Good morning, everyone. Mike Tamas is from Oppenheimer. We're very pleased to welcome back Shake Shack again this year to our 24th Annual Consumer Conference. Joining us today from the company is Katie Fogertey, CFO, and Mike Oriolo, Vice President of FP&A and IR. Thank you both for being here. You know, Shake Shack's an Outperform rated stock here at Oppenheimer. We have a $122 price target. The business has been remarkably steady, even as the industry battles choppy traffic trends. The company has expanded margins despite some inflationary pressures, and management's been working really hard behind the scenes to reduce supply chain costs, tightly control labor, and run its restaurants more productively. We see a path of further sales improvement, margins, and ultimately unit growth, particularly as Rob Lynch recently joined as CEO.
He's a proven marketer that we believe will bring a skill set and knowledge base from a much larger set of companies like Papa John's and Taco Bell to Shake Shack. We're excited to hear about his vision over time. So with that, let's jump right into it. You know, I'd like to first touch on the consumer environment. It's a topic we're going to be talking to every company about here, particularly around the lower-income consumer and the pullback in spending by this cohort. You know, nobody seems to be immune here, but your sales trends seem to be holding up pretty well relative to others. So what are you seeing from the lower-income consumer, both on like a check management and frequency standpoint?
Sure. Well, first of all, great to be here. Thanks for having us. So you know what we've talked about on the, you know, different income cohorts is pretty consistent over the past couple of years. So Shake Shack over-indexes to a higher-income guest relative to traditional fast food, and we under-index to the lower income. And what we've seen has actually been quite consistent and has held true for a while now. And it has been, you know, a little bit of that trade down at the lower-end consumer, but really holding on to in some, you know, quarters, you know, getting even strength at the middle to high-income consumer. You know, I think there's a couple of things to kind of distill from that trend and how that's playing out with Shake Shack specifically.
I think, you know, first of all, you know, I think that the higher-income guest has just, you know, their discretionary cash flow has just had a different trajectory than the lower-income consumer. The second thing is that, you know, what we're providing to our guest is, you know, a great elevated experience, great hospitality at a very reasonable price point. So, you know, a burger is fries and a drink, and many of our shacks is about $15. And we like where we're positioned relative to other fast casual and even, you know, in some instances relative to, you know, some of the other, you know, more quick service options. And then, you know, the third thing is we've been really leaning in on marketing. Shake Shack historically has under-invested in marketing relative to our peers.
And we've been leaning in on marketing to grow our brand awareness, to grow awareness of who we are and why, you know, why what we make is so special. When you think about brand awareness in New York, you know, kind of where we're from, it's very strong. Still opportunity for improvement, but, you know, many people know who Shake Shack is and, you know, it's their favorite burger and whatnot. But as we've grown out throughout the country and opened up more and more locations, now over, you know, 300 locations in the U.S. domestically, you know, that has not always translated in exactly the same way.
You know, we have very strong openings where all of our great guests come and join, but, you know, there are some markets where it's not quite so clear to our guests where we are in that value proposition relative to some other dining opportunities. So we've leaned in a little bit more on marketing to help drive that broader awareness. But frankly, there is a lot more opportunity to go on that side. And I really liked how you kind of started off the conversation, though, you know, bringing in Rob here, who has that deep experience in marketing. He's got a lot of other experience as well. But, you know, for us, that that is kind of another, you know, tool that we can add to our toolkit as we look to, you know, invest in a reasonable way and continue to grow sales.
Yeah, I just add, Michael, with the context of the choppy kind of backdrop, we are reiterating guidance for the second quarter and the full year. Feel good about our strategy and continue to hit what we've put out there.
That's perfect. And glad to hear nothing's changed in the last few days since you did that last week as well.
That's right.
That's good to hear. You know, it's a good segue also, you know, talking about Rob a little bit. He's been on board, you know, about a month now or so, a few weeks. As you got to know him, you know, what excites you most about being the CFO of this company with Rob now as CEO going forward?
