Chuy's Holdings, Inc. (CHUY) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day everyone, and welcome to the Chuy's Holdings Second Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, all participants are placed in a listen-only mode, and we will take your questions following the presentation. On today's call, we have Steve Hislop, President and Chief Executive Officer; and Jon Howie, Vice President and Chief Financial Officer at Chuy's Holdings Incorporated. At this time, I’ll turn the conference over to Mr. Howie. Please go ahead, sir.
Jon Howie: Thank you operator, and good afternoon. By now everyone should have access to our second quarter 2021 earnings release. If not, it can be found on our website at chuys.com in the Investors section. Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not a guarantee of future performance, and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. With that out of the way, I would like to turn the call over to Steve.
Steve Hislop: Thank you Jon. Good afternoon everyone, and thank you for joining us on our second quarter earnings call today. I hope everyone is staying safe and healthy. Let me begin by saying how pleased I am with the solid improvements we've made during the second quarter. I truly believe this was a direct testament to the hard work and dedication of each of our team members as we continue to navigate this environment. For the second quarter most of our restaurants while open we're were still operating under various capacity restrictions. Despite this fact, we grew our top line by over 64% compared to last year and further narrowed our comparable sales gap to negative 1.4% compared to pre-COVID 2019. The COVID-19 pandemic has given us an opportunity to reset our business model with continuing restaurant level operating margin improvement. This ongoing focus on cost management and operating efficiencies during the quarter resulted in another company record in restaurant level profitability both on a dollar and margin basis. With our business trajectory heading towards the right direction, we are all eager to return our business to more normalized operations and increasing our dining room capacities back to 100%. To that end, we are focused on our efforts on retaining and re-recruiting our existing employees not only to ensure that our restaurants are properly staffed but also stay ahead of the curve as we are facing industry-wide labor availability challenges. One of the ways we are doing this is through our management retention program, which we described last quarter and it includes an investment in our managers in the form of bonus payments to be paid in the second and third quarters of this year. In addition to staffing, we believe it's more important than ever for our team members to focus on our key -- our three key pillars that have resonated well with our guests throughout the pandemic; safety, convenience and value. Safety will always be at the forefront in our minds. And during the second quarter, we continued to invest in ways to minimize touch points between our team members and guests. We expanded our pay-at-the-table, our QR code payment and pay-by-tech solutions to two additional restaurants during the quarter. While we are still improving the overall processes, we believe these investments will further improve our in-restaurant peace of mind from our guests. Our off-premise offerings also resonated well with our guests during the second quarter, providing them additional convenience to enjoy a high-quality made-from-scratch food and drink. This was reflected in our strong off-premise mix at approximately 27%. As we've mentioned in the past, we believe we can maintain a low to mid-20s off-premise mix going forward given the enhanced level of convenience and how well our food travels. Lastly with streamlined menu including convenient family meal and beverage kits, our guests really appreciate the value in our current offerings. Looking ahead, our plan is to maintain our current menu until the end of the year. We will then slowly add back some items off menu starting in the fourth quarter with a goal to return to our new menu by the middle of the first quarter 2022. Again our menu has always been value line-oriented and it will stay that way. Turning to new restaurant development. We successfully opened two new restaurants during the quarter, one in Southport, Indiana and one in Amarillo, Texas and are pleased with the initial reception. We also have one more restaurant slated to open at the end of August in Brentwood, Tennessee, which will bring our total openings year-to-date to four restaurants and complete our development for the current year. Although it's still early, we currently expect to open between six to eight new restaurants in 2022 utilizing a smaller prototype that will be more efficient to operate and will allow us to better serve off-premise guests, while still providing them with the same unique dining experience. With that, I will now turn the call over to our CFO, Jon Howie to discuss our fourth quarter results in greater detail.
