Dominos Pizza Inc (DPZ) — Q1 2015 Earnings Call Transcript

Thanks, Kelly, and good morning everybody. With the year, we’re going to start with some prepared remarks this morning and then open to Q&A. But we do say this up for investors primarily, so I would kindly ask the members of the press to listen only mode during the Q&A session. And also to turn your attention to our Safe Harbor statement in the event any forward-looking statements are made. And with that, I would like to introduce our participants today. The first will be Mike Lawton, our Chief Financial Officer, and then we’ll follow up with Patrick Doyle, who is our CEO, and he’ll make some prepared remarks. Then we’ll open for Q&A. So with that, Mike, you’re ready to go?

Thank you, good morning everyone. This quarter, our positive momentum continued as we achieved excellent same-store sales in both our domestic and international businesses. We opened a considerable number of new stores, and our adjusted EPS increased by 19.1% compared to the same quarter last year. We are satisfied with this earnings growth, especially considering the strong foreign exchange headwinds. Global retail sales, which encompass total sales from franchise and company-owned stores worldwide, increased by 10.4%. Excluding the adverse effects of foreign currency, global retail sales rose by 16.4%. The growth drivers included domestic same-store sales, which increased by 14.5% this quarter, comprised of franchise same-store sales up 14.4% and company-owned stores up about 15.9%. This was primarily driven by strong order growth. We also experienced ticket growth during the quarter. We are happy to report that we opened 17 net domestic stores in the first quarter, made up of 22 store openings and five closures. Over the last 12 months, we opened 93 net domestic stores. Our international division performed strongly as well, with same-store sales growing by 7.8%, surpassing the previous year's increase of 7.4%. Our international division also expanded by 93 stores, consisting of 140 openings and 47 closures. This quarter, we faced more closures than usual, recording 36 closures in Peru, and are working towards reopening the market. Over the past four quarters, our international division has grown by 658 stores. In terms of revenue, total revenues rose by $48.2 million, or 10.6% year-over-year. This growth was mainly driven by three factors: higher volumes at our supply chain centers, increased equipment sales to stores linked to our store reimaging program, and higher domestic same-store sales and store count growth. There was also an uptick in international royalties from increased same-store sales and store count growth, although these were partially offset by negative foreign currency exchange effects. Regarding operating margin as a percentage of revenues, our consolidated operating margin for the quarter increased to 31.3% from 30.2% in the prior year quarter, largely due to improved operating margins at company-owned stores, benefiting from lower food costs and fixed cost leverage. Our supply chain margin percentage also grew from 10.7% to 11.2% primarily due to a decrease in commodity prices. The average cheese block price in the first quarter was $1.54 per pound compared to $2.16 in the same period last year, leading to an overall market basket decrease of 5.9% versus the prior year quarter. We had previously communicated expectations for commodities in our system to be down 2% to 4% in 2015 from 2014 levels, but now we anticipate they will be down 3% to 6% in 2015. Currency exchange rates negatively affected us by $3.6 million this quarter compared to the prior year due to the dollar's strength against smaller currencies. We have noted that foreign currency could negatively impact our pre-tax earnings by $8 million to $12 million for 2015. However, with the dollar's continued strengthening in the first quarter, our full-year projections now estimate a negative impact of $14 million to $20 million on pre-tax earnings. For reference, a 1% increase in the dollar against our currency basket impacts our full-year EPS by about $0.015 to $0.02. Turning to G&A expenses, these rose by $9.9 million in the first quarter compared to the previous year. $1.7 million of this change was due to a non-recurring gain recognized in the first quarter of 2014 from the sale of 14 corporate stores. The remaining increase resulted from several factors including planned increases in e-commerce and technology support, with our technology investments being somewhat offset by transaction fees received, currently around $1.5 million per month. Higher same-store sales also led to increased volume-driven expenses such as franchisee incentives, variable compensation, and advertising contributions from company-owned stores. For the full year, we project our G&A expenses to be in the range of $270 million to $275 million for our 53-week year, with the extra week contributing approximately $4 million to this total. Please note that our G&A expense for the year can fluctuate based on performance against our plan, affecting variable performance-based compensation expenses. Regarding income taxes, our reported effective tax rate was 37.6% for the quarter, and we expect this to remain between 37% and 38% moving forward. Our net income for the first quarter increased by $5.8 million, or $7.2 million when excluding the item affecting comparability. This adjusted increase of 18.3% was mainly driven by higher domestic and international same-store sales, global store growth, and supply chain volumes, although positive impacts were offset by foreign currency exchange rates. First quarter diluted EPS on a GAAP basis was $0.81, reflecting a $0.13 or 19.1% increase from the adjusted EPS of $0.68 in the same quarter last year. The $0.13 difference can be attributed to a $0.04 negative impact from foreign currency, a $0.015 benefit from a lower diluted share count primarily due to share repurchases, a $0.015 negative impact from a higher effective tax rate, and importantly, a $0.17 benefit from our operating results. Regarding our cash use, during the first quarter, we repurchased approximately 291,000 shares for $29.5 million at an average price of $101.46 per share, with 178,000 shares repurchased so far in the second quarter. We also returned nearly $14 million to shareholders through a quarterly dividend. Overall, our strong momentum continued in the first quarter, and we are very pleased with our results. Thank you for your time today.