Great. Well, you know, Rob has been really, really busy in, you know, kind of taking in all of Shake Shack. On day one, he opened up our first shack in Pittsburgh, which is where he's from, which was very exciting for him. And, you know, I think he, you know, he's very aligned with where the opportunities in the business are. And, you know, we're looking at all of the, you know, opportunities and strategies that we can deploy going forward to help continue to drive the long-term growth of Shake Shack.
Yeah. You know, most of his experience has been with heavily franchised businesses. You know, you do have about 40% of your sales and units from licensees, but the company owned units generate the vast majority of your profits. How do you view his experience relative to that business model? How do you think about that shaping the way he's going to approach the role?
Sure. So when you think about that mix and the scale of the companies that he's worked for before, there's actually, you know, when you actually look at the number of company-operated restaurants that were under his purview, it's actually substantially larger than we are today. So that's kind of one thing to consider. And the other thing is that, you know, priority number one is really on hiring a COO. While Rob has experience in operations, he was brought on to run the whole company. And so we need to make sure that we have, you know, great talent in all of our arenas with operations being so core to who we are. And he's been, you know, deep at work in that process. You know, for those that aren't familiar, last year, we started a COO search kind of in the September-ish timeframe.
And then when Randy announced that he would be retiring at the end of the year, we actually put that on pause just because most COO candidates would want to know who the CEO is before they came on board. So now that Rob's in the seat and that's all announced, we've been able to restart that process.
Gotcha. Makes sense. So as we dive into the business, I just want to sort of start high level, frame up the year a little bit. You're guiding low single-digit same-store sales, 20.2%-21% restaurant margins. You have a mid-teens unit growth algorithm and EBITDA of $160 million-$170 million. Can you unpack for us how did you formulate that guidance for the year and what factors, you know, do you think will put you near the higher or lower end of that? How do you scenario analysis that?
Sure. I mean, just, you know, kind of normal course of business, we can go through the P&L. So on revenue, you know, we're expecting to open about 40 new shacks this year. Based on timing, it's going to be a little bit more of a back-end weighted year than we had last year. So that's something to consider. We're also, you know, opening up probably fewer drive-throughs this year than we had last year. So really kind of focusing on optimizing that capital investment and getting the best cash-on-cash returns and really honing in on what that format is and the sales lift opportunity on the back of it. And then on the comp, you know, you alluded to the low single-digit comp. That's a mix of a low single-digit check mix. So price and then price being about, you know, mid-single digits.
And then in the mix headwinds, you know, bringing us down to kind of the low single-digit same-shack sales. Various, you know, scenarios on traffic there kind of get to your revenue range. And then also kind of our outlook for the licensed business as well. So on the licensed business, we're also looking to open about 40 units this year. We're facing, you know, pretty, you know, material pressures as we've been facing throughout the entire year in China and in the Middle East. So kind of expect those to persist. And then in the domestic area, we've been operating with a great source of strength. Airports have been really strong. And, you know, that demand has been pretty robust. On the restaurant P&L side, on cost of sales, you know, we're expecting to have, you know, kind of moderate, definitely lessening food inflationary pressures.
The things that our team has been doing in order to shore up the supply chain, leverage our scale more, and just be more efficient on that side are really bearing fruit and have, you know, meant that our realized inflation is definitely lower than we would have been absent those pressures.
And then on labor, we can spend some more time on this because I think you have some more follow-up questions on that side, but it's really about leveraging a lot of the work that the team has been doing in order to get tighter on our forecasting in our restaurants and really aligning that sales forecast with how we're staffing and working very closely so that our managers are held accountable to deployment schedules and understanding, you know, what we're expecting in the business and what that means as far as how many hourly team members that they need to have on in any given shift. And then, you know, going, you know, further down, we've been increasing our marketing investments. Some of that sits in the restaurant P&L, but we've been doing it, you know, to help drive traffic. And, you know, we're certainly outpacing industry trends.