Jon Howie: Thanks Steve. Revenues for the second quarter ended June 27, 2021, increased 64.7% to $108.2 million, compared to $65.7 million in the same quarter last year. The increase was primarily related to growth in customer traffic as we continue to relax indoor dining capacity restrictions for all of our restaurants as well as $3 million of incremental revenue from new restaurants opened during fiscal year 2021. For the second quarter of 2021, off-premise sales were approximately 27% of total revenue compared to approximately 61% in 2020 and 13% in 2019. A total -- in total, we had approximately 1,229 operating weeks during the second quarter of 2021. Comparable restaurant sales increased 60%, during the second quarter versus last year and included a 55.2% increase in average weekly customers and a 4.8% increase in average check. For a more accurate picture of our sales recovery, second quarter, comparable restaurant sales declined 1.4% versus 2019 and improved sequentially from the first quarter as compared to 2019. Turning to expenses, cost of sales as a percentage of revenue increased 10 basis points to 23.6%, primarily due to overall commodity inflation of approximately 5% largely offset by a decrease in the mix of the fajita family kits sold as compared to the prior year. Based on current trends, we are currently expecting commodity inflation of 3% to 5% for the remainder of the fiscal 2021, due to an increasing -- due to increasing cost pressures. Labor as a percentage of revenue increased approximately 160 basis points to 28%, largely because of increased hourly and manager labor as the company reopened all of its dining rooms and reinstated the reduced manager salaries as compared to 2020. The company has also incurred $0.8 million of incremental manager bonuses in conjunction with its $1.6 million manager retention program with the remaining $0.8 million to be paid in the third quarter of fiscal 2021. Hourly labor inflation for the second quarter at comparable restaurants was approximately 1.3% and was lower than what we were experiencing in rate because of the increased hourly mix to the front-of-the-house stations. However, we expect our hourly labor cost to increase through the second half as we continue to staff our restaurants to full capacity and expect hourly inflation to increase to approximately 5% to 7%, as the mix normalizes and is more comparable to the back half of 2020. Operating costs, as a percentage of revenue, improved 160 basis points to 14.7%, due to decreases in delivery service charges and to-go supplies as we reopened our dining rooms as well as leverage on fixed restaurant operating costs. This was partially offset by an increase in the liquor taxes driven by higher bar sales mix, as compared to the same period last year. Marketing expense as a percentage of revenue increased 50 basis points to 1.1%, as we resumed our digital advertising campaign system-wide. Occupancy costs as a percentage of revenue decreased 390 basis points to 6.9% primarily because of sales leverage on fixed occupancy expenses, partially offset by higher percentage rent as well as occupancy expenses related to three new stores opened during fiscal 2021. General and administrative expenses, increased to $6.7 million in the second quarter from $4.8 million in the same period last year, primarily driven by lower expenses in 2020, due to the reduced corporate employee staff and salaries during the COVID-19 pandemic, as well as higher performance-based bonuses and travel expenses in 2021. As a percentage of revenue G&A declined 100 basis points to 6.3%. The company recorded income tax expense of $2.3 million in the second quarter of 2021, compared to a benefit of $0.6 million during the same period in fiscal 2020. The increase in income taxes was driven by an increase in estimated annual net income and a $1.1 million tax benefit recorded in 2020 related to, the CARES Act administrative correction related to depreciation. In summary, net income for the second quarter of 2021 increased 156% in to $11.5 million or $0.57 per diluted share, compared to $4.5 million or $0.26 per diluted share in the same period last year. During the second quarter of 2021, we incurred $1.4 million -- $1.1 million net of tax or $0.05 per diluted share in impairment closed restaurant and other costs. These costs included closed restaurant costs such as, rent expense, utility, and insurance costs required to maintain our closed locations. Taking that into account, adjusted net income for the second quarter of 2021 increased 215% to $12.6 million or $0.62 per diluted share, compared to $4 million or $0.23 per diluted share in the same period last year. Moving to our liquidity and balance sheet, as of the end of the quarter we had $113.5 million in cash and cash equivalents no debt and $25 million of availability from our revolving credit facility. However, subsequent to the end of the quarter, we completed our new credit facility with JPMorgan Chase Bank, which will provide the company with a $35 million revolving credit facility that can be expanded to $60 million, based upon certain requirements. This credit facility will mature, in July of 2024. Lastly, while I'm still not in a position to provide our usual financial guidance, I will give you some directional metrics that I hope will be helpful. As Steve mentioned earlier, we are now planning to open just four restaurants in 2021. Net capital expenditures, net of tenant improvement allowances are now expected to be $15 million to $17 million versus approximately $15 million to $25 million previously. We still expect restaurant pre-opening expenses of $2 million to $3 million in 2021. And lastly, our effective quarterly tax rate is expected to be approximately 16% to 18% for the remainder of fiscal 2021. With that, I'll turn the call back over to Steve.
