All right, we're gonna get started here. I'm Kelly Bania, food retail analyst at BMO. Really excited to have Chefs here with us again.
Thanks.
I've got that for you. If you are not familiar with Chefs, they are a premier distributor and food marketing company with $4 billion in sales, and really specializing in kind of that top third of independent restaurants. Happy to have with us, to my left, Christopher Pappas, Founder, Chairman, and CEO of Chefs, as well as James Leddy, CFO. I guess to start, we are, you know, not too far off of earnings a couple weeks ago or last week, whenever that was, and you really had a strong acceleration in trends, notwithstanding kinda some of the worries about the Middle East. I guess the question that I wanted to have and talk about was just what do you think's happening, how much of that is Chefs specific?
You know, the end market for demand of those restaurants just accelerating, and how much is kinda Chefs' gaining even more share with those customers? Hard to measure from my seat.
Yeah. I think it's the Goldilocks, where I think our customers overall are doing well. I think that all the investments, especially the last 10 years, you know, getting these new facilities up, getting into new territories where we entered through acquisitions that we bought companies that were much less profitable, if profitable at all, than us, and rehiring, giving them the technology, you know, the right buildings to operate. The, you know, we have over 1,000 people in the sales force, it's no accident. The, the, we have many new people the last, you know, 10 years that we had to train, it's not easy.
I think if I had to give one area of the acceleration, and I'll get to category acceleration in a second, but it's putting all the time, effort, and investment in those people and the technology to help them. That's, you know, really giving us a tailwind, and it's mastering a lot of the new categories and learning how to sell those products, how to produce something that's different. Like you said, we're really a food marketing company that distributes.
You know, we take possession of product, and we have to go out and make markets for them. To do that, you have lots of specialists, you have lots of people to support the regular sales force, you have key account representatives, so it takes a village.
To do this. I do think there's a little tailwind, but I think a lot is just the team starting to gel, and we're starting to get leverage on the overhead that we added the last 10 years.
Can you maybe just talk a little bit more about that training process? How different is that at Chefs'? How extensive is that?
I think it's training because we're always adding categories.
Right
The world keeps changing, you know, how we buy, you know, from, you know I'm out the next few weeks visiting ranchers, visiting farmers. Our COO right now is in Europe visiting so many of our artisan producers. You know, you're constantly learning, and then you gotta give that knowledge to, you know, to the army. With that, we make the investments of getting all the producers in front of them, and it's, like, constant. It's like going to culinary school and business school for us every week. It's just constant. That does cost money, and it did cost us a lot of money over the last 10 years to build this, and we're starting to see the fruits of our labor.
I guess on that point, you know, your EBITDA margin, last quarter, I guess if you go kinda trailing four quarters, was 6.4%. I've been covering Chefs for a long time, and we've always talked about getting to this 6%-7% margin.
It feels like we're finally there. I guess I think you've also commented that that's not necessarily the ceiling. Help us understand kind of, that comment in a little more detail. Why is it not the ceiling? What is working, what is not? Where is there additional opportunity?
Yeah.
Because that's it's a really good market.
Well, you also remember I'll brief this down, and I said, we'll get to $5 billion. If we get to $5 billion sooner.
Yeah
We probably had a little bit more of M&A in, or the mix, you know, more expensive items, and we'll be a very profitable company, but maybe the EBITDA won't be 7% or 8%.
Okay.
If we get there, much more with the ground force and organically, it might take a little longer, but the EBITDA might be higher.
Right
because of, you know, we're not moving as fast, we're not buying as many low margin companies and having to, we call it Chef-size them.
Right? The, you know, the core business itself produces a much higher EBITDA. It's really the investment that goes into building new territories, building new categories that kind of is a drag. A lot of our products, you know, that inflated like beef, you might not, you know, might not achieve the same, you know, margins that we do in our specialty foods. It's very expensive box, but we love it because it's GP dollars. You know, I'd much rather sell a $200 box and make 20% or than make 30% on a $20 box.
Right? The mix can confuse you if you're trying to study it.
See it, and it's the way we grow territories. When they're up and running like New York, and you can load out of one facility, and you can get on one system, the EBITDA starts to go a lot higher. It's, you know, I would say we have to make it easier-
Take the cost out. For, so many years while we were trying to build this, you know, build this company, you know, nationally and internationally, we were touching the boxes too many times.
