Earnings Call: Q2 2020

Jul 30, 2020

Greetings, and welcome to Shake Shack's Second Quarter 2020 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Rick Powell, Senior Vice President of Finance and Investor Relations. Thank you, Laura, and good evening, everybody. Joining me for Shake Shack's conference call is our CEO, Randy Garusi and President and CFO, Tara Comont. During today's call, we will discuss non GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release and the appendix to our supplemental materials. Some of today's statements may be forward looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our annual report on Form 10 ks filed on February 24, 2020, Form 10 Q filed on May 4, 2020, as well as our Form 8 ks business update throughout the quarter and into July. Any forward looking statements represent our views only as of today, and we assume no obligation to update any forward looking statements if our views change. By now, you should have access to our Q2 2020 earnings release, which can be found at investor. Shakeshack.com in the News section. Additionally, we have posted our Q2 2020 supplemental earnings materials, which can be found in the Events and Presentations section on our site or as an exhibit to our 8 ks for the quarter. With that, I'll turn the call over to Randy. Thanks, Rick, and good evening, everyone. We hope you, your families and our entire Shake Shack community are all staying healthy and safe. Through this difficult time, I've been incredibly proud of our team. They have continued to show up, support each other, our guests, our communities and our suppliers. They've had an unwavering commitment to excellence and hospitality in the face of an incredibly challenging operating environment. We owe them a debt of gratitude and remain committed to their safety, well-being and ongoing development and growth. In the Q2, we committed to pay an incremental $2,400,000 across premium pay, guaranteed bonuses and scheduling related premiums to our teams in order to recognize the incredibly challenging conditions they're dealing with every day. We're happy to share that we'll be continuing to support our teams in this way into the Q3. Looking at the Q2, Shack sales were down 39% compared to last year, while same Shack sales declined 49%. However, sales showed continuous improvement through the quarter. Sales in June did see a significant impact from the temporary Shack closures and reduced operating hours related to nationwide protest activity. Carl will go into this in further detail, but given the high growth nature of our business and relative small size of the comp base, yet again, same Shack sales should not be the sole metric on which to understand current business performance. Total sales and average weekly sales continue to grow. And in fiscal July, we saw an 8% increase in average weekly sales compared to the prior period. As of today, approximately 95% of our domestic company operated Shacks are open, an improvement from them roughly 90% open at the time of our last earnings call. Less than half of our Shacks are currently operating with interior dining, however, a reduction from a few weeks ago as some previously reopened interior dining rooms have once again needed to close as we prioritize safety, particularly in high risk states. Of those that are open, they're operating at limited capacity and utilizing outdoor patio seating where available. Since the beginning of our company, we've built some of the world's favorite community gathering places. People desire to gather with other people, share great food, hospitality and the Shack experience is a very thing right now most challenged by COVID-nineteen. While so much of our real estate footprint has been centered thus far in urban office travel and dynamic traffic driving sales environment. As these are the most impacted restaurants around the globe, that's what you see in our numbers. Our suburban Shacks tell a slightly different story with a less acute impact than our urban Shacks achieving a faster recovery and with consistently improving performance across all regions over the last 4 months. We continue to believe in the strength of the strategy that has led to industry leading AUVs and those deep connections we make with our communities. In the meantime, we're going to improve those Shacks most challenged by the current environment while doubling down on the places around the country where we're learning, growing and in some cases doing even better than last year. We remain fully committed to our long term growth opportunity, which we believe is as strong as ever. With a robust real estate pipeline that was paused earlier in the year, we're back in a place where we've restarted new Shack development. We've opened 4 company operated Shacks in the Q1 and have successfully opened 5 Shacks since the pandemic started, for a total of 9 openings year to date. And we're pleased that this class is open with encouraging levels of sales and are so thankful to our teams for getting them open during these challenging times and working so hard to become an essential part of their new neighborhoods. In today's ever changing environment, nothing is certain, especially the permitting, construction and opening of restaurants. But assuming current conditions persist and no major work stoppages get in our way, we believe we expect to open between 6 11 additional domestic company operated Shacks back weighted towards the end of this year for a total of 15 to 20 for the full year. COVID-nineteen effectively cuts our development plan in half for this year from our original guidance. Looking ahead at 2021, we have a strong pipeline of leases. We're being proactive and opportunistic when it comes to real estate. With a strong balance sheet and a robust multi year development plan, we are aggressively in market looking to benefit from additional opportunities that we expect in a forever change retail landscape. In our license business, total sales have also shown gradual improvement as approximately 80% of our licensed Shacks have now reopened. We successfully returned the Shack unit growth with the opening of 4 new licensed Shacks since the onset of COVID-nineteen. All Shacks right now in Hong Kong, Mainland China, Japan and Korea with the exception of our Incheon Airport Shack in Korea are now open, although in most cases with limited hours and smaller capacity dining rooms. This is an ever changing situation. And even this week, we've seen Hong Kong close and then partially reopen dining rooms again due to recent spike in cases. In the Middle East, the majority of Shacks have now reopened, but primarily for takeout and delivery with a slow reopening of dining rooms. In the UK, approximately half of our Shacks have reopened, but we're excited to be testing 4 new cloud kitchens in various neighborhoods throughout London, which has helped to offset some sales loss and taught us a lot about this model in the UK. Our domestic license business, Jackson Airport, Stadiums and Roadside remains the hardest hit in our portfolio. With just half of our airport locations now open and operating at severely reduced sales, while air travel remains at a fraction of its pre COVID-nineteen level and nearly all of our domestic stadium venues remain closed. As an example of the dynamic and quickly evolving environment, our Terminal 3 location at the LAX airport will not reopen as the airport has chosen to take this time to tear down and replace the terminal entirely. As we look ahead, continue to build opportunities for growth, we're excited to have recently announced the expansion of our existing partnership with Maxine's Caterers Limited, which targets a development agreement of 15 additional Shacks across South China by 2,030, including locations in Shenzhen, Guangzhou and more. This agreement increases development targets for Mainland China to 55 Shacks by 2,030, of which just 5 are open at this time. We're really looking forward to continue our growth in this critical and sizable market. Moving ahead to our menu and product strategies, we've been taking this time to simplify our menu in order to allow our teams to focus on execution. We've temporarily removed some of the most labor intensive items, paused LTOs and have been more cautious about new item testing. That said, our innovation kitchen is still humming along and we're excited about a few upcoming product initiatives. This fall, we plan to bring back hot chicken, a