Steve Hislop: Thanks, Jon. Let me reiterate that we are optimistic about our business, given our continued sales momentum and increased operating efficiencies. Through our focus of our three key pillars: safety, convenience and value, we will continue to work on increasing our dining room capacity, as we continue to increase staffing. Of course, none of these would have been possible without our team members who are working hard every day to ensure that we can provide the unique experience our guests have come to expect from Chuy's. In summary, as we look toward the remainder of the year, we remain operationally and hospitality focused. With that, we are happy to answer any questions. Thank you.
Operator: Thank you. We'll take our first question from Nick Setyan with Wedbush Securities. Please go ahead.
Nick Setyan: Yes. Thank you and congratulations on another amazing quarter.
Jon Howie: Thank you.
Nick Setyan: As we kind of look at this over 800 basis point margin improvement versus Q2 of 2019, has your thinking changed at all in terms of the margin opportunity longer term? I know historically you've talked about 300, 350 basis points. But it just seems like every quarter you guys are getting better at this. And so, is it possible that maybe instead of 300 to 350 it might even be a little bit more?
Steve Hislop: Nick, it's important to you to know that through quarter two, we've -- we maintained basically truncate mode since we went into COVID at the beginning of 2020. And so, we're still in the process of having a reduced menu. And as I mentioned, you'll see us add -- do some add-ons in that off menu starting in the fourth quarter to -- going back to what our menu -- right-sized menu will be in February of next year. And we also still have our reduced hours. And I think what we've been saying is, we're still in that 300 to 350 down on a conservative basis, we believe that's still where we'll end up.
Jon Howie: Yes.
Nick Setyan: Yes. You guys talked about kind of still being at reduced capacity. What capacity in July? And I guess, if you were at full employment or full staffing, what -- I guess what -- maybe another way to ask is, what you think the sales impact in July may be of not being fully staffed may have been?
Steve Hislop: Well, we just came out of -- we probably went through 100% of capacity four to six weeks ago. And with that, obviously, what I mentioned to you at the last call, when we were at 70% approximately capacity, we were probably staffed about 85%, 90%. So, obviously, right, when we went that, we've obviously started hiring up there. So we're not all the way back up. We're probably about 85% staffed currently. And so, not sure if that's answering your question, but that's kind of where we're at.
Jon Howie: We eliminated all restrictions in our restaurants probably about the second week in June -- second and third week in June and been without restrictions. So our bars are now open. However, like Steve said, we're at 85% of employment right now to get staffed up to 100%. So we've got about 15% to go.
Nick Setyan: And, Jon, just lastly, how are you thinking about G&A in the second half?
Jon Howie: G&A in the second half, I mean, if things progress, we're going to have similar -- probably performance bonuses in there. So you're looking at something similar to probably this quarter, versus the first quarter, was a little high. So something in that mid -- well, with the -- excuse me, I'm sorry, with the stock comp, probably something in the mid-6s for the rest of the year.
Nick Setyan: Okay. Thank you very much.
Steve Hislop: Thank you.
Operator: We'll take our next question from Chris O'Cull with Stifel. Please go ahead.
Patrick Keeley: Thanks. Hey, guys. This is Patrick on for Chris. I guess, first, I wanted to see if you could quantify the impact of the July 4th holiday shift in the July quarter-to-date result? And then also, just, managing turnover in this environment, especially in your managers, how is that going? And then have you seen any sort of change in that since you implemented this bonus program? And how does that have implications for making sure you've got the staff you need to sort of ramp up development next year to get these stores appropriately staffed? Thanks.
Jon Howie: Great questions. I'll answer the first and I'll turn the second over to Steve. As far as the impact on 4th of July for the seventh period, is about 40 basis points. And so, instead of the 1.7 you're probably looking at a 1.3. The other thing we didn't really call out. But in - we had a Cinco impact as well as far as favorable. And so that was about 40 basis points in the second quarter as well. So that had an impact of 40 basis points on the whole quarter. And what I said on 4th of July was 40 basis points just on the period seven. And that was negative. Cinco was positive. So with, that I'll turn it over to Steve.
Steve Hislop: Yes. And the turnover, we're doing great in turnover. What we need to do is during the pandemic, obviously, we went down to four managers a unit and then we furloughed the rest and we brought most of those back. I'd say, we're probably two weeks from being -- probably in that 100% staffed on managers and we have a pipeline of over 35 managers in training currently. So we're looking pretty good. And we've been there before as far as ramping up for our growth and we're pretty well set and we have a good plan on moving forward to be able to do that six to eight stores than be in front of it throughout 2022. And then obviously when we said 2023, we'll get back to around that 10% growth rate and we'll be ramping up for that also. So we're in good shape, with a good plan.