It's self-inflicted, but it was necessary to get this thing to where it is now, where we could start to leverage it. The more leverage you get, you know, the more pounds and boxes on a route, you're gonna make more money if you're doing it right. We're starting. I still think we're only in the first, second inning of that.
I guess on that same note, you know, your Analyst Day, I think it was last year, last spring, you talked about a lot of different areas that would get you to this kind of margin. You kind of mentioned some operations right there, procurement, and logistics, I guess. You know, what has worked, you know, as you get to this margin? Where there are more what areas are there and more opportunity to kind of, as you think about those buckets that were, That building block that you laid out?
About margin?
Yeah.
Or about, EBITDA?
Well, both.
Not the same.
Yeah, it sounds like.
Not the same.
Right
It's, you know, with so much inflation in the last five years, it's GP dollars.
Yeah.
Right? as long as we can grow, you know, Jim sings this every day, you know, the whole team, as long as we can grow the GP dollars faster than the overhead, we will have success.
Right.
We'll start to get that spread. 'Cause a lot of the big overhead is kind of fixed, right?
Obviously there's this variable overhead. You know, as we hire more people, it takes time to for them to really produce, you know, they're more of a drag. As we build new buildings, there's a timing. You know, by the time we move everybody in, close down old buildings, and get the volume, there's a drag. The increased EBITDA margin, it Sure, higher margin is great, but it's really the GP dollars to Cause we are so, We've changed, you know, the business with all the categories that we sell, that some are lower margin, that margin gets a little fuzzy.
Okay, that's a good reminder. What about your Power BI tool? I think that was kind of very early. What has, you know, last year when you'd rolled that out, I guess, what is the feedback from the sales force on that? How, I guess I would add to that, when you have these smaller companies that you're acquiring or even evaluating, how much technology and tools like the Power BI tool do they have? Is that something that really come to Chefs and go, "Okay, wow, we have these"?
Yeah. The Power BI tool, it's been rolled out over the last year or so. It's really not just the sales force.
Okay.
What it really does is it really levels up our use of data. We're a very data-driven company, and, you know, analytics and data, KPIs that we would regularly produce at the corporate level, sometimes fairly manually through aggregating all of our, you know, 32 operating companies, through that process. Power BI has allowed us to really up the quality of our data, and also to disseminate that to our operators, our logistics teams, our procurement teams, and the sales force. It integrates with our digital platform, providing our salespeople with real-time information, combined with our digital platform on our customers' behavior. Are they inelastic towards this product pricing? Are they more elastic to help them upsell?
It also feeds information to our operators real time on everything in their operation regarding hours, cost, all the KPIs around inventory. It helps us better manage inventory. It's really just a leveling up.
It was one of the pillars that you talked about in that waterfall.
Yeah
Our 2028 targets. All of those things are contributing in many different ways to the march towards 7% and $5 billion. Along with what Chris just talked about at a macro level, just driving volume through the investments that we've made, which we're in the early innings of.
What about, Can we talk about kind of dynamic pricing?
Thing on that waterfall.
Explain to us, you know, what does that mean? What have you learned from that initiative so far?
Sure.
Well, I think-
Oh, go ahead, Chris.
Yeah. You know, you know, if I look into this room, I see, you know, operations trying to get the trucks out, you know, sales and marketing, you know, you have all the day-to-day. That's what took so long to build, is put the talent. Then as you say, when we buy somebody, we see what they have. You know, you learn, even the smallest company you buy, you learn something. We realize that how much we're light years ahead, you know, of the way we look at the business. That's why we're able to buy, you know, take a company like in New England or Texas that makes basically no money. Start to get their march towards, you know, what I'd like is 10%.
It's giving them the tools, eliminating the excuses, the downtime of having to do so many things manually that gives them the time, and that doesn't mean everybody makes it because now you're really exposed. Like, what do you do? You know, in my past world for 40 years, you know, you had to take orders, you had to go collect the money, you ran around, you had to do specials, you had excuses why you weren't growing at the rate you're growing. Now, we do everything for them.
The AI tools now in, like, 10 minutes can give them the information that used to take days, and now we're like, "Well, what's your excuse?
Maybe you're lazy. You know? Maybe it's not for you. Because you have the time to go knock on the doors. We give you tons of leads. We have so much inbound people that are interested in our products because we are special, right? We're not for everybody, for the people that are You know, they have the right menus, they should be buying from our company. As we enter markets, they discover that. I think that's why, you know, growth's accelerating. More people know about us, we're able to reach more, we do a lot of marketing, do a lot of shows. Come to the National Restaurant Show, this.