perennial fan favorite, while upping the offering this year and adding hot chicken bites and spicy fries. Longer term, as we've talked about in the past, we believe we have many opportunities to expand our menu and additional excuse me, with additional vegetarian and vegan options. We've got a new Veggie Shack burger made with real vegetables, herbs and grains and topped with avocado, roasted tomatoes on a wheat bun. Being tested at 2 Shacks right now and we hope to expand that test next year. It's a great product, something we've been actively tweaking as we solicit guest feedback. As always, we continue to offer rotating beverages and shakes such as our current Pink Lemonade and S'mores shake. And as we head into the fall, we're planning the return of our popular pumpkin and holiday shapes. There's no doubt that this moment has amplified the need and the speed with which we intend to execute our plan in order to return to growth and prepare for a strong future. We've been intentional throughout this crisis to double down on those things that have made Shake Shack great and improve those things, we know we can do better. For us, that's always meant a focus on creating an uplifting guest experience crafted 1 burger at a time. We've elevated every piece of the traditional burger experience and now we're focused on adding much greater accessibility, convenience and ease of use to that strategy. That begins with our real estate selection, our Shack designs, our digital journey and the expansion of the way our teams and guests will experience the Shack. And indeed, while some of our strongest Shacks in the country are the hardest hit right now, we believe this to be temporary. Great real estate stands the test of time and we're excited about the evolution we have planned to aggressively target a multi format diversified portfolio of locations that thrives under any circumstances. Our intent is to further the progress we've made during COVID-nineteen across digital channels and to facilitate more pre orders with a seamless pickup experience. Here's what we're up to. We've just launched curbside pickup in our app. For the first time, guests can pre order on the app, identify their car and we'll bring their order out to them with contactless pay and handoff. This is live in test in around 10 Shacks right now and we expect it to be rolled out to approximately 50 Shacks by the end of the Q3. It's really early, but we're encouraged by the initial results and convenience this adds for our guests. Next, we're adding Shack Tracks to both existing and new Shacks. The Shack Track experience is an enhanced digital order and pickup solution that includes the ability to order via app, web, pickup via curbside, walk up window, drive up window or with an improved in Shack pickup area. Through the end of this year, we'll expect to add at least 8 Shack Track pickup walk up windows to existing Shacks, as well as add our 1st drive up Shack Track as we reimagine our Vernon Hills, Illinois Shack where guests will never have to leave their car. For 2021, we expect roughly half the class to have either a drive up or walk up window with the remaining shacks having a combination of enhanced interior pickup curbside and or dedicated delivery courier pickup areas. We're also really excited today to announce that we'll be building our first ever drive through experience in 2021. And we hope to execute more of these in the future as we learn. And as you'll see in the initial renderings we've arrived in the supplemental deck, this is not your average drive through. Our design will retain the experience of the great community gathering place that has led our brand for 16 years, while adding the convenience of pre order ShackTrac pickup or in person drive thru ordering. We've not yet announced the initial drive thru locations, but intend to lead with traditional suburban high traffic quarters. So why are we doing all this? The answer is simple. As we look ahead, our goal is to increase the addressable market opportunity for Shake Shack, while driving strong AUVs and returns on capital. We're still in the early days for Shack Track, drive thru and our enhanced pickup models and we have a lot to learn in terms of sales and throughput. We're bullish about the potential white space opportunities formats could create while meeting the evolving needs of our fans. Moving on to digital. As guests begin to return to ordering at the Shacks, the mix between in Shack and digital sales will continue to shift. During the 2nd quarter, total digital sales represented 75% of sales and it more than doubled compared to the Q1 of 2020. Our own native web and app channels more than tripled compared to the same period last year and when they've been combined continue to be the fastest growing and largest ordering channels for us throughout Q2 and into July. For fiscal July, digital sales represented 62% of total sales, retaining over 90% of the digital sales that we achieved during fiscal May, even as In Shack sales have gradually returned. In addition, we've welcomed over 800,000 first time purchasers via our app and web channels since early March. This is nearly 4 times higher than the same period last year. We're delighted with these results and we're planning for digital sales to remain a significant component of our business and ongoing growth. As a result, we're doubling down on our digital investments that will continue to fuel the guest experience. We launched a number of new features and functionality in response to COVID-nineteen. We're now extending much of that learning into broader initiatives. I just spoke about the opportunity we believe curbside pickup can create now and long term. And I'm proud of the quick work the team did to launch this product. We're also fully rebuilding our broader web and app functionality over the next year with new and enhanced options that will allow additional personalization and feedback as well as functionality to give guests real time order status among many other features. But the most important new feature will be the ability to offer delivery directly through our own channels for the first time, targeted at keeping guests within our native infrastructure and deepening our ability to connect directly with them over time. In addition, throughout the next year, we'll be leveraging our improving data and insight capabilities along with further guest facing features such as expanded payment options, gift cards and much more. Our teams and leaders have used this moment to accelerate the pace of learning and innovation in our company. We're committed to getting after those areas of greatest opportunity as we see them and take this time to set ourselves up for a strong future. With that, I'll turn it over to Tara. Thanks, Randy, and good evening, everyone. Firstly, I'd like to reiterate Randy's thanks and appreciation to all our teams right now, particularly those in the Shacks, but also our home office working remotely. Everyone has stepped up to such incredible new highs over recent months in support of each other and our company as a whole. We're looking forward to being in person together again soon. In the meantime, thank you for all you continue to do. Moving on to the results. As previously shared, total revenue for the 2nd quarter was $91,800,000 including Shack sales of $89,500,000 and licensed revenue of $2,300,000 We estimate that Shack sales were negatively impacted by approximately $3,200,000 due to nationwide protests and resulting curfews causing temporary Shack closures and reduced operating hours during the 2 week period from May 28 to June 10. Same Shack sales declined approximately 49% in the Q2 compared to the prior year, driven by a decline in traffic of 60.1% and an increase in price mix of 11.1%. The increase in price mix was driven by 28% increase in our average check as a result of the significant shift into digital channels we've seen over the last few months, which which have historically carried a higher average check than in Shack. In terms of sequential progression of same Shack sales throughout the quarter, we were encouraged with the continued improvement with year on year declines of 64% 42% for fiscal April May respectively and 39% in fiscal June when adjusting for the impact of the protest. Including the impact of the protest, same Shack sales reflected a decline of 42% in fiscal June. Same Shack sales in fiscal July were down 39%, while delivering a further