Patrick Keeley: Great. Thanks. And then I just wanted to clarify one thing you said earlier. So as you get back to full capacity here without the six-foot distancing is this, sort of, the quarter we should expect inflection in that labor line and at least start to see it normalize? I know you're still running with a minimal menu, but from at least a labor standpoint is that something you're expecting to see in 3Q, or do you think we would see that as we move on down the line?
Steve Hislop: Yes. I'd say between rolling through the third and fourth quarter you'll see some -- get us back to what we've all said about that 300 basis point to 350 basis point improvement by probably near the end of the fourth quarter.
Jon Howie: Yes. Our meal gradually go back. I think once we put the full menu back in in the first quarter that's when you're going to see the biggest impact.
Steve Hislop: Yes I'd agree.
Patrick Keeley: Got it. Thanks, guys.
Steve Hislop: Thank you.
Operator: We'll take our next question from James Rutherford with Stephens Incorporated. Please go ahead.
James Rutherford: Thank you very much. I want to get back on the margin question we've been kind of going through here. By my math you're running about 40% more restaurant profit dollars than two years ago doing 5% less in revenue, which is just outstanding especially if you look at the peer group. I'm just curious high level what is it about your business model that's so different from everybody else in your ability to squeeze out those profit dollars? And the other way to ask it is with your guidance of low 20s restaurant level margins that you gave last quarter. What was different this quarter that caused you to come in closer to that 26% range?
Jon Howie: Well, James, this is Jon. As far as the low, I mean, we set a new record on a consolidated basis in the last quarter. We tend to leverage more in the second quarter. I think our sales went up a little more than we expected. And so we've got a little more leverage on some of those fixed costs that bumped that up a little bit. And as far as our labor our labor came in probably a little better than what we expected as well. We thought that maybe we'd get back to staffing our restaurants and getting back to 100 capacity -- 100% capacity prior to when we did. We actually opened those up like I said in the time of June the second or third week of June. So I think that like Steve says, we're running truncate mode and that has something to do with that better margin and basically performing in what we generally have as a high index -- what we call a high indexing quarter and it tends to leverage more than any other quarter we have.
Steve Hislop: Yes. And things that you'll see us in the back side of the year the second half third and really specifically the fourth quarter you're going to see us obviously bring back a few items that will bring in more -- a little bit more in a handful of new items will be -- our existing items will be coming back on. You'll also see us as Jon has mentioned in past calls that we no longer have the natural cart, but you will see us introducing by the end of -- by definitely the fourth quarter some increases in our happy hour food. We will be doing some specials on that. That will be putting something in. And obviously that will add a little bit of labor as you continue to do that along with adding menu items and so forth. And then we're also going to look hard, again we're still at the reduced hours and we'll be looking at that for the rest of the year and making some adjustment on hours as we move forward. That we haven't done any of that since we went into the pandemic and that's basically been our truncate mindset that we've been in since last March.
James Rutherford: Okay. Jon, I know, you're probably only getting a pattern of giving quarter-to-date thoughts on margins and so forth. But just given everything is so dynamic and for our modeling purposes can you share what kind of restaurant margin you ran in July?
Jon Howie: You're right. I don't want to get into that going forward. But again, I mean, we're expecting probably in the low-20s like we were referring to previously. As -- like we said we've opened up the capacities to 100% now. And now we're just trying to get staffed up. And so as we get staffed up we'll see a little decrement in those margins, but I still think we'll be in the low-20s.
Steve Hislop: Yes. And another thing that will happen there. Obviously, you got the back-to-school which definitely affects our average unit volumes quite a bit and put a clamp on labor during that period in time.
James Rutherford: Okay. Thank you so much. I will pass it on.
Operator: We'll take our next question from Andrew Strelzik with BMO. Please go ahead.
Andrew Strelzik: Good. Thank you and good afternoon. Just one capacity clarifying question. I know you're at full capacity now. I think you said 70% as of the last conference call, but what was your average capacity effective for the quarter? Apologies if I missed it.
Steve Hislop: It was right in that 70%, 72% because again we're just talking about the last two weeks specifically of the quarter where we were at 100%. And again, even with the 100% because of our staffing issues we were probably in that 85% range as we open them up.
