year ago, you rolled off of a 5 year port contract. And I guess, could you just help us understand how far out you are able to lock pork and how much of that is, lock pricing versus lock quantity and just sort of the methods of how you can do that in the market? Yes. We don't want to disclose specifics around, how we purchase some of those commodities, including pork. The pricing is a formula based and it is subject to the underlying commodity basket. But as I said, as we look at the fourth quarter, we feel like we have good visibility. We've locked in, on a significant portion of that. The pork prices are baked into our 4th quarter guidance. And then as we look out from a commodities in general, pork in specific, we would expect that to be a bit more of a headwind and a little more choppy in the commodities market next year. And maybe if I can sneak one last one in. Just the decision to put the special dividend where you put it, I think it will still potentially this year have the total dividend outpace free cash flow modestly. And I guess, I'm curious, how you're thinking about your debt balance right now and, whether or not you think that's an opportunity to maybe take advantage of where your balance sheet is to take debt up modestly over time and sort of the magnitude of that? I guess I'm just curious where your head's at on that front. Yes, no, that's a great question, Greg. As you know, we've we generate a fair amount of cash and we've been able to reinvest that cash back in the business to drive both top line and bottom line results. And then we've been able to pay out the regular dividend special and then the modest share repurchase that we've done historically, with that cash. As we look longer term, what we've said in the past is that we'd be comfortable with a leverage ratio in the range of 1.5 too kind of depending on what drives us there, but this fiscal year, we should be comfortable funding what we've announced. Understood. Thank you very much. Appreciate it. Our next question comes from Alton Stump of Longbow Research. Please go ahead. Great, thank you and good morning. I have two questions, I guess, first off, and if I missed this, I'm sorry, but do you quantify or kind of ballpark what percentage of your total food input costs is represented by pork? And secondly, as mentioned, the West Coast openings being strong, if you could just give us an update on kind of how things have trended. Obviously, you've been out there for almost 2 years now and sort of how you foresee the West Coast market playing out as a advantage of retooling to build going forward. Okay. Alton, this is Jill. I'll start with your pork question. Pork is about 10% of our commodities backed basket, approximately half of that is bacon. Thank you. With respect to the West Coast Dalton, we've opened our 1st store in California a little over a year ago. Oregon before that, which, is probably what you're thinking about the 2 years. We currently have 4 stores where we're pleased with the guest responses Jill mentioned, our top line, results have been encouraging. And now we are working on and focused on improving the profitability in, out there. And based on our learn about how we specific cost pressures that we find out in California. Our next question comes from Jake Bartlett of SunTrust. Please go ahead. Great. Thanks for taking the question. I had a question on the EBITDA guidance for 2019. Typically at this point of the year, only one quarter left, you would have narrowed that. So looking at a 30 basis points kind of range. And maybe just if you could let us know if there's any real big swing factors in the quarter that kind of have kept you to keep that wide guidance or how should we think about the EBITDA guidance for the fourth quarter? Great. Jake, that's a great question. This is Jill. As I said in my prepared remarks, we've been pleased with the top line for farm and the progress on our initiatives. We do have some headwinds, probably more we've had at this time a year ago with a little bit more uncertainty around them. We've mentioned them on the call earlier. So retail sales and tariffs being 1 and then wage inflation and commodity inflation. So Given that, we've remained a little more cautious and provided a wider range. And then Sandy, earlier was just talking about the visit frequency, with our travel guests. We believe we've made some significant progress with that, but the travel guest is disproportionately has more visits in the fourth quarter. So we remain a little bit more cautious on that. So Those are the factors that led us to keep the guidance range where it was at. Got it. And are there some impacts or in fourth quarter that we should think about? Like for instance, advertising, I believe you're advertising for more weeks, I guess, 12 weeks this fourth quarter versus 8 last year, if I have that right. But just anything to call out that we should be careful about with our fourth quarter margin expectations? Yes, Jake, there's a few things. So you do, you have the marketing right, this fiscal year, because we wanted to feature and launch the chicken initiative on television. We've got 12 fiscal weeks versus 6 national last year. We did have 2 weeks of local media last year. So marketing will be up over last year in the range points or so, although we expect it to be flat on the year. And then we've invested in something. So we've invested around training and labor to the chicken initiative. So those are the primary items within the 4th quarter. Okay. And then Sandy, I'm hoping you can give us a little more color on how the chicken fried chicken launch has gone. It's been in test for quite a while now, I guess, for about a little more than a