sequential increase in average weekly sales in the period, all of which can be seen on Page 7 of our supplemental materials. I'll talk about some of the underlying dynamics of our sales performance and our comp base in a moment. At the end of the Q2, our trailing 12 month average unit volume was $3,400,000 The more relevant data point, however, as we gradually rebuild sales within this COVID-nineteen environment is average weekly sales, which for the Q2 were $45,000 with a clearly improving trend throughout the quarter. Average weekly sales in fiscal July were $56,000 representing an increase of almost 2.5 times average weekly sales at the low point of the COVID-nineteen outbreak. The speed at which our business is recovering differs generally depending on the location, whether that be in relation to the broader states reopening progress or the extent to which our Shacks are located in a typically dense urban or high traffic neighborhood, which many are. Our urban Shacks, which make up half the units in our comp base, accounted for approximately 60% of our comp base sales pre COVID-nineteen. These Shacks were and continued to be highly impacted by COVID-nineteen and were down 57% in the Q2, improving to down approximately 50% for fiscal July. From a regional perspective, it's also worth noting that New York City, a fully urban footprint, saw same Shack sales in fiscal July declined by 56% with Manhattan Shacks specifically down 65%. This quarter, we've included a regional breakdown of comp based performance in our supplemental materials, and you can see the disparity between regions and the outlier that is New York on Pages 1011. The other half of our comp based Shacks are our suburban Shacks, whether freestanding or in suburban malls or shopping centers, which represented approximately 40% of our same Shack sales pre COVID-nineteen. These Shacks were down 38% in the Q2, improving to down approximately 24% for fiscal July. This stark difference in sales performance is something we expect to continue to some degree for as long as COVID-nineteen continues to impact our cities, our offices and our travel, recreation and entertainment habits and is likely to be particularly true in some of our larger footprints like New York City, Chicago, Los Angeles or Washington DC where some of our previously highest volume Shacks are located. We've been encouraged by the initial performance of our 2020 class. Average weekly sales in fiscal July for our 5 most recent Shack openings were nearly 40% above the company average in that period. Even in a COVID-nineteen world, new Shacks are opening with strong levels of sales and we believe the return on capital of this 2020 class remains healthy. We have a huge sales opportunity ahead of us and we're committed to capitalizing on that, albeit short term sales predictability remains unclear. With states opening up and then regressing as cases spike, we're focused on remaining flexible in our operations and decision making. With week to week volatility still a reality, we will not be providing specific sales guidance at this time. Moving on to Shack level operating profit margin, which in the Q2 was 2.2%, severely impacted by reduced sales levels and a number of exceptional and incremental costs across the business. In particular, for a large part of the Q2, we experienced significant inflation in beef with cost nearly double last year for most of June. Beef prices have since returned to more normalized levels, but we estimate the spike in beef costs negatively impacted our Shack level operating profit by approximately $2,500,000 or 280 basis points during the quarter. We'll also continue to have significantly higher paper and packaging costs as a percentage of sales with all orders packaged as to go in sealed bags with additional internal packaging for security. We estimate this increased level of packaging impacted Shack level margins by approximately $1,400,000 or 160 basis points in the quarter and will continue for such time as we remain in a heightened COVID-nineteen risk environment. In terms of labor, our priority remains safety for our teams and for our guests. As we adhere to social distancing and other safety protocols, as well as limited capacity dining, our labor costs will continue to show some inefficiency compared to prior levels. In addition, as recognition and gratitude to our teams in the field, we chose to pay 10% premium to hourly team members on top of their existing hourly rates and also guaranteed bonuses for Shack managers in the Q2. Currently in the Q3, we've extended this premium pay and guaranteed manager bonuses and we'll be continuing continually evaluating this during this time. Also incurred in the Q2 were heightened levels of payments primarily due to the fair work week in relation to scheduling changes for hourly team members. And taking all these incremental payroll items together, they represented additional costs of $2,400,000 in the quarter with an impact of 2 70 basis points on Shack level margin. In addition, we also continued to pay 100% of all health benefit premiums for furloughed employees. We greatly appreciate the sacrifice that our teams are making throughout this whole pandemic and are committed to continuing to support them in any way possible. Finally, our other operating expenses in the Q2 were 16% of Shack sales, driven by higher delivery commissions due to mix, but also due to a step up in blended commission rates in our expanded multi partner arrangements. We continue to operate with consistent menu pricing on our own channels and third party marketplaces and may revisit that at some point going forward in order to improve the profitability of this delivery channel. We also plan to offer delivery through our own channels in the future. And while this will still come with a cost, it will provide us with greater flexibility in our overall pricing and marketing strategies for delivery. Outside of the delivery impact in the quarter, other operating expenses deleveraged compared to the same period last year due to lower levels of sales. Despite these increased costs, we were pleased with underlying improvements in Shack level operating profit margin as the quarter progressed. The low point in Shack level operating margin was in fiscal April at negative 11%. This improved to positive 7% and positive 5% in fiscal May June respectively. However, June was the period in which we saw the most acute impact from beef inflation, additional labor costs and the impact of protest activity on sales. Taking these into consideration, we would have seen further sequential improvement in Shack level operating profit exiting the quarter. Moving on to G and A. Total G and A for the 2nd quarter was $14,000,000 and included $1,600,000 related to non cash items. In addition, we incurred higher professional fees of approximately $250,000 related to the April equity offering and the implementation of the CARES Act, which we expect to continue in the Q3. At the beginning of the quarter, given the significant impact of COVID-nineteen, we quickly cut back spend in many areas, including furloughing home office employees, cutting discretionary spend and pausing investment in the majority of our strategic growth initiatives. Our sales performance has continued to improve and with a strong balance sheet, we recommenced investment spend during the Q2 across a number of key areas. These predominantly center around our digital innovation initiatives, but also includes critical growth areas in design and development among others. While we maintain high levels of cost diligence across the business, we do expect our G and A to sequentially increase in the second half of the year and reach more normalized levels by the end of the year in support of our continued recovery. On an adjusted pro form a basis, we had a net loss of $18,300,000 or $0.45 per fully exchange and diluted share. We estimate an approximate $0.11 impact on EPS in the quarter due to the exceptional costs related to beef, packaging and labor mentioned earlier. In addition, there was an additional $0.02 unfavorable tax impact from a stock compensation related adjustment. Our underlying effective tax rate was 27.8%. A reconciliation of our tax rate is included in the appendix of our supplemental materials. And finally, we're continuing to evaluate tax and other regulatory changes that were recently enacted related to CARES Act. These retroactively changed the recovery period for