Thanks, Mike. It was a great start to 2016. Many who follow Domino's continue to ask about the factors that explain our momentum and steady performance. While I may sound repetitive, the reality is that the fundamental strength of our business and the value of our brand have consistently led to strong financial results over time and across various market conditions. Global net store openings were at their highest in the last decade for the first quarter, and we now have 751 net store openings over the trailing 12 months, averaging more than two stores per day. This momentum, combined with our same-store sales, allowed us to achieve 19% adjusted EPS growth despite foreign exchange challenges from a strong dollar. Domestically, we’ve seen 16 consecutive quarters of positive same-store sales. Our last negative quarter had a decline of 14.3% from the time we launched our new pizza. Additionally, our impressive run of positive quarters internationally has now reached 85. Overall, we’re quite satisfied with how 2015 has started and how our narrative of strong fundamentals and sustained performance continues. Specifically looking at our first-quarter domestic business, I’m particularly proud of our 14.5% same-store sales increase. We’re achieving this by enhancing brand equity over time through engaging advertising, innovative technology, strategic menu management, and strong operations, alongside our recent store reimaging; this combination has proven successful. One aspect that excites me the most regarding our domestic franchisees is the progress we’ve made in store-level profitability. The results from 2014 franchise profitability are in, and it was a record-setting year with an average of about $89,000 in EBITDA per store. Our work isn’t finished, and we will keep focusing on this in everything we do. I’m very pleased that this trend continues to rise to even higher levels. Even as franchisees invest in reimaging their stores with the new Pizza Theater design, they continue to open new stores and drive domestic growth. Concluding my thoughts on our domestic business, I believe our current advertising campaign, where we ceremoniously dropped pizza from our name, illustrates the state of our brand effectively. We’re about more than just pizza; that extends beyond our products and menu offerings to the overall experience connecting customers with our brand. Technology is certainly one of those connection points, and our leadership in unmatched innovation continues to evolve the brand and transform the Domino’s customer experience. Around 50% of our U.S. sales now come from digital ordering channels. Our approach continues to shape this new category, and our innovation will not slow down. Recently, we introduced three highly innovative new ordering platforms: Pebble and Android Wear smartwatches, plus the option to order through smart TVs thanks to our partnership with Samsung. Thus, in addition to being more than just pizza in technology, we are now clearly more than just mobile. Whether it’s smartwatches, smart TVs, or voice-enabled platforms like Ford Sync and our virtual ordering assistant, Dom, we’re fulfilling our goal of allowing customers to order from Domino’s anytime and anywhere. Our strategic investments in technology have been effective in driving results and enhancing shareholder return, and we’re committed to these efforts to maintain our status as a technology leader. On the international front, as Mike mentioned, we had another strong quarter. This segment continues to be a key growth driver. Same-store sales are very robust, and the performance of our publicly traded master franchisees, including Domino’s Pizza Group and Domino’s Pizza Enterprises, has been exceptional. We’ve seen outstanding performance from standout markets like Turkey, Canada, and Brazil, and we’re also pleased with the improving same-store sales in India. These results underscore our ongoing global success as we’ve surpassed 21 consecutive years of quarterly same-store sales growth internationally. We were delighted with 140 new store openings in the first quarter, as well as entries into markets like Azerbaijan and Cambodia. I’m very excited about the leadership of our master franchisees in these regions and their enthusiasm for bringing the Domino’s brand to local customers. We have also continued working on a common point of sale platform in our international locations, with about 60% of stores outside the U.S. now using Domino’s PULSE. This highlights our effort to share best practices with our master franchisee partners, and we anticipate that the operational management and digital tools from Domino’s PULSE will be implemented by stores globally, just as they have been in the U.S. While many international markets are leveraging digital effectively, numerous markets still have not launched online ordering and present significant digital opportunities. Nevertheless, we continue to see about 40% of digital sales across our international channels. We are committed to collaborating and sharing best practices worldwide to help more markets achieve their full digital capabilities. In conclusion, our fundamental strength and ongoing momentum set the stage for a very solid start to 2015. I am encouraged by the profitability of our franchisees and the improvements in job growth and employment in the U.S., which correlate with increased pizza orders. I am also excited about our undeniable position as a technology leader and digital innovator, and I find inspiration in our global team at Domino's as we embark on another year filled with passion, energy, and results. Thank you for your time. I will now open the floor for questions.