year in some markets. How has the experience been versus what your expectations were, what you saw in test? Well, we're pleased, encouraged. So just to remind the group, the objective was to drive frequency and trial with some new craveable signature food innovation. We started with Southern Fried Chicken, which is the bone in. It's in about 6 fifty stores now. The, really, the media launch was the beginning of May. Guest feedback's been positive. And I'm really pleased with the operator execution and engagement. And how they've delivered it. It was a complicated initiative to, implement in each of our stores with a in terms of training and knowledge and all that. But this product launch we've just started, it will go continue through the summer with Southern right chicken. Then we'll be introducing our Sunday chicken homestyle, which is a boneless fried chicken, product in the fall, that'll add to the platform. And then we intend to bring, hand breaded, batter breaded tenders on, maybe a a sandwich and so on. So longer term, I'm encouraged by the initial response to this initiative. Great. And then lastly, Jill, if you could, you've given the longer term target for leverage of one point 5 to 2 times. My math is that your kind of current plan doesn't really move the needle very much on leverage, but how should we think about that target. Is that, along over a number of years? Or, I mean, I guess I'm just trying to understand, what your intentions are with leverage, given that now you have the opportunity to increase your leverage buy back more shares, but you're not, more aggressively doing so now. Yes. No, Jake, that's great. I think you answered or answered the question for me. Yes, That's a longer term target for us. And really as we look at it, it's what would be the drivers that would require us to increase that leverage. So what would we be investing in and what would we use, the cash for? But, yeah, it's a, that's a longer term target of the 1.5. To two times. And do I interpret that that the uses of the cash would be different than just buying back shares? It would be something else like acquisitions. I'm just trying to understand the what that means. Yes, I mean, it goes back to our overall capital allocation strategy. So first, if we have great ideas like chicken to invest in the business, that was one initiative that wasn't on our radar screen this year that we pulled forward. We have the POS. So there's a number of initiatives that that could encompass. Got it. I appreciate it. Thank you. Our next question comes from John Tower of Wells Fargo. Please go ahead. Great. Thanks. Just, I was hoping you could go into the pricing potentially for next year. Obviously labor inflation and COGS inflation now picking up. Just kind of trying to think about how you think about using the pricing lever, versus eating some of the margin impact to keep the relative value to the consumer at a reasonable level given that average check growth over the past several years is then between roughly 2.5% 3%. So maybe you could just talk about how you balance the relative value to the consumer versus protecting store margins over time. Yes, great question. So, we believe, pricing in the range of 2% is an appropriate target for us. Over the long term, we want to make sure that we do that pricing effectively. So then we continue to leverage our price tiers. We have a group of holdout stores that help us evaluate the pricing and some other consumer research that we're focused on to ensure that we've remained or retain our overall value proposition with the guests. That said, we have the opportunity to float up or float down a little bit on that. So definitely we would think about is there some pricing that we could take to help offset things like higher commodity inflation. And then another area that has that we have benefited from and expect to benefit from, in the near term and some of the favorable menu mix. And we talked about the consumer's response to the introduction of the fried chicken that has been a great consumer benefit, but it's also helped our overall check and margin at least in the short term. So that also could be a benefit. Okay. So today, is that the product priced in such a way that Southern Fried Chicken that it's actually accretive to margin? Yes, it is. Okay. And then just thinking about the next iterations of this platform, how should we think about the training around that and the cost behind it? I guess, both on the training side, as well as the marketing side. It sounds like trading should be less, but I don't want to make too much of an assumption there. And perhaps the marketing push next year around new iterations, whether it's the homestyle chicken or the tenders or the sandwich won't be as great as perhaps this fourth quarter launch, but, you know, maybe steer me in the right direction. Well, I think the training, you're probably right. I think the biggest lift was the initial training of the actual frying system. And we had not previously done a bone in fried chicken product We currently do, home style chicken only on Sunday. So that will be easier for both our stores, and our guests to understand, I think from a marketing standpoint, though, we want to be sure we continue to drive awareness of the offer and the brand and and the excitement of of this in the case of the sandwich, for example, the new news, the case of the Sunday chicken be available all day and the tenders and so on, So I would not necessarily in a training 1. Okay. And then just lastly on the retail business, same store sales of at least the guidance for the year kind of bounced around from starting the year flat to 1 to up to 1 to 2 and now down roughly in that