qualified investment property, which enables the cost of our leasehold improvements to be 100% eligible for bonus depreciation as opposed to the 39 year period enacted with tax reform. Moving on to cash. Our cash and marketable securities balance at the end of the quarter was $190,800,000 We repaid the $50,000,000 we had previously drawn down from our revolving credit facility and this facility remains fully available to us if needed. In terms of cash burn at current sales levels, cash flow is positive at the Shack level and continues to improve as sales grow and our business recovers. At the enterprise level, weekly cash burn has also improved to approximately $100,000 per week, excluding the temporary pay increase and guaranteed bonuses for Shack teams and new Shack capital expenditure. This cash burn includes G and A at current levels. As we look at our financial results, the sequential sales and profitability improvements, our strong digital performance, our investment priorities and accompanying robust balance sheet, we're confident in our future and what lies ahead. We believe that as we fully exit COVID-nineteen, whenever that may ultimately be, that the return metrics of our Shacks remain robust and compelling. And in the meantime, we will continue to proactively invest in both safety protocols and support and recognition of our team as we navigate the journey through and out the other side of COVID-nineteen. Randy, back to you. Thanks, Tara. Despite this being one of the most challenging environments any of us could have ever imagined, we're moving forward with confidence. The team is looking after each other. Our business is gradually working through its recovery along with the rest of our country and we're excited about the progress being made across the key strategic growth areas of our company. We entered this crisis with tremendous momentum in a position of strength. Our balance sheet today is now stronger than it's ever been And we will come out of this moment with an unmatched resolve and determination to grow again and improve the lives of our team along the way. As cities recover and people ultimately gather again, we're well positioned to capitalize on the many opportunities that lie ahead. In the meantime, we'll continue to use the moment as one for learning, for testing and innovation, ensuring that we come out of this crisis even stronger than how we entered it. Until then, hope you all stay safe and stay healthy. With that, operator, please open up the call for questions. Thanks. Our first question comes from the line of Sharon Soficki with William Blair. You may proceed with your question. Hi, good afternoon. Good try on the name. Thanks for all the detail and congratulations on pivoting a lot in the current environment. I guess, I'm sure a lot of the other questions are going to be asked. I'm going to ask about Cloud Kitchens. I was actually pretty curious about what led to that decision in the U. K. I know they have a very different delivery architecture there, but are there applicable elements there that might make sense as well as you think about the U. S? Yes, maybe Sharon. I mean it's not something we're focused on. We haven't really been. We're really much more focused on ShackTrack and then taking our current Shack and obviously the ones with capacity right now more ever and making sure we can ease the access for all channels at our current Shacks. In the UK, it was interesting for the UK completely shut down, okay. And we support our partners and the tests and things that they want to try as long as we think it's great for the business overall. What's been cool about our tests in London and sorry, one other fact, the way that the UK laws have worked with landlords and paying rents and those sort of things, you got to be sure you can kind of recover in order to make it worthwhile opening. There's a little bit different structure there. So it got the team aggressive. It got the team thinking about what else they could do to recapture some of that lost sales and what it did with the 4 that we have is sent us to different neighborhoods. So it was at one time a sales saving atmosphere and at another time a test of new neighborhoods. That's the kind of learning we want to get to, especially in urban centers as we think about our ability to drive deeper over time. Let's remember, we only have 172 Shake Shack that we own in this country in the U. S. We got a long way to go. We got a long way to go in London. So again, not our top focus today, but we love working with our partners to get the learning we can. And we'll see where it goes from here. But thanks. Thank you. Our next question comes from the line of Joshua Long with Piper Sandler. You may proceed with your I wanted to see if you could dive into some of the items you alluded to in terms of helping out those Shacks that have been most impacted. Curious on kind of how that's evolved from Q1 going to Q2 and then now as some of the markets have started to close back down again, just what you've been able to do and what you found most impactful? Well, this goes to what we started at the beginning and talk about our teams. It's been incredible the pivots that we made. You go back to March, it seems both like yesterday and 100 years ago, right, where we were immediately flipping towards stay at home orders, taking orders outside, changing to these pop up drive throughs. We've been able to shift a lot of that now to more of a better understanding, more contactless. Our Shacks before at the beginning of this, we didn't have that immediately ready. Now we've got it. Really making sure our outdoor patios, we have over 80% of our Shacks have the opportunity for some type of outdoor patio seating. We're lucky as part of our real estate strategy, even in the hardest hit areas, we're next to parks, we're next to places where people can gather. So it's been really about making sure we can improve the access convenience. Then we started to do some really fun brand marketing, right? We've done Shack camp for our families at home this summer. We've continued to engage with our guests. Been really fun for us. And as we've I hope you caught some of those notes where we had 800,000 new users on our app channels. That is a huge number for a small company like us on top of only 172 restaurants. That's huge. We're going to capitalize on that. So the digital initiatives, the opportunity to drive digital engagement is huge. And as we look ahead, we look at kind of the first product where we've kind of gone purposely slimmer on product. Now we're going to start to expand that as we head into the fall with hot chicken. I think that'll be a good opportunity to hopefully draw some sales. But Josh, look, the neighborhoods are impacted as they're impacted. There's not a lot we can do on 44th Street and eighth Avenue with Broadway shutdown, with tourism shutdown in New York City. One of our best restaurants in the world, our theater district location is today one of our lowest performing. I mean to think that that could have ever happened, It's crazy, right? There's not a lot you can do, but make it great every time with every guest you have in that restaurant. And as things recover, we fully expect it to recover. But the impact, you're seeing this, the lag in our numbers that you're seeing is really due to that urban, suburban breakdown and the kind of Shacks that we've built over the years that have been our sweet spot as our brand and will be again certainly. But in the meantime, they're tougher to come back, but we'll get there. We're going to keep learning and trying new things. Our next question comes from the line of Jared Garber with Goldman Sachs. You may proceed with your question. Hi. Thanks for taking my question today. Really cool renderings of the new drive thru locations potentially working through. I just wanted to get a sense of how you think about that long term. Is this something that is going to be a major focus for the brand as we continue to see new units go up? And then I also wanted to get a little bit of an understanding about how you're thinking about the sort of the unit level economics of these locations versus your typical sort of $3,000,000 $2,000,000 20 percent margin figures? Well, look, our goal, I'll start the second part of your question. As I said in my notes, our goal as always is to increase the addressable market for Shake Shack, as well as drive those long term AUVs and profits and returns on