Congratulations on a great quarter. Looking out as you go from here in the year, what are your thoughts on your company stores and then franchisees on the wage environment? With increases in some states, are there other signs that wages are coming up? What are your plans to help manage through that, or help your franchisees manage through that? What are the opportunities to offset it?

It's very manageable; when you're generating this level of top-line growth, we are very comfortable with the environment. We see it as something that we can manage through. Minimum wage is a starting wage, and frankly, most of our team members in our corporate stores and in our franchise stores are delivery drivers. Delivery drivers with tips are making substantially more than the minimum wage. So we're very comfortable that we would able to manage in this environment.

And then just quick modeling follow-up. The change in G&A guidance—how much of that relates to technology spending versus the entire bonus accruals or something else?

It's a little bit of both, and it’s not a significant change from what was out there before; it is a little bit higher. But it's certainly as you can see, the variable component, which also includes things like advertising contributions in corporate stores, is significant.

Patrick, have your recent advertising campaigns resulted in an increased mix for non-pizza items? Or is there anything you can tell us about how you expect to see the campaign handle different occasions?

It absolutely does. We've done this mix-and-match promotion that we've put out there probably once a year on average, and it certainly drives the mix of other products. We saw that again in the first quarter. What I would say is we are and will continue to be overwhelmingly a pizza company; it is the majority of what we sell, and it's going to continue to be the majority of what we sell. But we've got great sandwiches, pasta, and chicken and other items on the menu, and we make sure we remind people of that on an occasional basis, and it works.

And then I had a question regarding franchise contribution rate that helps recover some of the investment in the digital platform. Has that changed at all, or is there any plan for that to change?

The numbers reflected in the first quarter don’t reflect the change; there can certainly be changes going forward.

I'm wondering, given the strength in comps, if throughput is now an issue. In other words, you've got such huge demand. Is there a bottleneck in the stores? Do you have to do things to relieve that bottleneck or capacity constraints given this level of sales gains?

In the first quarter of the year, with a lot of weather knocking around, I would say the weather was, even though regionally it was pretty tough, it was not an abnormal first quarter for weather. Certainly, you are going to feel some of that; our highest volume stores are getting a little capacity constrained. You're seeing some stores that need to add new equipment or new ovens, but I will tell you that’s the highest quality problem you will ever face and certainly something we know how to deal with. But yes, there are certainly some small percentages of our stores that are seeing volumes now that frankly they weren’t built for when they were built 10 or 15 years ago.

That makes sense. And you talked a lot about, over the last several years, technology and leadership in ordering. But I'm wondering if there's a way to use technology for the deliveries side as well. Some restaurants have begun to experiment with Uber or other kinds of new technologies on the deliveries side. Is that an opportunity for you in some respects, or is the delivery driver in that piece of the business sacrosanct, and that's not what you look for to gain further efficiency?

We've got the best kind of real-time delivery system around. What I'd say is when you think about Uber or some of the other folks that are coming in, the technology that they are using is terrific. But at the end of the day, they are service companies, and it's about can you find great people who are motivated, can you back them up with great systems that are going to help them be efficient. We've been doing that and doing that very well for a long time. So are there things that we can do that potentially are going to make us more efficient? Sure, and it's part of the investment that we make in technology to help our folks be more efficient over time. But are we going to wind up ahead of using somebody else to do it? No. We’re planning to be plenty efficient with our people, and they want to see a Domino’s delivery driver showing up, looking great in uniform, and that’s the way that it’s going to continue.