Too
Weekend in Chicago. You'll see a magnificent show of our people. We got our dry aging room. We know our customer base. You know, we're really after it to build the moat more and more around it. The more tools we give them, and I'm the biggest fan of the technology. A lot of people are worried about it. Salespeople are worried it's gonna replace them, and they're right. Unless you work, you will be replaced. If you're good, you're gonna make a lot more money, which they are.
You're gonna have a better balance of life.
Because you don't have to be working seven days a week, which a lot did. The phone rings Saturday, it rings Sunday. You know, from knowing where the truck is, from knowing, you know, what shorts there are, from customers being able to place their own orders, now they're, now they have to step up and be real merchandisers and run their own P&L. We have, it's not easy, but that's the way we run the business and I think it's proving more and more successful, and I still think we have lots and lots of improvement to do.
You mentioned just kind of how much further you are along with technology than a lot of these small companies. Is that?
Even large ones.
Even large ones.
From what we see.
You know, do you think it's starting to really, you know, drive a divide between these companies that have all these tools and these sales reps that have all these tools and how much easier it makes?
I think it affects everything.
Yeah.
I could tell you that there's still, like, small competitors that I would love for them to become part of The Chefs' Warehouse, and they're almost pen and paper, and they do fine because they're special.
They have good relationships, and a lot of customers still wanna buy, you know, some of their offerings or some of their services. I think the technology is great. From the larger customers, yes, they're gonna put it all on a spreadsheet and RFP you, and, you know, if you're efficient, then you can figure out how to make a few nickels. I think that part of the business is gonna be more driven by the data. I think that if you're gonna go out to dinner tonight, and you want a really good meal, you're not gonna look for the most data-driven, metricly driven restaurant in town. You wanna go to where the food is great and the service is great.
Right.
A lot of customers feel that way too. A lot of customers don't. They want this, they want that, but, it's still the hospitality business.
Okay. What about, the route consolidation, initiative? How far along?
Tim's on the loading dock every night. You know?
Consolidating.
We love consolidation.
Yeah. I mean, we can You know, a big part of that is, you know, in many markets, as we add categories and buy companies, we eventually have to build a bigger facility like we've done in Florida, in Southern California, Northern California, and consolidate the acquisitions that we've done to grow the categories and to grow the market into a true Chefs' Warehouse, and that's part of the just process of what Chris calls Chef-asizing our market. You start out in Florida as a specialty company. You add center of the plate, both fish and meat processing. You add produce. You might have, you know, four or five facilities in that market.
When you build a brand-new state-of-the-art facility like we did in 2023 and you consolidate, you get everything on the same trucks, you get the operational synergies, and you get a real marketing environment where you have state-of-the-art test kitchens, where you're bringing customers in to see your dry age room and state-of-the-art center of plate processing. Chris can speak to it better than myself, but it's also marketing.
As well as operationally efficient.
We're trying to do that in, we're in multiple phases in different markets, but that's really the end goal in almost all of our markets.
I guess going back to what you're seeing right now, are all of these geographies kind of Did they all kind of lift up, or was there one, you know, that's getting more Chef-icized now that's kind of really growing fast?
The Middle East is definitely not helping right now.
Not the Middle East.
Right?
We'll get to that.
Yeah. We're at different, we're at different levels of maturization, I think, in the markets, right? New York being our core market, and, you know, they're killing it. Then you have Texas was a huge undertaking. You know, we wanted to be in Texas. We know Texas is gonna be a great market. Didn't realize how far it was from everything else. It was a logistical nightmare for us to, you know, get merchandise in, obviously perishables. You know, you don't sell them, they go bad, so you're gonna have more losses. Everybody is getting better, right?
The better ones have gotten even better, and the ones that were still in training are starting to make contributions. We still have a long way to go, but we're starting to get there. No rest for the weary. There's just a lot of work, right? That's why we have, you know, Chef's Warehouse University, and like Jim said, we're building You know, we're making the investment in these facilities and our new word is, like, we need to inspire our customers, right, to keep creating, you know, great food and think of us as their partner, and we have to walk the walk, right? I mean, we don't have a lot of room for error, you know.
The customers that We supply the best chefs in the world, and they're very demanding, you know. If you're gonna sell them raspberries, they gotta be in perfect condition. You're gonna sell them, you know, a Parmigiano, it's gotta have age on it's gotta have taste. extremely demanding, and we like it that way, 'cause we know how hard it is to do it, and we wanna be the only ones that can really figure out how to do it because we put in the years and years of training, right? It's, you're not gonna wake up tomorrow and go run the marathon, you know. We hear these people, "Oh, we're gonna go in specialty foods." It's like, good luck. You know? I mean, we've invested billions at this point and still invest millions into training.