capital that this company has been known for since day 1. It's too early to comment on what those numbers are going to look like. We'll let you know as we perform. Our hope is that we create access in places where we may not have had access before and we create opportunity in real estate that we may not have had before. And we're really excited about it. If you look at our renderings, these are evolving things. We've got our sites on a few locations that we think we can execute, but we'll see. I think initially it will be a smaller part of our portfolio where we'll be leaning more into ShackTrack, both drive up and pickup for pre ordering on the app, because we think that digital engagement we've created is going to be sticky. But we'll see. I think one of the things that we've learned over time and you see it certainly now, look in the moment of safety, people want to stay in their cars. That's not going to last forever, but obviously this country has proven that the drive thru in its old form works. We want to do in its new form. We want to do it better than ever with an experience that you stay, you drive through whichever you want And it's everything Shake Shack has always been, that modern version of that old roadside community gathering place. Thank you. Our next question comes from the line of Lauren Silverman with Credit Suisse. You may proceed with your question. Just a quick follow-up on the other the prior question. Are you rethinking your unit development pipeline at all just over the next 2 to 3 years in terms of where you'll look to grow? And then my actual question is, you've talked a lot about your holistic approach to digital across the business. We've seen a large number of restaurant companies launch loyalty program recently to complement their digital strategies. So how are you thinking about loyalty and has your thoughts evolve as you've attracted more customers into the digital ecosystem? I'll take the first part and let Tara take the loyalty and digital part. Lauren, we've always had a multi format approach. I think what this does is accelerates and amplifies our desire to get as many sites as we can that meet all those goals that also have accessibility. Look, we still have a number of fantastic sites even in urban Manhattan that we hope to do in the near future. So we're going to keep doing those. There are many great cities in this country that we've not even been to yet and many that are we can go a lot deeper in, in both urban and suburban. And look, we fundamentally believe that real estate, great real estate is great real estate. There's no question that hurts us today and it hurts us more than others that are just drive through in suburban atmospheres and you're seeing that. But we that will come back, right? That will come back and that's important for us to continue to build a diverse portfolio that can sustain all of those. So as you look at next year, as I said, roughly a quarter of the class should have a walk up Shack Track window, roughly a quarter of that class should have a drive up, Shack track window for pre ordering. We'll throw a we'll test our 1st drive through in there and the rest will be similar Shack experiences that you've known, which just continue to enhance curbside pickup and pickup experience to add new conveniences to the way that the Shack has still continued to be. We're going to continue to be that. Tara? Yes. And then hey, Lauren. So we have no plans today to launch any sort of formal loyalty program. But I would say what underpins loyalty program in terms of its objectives, whether that be around new guest acquisition or more typically around driving increased retention and frequency, sometimes average spend referral, all these different types of components that typically a loyalty program is trying to achieve are absolutely part of our broader digital strategy and marketing and tech development plan. And we're just in a we're in a position today where we're really in the grand scheme of things, although digital has been a priority for us for a couple of years now, we're still actually relatively early in that journey. I think as you can see from some of the things that we're just launching. And so behind the scenes, behind things like curbside or ultimately delivery through the app or as we expand our payment options. Behind the scenes, we're also working very hard to further build out and in some cases upgrade our digital infrastructure so that we can build a more holistic view of that guest. And as we've talked about before, then ultimately go on with the kind of data and insights from that holistic view and that single view of the guest, but also more importantly, build a more engaging dynamic personal relationship with them. So I think no dynamic personal relationship with them. So I think no to the formal loyalty program, but absolutely yes in terms of the types of functionality that we're putting into these products to drive the same type of outcome for the loyalty program ultimately would. Thanks so much. Our next question comes from the line of Jake Bartlett with SunTrust. You may proceed with your question. Our next question comes from the line of John Klaas with Morgan Stanley. You may proceed with your question. Thanks. Perhaps 2 unrelated questions, but one is, what is the percentage of your food that's actually consumed off premise now? I mean, a lot of brands are now sort of realized in hindsight, well, you've got a dining room, but really actually very few people are using it relative to the size of it. And so one is what is that off premise mix in total, people walking out as well as delivery and all the other things. Do you think that on average the Shack sizes could come down over time as a result? I know there's a lot of different formats, but is that a goal or not really? And then just the unrelated part is you added some aggregators this quarter. I just wonder if that's gotten the result you hope to, did it expand delivery? Any comments on how delivery stood in your second quarter since that was such a heavy delivery quarter for the consumer? Yes. So as a percentage of sales, John, the most recent data that we shared P7 was 62% of orders happening digitally, okay. That includes our channels, the biggest and biggest growing channel as well as delivery channels. Now of the people who order of the remaining 38%, a lot of them still take it to go. So we haven't shared that exact number, but the vast, vast majority are taking it to go, where I even noted in the notes, just about only half of our Shacks even have some kind of dining room continuing to be open. And we were well on that road to reopening dining rooms as many others were. But as harder hit states like California and Texas, Florida, we also pulled back. And we're going to take our time on that. We're not going to put our teams in danger unnecessarily or our guests. And we want to make sure when we open it, we feel like it's it can be in a place that that makes sense. So vast majority of people happening off site right now and we can't wait to get them back. And I know they can't wait to get back too. To your second question on Shack size that I think it's going to be all the above. I think there's going to be some that are the current larger Shack size and we do continue to target especially as we think about some of these urban locations for the future that can be smaller, that can really lean into this new and improved digital architecture here where people are taking it to go. And so many of our urban Shacks always had a higher percentage of to go than the suburban Shacks anyway. I think we can look at it that way and possibly benefit from there. And that will be balanced out by the full experience checks that we will continue to build in the portfolio. On delivery, yes, I think the answer is yes to certainly has had an impact. We have great relationships with all the major delivery carriers, really excited with the growth most recently of Uber Eats. But we're excited with what that's going. I think as in Shack has come up and our own channels continue to grow, delivery will likely settle in a very comfortable place, still much more elevated than it ever was. And we're excited about that. But I want to also note that we mentioned that we are working through delivery in our own app, and we hope that we can continue to build that channel with great growth and keeping people in our infrastructure over time. So lots of that, lots of relationships