And then, you know, throughout the, you know, R&M, utilities, T&E, all those other, you know, great parts there, you know, lots of bodies of work, you know, that have been going on in order to help make sure that we're being thoughtful and being prudent in our spending on those lines, really kind of prioritizing the investments which are needed to deliver a great guest experience and to drive sales. On G&A, you know, we continue to take a very prudent approach to that spend, really having a pretty, you know, pretty reasonable, I would say, step up in baseline G&A and really having that big lever or opening there to invest more in marketing. Most of our marketing spend sits in G&A, but some of it does sit in the restaurant profit line.
However, you know, what we've been doing is increasing our performance marketing, our brand marketing, getting our message out there more and more. And we've been, you know, pretty pleased with the returns we've been able to drive on the back of that investment. So those are kind of the major drivers on that side. Again, just really, you know, if I was to sum it all up, really highly focused on profitable growth and, you know, continuing to build up our margins and build up, you know, our, you know, generate more profitability so that we can get closer and closer to cash flow break-even.
Yep. And we're going to dive into some of those themes, you know, over the next few minutes here. But, you know, you kind of just touched on this, but your revenue guidance is about mid-teens at its midpoint. EBITDA growth is, you know, mid-20s. So really strong margin improvements there. You know, not asking about formal guidance, but just talk about the relationship between growing EBITDA faster than revenue growth. And, you know, is that a safe base case as we move forward?
Yes. We're not going to talk anything beyond the guidance that we've given for 2024. And, you know, I would say that, you know, we remain committed to driving restaurant margin profitability, being better at operating our restaurants. We've been doing all of this without a COO. So, you know, certainly I'm expecting that to be a big focus of the COO as well once they get on board and ramped up. And then, you know, on the G&A side, you know, continuing to, you know, be prudent in how we are adding headcount at that home office, finding, you know, savings on that side and really opening up that additional funds for marketing. And I think the thing about marketing that, and I think Rob gets this as well, it's not just about the dollars that you put after it.
It's about really optimizing what the messaging is and the strategy is to make sure that you are getting those strong returns on the back of it.
Yep. All right. Now, you know, if we start at the top in the first quarter, your same-store sales were up, I think, 1.6%. I don't think it really tells the whole story, though, because it's kind of masking some really strong performance. I think your team, like mid-teens in Florida, New York City was a little bit weak. So can you talk about some of the bifurcation between those markets? What are some of the big factors driving those differences?
Sure. So, you know, first quarter, I think for everybody in the restaurant sector was a little bit more challenging. Certainly, weather was a big driver of it. If we look at kind of the best weather that we had the year ago, kind of lapping that with a lot of rainy Saturdays in New York City, you know, some pretty, you know, strong weather headwinds. When you take all of that out, we actually had about flat traffic in the first quarter. And that trend was consistent into April, where we had 4.9% same-shack sales and approximately flat traffic. So we like what we're seeing overall in the business, you know, weather headwinds, you know, aside. And then when we look at Florida, just exceptionally strong trends there. There's, you know, kind of a mix of, let's call it a macro and micro.
So on the macro side, clearly, you know, lots of mobility in the region. We were picking up on a lot of, you know, East Coast people going down there and vacationing, which is no new trend. Then on the micro side, you know, a lot of our marketing initiatives hit very well there and probably a testament to how we have the ability to grow our brand awareness in some of these, you know, newer markets outside of New York City specifically.
Yeah. You know, touched on it a little bit, but aside from, you know, weather headwinds fading as we moved away from the January and February, what do you think was also a driver of the improvement as we moved into April? I think comps were up nearly 5%.
