TXRH
#<UNK>, this is <UNK>.
Most of our negative mix is related to really three areas.
Two of those are beverages ---+ soft beverage and alcohol ---+ and then on the appetizer side.
So, it's a little piece from each one.
That's pretty much the big driver of the mix.
Hard to say why.
Alcohol, is it because the prices continue to rise for alcohol relative to the cost of entrees.
Is it because of DUIs or people being more careful.
We don't know.
And same thing on soft beverage.
Is it because the prices continue to rise for those items.
Or negative news on soft drinks in general.
We really don't know the answer to that.
But, again, you are talking relatively small changes relative to the size.
Same thing with apps.
Apps are very small change in mix but all of those things added together make up that difference.
Yes, I think in-bev needs a little more money from us to pay for all their debts for their recent merger.
But that's my opinion.
I think those guys just volunteered, and they are a pretty close in market, at least geographically.
So, a combination of the two.
Easy for us to keep the guests, I guess you could say, contained, and who has got the app and who doesn't in that particular market.
And they were more than willing to help us test it because any time you test something like that there's inevitably some bumps along the road, along the way, so they were kind enough to let us work with them on that.
I thought they put a blindfold on <UNK> and he threw a dart at the map.
So, I'm now educated, as well.
I would tell you, <UNK> ---+ this is <UNK> ---+ I have no idea on the demographic makeup of our guests.
This is <UNK>.
I don't really see a huge difference in what I see in our restaurants as far as both young and older folks.
Older folks typically come in a little earlier in the evening, maybe take advantage of our early bird deals from 4 to 6.
And then you will see a little bit younger audience later in the night.
And the fact that our traffic and sales are up, I don't think we are losing either one.
I think we're over 6 million, I want to say, names in our email program.
And our restaurants can do individualize communications to the folks in their respective trade areas.
I wouldn't say it's a big driver of our sales.
I would tell you ---+ and it's always been this way since day one ---+ operations is our best marketing at Texas Roadhouse.
We are an operations driven company.
We focus as much on the guest getting a great experience, not getting cute with messing that up, and supporting that with very relationship-driven local store marketing.
That's one reason why we don't have a traditional loyalty program that involves discounting our food and so forth after a certain number of meals or whatever.
We think we give people a great deal every day they come visit our restaurant.
That's probably not going to happen in 2016 because we had a wage and hour settlement deal that hit our G&A line.
I think with without that we might have a chance to see a little bit of leverage on G&A.
But on a reported basis probably not.
This is <UNK>.
We actually currently have three different prototypes for Roadhouse.
So, we already choose A, B or C depending on the market.
And, like I said with Bubba's, we just experimented with a smaller prototype there.
So, we're actually already doing that.
This is <UNK>.
It's just short of 120% on the hourly basis, which we are absolutely not happy with.
And that's quite a bit higher, 20% higher than we were three or four years ago.
We can make all sorts of excuses ---+ tightening labor market, lower unemployment, so forth and so on ---+ but, at the end of the day, it's just unacceptable.
And we're definitely talking about it internally and challenging ourselves as being a great place and the best place to work amongst our restaurant peers, and looking at ourselves in the mirror.
So, we've got some work to do on that.
And with that kind of turnover change, absolutely positively that impacts our labor costs.
Just the number of employees we do have and the amount of time we spend in training, which is longer than many folks, that's a pretty big cost to us.
I can't recall from the last Olympics.
My guess is probably more people stay home to watch the Olympic games because it is once every four years.
And maybe because it's in Rio, more of the stuff is prime live, if you will ---+ you are seeing it live.
So, I don't know, but, fortunately the Olympics are only for a couple of weeks, if they do impact your sales, and it's only every four years and not every year.
So, I guess we can look at it that way.
And if it does we just get to lap it next year and get to tell you guys we had better comps because we lapped the Olympics.
This is <UNK>.
I will tell you, our sales were a bit stronger in July than they were in June, and the Democratic and Republican conventions were in July, so go figure.
This is <UNK>.
I like what you are saying and why not.
I will let <UNK> have a more serious answer.
I agree with that.
I think if folks do move away ---+ and there is a material difference in what moving away means from price point advertising and discounting ---+ absolutely I think it strengthens our value proposition overall.
Hey, <UNK>, this is <UNK>.
I would tell you I think it's easier for us when it's minimum wage related and that's impacting everybody in the same way.
We have typically taken a little bit more pricing.
It's a little tougher when it's commodities because those impact everybody differently.
Some years for some concepts they had very little inflation and we may have a ton of inflation if it's all beef related versus wheat or some other commodity item.
So, I think it just varies.
And then the Department of Labor reg stuff will vary depending upon what approach you take.
And you can definitely take approaches to absolutely minimize the impact.
There are different things that you can do.
Or you could take an approach and show a little bit more love to your folks and what-not.
I think if we're taking a little bit more love for our folks, we may not just use that as an excuse to take pricing because a lot of our competitors may not take the same approach, if you will.
So, to make a long answer a little bit shorter, minimum wage, probably a little easier to take pricing.
Commodity inflation, I would tell you a little bit tougher.
It could be based on the labor pressure that we have.
However, we will always take advantage of an environment if you've got food cost deflation because, again, people talk about pricing power.
We never assume we have per se pricing power because you just cannot take anything for granted.
And, as you know, from being on all the other calls, all the other competitors in the industry, nobody is standing still, and everybody is pulling different triggers and doing different things in their respective chains, whether it's reinvesting in their food quality, their labor standards, remodeling, and so forth.
So, you just can't take your competitive positioning for granted.
You've got to continue to act like you cannot take any individual guest for granted and treat your pricing actions as such.
I don't think our Department of Labor changes will influence our pricing decisions.
I think those will be more influenced by just other wage rate inflationary items, whether it's the overall strength of the market from the hourly perspective, that's where the bigger dollars are, and then specific state minimum wage actions is also where the bigger dollars are.
And depending upon how much of all of that is offset by food cost deflation, will have a greater impact on where we take menu pricing actions and what specific items we touch or don't touch.
And more happy faces.
Anyways, thanks.