Of course, great job on the quarter. Obviously, a huge comp, in particular. Can you talk about the specialty chicken launch, which if I recall was April of last year? Are you still seeing a benefit to comps year-over-year in the first quarter? And then, as you look out in coming quarters, could you talk about any sort of new product plans? Obviously, you probably don't want to get specific, but just any color on what you plan to do on the new product front in coming quarters?

So, specialty chicken did very well for us. Our chicken mix continues to be higher than it was before we launched specialty chicken. So at some level, is it part of what’s contributing to our comp? Yes, probably. At this point, that's kind of more at the margins than a big part of it. And in terms of new products, we absolutely have lots of things in the pipeline that we can turn to, but I think the overall message, as we've talked about before, and certainly as we discussed at our Investor Day in January, we think our discipline around our menu and launching fewer things in a bigger way and doing that very thoughtfully and purposefully is continuing to be a fundamental strength for us. And with our strong performance in the restaurant industry in the first quarter, we believe our approach on this is working remarkably well.

Real quick, if I could follow up—and if I missed this, I apologize. But I think you guys have talked about 2% to 4% comp growth in the U.S. heading into the year. Is there any update on that range after, obviously, the huge first quarter?

That’s our long-term guidance for you. 14.5% is a little higher than 2% to 4%, so this year we were off the high end of that for the quarter. But obviously, we’re incredibly pleased with the comp in the first quarter. I guess what I would say is that 2% to 4% is the long-term guidance that we’ve given, but we’re awfully pleased to have beaten it by I guess 10% plus. We’re pretty happy with that.

Two questions, and first one, Patrick, thank you for that help on the 14 bigger than 2% to 4%. That was a very strong result, so congratulations. I appreciate all the help I can get. The first question was on the comp. We've heard from a lot of people in the industry that the quarter started off strong and then slowed. I know you don't give monthly sales, but I'm wondering whether you can opine upon whether you saw something similar and maybe whether you can make any comment on the broader industry, because I know you talked about the industry maybe growing at 1%. I'm wondering if this is a Domino's phenomenon, or is there a resurgence across the broader pizza segment?

I think the pizza category is doing a little better than the restaurant category overall. I think it’s up maybe more 2% to 3%. But there is no question that we’re taking share right now with the numbers that we’re putting up. And in terms of the quarter, I am not going to comment on that. What I would say is what we are seeing is that the employment market looks very healthy out there. We’ve said it many times and it continues to be true: employed people buy more pizza than unemployed people. So when we look at the overall market and the restaurant category, we’re continuing to see the employment picture looking good. People are continuing month to month; we’re continuing to add jobs. Certainly, we’d like to see that a little stronger than we saw in the last month or two. But the trend is clearly up, the recovery is continuing, and we’ve said often that that correlates to higher pizza category consumption, and we’re certainly seeing that play out again.

Got it. And then just on a balance sheet perspective, Mike, there was no mention of leverage positioning. Obviously, Domino's being a heavily franchised business, that's always a key part of the story. I'm just wondering whether there are any comments in terms of closely monitoring the markets or if you are content with leverage flowing to that four times or below range, or how we should think about that over the next 12 months.

As we've said, we are comfortable in the three to six range. We're still solidly in that range. But yes, we'll continue to monitor and evaluate what is the best approach for us.

A follow-up on John's earlier question. You talked about some stores that are becoming a little capacity constrained. What types of volumes are those stores doing so we can at least imagine what the upside in the current asset base looks like in the U.S. potentially?

We've always said we think there are at least 1,000 stores yet to be built in the U.S., and as unit economics are continuing to improve, we like the building momentum on that. I released the kind of final estimate on franchise profitability last year at $89,000, with moderating food costs. As you saw in our corporate numbers, the comp we put up clearly in the first quarter this year was better than the first quarter last year as well. So the cash flow per store continues to go up, and so we're feeling pretty good about how that plays through over time. From a capacity standpoint, it certainly means that as sales go higher, there's even more opportunity to continue to build. So we're feeling good on that front.

I appreciate that. I should have framed the question differently. What I'm asking is the actual stores that are seeing some capacity constraints on volumes. What type of AUV levels are they doing so we can think about what type of AUVs those stores are doing versus the overall portfolio?