to grow. It will be interesting to see how the delivery world continues to go as this pandemic and beyond goes. Thanks, John. Our next question comes from the line of Jay Corlett with SunTrust. You may proceed with your question. Great. Thanks. Can you hear me now? We can. Good. All right. So I'll try to make it quick. My first question really is on dine in in being offered. You mentioned it was in less than 50% of the system. Is that could you give us the percentage that it's open in the suburban Shacks versus the urban Shacks? And also in that context, maybe how are the sales at the stores that have dine in open performing relative to your overall same store sales? And then my second question sorry, I'll ask a second after your response. Go ahead, Jake. Go ahead. Okay. The second one is just on development going forward. And I'm wondering if it's fair to kind of assume that the stores that are slipping out of 2020, you've talked about being confident in the real estate pipeline. But should we assume that that basically kind of layered what would have happened in 2020 into 2021? Or are there any constraints like labor or any other constraints that should kind of caution us away from assuming that you kind of not double up, but kind of make up for the loss development in 2021? Okay. So on the dine we haven't really broken out whether suburban or urban dine in works better or worse. I think that really is a Shack by Shack conversation. Again, with us being still not having that many units, it's really regionally based more than suburban and urban. Look, if you go around New York City right now, you're not eating inside any of our Shacks. They're only open outside. That impacts us, right? If it's a 95 degree July day in New York City, that impacts us. But some of our suburban Shacks that have opened do quite well. And to your the second part of your question, yes, generally as we reopen dining room that benefits sales. That is a direct correlation for us. So as we've had to revert to some closures through B7, that's harder, right? You see that slowing the recovery. And we'll see. This is something that is unknown. We're going to have to take our time. As development, as you look forward, look, we do not expect to do the lost 2020 plus a full class of 2021. We're working on what we believe will be an appropriate class 2021. And what gets in the way, it's a pretty straight answer, the uncertainty of COVID and making sure that we can continue to execute. Look, the real estate is there, but we've also got to make sure we're rebuilding. We've got to make sure we're staffing. It's a time where you have a lot of people unemployed. You have a lot of people shifting how they want to work. And we really do need to get past this COVID time. That said, we are committed to openings. We're committed to continue to hire and provide those development opportunities for our team that we always have. So no guidance at all on 2021 for you yet, Jake. It's still a class that needs to come together and it's still a world that needs to come together. So, we'll keep you posted as all that goes. And as COVID recovery goes, I think, we'll try to capitalize on that as soon as we can. Our next question comes from the line of Don Ivankoe with JPMorgan. You may proceed with your question. Hi, thank you. Two related ones, if I may. Tara, in your prepared remarks, you kind of talked in the comment around you're looking at pricing for delivery. And I do wonder if that potential pricing could be used to potentially fully offset the cost of delivery making it more or less profit neutral to the in store transaction? That's the first question. And then secondly, you did mention expecting some data and analytics to be rolled out in 2021. What are the benefits that you could see in the near term in 2021 from this new program or this functionality in that year that you haven't gotten either this year or in the past that could potentially change your trajectory? Thank you. Hey, John. Well, we're actually really pleased with our trajectory when it comes to digital. I mean, some of those stats that we gave you on the call with the fact that we pertain 90% of the high points or the quadrupling of new users, for example, on a year on year basis. We're really excited about the fact that digital momentum continues in such force. As it relates to delivery pricing, yes, I mean, we mentioned it, there's no plans today to increase our prices or change our prices in the delivery channel. But it remains something that we look at, remains something that is an option to us on a go forward basis. And it's minority in terms of restaurants who do not have some sort of pricing differential, but we'll see. It's good to have that optionality. And I think really we will look at it in totality and then with a broader lens as we bring delivery into our own channels, for example, and then think about it really within that context. So there's a lot of progress when it comes to all the delivery, all the additional initiatives really across the board outside of just delivery. And I apologize if I misheard or I misspoke, separating digital, which very clear that you are doing a very good job with. But I thought I heard something around data and analytics in 2021. Maybe I didn't hear that or heard that on a previous conference call, I'm not sure. But can you kind of talk about the data and analytics side of your business in terms of understanding some of that digital, understanding some of that customer, how to get your customers to you can see more frequently or broaden that customer base or have that customer spend more what have you. I mean, did I hear correctly that that is a new functionality that may be coming in 2021? And if I did mishear that, just comment on that broadly speaking? Thank you. Yes. No, I don't know I don't think I mentioned it specifically in my prepared remarks, but you've certainly heard me talk about data and insights many times before. And so I'm not sure that we've got a light switch that's about to be flipped at any point today or in 2021. But as we look at the vast amount of development and innovation that's going on across the company right now in the digital kind of ecosystem, Behind the scenes, building the data and analytics infrastructure is absolutely a part of that roadmap. It's something that we started earlier in the year. It's something that is part of the investment that we have restarted. And you're absolutely right, it underpins all of these different digital channels because it will allow us to build that single view of our customer. And as I mentioned in my answer to Lauren, also begin to engage with them in a much more personalized, in a much more individual, a much more relevant manner to drive all those type of outcomes that we're talking about, which again you rightly mentioned. So you're absolutely right that it's critical. It's just not guest facing. And John, you were right. It was in my section where I noted it quickly, as we were talking about some of the investments that we're making to digital. So you're both right. Yes. Our next question comes from the line of Alton Stump with Longbow Research. You may proceed with your question. Yes. Good. Thanks for taking my question. I just wanted to press what I think was asked earlier about, as I think about over the next couple of years, kind of playing devil's advocate, if we don't see the consumer go back to sort of pre COVID normal, Could that have any impact on your decisions, maybe build more suburban versus urban locations or it's just too early now to really no sure if it's going to have that impact or not? Well, Austin, it's a good question. None of us I'll leave that to you, the economists and the future tellers to figure that out for us. What we're going to do is make sure that our company is well positioned for value, which it always has been. For experience, even if the economy and we see a deeper and longer lasting recession that certainly could happen. There's maybe some impact from that And we will see. What we want to do is make sure our product, our pricing and everything we do fits into a world that that can work for people. That is who we have been from the beginning, both in good economic times, entering the last great recession when we began the growth of our company in 2008 and 2009 and in today. So look, I think when we think about the portfolio, it is going to be balanced. As I've said a few times on this call, we absolutely