Andrew Strelzik: Got it. Okay. And then I wanted to ask a philosophical kind of pricing question. Obviously, the margins are so strong and you're talking about the incremental inflation in the back half of the year. I'm just curious kind of where is your thinking right now on pricing as a lever? Is the inflation at a point at which you feel like you'd like to do something with that, or given the margin strength you're kind of willing to support the value and let the margins fall where they may?
Steve Hislop: Yes. We won't -- definitely looking at any price for the rest of this year maybe incremental, but none this year. And we usually take price increase once a year. It's usually at the end of the first period of 2021 -- 2022 which will be in February and we'll look at that. But right now we're in a -- studying each of our markets and all our competitor set to see what's going on out there. But that would be the earliest we'd look at it. But right now, we'll just run our restaurants with exactly how we're doing it currently with no price increase for the rest of the year.
Andrew Strelzik: Okay. And then just one last one for me. Now that you're back to full capacity dining is obviously recovering. I'm just curious have you been able to look at how much overlap you see and from the customer perspective from the off-premise business and the dining. Do you have a sense for how much overlap there is or how much switching is going on? Thanks.
Steve Hislop: We have a -- we don't have that information. Andrew. That's a great question though. As far as people that are transitioning, I think what your question is people that are transitioning to that we're just using our to-go and now coming into our dining rooms. I don't have that answer, but I will say that our to-go yes it has come down to 27%. It's in that mid-20s now. But from a dollar standpoint, it's still in the low-20s per week per store. And so, it hasn't come down significantly on a dollar basis. So I think a lot of those people that were using the off-premises continues to use that. And then a lot of our raving fans are coming back in dining room.
Andrew Strelzik: Yes. Thank you very much.
Steve Hislop: Thanks Andrew.
Operator: We'll take our next question from Mary Hodes with Baird. Please go ahead.
Mary Hodes: Good afternoon. Thanks for taking the question. One more on the staffing dynamic. Are there restaurants that are staffed at 100%? And if so, can you see that the sales in those restaurants are outperforming the system average? I guess said differently do you think that improved staffing can be a driver of better sales momentum as the second half unfolds?
Steve Hislop: Yes. Probably as we get into the fourth -- I'm saying right now as we mentioned to you earlier when our restaurants were at capacity, we were right around that 70%. So everybody had some staffing to do. And so we have very few that would -- I'd tell you we are at 100% currently. And as we move forward, we'll do that. But it's -- I think it will be more towards the end of the year that you'll see the capacity restraints of the 100% being able to get us to where we'd be flat to 20192019.
Mary Hodes: Okay. Great. And then just one on the unit development side. The guidance for 2021 is now at the low-end of your prior range. Can you just talk about what were some of the drivers of the decision to come in toward the low-end? Was that due to external delays or an internal decision to kind of pull in just slightly? And then just any perspective that you have on how the development pipeline is coming together as you look ahead to future years and just anything on what you're seeing in terms of availability cost competition anything like that would be helpful.
Steve Hislop: Sure, sure. That's a great question. Let's deal with the first part first here. We came in with 4. Just to remind everybody these four stores were basically in the ground and mostly built in 2020, when we staffed our growth. And as I was looking for opportunities that we'll be looking at for 2021 we felt -- and we thought that there might be some opportunities of some restaurants that might have gone under during the pandemic and we were looking at some opportunities. And to be honest with you in our markets we didn't see a whole bunch of that. There wasn't a lot of store closures on sites that I'd like to do. So we're going to do A sites. And if anyone -- if an A site popped up we do it if it didn't we weren't going to push the issue and move forward with the sites that we -- the four stores that we basically had in the ground for 2020. Our pipeline is good. As we've mentioned in the past that we -- over the next three years you're going to see us probably stay in the markets that we're currently already in and where we have good name recognition and good awareness. And you'll see that over the next three -- probably the next three years. And our pipeline is looking pretty strong. We're working in a good 12 to 14 units currently to move in for 2022 and for 2023. And as we mentioned earlier, we're in that 6 to 8 number for 2022. As far as -- and we're not seeing any reduction in prices for landlords or anything like that through 2022. And of course, everybody is always going after the A sites. So, we haven't seen it loosening up there at all. And as far as construction costs go, we're looking -- there's probably an increase about that 18% to 20%. We are here in number coming down and so forth, and we'll continue to that. But we think that we'll start maybe in the beginning part of next year start possibly coming down a little bit, but that's where it's sitting for us currently. I hope I got all those questions. I hope I get all -- most of them.