flat to slightly negative expectation. So can you just talk about how you forecast sales in that category? And specifically, how you choose the items that are featured and perhaps what has hit and why it hasn't hit at the rate that you were anticipating? That's a very broad question. So, our retail team works over a year out as they think about time. The core of the center of the store, our theme business is changes, I don't know, something like thirty times a year and we try to keep that assortment sort of topical, fresh and, and to provide new news for our guests. And the perimeter of the store, if you think about it's the food wall, the apparel wall, the toy department, personal care, and sort of if you picture the retail team. So, our retail team is always trying to anticipate what guests are going to be looking for whether it's unique, fun, nostalgic items that you can kind of buy on an impulse, but has a great value. And they work pretty far out to do that. We are addressing different times of the year. The guest chain So whether it's a travel guest who might be looking for different kind of items than your core guests at other times of the year. We're also trying to understand what the guests who are coming for an off premise pickup occasion might want to have a retail attachment to a guest who isn't planning to spend an hour with us on a visit and eat in the dining room and so on. So what kind of items in the retail store would be the most likely to be interesting to that guest. So the retail team is doing a a lot of heavy lifting about trying to understand how we can set our retail store up to have something for that everyone just has to leave with. That being said, I think that the disappointment in the last quarter, you don't always get it right. And I think we went a little deep in did to see. And I think that they've navigated through that well. We managed our inventories, effectively, we were able to deliver an improvement in margin rate by managing optimizing our markdown spend with some improvements in shrink. And so I think they're doing a good job of navigating through but it's a very difficult, challenge for any retail team to try to anticipate that far out what guests can't live without. Our next question is a follow-up from Stephen Anderson of Maxim Group. Please go ahead. Yes. I wanted to follow-up with you, just take a little bit different track. So let's talk about your 2020 and perhaps even 2021 pipeline. Kind of range you see in terms of new unit growth and whether you're taking a look at a holler and dash again. So Steve, on the new unit pipeline, it's just too early for us to talk about 20 in 2021. So we'll save that conversation for September. Okay. And with regard to holler and dash, you know, I wanted to see if there's an update. You know, I haven't obviously, no new stores added this year, but, wanted to see, talk about the progress you're seeing there? Well, as we talked, I think going in the last call, the call over that, we've got 7 units, different market types, and we are in the process of now understanding better the demand, the profitability possibilities and the viability in different real estate locations. And once we feel like we've got a real solid understanding of that, we'll give you an update on what we plan to do, going forward. Our next question is a follow-up from Robert Derrington of Telsey Advisory. Please go ahead. Yes, thank you. Gio, could you help us with, as we look at the 3rd quarter results, how much of the 50 basis points of labor cost increase year over year was related to the training of the new chicken platform? We don't really want to break all of that out Oh, come on. You can you can just tell me. Okay. Yes. Clearly, the biggest piece of it was our overall wage inflation of 3.3%. Okay. All right. And Sandy, haven't really talked a whole lot about the opportunity within 3rd party delivery. And it sounds as though it's certainly being expanded across the system. You told us before you're going to use, I think, one out state provider of the service and one more, I guess, for your more urban or suburban markets, what can you share with us at this point about that program? Well, I can show that we're excited about the where we are so far. I think I've mentioned we're in about 350 stores. We are using DoorDash currently think we will potentially add to additional vendors to increase our coverage. So it will largely depend on as we grow who is the best vendor in a particular market. But we're pleased with the early results, and we do believe this occasion is highly incremental. How is, how do you look at the pricing of the product through those platforms? Is the product place priced at your store level, retail or is there an add on, through the service? I think that what I'm saying is it is not priced at the store level. Okay. All right. And then one last question as we look at the different components of the way you use your new chicken platform, whether it's in store dining, carry out 3rd party delivery catering, what are you seeing the most traction so far within and where do you see the biggest opportunity? Well, we've we've only, so we haven't had much time. And I would say the majority of our sales are dine in We've recently, implemented this picnic box which is, an offer that I'm excited about, and I can see it being, that fried chicken could play an important role in our off premise and catering initiatives. But we're going to just build on this platform 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 remains one of the most differentiated brands in the industry, and I'm confident that our strategy and initiative will continue to drive shareholder value. We appreciate your