CMG
#<UNK>, it's going to be hard and I really don't want to peg specific quarters.
At ICR we talked about there's risk levels of everything we need to do to get to that kind of a 20% run rate.
Some of the things like avocados have already come down, so that's going to happen.
You're already going to see food costs improve during the first quarter.
Other items, strategically doing a better job of managing our food costs during the year, that will happen over time.
And so to say exactly when we will achieve the full savings that we potential get at the restaurant level, I don't want to commit to that.
We could move really quick on that ---+ quickly on that and what's likely to happen is that our restaurants are going to move too quickly and portion size might be reduced.
Holding times might increase so that the quality experience might be reduced.
Instead what we want to do is make sure that we are ordering correctly, we are scheduling the right prep, that we're rescheduling people during the right times, and we want to make sure that we are doing that in the right way every time.
So I'd rather talk about it as we expect to get to a run rate during the year, <UNK>, and rather than commit to it in terms of specifically which quarter.
And of course the biggest variable here is the sales building.
And so, that has been the biggest variable in the last year, the hardest to predict.
And so, our ability to recover our margins is highly contingent upon how we proceed in terms of the comps from here on out.
I'm not sure; you might get a different answer for each of us.
I think it's going to be based on the way we execute in the restaurants, delivering a great customer experience because that includes making sure the restaurant's clean, the line ---+ the serving line is clean, that throughput is fast, that our crew is just providing an overall excellent experience.
And when we execute well in the restaurant everything else is going to work well also.
We have a better shot at executing digital.
And so I think the single biggest thing we can do and this thing that we have been focused on really intently is to simplify our operation, make sure that our teams know clearly what it takes to deliver an excellent customer experience, which they do.
That's the thing they do the best.
If anything we have maybe complicated it in the past.
We've really demystified that.
We have uncomplicated it.
We are tying incentives to delivering an excellent experience and I think that's the single biggest thing that will drive our sales during the year.
<UNK>, we would look at our strongest markets, the markets that have recovered the best, the markets that weren't impacted in the first place, and we'll look at markets where our operations are strong.
And then we will look at what competitors are doing.
We don't have any plans right now, specific plans.
But at some point we will dip our toe in the water and we will take market where there is a very low risk.
And when the trends continue to build ---+ and again, we are confident about our teams, we are confident about our pricing power, we are confident about we've got room to do this compared to our competitors.
We'll at some point decide to dip our toe in the water and see how well that goes in that market.
If that goes well we will consider what we do from there.
But no specific plans right now to do doing anything with price.
I'll take the question on the comp, <UNK>, and then I'll turn it over to <UNK> on the new stores.
The way I would say it is I feel good about the comp trend.
I feel like we're at least holding our own and perhaps starting to see an inflection point.
But most importantly we are doing this with very little promo.
So we've weaned ourselves off of promo.
Most of the improvement from December into January was we are going up against a softer comp, but I feel really good about that.
And January is not a great month to get a perfect read on the trends.
When you look at it day-by-day and week-by-week you do see some volatility because of weather this year, weather last year.
But when we look at it day-by-day, week-by-week we feel good about what we are seeing.
We feel good about holding onto or perhaps building sales from the previous trend.
We are also seeing geographically that the Northeast has made a nice move in January.
And so they've come back to the pack.
And so we talked about the coast being the weakest, but during January we saw the Northeast really come back to the pack quite a bit.
And so, the West Coast has still remained to be an outlier, so that was a nice move.
And so, we will, <UNK>, continue to watch what happens during February, and then as the weather clears, but we feel pretty good about the trend so far.
And then, <UNK>, do you want to ---+.
Greg, if you look back to those periods, depending on what to you look at, you are going to see a much different food cost.
We in the fourth quarter had a 35.3% food cost.
When you look back into those periods you're going to see a food cost somewhere in the 30%, 31% range.
There's 400 basis points right there.
The other piece of labor inflation.
Since 2012 we've had labor inflation totaling about 20%.
We've only taken about 5% of menu price increase in that time.
And so, we have beaten a couple hundred basis points worth of labor inflation at least, maybe even more.
So the food cost is higher because of things like we've had inflation in steak.
We've invested in Food With Integrity, things like that.
And because we are a little bit behind right now in menu pricing, I would say our food is at an elevated level.
We have been eating some of the higher food costs over time, same thing with the labor.
And so we need a combination frankly of getting our volume back, getting back into the $2.5 million range, delivering on some of the efficiencies that we've talked about, and passing on some of these higher costs to our customers.
And if we do all that I think we can get back into the high [20%s].
If we only stayed at this current volume, $2 million or so, I think it would be a stretch to consider getting some ---+ margin in the mid-20% range or higher, unless we wanted to just jam a very high menu price increase.
But that's never been part of our strategy because they want to be accessible to the mass and we want to remain affordable.
Well, it's within our guidance range.
We talked about a guidance range for the year of in the high-single-digits.