Yeah. I mean, part of it is also pricing. So we took various levels of menu pricing throughout the first quarter, including on our delivery channels. We, you know, raised the white label delivery premium to 5%. We kept that spread between white label and third party at 15%. And then on top of that, we took about, you know, most of our shacks had about a 2% price increase, very similar to our pre-COVID behavior. And then we did take a little bit more price in California to help offset the move to $15 or to $20 an hour. So, you know, there was a little bit of that as well. But really the underlying, you know, trends in the business and how we're driving incremental traffic and frequency from these marketing initiatives, I think is helping us a lot.
Yep. Then, you know, your same-store sales guidance for the year is low single digits. So, you know, it's a little bit below what you did in April, even though comparisons are going to be easy. I think you lapped at 10 in the first quarter, for example. So what are the dynamics around same-store sales as we think about the rest of the year?
So we're rolling off menu price. So that's part of the headwind on that side. We're continuing to expect to have mixed headwinds just as part of our marketing initiatives. And then, you know, various levels of, you know, traffic assumptions based on macroeconomic risks.
Makes sense. And then, you know, you touched on marketing. It's been a really big topic of discussion with Shake Shack. You know, you haven't shared a specific number, I don't think. But how do you plan on deploying that extra spending and how is it different than what you've been doing?
Sure. So we did talk about picking it up a lot. We give that number annually in the 10K. And so we've made a commitment to, once again, increase that this year. So a couple components of this. So first of all, it's just performance marketing, getting our word out there more and more in different channels. We're also doing brand marketing through a number of different kind of categories, I would say. So you might have seen we did a Chicken Sunday promotion in April where we had a free Chicken Shack on Sundays if you used a promo code and really highlighted our antibiotic-free premium chicken that a lot of others have had to back away from. But we're keeping it as a core commitment to our brand standard. You know, we took out an ad in the New York Times on the back of it.
We ran a lot of social as well. And, you know, those are really great opportunities where you have a really awesome brand moment opportunity that you're able to then supercharge with performance. And it really has like a massive impact on the ability to grow, you know, top and mid-funnel conversion. Then on the back of that, you know, there's other initiatives that we've been running throughout the year. So we just did something with the Westminster Dog Show. We also have been running very, you know, constant pulses in Los Angeles and doing connected TV there, again, highlighting our brand, our brand story. We've been doing tests in Dallas. You're going to see us kind of do more regional tests later this year as well as we have some pretty exciting, you know, more traditional brand, you know, marketing initiatives going on as well.
But, you know, I would think about this as still being very early innings and what a marketing strategy could look like for Shake Shack. We just don't have the funds and it just doesn't really make sense for us to do a very big splashy national brand campaign. So we're sticking with regional, growing a little bit more, increasing our confidence in the returns we're able to get and also increasing our performance.
Yep. And, you know, it seems like we're in another value war within fast food. You have a different product than a traditional fast food restaurant from a quality standpoint. And so I don't think we're going to see a dollar menu from you guys anytime soon. But what are some of the strategies that can be most effective for the consumer from like a price value perspective in the Shake Shack way?
Sure. We, you know, we think about it a lot as value-added opportunities. And we've been actually doing this since, you know, kind of late last year using different channels and opportunities to drive increased awareness through if it's a free Friday where on Fridays you can get free fries with a minimum spend or the Chicken Shack, get a free Chicken Shack on a Sunday with a minimum spend. We'll do BOGOs and just exciting, you know, you know, opportunities for guests to engage with us. It's been very incremental for us and we're kind of learning more and more and getting more and more confidence about, you know, how we're able to drive, you know, increased visits, greater awareness of us in a way that just doesn't, you know, just discount for the sake of discounting. We're trying to be very strategic about this.
And I think the key thing to note is that these value-add moments that we have been pulsing and feel really good about have been positive to our margins and also have carried, you know, pretty substantial checks on the back of them. So kind of goes to, I think the consumer right now is just feeling it from all angles. And, you know, when they open up their Shake Shack app and they see that there's an opportunity for them to get a free chicken sandwich for coming to Shake Shack, that's great. They want to do it. And we want to, you know, be there to kind of offer that added value at this moment. But, you know, you're right in saying like we're not in a position to offer, you know, 10 bites for a dollar or anything that's hyper value competitive like that.