there will be a mix of suburban. We think there will be a return to cities. It might look a little different for a while, but ultimately, we believe urban centers are going to continue their path that they began. But it may take some time and we're going to balance out our portfolio in the meantime to make sure we've got strength everywhere. Our next question comes from the line of Chris O'Cull with Stifel. You may proceed with your question. Great. Thanks. Good afternoon, guys. This is Patrick on for Chris. I was curious when you start planning or when you're planning to start testing your own delivery channel and if that's something you see rolling out across the system or do you believe it's just certain markets or location types where that makes more sense? And then secondly, on the Shack Track additions that you mentioned in the deck, what do you think the total opportunity is to potentially add a Shack Track to or retrofit a Shack Track with existing units? So I'll start with the Shack Track. Go ahead. Okay. I mean on the delivery, I think we don't have a specific launch date for you. I think we expect that to be a capability that we can offer within the next sort of 6 to 12 months. Hopefully, the earlier part of that, but there's a lot going on in the digital and development team right now. And I suspect like most new functionality, we will test it in different ways in different places. So all of that still to be worked out and we'll update you once we've got sort of a more formal launch plan. It's certainly not tomorrow, but it's very much on the roadmap. Yes, as we look at Shack Tracks, it's hard to say. Not every Shack will be able to be easily converted when we think about the exterior ability to have either delivery drivers at a separate area and our preorder channels really the definition of ShackTrak is going to be our preorder channels and the ability to get that pickup in an exterior way that's separate and easy for you, whether you choose to stay or take it to go. There's a lot that can, there's a lot that a little funkier than others. We showed a couple of pictures of some of the ones we think we're going to work towards execution in the supplemental deck and you'll get an idea for that. So at a minimum, the interior pickup experience will continue to improve. Doug, we know one of the greatest challenges at Shake Shack is we're high volume restaurant, there's a whole bunch of people. And we know that was a challenge pre COVID and certainly it would be a challenge now, so that we want to make sure we can improve that ease of use and convenience for our guests to get their great premium Shake Shack food in a little bit easier fashion. Our next question comes from the line of Jeffrey Bernstein with Barclays. You may proceed with your question. Great. Thank you very much. And again, thank you for the incremental color in the slide deck, the period and geography stuff is very helpful. Just as I think about the comp recovery as you progressed over the past 3 or 4 months, it seemed like you had a huge improvement in May, north of 20 percentage points off of the April troughs. But then in June, I guess, it slowed down to 300 basis points after you adjust it. And July seems like it's totally flat with June at the same down 39%. And then I guess is despite some reopenings. And then when you look by region, it shows like the Northeast saw a huge improvement in July, but yet it was only single digit improvements in non core markets. So my question really, why do you think the recovery maybe slowed or stalled out a little bit in the most recent month or 2? And how do you gain confidence that the headwind is all COVID related rather than perhaps the brand maybe not resonating in certain new markets. Just wondering how you decipher that as a new kind of growth company going into some of these markets, whether it's the brand or whether it's just the COVID headwinds? Thank you. Well, I wouldn't put a whole lot on the brand and trying to establish that during COVID. I think the brand is stronger than ever and remains one of the great brands in our industry. So we're really confident in that. Look, the Pop to May was coming off of massive lows. June, we're deeply hit by protests, again, a result of our urban architecture that you see. And then as you look at July, we had re closing of dining rooms. And that's another kind of bump back as some of those regions like California, Texas, Florida and many others were hit. If you really look at the regionality, you'll see and this is let's go back to the beginning of what we've said since we've gone public. Comp is not the only way to look at this business. We have about half of our restaurants in here and they are wildly swung. If you were to look at some of our top restaurants, okay, in this company and understand the impact that they have, Theater District in New York City, Penn Station, these Shacks haven't gotten any better because of the summer came. These are some of our best restaurants and some of the best restaurants. I'm not sure there are a whole lot of $5 burger joints in the world that look like these. And there's a lot of those in the Shake Shack system, not just in Manhattan. But those really drag it down. Those big impacts really drag it down. And that is part of the story we've told for the Shake Shack, same Shack sales, comp base from the beginning. It's frustrating for us and we've got some of our best restaurants still closed. Grand Central Terminal, one of our best restaurants in the country, it's closed, right? These are unfortunate truths in the COVID reality. So, look, I think our brand is strong. I think July was better than it was in the past, and we're hopeful that will continue to tick up. And as the world can we hope continues on a positive trajectory, but there's no guarantees. We're going to try to capitalize on that and get ourselves back to a gradual recovery. Our next question comes from the line of Andrew Charles with Cowen. You may proceed with your question. Randy, I appreciate the commentary for 15 to 20 planned openings for 2020. But can you talk about the decision to resume development following same Shack sales that have hovered at a similar level in the last 3 months? Given the cash positioning, is there an opportunity to secure the lease and get you good sites for the future, a part of the actual construction development in order to concentrate the efforts and increase the focus on the recovery rather than growth? I think we can continue to focus on both, Andrew. This is not a cash issue. We have fortified our balance sheet to an incredible amount that gives us total flexibility as we look forward. I want to call out a note that Tara shared that our new Shacks in period 7 July performed at 40% higher average weekly sales than our current system. So if that gives you any indication of whether people are excited to find a new Shack in their neighborhood, I think that answers it for you. Now, we'll see where that goes. It's very hard to measure what a new Shack looks like during COVID. But we've opened in places like Sacramento, California for the first time to extraordinary start. We've deepened our footprint in LA. We've given our footprint in St. Louis and North Carolina and many other places. So we're excited to keep growing, but we shouldn't do it at the same rate. It's why we're not going to hit our original guidance for good reason. But it certainly is not taking the focus off of recovery. Recovery, for us, I believe our teams are working hard and doing so many of the right things. Recovery for us is a big part of COVID allowing for return, return to travel. We exist in some of the best, most high traffic demand areas in the world. And we'll keep focusing on that with everything we can. And we also need some tailwinds of the world and COVID to start going our way a little bit to get back to full recovery. And it's going to take some time. Our next question comes from the line of David Tarantino with Baird. You may proceed with your question. Hi, good afternoon. My question is on the shape of the sales recovery you're seeing and I fully appreciate the challenges you have in some of the urban markets. But I wanted to focus the question on the suburban Shacks. So if I look at how that's trended and how that is trending down 24% in July, it does seem like the absolute level of the comps or the recovery has been shallower than what we're seeing elsewhere among concepts that we've put in your peer