I don't know if I am going to get into giving any kind of specific number on that. It depends on the store, and we've got stores that are 1,200 square feet, and they are pretty capacity constrained if they're doing $30,000 or $40,000 a week. It's tough to do that out of a small store. But we’ve got stores, I can think of stores on military bases, that essentially have two lines; they are effectively doubled the capacity in a single store, and they can do substantially more than an average store. So there isn’t a single answer that I can give on that, but what I can tell you is with the increases in volume we're seeing, there are certainly more stores that are falling into the category of being a little capacity constrained. There are really two ways to solve that: either by adding more equipment into existing stores or building more stores, and both of those are relatively straightforward and are pretty good for our shareholders.

Okay, thanks on that. And last question—you guys obviously have a lot more insight into the business and the trends than we do. The acceleration in the business to mid-teen comps is obviously incredible. What I'm really trying to understand better is when you look at your business and you see that inflection, how much of it is due to you truly being at the epicenter of a tightening labor market? And how much of this is doing what you are doing with technology and new products—just thinking about macro versus micro here?

If you look at what I said on category growth, winning category growth is more in the 2% to 3% range. That includes store growth in that number; that’s not just same-store sales. We're clearly outperforming the category by a lot right now. So it is more about things we’re doing in the business. I guess I’ve got to fallback on what I said before: it’s about a lot of different things coming together—getting the food right, having the best franchisees in the business, and I mean now we’ve got terrific franchisees who are leaning into the business right now. They’re excited about what’s happening; they’re staffing up as volumes are growing so they can continue to give great service. It’s about the advertising that’s been very effective, and it’s about what we think is some of the best, if not the best, use of technology in the category, giving customers a better experience. It's about getting stores reimaged, though I would remind you that’s still only kind of 20% to 25% complete in the U.S. So it’s just a lot of different things that have been coming together that we have been talking about, and they’re really all happening right now, and that’s strengthening the brand in the minds of consumers, which is building phenomenal momentum in the business.

I wanted to ask about—you mentioned the remodels, but can you give us an update on the returns you are seeing on the remodels and then also on the relocations? How many relocations do you guys expect to do at this point? And is there any impact when you relocate from maybe a less desirable location to a better location on the carryout business?

I think the last one first—yes, the relocations that are getting done do see a bigger bump on sales; more of that is within carryout. What you’re going to see is it’s still going to be a minority of the stores that are going to relocate over the course of the next couple of years—this is primarily going to be about reimages. My answer on reimages and the results that we’re seeing continue to reflect exactly what we said in the past: that an individual store getting reimaged will see a very low single-digit lift—point two points, maybe three points in lift—versus the stores around it when the reimage is done. What we always believed, and what I think you’re seeing play out, is that it’s really more about the overall brand momentum. As you’re getting lots of these done and people start rethinking Domino’s pizza, it’s really more about overall brand momentum than it is about the specific store that’s getting done. We’re still roughly a two-thirds delivery, one-third carryout business. And so it makes sense that only a third of our customers are walking into the store. You may look at it a little bit lower—so maybe 35% or 40% of orders you’re going to have less of an immediate impact on comp sales from a reimage of a specific store. Given what we’re doing with the overall business and the brand and technology and the food quality and service—everything that we’re doing—we can’t have stores that don’t reflect our overall brand image. We think it adds to the momentum of the brand. That’s what we’re seeing. The individual store reimages don’t produce that big of a bump in the near term, but we do think it’s part of what’s feeding into the long-term momentum.

And then, on pricing or menu pricing, I know lots of the other restaurants have talked about higher pricing than historical, at least for this year. How are you and the franchisees thinking about pricing in the environment where you've got commodities coming down, but you're probably seeing some labor pressure as well?

So I think the answer is really in the profits that you’re seeing in the stores. I mean they had record profitability last year; they did that in an environment where commodities were up pretty dramatically. Now the commodities are easing, and you’re seeing that play through in even better profitability. Our system, our franchisees, were exceptionally disciplined last year when commodities were up a lot—they decided that the long-term benefit of the customers feeling good about the value they’re getting was more important than simply covering a little bit of short-term pressure from a cost standpoint. This year, that’s going back the other way. So any pressure that you saw on wages, which again for us is reasonably minimal because most of our people are tipped and are making far more than the starting wage—you're seeing a lot of discipline in our system, and they’re benefiting now as commodities have gone a little lower, and it’s playing back ultimately to discipline around doing what the consumer needs, what our customers need to continue to give us more of their business.