Our food quality is just so high. It just doesn't make sense from a P&L perspective.
Yep. You know, and you've kiosk deployed across the system. It's driving a high teens benefit to your check average. And that's up meaningfully. I think you were, you know, high single digits last time you talked to us before that. And so how are you generating such a meaningful shift in that check average? How do you elevate that so much so quickly?
So, yeah. And just to clarify, that check lift is relative to a cashier transaction. And so when you think about the kiosk in general, I think about it as an amazing visual merchandising portal. Our menu, you know, just if you kind of go to, you know, our Shacks in areas of the country where our brand awareness is a little bit less, not everybody knows what a Shack Burger is. It sounds, you know, it sounds funny to think of this, but they just don't know, you know, is it a cheeseburger or why is this different?
When we have our LTOs, like our Carolina barbecue we have right now, or, you know, we have also the kind of a sweeter smoky barbecue menu as well, or all of our LTO shakes, it's not quite so clear and understanding to our guests who are new to the Shake Shack story. So what the kiosk does is it really translates our menu into amazing visuals and allows kind of the guest to sit with the menu and see it and understand what makes each of these products so special and delicious. And also you just watch the guests can sit there and build their tray up. You have a higher attach rate of our LTOs. You have a higher attach rate of premium, you know, items of also of shakes and of cold beverage and fries.
So, you know, instead of waiting in line and having everybody behind you
[Crosstalk]
Then to kind of blurt something out, you can take a little bit more time with it. The other great thing about the kiosk is that we are running food. So you put your order in at the kiosk and then you get a table tent number and you can go sit down and wait. Instead of everybody hovering over where we hand off our food and then be like, "Oh, when is my order going to be ready? Where am I in the queue?" You can actually sit down and your food is brought to you. It creates a better guest experience. There's a lower perception of our wait times, which is pretty fascinating.
We're, you know, we're able to kind of address, you know, any kind of issues with guest experience on the spot there too.
Yep. And then, you know, how sophisticated is the kiosk system right now? Is it simply just a simple upsell opportunity? Do you want to add bacon or fries or something like that? You know, where are we in that journey of it being integrated into the entire digital platform, you know, at a very sophisticated level?
Yeah, I think we're very early days. While I'm so excited by what this mighty little kiosk has delivered to our company, we, you know, right now, I mean, we just rolled out, you know, enhanced upgrade to the software, which allows, you know, better customization and a little bit of an increase in upsell. But we are still, you know, there is still a body of work that we could choose to go down in order to really integrate that with our digital experience and get better guest recognition on the back of it. We get very excited about that. I mean, the kiosk itself, being that it's our largest sales channel now, could also be our largest guest acquisition channel into our digital world. So these are all the things that, you know, we're kind of throwing around and trying to wrestle with here.
But it, I think, is a very exciting way of thinking about the future of our digital ecosystem.
Yep. You know, as we move into margins a little bit, and you can tie kiosk into this however you see fit. But I think your margin guidance assumes, you know, 30 to about 110 basis points of four-wall margin expansion versus last year. So what are some of the assumptions that, you know, that you guys are using within that? Again, you can bring in kiosk to that as well.
Yeah. So, you know, first of all, it's going to be kind of where macro traffic trends end up shaking out. That is always, you know, an important part of how you're able to leverage your fixed costs in a business. On the supply chain side, you know, how we're able to continue to kind of use our scale and negotiate better and more diverse contracts with our suppliers and agreements with our suppliers. That's highly helpful. And also our team members, you know, with the greater tenure we have and the more retention that we've had with our teams, we're and the work that we've been doing and helping to educate our operators more, we've been able to drive down waste, which, you know, had during the pandemic was, you know, a more material drag on our margins than it is today.