And so, if we can achieve that kind of a comp, then achieve some of the negotiated savings that we've talked about, achieve the operational savings principally in food and labor, we think we can get up to that ---+ in the range of that 20% run rate.
I'm not sure I understand the question, <UNK>.
So unit by unit when we see ---+ are you trying to link our cost savings initiatives with sales building initiatives to see if there's a correlation.
Yes, the answer is yes and the volatility, it's not unit-by-unit, it's more market-by-market based on geography.
But yes, it's a lot easier to manage food and labor, labor especially when you have predictability.
And so when you have volatile weather where you have a snowstorm one day, your tendency is to probably have too many people on the staff and certainly even send people home.
But generally are going to have deleverage and you're going to have excess labor.
Maybe excess food, although we don't usually ---+ we have multiple deliveries a week, and so we don't usually have a problem unless we're closed because of a snow storm for multiple days.
But there's no question about it, when we have predictability of the sales we can do a better job of managing things like labor.
I will start with it and then Curt may want to add on.
<UNK>, the second make line is a huge part of it.
It's a critical part of it.
We have the second make line in most of our stores, some 90%-something, I don't have the exact number.
It is underutilized in a lot of our stores.
In the 1,200 stores that we have already rolled out smarter pickup times, all of those stores already have a second make line specialist, a take-out specialist.
We have rolled out specifically to those stores first because we knew that they were staffed.
We already knew that they had a skill and already the habits of using that second make line and executing well on that second make line.
The stores that are going to roll out next week are the lower volume stores.
They don't necessarily have a trained take-out specialist.
The $2 million investment that I described, that is an investment in labor for those teams to open up that line.
It is going to be in excess ---+ kind of an advanced investment, because if the sales ---+ or as the sales come, labor matrix will fully fund and fully allow those hours and we'll have normal margins.
But we don't want to wait for the sales, execute poorly, and then say we better start adding some labor.
So we're going to front load that a little bit, invest some extra labor in those stores, and then we will be able to adjust ---+ if stores stay low volume we will be able to adjust and make sure that we have the appropriate amount of labor.
But we are optimistic that we are going to see additional digital second make line sales in all of our stores and that will justify the labor investment that we are making in February and it will be fully part of the labor matrix.
Yes, <UNK>, when we have promotions, none of that would be in the sales because it would be free.
You would see the entire cost of that, so we would take the food cost related to the food that we are giving away.
All of that would be other and that would be in promo.
And so, for example, when we talk about 4.7% of sales in the fourth quarter being marketing and promo, the promo part of that is buy one/get one's or free chips and guac and things like that.
So that's how you would see the pieces.
Yes, we would record our transaction.
So when you saw us report last year if we did a ---+say a ---+ where transactions outperformed sales, that would be because if you came in and you got a free burrito, we would count you as a transaction, yet there would be no sale.
I don't know yet, <UNK>, whether I can attribute it to that.
I am very confident in the team out there and I'm very confident that they will drive not only operational savings and customer experience improvements and that will lead to better sales.
And so we may be seeing some of those early dividends.
It may also be just a little volatility with the winter weather.
But it looks pretty good to me.
It looks like they closed the gap in a pretty meaningful way.
So I would like to say that yes, the folks out there, even though they've only been out there a couple months, that they are already making a difference.
But I know they've still got their work ahead of them.
But I'm optimistic that this is the right team.
They are some of our top proven leaders that have gone in other markets and done a really fantastic job of hiring great people, training them and delivering a great experience.
So it probably is some early dividends on that, <UNK>, but it's really hard to tease out how much is that versus how much is just other factors.
Well, it's fair to ask, but we're not going to give it.
We're thinking about building this building this business over more than just a quarter at a time.
We're focused on running great restaurants, we are focused on the customer, focused on digital, focused on brand marketing and focused on restoring our economic model.
So the break out predictions quarter-by-quarter and then being defined based on those quarter-by-quarter predictions just isn't really helpful for us right now.
So sorry, <UNK>, we're not going to do that.
But we will continue to give you updates each quarter and we'll give you as much insight as we can about what we are doing, how we are doing, and I think that's a better way to discuss how the trends are going.
Sure, there's no question that we saw accelerating turnover rates post crisis for a number of reasons that we've talked about the past.
Laying on a lot of complexity to the teams, not ---+ a lot of new food safety initiatives, things like this.
So it's complicated for our teams and that was one of the reasons that there was turnover.
I will say though that since we have made it very, very clear how we find success in our restaurants now and how we get our restaurants to A and then on to restaurateur, the clarity and the understanding of how to do that has been really helped morale.
It's palpable.
We can feel it in the restaurants.
I think our folks appreciate that we have simplified it.
I think that in our past the tools that we had were sometimes more complicated than actually running a good restaurant.
So we've really allowed now our folks ---+ with great training, with a clear path to restaurateur ---+ we've really allowed them to thrive.
And we are starting to see great morale and I think this is going to contribute to lower turnover throughout the year.