group. So just wondering if you could comment on that and what you think might be the biggest impediment in the suburban Shacks specifically in terms of recovering the sales? Well, I'll start let's start with anyone you would put in our peer group probably has 1,000 or multiples of that more restaurants than we do. So let's just start there. We have less than 100 Shake Shack's in the comp base of which we're talking about right now. So it's wildly swung by just a few. So it's really hard to compare us to the industry in that regard. There are some Shacks that are up. There are some suburban Shacks that are up. But you have to remember, when you think about suburban, a lot of these are high traffic destinations as well, the malls, right? The malls are not the busiest places right now. Other places where people would necessarily gather, where even where traffic, travel, tourism and business, suburban business centers as well. So the greatness of our real estate is exactly the challenge we have today. I think if you compare us to companies with thousands of other restaurants that have a more regular real estate and much more diversified over time, it's much more I only not speak for them, but it's a little bit more spread out. Our real estate is a little more special and therefore impacted. And that's really the story we're trying to tell with these extra numbers today. Great. Thanks for the perspective. Our next question comes from the line of Brett Levi with MCM. You may proceed with your question. Great. Thank you. Thanks for taking the call and thanks for sharing all the details. Tara, if you could just recap again what you said on the cash burn rate. I think you had said, but I'll just let you speak on that. And also, you've given us great segmentation on sales. Would you care to share anything in terms of buckets of margins by either suburbans or the regions? Just what the delta looks like in the best and worst quartiles? Thank you. Hi, Brett. Yes, I'm happy to just restate the cash burn piece. So what we said was that we're pleased that we are now positive cash at the Shack level and we're improved at the enterprise level to the tune of 100,000. That 100,000 excludes the temporary premium pay and the guaranteed manager bonuses in the Shack and also excludes new Shack development CapEx. It is that number is also reflective of our current G and A spend, which I also mentioned in my prepared remarks, we're beginning to gradually increase as sales come back and we become more proactive on our strategic investment strategy. In terms of profitability, we obviously haven't reported and broken down profitability in terms of any kind of segmentation. But the biggest correlation to profitability, it won't surprise you to know, is sales. So I think you can look directionally at sales performance and assume that profitability to some degree will mirror that. Sales will be as sales recover, there will profitability. And therefore, you can apply that rationale on a Shack by Shack or a region by region basis. And it's fair to say the urban Shacks are hurting a bit more right now, generally speaking. Our next question comes from the line of Peter Saleh with BTIG. You may proceed with your question. Great. Thanks for taking the question and appreciate all the color that you guys provided today. I want to come back to the conversation on the development side and all the formats. Can you just give us a sense on the real estate strategy going forward with the new formats? Do you think the sites that you're going to be targeting, do you think they'll be available for lease? Or do you think you'll have to spend more to acquire some land and maybe change your strategy up a little bit going forward? Yes. We don't really intend to purchase. That's part of the question. We do continue to intend to lease as we have. We don't own any real estate today. And I'm not saying we would never, but that's not our the best return on capital for Shake Shack today. Look, we're finding that there is an ever shifting moment here. Big landlords and small are waking up to see who's out there. Many restaurants and retail will struggle, both in dry retail and restaurant. And you're going to see a pretty radical shift. Look, I think drive thru locations will continue to be kind of what they were. They're pretty good locations. We'll see what the expectations are because I think people are going to continue to grow in those. But they're available. They're available. There's a lot of brands who I mean, you follow it. You see the number of brands that are either bankrupt or struggling. There's going to be a lot of sites available. We want to make sure we go after the best as we always have. And when we do that, we'll do it in each category. So if we're going after some suburban real estate that can either be a drive through or a Shack track drive up or pickup, We're going to make sure that's great real estate and has a great return on capital. We're going to go right after it. I think this is a great moment to be in market and being a buyer. It's a great moment to be one of the not so many brands that are out there being opportunistic, being aggressive and getting after it. We've got a lot of phone calls coming our way about great real estate opportunities and we're going to do that appropriately. So the whole point of sharing with you these new formats today is to again continue to encourage the understanding of the growth of the addressable market and the amount of locations that we think we can get to. And that's taken the next step for us in that opportunity next year. Our next question comes from the line of Brian Vaccaro with Raymond James. You may proceed with your question. Thanks and good evening. I had a question followed by just a quick clarification. The question is based on the disclosures from many of your peers, it's been interesting to see how consumers utilize takeout versus delivery in the COVID environment. And just curious what percentage of your digital sales were delivery in the second quarter? I know it's still early, but could you share a little more on how that curbside pickup test performed in the test the 10 test units? Yes. So we haven't broken out the delivery. It's within the 62% total. We haven't broken it out. What we have said and reiterate is our channels are the stronger ones and higher growing channels. While again, we're excited about the amount of delivery we're doing and excited to continue that channel, We haven't broken it out. When we talk about curbside, it's literally just been a couple of weeks. So it's really new. It's only about 10 Shacks. And the initial data is that each day it's grown a little bit. Each day people are figuring it out. We haven't marketed it. We haven't told anyone. It literally just pops up in the app. So if you're savvy enough, you say, oh, cool. This is a new option. I'm going to choose this. I'm going to try this. And people are trying it more and more every day. And we're really excited about it. So that to us, we believe has the opportunity. Everything is about guest experience, especially now. And everything now is about guest experience, including safety. Make sure I can come to your brand and feel good about it, feel good about being safe. We're going to live that for a while and curbside, we believe can be a solid addition. So we're hoping to get to 50 Shacks by the end of this quarter and we'll keep you posted. I'm excited about this. I think this is a fundamental big opportunity for Shake Shack just to shift how people use us, make it easier on them, reduce some of that stress. And in the meantime, use that and we'll see. And you could even do it if you intend to stay. We'll see. So pre order ahead, there's going to be a lot of opportunities to ease the convenience. Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Mr. Randy Garutti for closing remarks. I want to thank everyone on the call today. Look, the Q2 for us, for our country, for so many companies has been a hard one. It's been a hard one for our team and I'm incredibly thankful for their resilience. We're all hopeful that that was a trough moment that we will continue to see the gradual recovery coming out of it. And looking forward, we've got a lot of new ways and new exciting things we're going to be doing at Shake Shack to capture a great future. Thanks, everybody. We look forward to talking with you soon. This concludes tonight's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.