On the labor side, we're just getting much tighter on the scheduling side. Just as a reminder, we're starting to anniversary a lot of the work that the team did last year in making sure that, you know, our sales forecasts are tight, making sure that our operators are scheduling to the hours, which we think that they should be scheduling towards and making sure that we're having that conversation back and forth where schedules are differing. So really kind of the next leg of opportunity there is around refining and, you know, implementing our new labor scheduling tool and algorithm. So, you know, that's kind of where we're thinking on that side. On, you know, other restaurant expenses, the extent of the delivery business and our profitability in that channel is, you know, continues to improve on that side.
We're just, you know, making little, you know, nits and nats on a lot of those other line items that we made a lot of progress on last year and just continuing to go forward on that side.
Yep. You know, as we think about the guidance for the year, I think in the first quarter, you expanded margins by about 120 basis points or so. That is above what the rest of the year would imply then. You know, even though sales trends might actually be better for the next three quarters, you know, what are some of the offsets we should be thinking about on the margin side?
Sure. That year-over-year comp does slow. We're expecting it to slow throughout the rest of the year. I think the big callout though is that last year in the second quarter, that's when the team stood up a lot of work around working with our operators to really bring things in and have more accountability and standards on the operation side. And, you know, that's kind of what we're going to be anniversarying now. So it is natural to expect that that will kind of, you know, our momentum will continue to grow margins. But, you know, we're operating off of, you know, quite a difference in the margin last year versus this year in the first quarter. And that will, we're expecting that to kind of, you know, smooth out throughout the rest of the year.
You touched on this a little bit, but you do have this new labor scheduling that you're deploying across the system. You know, is that in your margin guidance for this year? And then as we think about sort of, you know, the ongoing journey with margins, how much have you guys really done within the four walls versus the opportunity you might see in front of you still?
Sure. So on the labor scheduling, we started to test our new labor deployment model at the end of last year in a couple of shacks. You didn't really see it in our numbers. We're encouraged by the results that we had. And now we're in the process of rolling it out to all of our restaurants by the end of this year. We're not going to go into kind of what our anticipated cost savings is on the back of it and the extent of that. I think it's a little premature just given this is change management. The first tranche was great and we feel really good about that. But, you know, we're talking about a number of restaurants which we're, you know, improving and optimizing their deployment schedule. So, you know, hold tight on that and it's not in the guidance today.
Sorry, what was your second question?
Just where we are in the journey to improve margins. I mean, it's obviously an ongoing journey.
Yeah. I mean, look, like our current guidance is for 20.2%-21% restaurant margins. We are getting very close to pre-COVID margins. There's a lot of things that we could do to get way above that. And it's not necessarily clear that those are in the best interest of long-term shareholders. So, you know, this is the work that we've been going through, Rob and the board, you know, weighing heavily in on, you know, what all the opportunities are. And we just want to be thoughtful with preserving that guest experience. If you go back to our strategic plan, the number one great thing that we want to do this year is deliver a consistent guest experience. We don't want to sit here and cheapen the product materially for the sake of a margin that will just dramatically impact the guest experience.
So, you know, stay tuned on, you know, outlook for other years. But those are kind of the weighing points. And then the other thing that I would add is that, you know, this is a company that really has not had a COO for at least, you know, we've been undergoing that search since September. The finance team has been working really closely with our operators to try to, you know, bring us along on this journey. But it's something that I would expect that a new COO would have, you know, especially, you know, given kind of the background that we're looking for, somebody with scaled restaurant company operated experience, they'll have some strong views on where potential opportunities are as well.
Yep. You know, when you look at your system, if you were to kind of bucket into some cohorts, you know, what's the separating factor or a couple of factors between some of your well above average units on margins versus those that might be below average?