Just getting people to, you know, to learn takes a long time.
Are you Historically, you've been kind of growing the sales force, I think, around that 10% pace. Is that still kind of the way you see things, or?
I don't know. It's not the way I look at it. Each market, they need-
Okay
To hire enough people to meet demand and build a bench.
You know, some businesses are, you know, right there and, you know, right on key, and other ones are still catching up, you know.
Okay.
Each market is different.
Okay. I guess you mentioned Middle East, so I guess that business, you noted it's running at about 75% of last year, I think since around March. I think it had been growing, or I guess maybe we estimate maybe double digits prior to that. So it's had an impact on the growth. Was that business, I guess, around $240 million last year? Is that in the right ballpark? A lot of questions on that from investors as they just size up what's happening now.
Yeah, we haven't disclosed an exact amount. We put in our published financials our total international revenue in 2025-
Okay
Which includes Canada and the Middle East. The best way to think about it's between five and 10% of our business.
Yeah. I guess, you know, this type of, you know, conflict had to be into consideration when you kind of bought it years ago. What have you learned about how the organization and how they've responded so far with what's happening there?
Well, the only it took me five years to pull the trigger on the Middle East.
Okay.
It was because it was the Middle East. You know, I also said many times, I was just there right before the bombs started dropping, that, if I was 30 years younger, I would move there.
'Cause I thought it was the most dynamic place I've seen. You know, new buildings, the most beautiful resorts, the most beautiful restaurant, demand for high-end products. I'm like, "This is great." Right? What could go wrong? The biggest reason I pulled the trigger is that I love the management team.
You know, I knew that if we're gonna buy something so far away, it had to be a standalone, have a great team, and then we would contribute, right? We would contribute technologically, expertise in all the categories. They were the only company we've ever bought that had similar supply channels and a go-to-market as a large specialty company, right? Our goal there is we double their facilities 'cause we're gonna make them more like a Chefs' Warehouse, where you're more of a one-stop shop. It's not, it's not pretty, honestly, it's a lot better than I thought. Like, listen, we survived the first quarter, put up double-digit sales with two major snowstorms, right?
I mean, it made, we lost millions of dollars, and a war breaking out, right, in March. That they're doing whatever the number is, 60% or 70%, to me shows that that management team is one of the best in the world, that they can manage through this. Obviously, they have a lot of customers. They're still selling lots of food. The hotels aren't full, that's why they're not at their numbers.
Organic pace. The real challenge, the biggest challenge besides you don't have the tourists, is getting product in.
Yeah.
They are fantastic at that.
You gotta truck it in. I don't know if there's any trains, right? You know, the straits aren't open. You know, we got used to it from the problem with the Red Sea when the Houthis were attacking our ships.
Right.
They are just, you know, they must have a room full of people like this in logistics. We realized that when we were looking to buy them, that why do they have so many people?
You have to figure out how to get the products in, especially when something like this happens, they're doing a unbelievable job.
Okay. That's good to hear. I don't know if I've ever asked this question, given that you do have some exposure in Canada, I feel like I should ask, is that a potential growth market?
Are we going to work Canada too?
No. No, we're I don't know.
Canada's a small business.
Yeah.
It's not very big, but it's in good markets there.
Yeah.
Profitable.
Right.
Yeah.
Right.
It's very profitable.
Okay.
What do you mean by exposure?
Well, no, I mean, like, is that an area that could be more of a growth opportunity, like a market that?
You know, Canada is.
More
It's very big.
Well, a couple of markets.
Yeah.
One or two.
It's very big. You know, the distances. It's a good business.
Yeah.
The team that You know, the person in charge of that's doing a great job. It's profitable. I think long term there, it'd be That's one area I would love to do a sizable acquisition.
It's, you know, we're sophisticated there. We have management, which took a long time to build. It is different. You know, doing business there is a lot different than doing business in the U.S. I think what fooled me a little bit there, if you go to Toronto, you know, you stay at one of our customer-facing hotel, you're like, "Yeah, this is great," it's a lot different environment, yeah. Montreal is more like New York as far as the food scene, I don't speak French. I don't know.
Right.
That's something I want to do right now, especially when we have, you know, Texas to quadruple and.