Mary Hodes: Yes. Thank you so much for the context. That's it for me.
Steve Hislop : Thank you.
Operator: We'll take our next question from Todd Brooks with C.L. King & Associates.
Todd Brooks : Hey, thanks for the question guys. I've got a few they're more offensive. So with the removal of the six-foot restriction and the normalization of capacity staffing allows. Steve, I was wondering if -- kind of going into the pandemic you talked about some increased cadence in the limited time offers and a barbell approach around that. I guess, what's the right time that you're thinking is starting to flow some of that LTO activity back into the calendar?
Steve Hislop: Yes. Great question. Let's kind of go through the process we're going, but you'll see us add some off menu items probably like I said in the fourth quarter, that you'll see added on to the menu probably around price increased time, which is about the second period of 2022. We'll run those and get everybody up to speed, because obviously any changes you make in operations, you have some -- get it into the training and make sure you can execute it long-term. And then probably late second quarter, early third quarter, you'll see us start introducing LTOs and some newer items onto our menu probably the whole second half of 2022. And you will see us from a marketing standpoint probably get a little bit more aggressive in this year's fourth quarter, as we're introducing these off menu items in the fourth quarter. You'll see us do -- through this last -- through the whole pandemic, you've been seeing us do paid search and paid social. And we'll probably start going and introducing a few other things in the fourth quarter. You'll see us probably do some new media with like TikTok and some Snapchat that you'll see us do in the fourth quarter. You'll see us do Yelp click-to-pay advertising with some showcase adds probably in the fourth quarter, you'll see us do some Yelp. Going back with some pay advertising, and DoorDash marketing dollars we'll be spending. And again why I'm picking the fourth quarter is, there is a that's kind of the time frame that we can spend the rest of this quarter, making sure we're getting staffed and more properly trained to make sure the level of hospitality is right where we want it to be before we really start throwing a lot of stuff out there in the fourth quarter.
Todd Brooks: That's great. And it leads to my next question. Pre-pandemic you were really gearing up to try to attack the catering opportunity. I guess, as you look at the world now and we're recovering, but it can seem fragile sometimes with some of this variance stuff. Thoughts on pushing catering this holiday, or do you think that's more of a fiscal 2022 type of effort?
Steve Hislop: Two weeks ago I would have said were pushing to IR, but the variance going a little bit nutso with the media over the last two weeks and so on. But right now our plan is by the fourth quarter to get back to the 13 markets that we are catering in -- when we actually ended well the pandemic started after the first quarter of 2020. So we'll be adding those catering markets back on and get ready. Now the one thing that's still not happening is obviously the demand isn't as high as it was back in 2019 yet. Those don't need to get back on and still moving. But definitely looking at it in the fourth quarter, we'll get some up and running and then expanding that specifically if everything makes sense gets rid of these variants and as we move into 2022.
Todd Brooks : Okay. Great. And then one for you Jon. Just you talked about getting the new credit facility done after the end of the quarter. The balance sheet is pristine as always. You're starting to build up a decent amount of cash on the balance sheet. I guess, given the environment is there a level of cash that you want to maintain now that this facility is done versus any sort of other use for the cash or returning it to shareholders? Thanks.
Jon Howie: No, that's a great question. And we've had several discussions on that very topic. Kind of where we've settled right now is to keep it on the balance sheet to remain flexible, to really get on the other side of this variant and other things, and maybe take another look at it towards the middle to the end of next year, and then decide kind of where we want to go with that. But I think that gives us some flexibility on the balance sheet to possibly be more flexible in real estate, be more flexible on buybacks and things like that. So, especially with how the market is treating restaurants right now that may be an opportune time to exercise some buybacks. So, that's kind of our thinking. We'll have more to that next year.
Todd Brooks : Okay. Great. Very helpful. Thanks and congrats on the quarter guys.
Jon Howie: Thanks.
Steve Hislop: Thank you.
Operator: Ladies and gentlemen, this concludes today's question-and-answer session. At this time, I'd like to turn the conference back to your presenters for any additional or closing remarks.
Steve Hislop: Thank you all so much. Jon and I appreciate your continued interest in Chuy's, and we will always be available to answer any and all questions. Again, thank you. Everybody stay healthy and have a good evening.
Operator: Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.