Sure. I mean, the number one thing is sales. You know, sales does a lot. And, you know, that really can, that's probably the largest explanatory variable on that side. But, you know, I also go back to, you know, a lot of times it is the quality of the manager that's in that restaurant. So once you kind of isolate for sales, then it's how good is the manager and how good are they at deploying, well, first of all, hiring talent, training, and deploying the talent across the restaurant. You can achieve sales in many different ways. And a great operator will understand, you know, who makes great talent and how to build out their team. There's also some, you know, a little nuances that, you know, can sometimes impact certain regions.
So we've talked about when we're able to get bigger density in a certain market, we're able to optimize our supply chain a little bit more. These things are all helpful. But, you know, the two things that I talked about before are pretty important. And then, you know, not to also miss out on rent expense, but, you know, there are some locations that, you know, we have very favorable terms with our landlords. And then there's others where, you know, maybe the site didn't materialize the way that we thought it would, or there's been locational shift or, you know, for various reasons, the rent expense is just larger than we'd like for our typical restaurant.
As we shift over to unit growth, with just a couple of minutes left here, you know, you're growing about mid-teens or so this year on the company-owned side. And, you know, that's the right number for this year. And not asking for a number going forward, but what are the important factors you're looking at as you think about either accelerating or decelerating unit growth going forward?
Sure. So I think the work that we've done to increase our margins and decrease our build costs, we haven't really talked about that, but, you know, we're on target to lower our build costs by at least 10% this year or by 10% this year and are on path for more reductions in out years. Those two things together are incredibly important because they're improving our cash on cash returns. So I don't want to underestimate what that has done to our ability to grow units over the long term. For a company like us, where we are, you know, company operated, you know, talent and pipeline in running these restaurants is very important. So, you know, that can be, you know, sometimes people ask like, well, why can't you just double your openings next year?
It's like, well, you need a lot of people trained up and ready to go. And by the way, that does hurt your margin in the near term. There is a balance between unit growth and margins, especially kind of at our scale, where if you accelerate new store openings a lot, and I'm talking about a meaningful increase, that will weigh on your margin progression. You will have to hire people earlier, train them, put them in your existing shacks as you wait for openings. And then when a new restaurant opens, it typically does not open at optimal P&L. You have a lot of new team members, which you then have to, you know, train and you see their efficiency go up over time. You're able to pull people off the schedule. You also tend to have more waste in the beginning.
It's just, you know, people who haven't done a lot of reps. And then you might have T&E associated with those openings and so forth that can be a drag to your margin. So those are just some things that I would consider. But as far as, you know, the number of sites that we see and the pipeline and all of that, it's great. It's just about balancing our ability to execute from a people perspective, from a build perspective, and managing that throughout the year.
You know, we've got about 30 seconds left here or so. And, you know, you touched on a little bit earlier, but, you know, our model suggests that you could be free cash flow positive this year and, you know, 2025 for sure. So how important is that? And is it something you and the board are focused on going forward?
Yep. So getting a path to free cash flow profitability has been a very important target for us. And it is something that we have, you know, eyed in the near future. And, you know, when we talk about kind of, it also is kind of, it is something that's very important to the board as well. And it's part of our balance sheet program as we look towards our 2028 convert maturity. As just a reminder, we have a 0% convert. You know, it's a great thing to have in this market, but it does come due at a certain point. So that's always been kind of in the back of, in front of my mind, back in front. So we want to make sure that we are well positioned on that side. But then it goes back to your question on unit development.
You know, certainly if you are to ramp up your unit development a lot, there is, you know, an impact to your ability to be free cash flow positive. So it's kind of just weighing that and the opportunities we see. At the end of the day, if you have a great restaurant that's going to produce strong returns, you know, and, you know, that is a priority for us. But we also are mindful of our balance sheet.
That's perfect. With that, we're out of time for today. So just want to say thank you. Really appreciate your attending our conference and have a good rest of your day.
Thank you.