Right
Florida quadruple, we have enough on our plate.
Okay. Yeah, you kind of, I guess along the lines of M&A, you kind of mentioned, you're in a position, you know, to remain patient, which is a good thing, I suppose. As you do think about your priorities, you know, obviously a lot of opportunity still in some of these markets, like Texas and Florida, what would the priorities be when you're ready for them? How should we think about that?
Leverage is down. Do you know, we went from a family business, no leverage, to, you know, buying back the third we sold to private equity and leveraged that 8 times.
being levered below 2x is a really good feeling. I think we're patient. I think that there's deals out there. I think they're gonna become more reasonable. I think coming out of COVID, everyone thought they were worth 15x for whatever reason. Maybe some are. The good thing is we really don't need anything right now.
You know, we'd like to get to the Carolinas. I think we can get there. We've already started to enter. I think we could do it smartly.
I like being delevered. I like building big cash, you know, balance. Eventually, you have to do something with the money.
Right? You know, we're spending X amount on facilities right now, so a good use of capital. It's gonna really keep that hyper-charged organic growth.
in all these markets. I'm sure, like I said before, I would do a good fold in every week, 'cause, you know, we're low risk. You could do them almost, depending on the size, in a week.
Even if something goes wrong.
I could see a few of those coming down the pipe. That's why we added extra space in a lot of these new facilities. I think the phone will ring in something interesting, but if we could grow, you know, close to double digit or double digit organically, You really don't have to do much but keep investing in people and ideas and just keep feeding the, keep feeding the machine that took so long to build. If something good comes along, we tell them all the time, the 10 deals on my desk, and it's like, "If you're reasonable, you know, come have coffee. We have good coffee.
I bet. I mean, going back to some of the geographies, maybe can we just talk about, you know, Texas, Florida, a lot of the different growth geographies, where are they on this curve to Chef-ize with getting all the categories where you want them?
Oh, boy.
Yeah.
It's a loaded question. I'd say Texas is in the second inning.
Okay.
Florida will triple.
Yeah.
They're killing it, but I just see, you know, not that everybody's moving to Florida from New York and California, but you do have, you know, you have good population growth, a population that has come with money, and with money, people want good food, and they want to eat out. That's really helped us.
I mean, trees don't grow to the sky, but I don't see that slowing down anytime, just like Texas, you know. You know, I never went to Texas because I thought everybody just ate barbecue and I'm like, "This is not a market for us.
Well.
Texas has been changed, you know, since COVID.
Right.
You know?
Right.
I mean, so many Californians, New Yorkers, and people are putting foie gras on top of their brisket. It's exciting, you know, to be part of it. It's going through, like, a transformation.
I mean, to your point, Texas is so big. You've got Dallas, you've got Houston, you've got Austin.
Got Austin, San Antonio.
San Antonio. I mean, where, what's happening in those kind of four big?
We're in different, the heart and soul is Dallas.
Yeah
We have a good business in Austin. We have a good business in Houston. We have a nice little business in San Antonio. You know, we're gonna build them a new facility in Dallas. Hopefully, we find something so it's not as much CapEx as usual. Houston will need a new building in a few years. Austin needs a new building right now. They've outgrown it. High class problems, but those are almost at the top of our list right now. Dallas is really the, you know, the highest, in need, you know, because we wanna consolidate. We're same in New England, same in Florida, we're in three or I think maybe even four different facilities.
In Dallas, we're in three different facilities. You could just, you know, use your imagination how much more synergies there's gonna be there and ease of selling, putting them under 1 roof, kinda like we did in other markets. You make it easy and they just accelerate.
Yep.
So-
All right.
That's another big word now, acceleration.
Acceleration. Okay. I guess, maybe just one more quick question on Hardie's and then a couple more other questions. You know, we're finally through that kind of attrition and the math that we kind of have been talking about. How happy are you with Hardie's, just, you know, as the core business and what you've kind of retained and, what that's doing in that market, I guess?
Yeah. Hardie's was a hard one. Great people. A business that, a great reputation for what they did. I think 20 years ago it was, like, a great business. They, you know, the market just evolved differently.
We had to take it backwards.
You know, you see, I think we're finally next quarter, we're out of that comparison to business that went away that really it's not our business. It was not profitable for us or a little profitable.
Yeah.
It has allowed us to rebuild them. On a scale of happiness, I am ecstatic what's happening. You know, the team there has done a phenomenal job, and they're just in the first inning, the second even. They've really, you know, we're putting that Chefs' Warehouse culture. We've brought in tons of products. We took our hits because you do that, you're gonna have a lot of losses.