Patrick, you mentioned the tip aspect of the drivers a few times. Are the drivers paid a tip credit wage, or are they paid at least a minimum wage and then tips on top of that?

It depends on the franchisee, so remember over 90% of our stores in the U.S. are owned by franchisees, and they control that. What I can tell you is it is all over the board, and it’s really market-dependent. So there are places where people could pay tip credit, and they’re not; there are places where they are paying above the starting wage, and some where people are paying out of the tip credit. You pay what you need to have good people in stores and be staffed. But what remains true is that with tips, our drivers are certainly making on average $10 plus and probably substantially more than that as you look across the country. So they're doing well, and it’s really more about kind of market demand for labor than it is about the starting wage.

And in the company stores, is it a tip credit wage?

That varies also by market. There are some markets where we're doing it, and there are some markets where we aren't; there are also some markets where we can't, where tip credit wage is not available, and you pay at the same minimum as non-tipped employees.

And then just another question on consumer activity. Obviously, your comp is not reflecting the macro, but the macro may be a small part of it. Are you seeing customers willing to spend more? Is the mix going up, or are add-on items going up? Are you seeing consumers willing to spend a little more aggressively?

Not particularly, and you've been asked the question before about gas prices going down. We just don’t think that’s a particularly big factor in consumer spending right now. You've certainly seen the same data that we have that savings rates may have even gone up a little bit in the last three to six months. So I don’t think that’s really playing in, and we're not seeing that. Mike mentioned in his prepared remarks that this was overwhelmingly about order growth for us, but our ticket was up a little bit. I would remind you that ticket is both a function of price and what they're buying in terms of the basket of products in the order. But I wouldn’t say that we're seeing a particular change in customers' willingness or ability to pay more. Customers are remaining disciplined coming out of the crisis now five, six years ago; they are smarter, they are remaining disciplined, and they continue to want value, which is a function of both the quality of the food and the quality of the service as well as the price. I'm not seeing a dramatic change there.

Congratulations, obviously—very exceptional. I did want to talk about the restaurant modernization and I guess maybe more specifically the Pizza Theater in terms of what some initial experience has been in terms of sales lift, how far along you are with that in terms of the overall program, if the costs are where you want. I think a theme that has been discussed a lot on this call is whether that can actually start to push business to things like lunch and earlier in the week and what have you, where I think most Domino's stores would, in fact, have capacity if they don't have capacity on a Friday or Saturday night, for example.

I think the broad answer is that we've always been very, very good at delivery. We haven’t been particularly differentiated on carryout. And the experience that the customer has in our store is critical. So getting that right starts with having a good environment for the customers. Importantly, for the team member, our team members prefer to work in these new stores, which helps us attract better people and helps us be properly staffed in the stores. It's relatively early in this process; we still are only 20% or 25% done with reimaging in the U.S. We're moving very quickly; those numbers are going to continue to rise rapidly over the course of this year and next year, really til the end of 2017. It's probably too early to say that there are dramatic shifts in dayparts or mix, but having a great environment for customers in our stores certainly gives us far more opportunity looking forward to do something differentiated for our carryout customers as well. We’re excited about the prospects of getting better there. This reimaging is foundational; they've got to look good first.

If I may, obviously there's a lot of attention—probably even more so in the investment community than maybe even the consumer, but certainly a lot of attention in both places around this personally made, what I'm going to call it Neapolitan style pizza. Do you want to have the Pizza Theater in place before you start looking into a segment like that? Or does a segment like that make sense for Domino's? Or could you even basically serve that customer or serve that demand within your existing format?

If you examine what many refer to as fast-casual establishments, it revolves around food quality, the ambiance, and an open kitchen. Speed of service remains a priority. We believe we excel in these areas compared to most. Regarding the specifics of your question, which touches on aspects like wood-fired ovens or thinner crusts, I don’t anticipate us moving in that direction. However, having everything else in place allows us to explore new opportunities. While I don’t expect us to fully adopt those changes, it does provide us with a chance to enhance how we present our food.

No. I just want to thank everybody for getting on the call. I know it is a very busy earnings season right now. I look forward to talking to you again as we discuss our second-quarter earnings on July 16.