We've been through that. We're gotten better operating out of three facilities in Dallas.
They're profitable. They're getting more profitable, and they're still probably in the first inning until we get these facilities up and get them on, you know, one system.
1 truck. It's gonna be a very profitable territory. I think top three.
Okay. I guess switching gears a little bit, can you talk about just trends? It's something I guess we don't really talk about much. I mean, from the conference, everybody's talking about protein. You sell a lot of protein, so that's not new. What are you seeing in terms of trends? Are you seeing chefs, "Hey, we want more of this. We want smaller portion sizes." Is there anything like how, you know, the alcohol consumption is affecting you guys?
Yeah. I mean, oh, you know, I go to bed every night, all I get questions, you know, I'm like, okay, I get 20 emails. How's GLP-1 affecting me?
Yeah.
Right?
The last-
I was just telling Jim, I took a walk. We had a break, and I ran into some old customers, and it's kind of a tale of two cities. You know? Some are just, they didn't evolve, and they're not doing great, and they're complaining. We have so many customers, obviously our numbers, that accelerating.
Yeah
Their demands are even for higher quality, more expensive product. You know, we have one, you know, when you're dealing with corporate banquets and that, you know, it's price, it's value. They want to keep it up. Our better customers, which there's thousands and thousands, the protein is expensive. You know, I'm like, oh my God. It's gonna decimate demand. Our demand is, like, through the roof.
Yeah.
Yeah. Better hamburgers. You know, if you feel like you can't charge, you know, $70, $80 for a really good steak, a $28 hamburger seems like a bargain, right? It's really in the better restaurants, their overhead is pretty high. It's really the seat. You know, whenever I send somebody to a restaurant, they give me a reservation. They call up, "My God, it was so expensive." I'm like, "How long were you there?" I'm like, "Oh, about three hours." I'm like, "Think about it. You sat there for three hours. Did you expect to spend $30 on them to make money?
Right? They kind of have to charge you for the seat. The food is, you know, give or take $10. I think the, our better restaurants, their clientele, if it's $70 or $75, is somebody not going to come?
Right.
They're gonna come. The good ones are. They know that you will not go back if it was not really good.
We've been trying to coach some of our younger customers and all that, "Oh, we got to save money." I'm like, "No one's gonna remember they saved $10.
Right.
They will remember if it sucked.
Right.
Okay? I said, "Don't suck." You know, I mean, make sure, you know, you're hospitable, your people are trained, and give them an experience and they will come back. Maybe they won't order the $100 steak every day, maybe, you know, they'll Yeah, we see we're selling more pasta, we're selling more rice. You could see, you know, more potatoes, they're filling up dishes a little more with less expensive products. Maybe some are, you know, I think the portions are too big, I want to sell more product, I think the portions are too small. Right? It's smart ones are getting smarter with their portions.
As far as the GLP-1s, I think people take it home.
Yeah.
Right? You go out and, you know, I'm around people on the shot, you know, sometimes I make three out of five are on the shot or the pill. Right? I'm like, "You're looking really good." And you see them, they just don't eat everything.
Yeah.
They take it.
They want the leftovers.
What's amazing is I still see them drinking, you know?
Really?
Yeah, they're really powerful. They, like, drink right through it. No, no, kidding aside, they are drinking less.
Yeah. Yeah.
I think that's where restaurants have to figure out. That's why you have mocktails.
It's an interesting point, though, because does that impact their total check and where they're getting their pro- like, you know, a lot of the restaurants make a lot of margin there?
You know what? The higher end people still drink, right?
Yeah.
I think it's a treat and, you know, maybe if you're not drinking as much, that's when you do drink.
You know, I hear complaints, "Why is the mocktails $20?" I'm like, "They have to make the profit-
Right
on your beverage. They can't, the model doesn't work.
Right? They're making really great mocktails, gotten more and more sophisticated, all these mixologists. We're selling, you know, superior types of tonic, club soda, ginger beers, fruit purees. They're not cheap to make.
The labor.
I'm not a mocktail person, but when I do sip them, I'm like, "Wow, these are really good.
Yeah.
You know?
Interesting.
Yeah. I just need the wine.
I hear you. Well, I think we have to wrap it up, unless there's anything else you wanted to add.
I think you thoroughly examined us.
Well, good. Thank you so much once again.
All right. Thank you.