CAKE
#Well, as you know we are in a lot of malls.
The malls that we're in are all of the higher A-plus ---+ A to A-plus malls.
We like being in malls, and we bring traffic to the malls.
When we choose a site, we look at many factors ---+ parking, exterior door.
We look at all the demographics, and malls are great places for us to be.
The amount of money maybe that's being spent at some of the big box department stores in some of the lower malls, or maybe even some of the malls that we're in, that might be down some; but specialty retailers are doing well, and we're doing well in malls.
The components, I said that earlier, but the comps were 1.7%, price was 2.6%, our mix was positive 0.5%, and traffic was up 1.4% ---+ I mean down 1.4%, excuse me.
Grand Lux comps for the quarter were up 3.4%.
In the third quarter, our Las Vegas restaurants, which are our highest-volume Grand Lux restaurants, continued to perform well.
We also saw improvements in our Florida locations.
Grand Lux traffic was also positive in the quarter.
Well, geographically, I think it's good news that we continue to see fairly consistent performance across geographies.
There is about a 4% gap on the average between our best-performing and worst-performing geographies.
California is our ---+ in the northwest and the northeast, those are all our strongest markets.
Our weakest marks are the mountain region and the southeast.
In fact, those are the only two geographies with negative comps.
With respect to Texas and Florida, both of those were slightly positive, as we started to see signs of stabilization and growth in those markets.
I don't think so.
The comp-store sales guidance for 2017.
Well, certainly we see it as achievable.
That's why we said it.
But 1% to 2% would assume traffic somewhere in the neighborhood of negative 1%.
We can get with you offline on that.
Okay, so let me see if I've got this.
From a labor standpoint, in the third quarter, the increase as I mentioned was largely driven by hourly wages.
It was also partially driven by a group medical expense being higher year over year.
Certainly, the fact that our comp-store sales were over and above our range that we gave, 1.7%, that helped with some leverage on the comp line.
Also, we had some, during the quarter, some timing of expenses that benefited the third quarter, and are moving into the fourth quarter that we have incorporated into our guidance that also helped us with the earnings-per-share beat over and above our ---+ the high end of the guidance we gave.
We also, I think frankly, effectively managed our costs very well during the quarter.
G&A and Management labor came in somewhat below plan, and that helped earnings per share in the quarter, as well.
Then your other question, I forgot it already.
Well, that's the way ---+ that isn't the way it works.
The tax-rate guidance is going to be dependent on what our stock price really is, because it's a tax benefit that we're now able to run through the income statement that before had to go on the balance sheet.
The tax benefit that we get from a tax deduction, when restricted shares lapse or stock options are exercised, it's going to be dependent on what the share price is at the time we do it.
That's our estimate for what the tax rate will be for 2017, based on an assumed stock price that we've assumed throughout the year.
We have to do the same thing.
We have to assume stock prices for share repurchases, as well, so we've done it with respect to this, too.
No, I mean they only shifted a few weeks.
The year or the month that you open restaurants, they're not positive obviously for a couple of months anyway because of the pre-opening that's involved.
No, I don't think there's a material change.
You're welcome.
Well, it's a unique concept.
It has a high customer appeal.
It's been voted in several surveys as a very good restaurant, and is frequented by high-profile people.
It's on trend, we think, with the increasing consumer interest in ethnic cuisines.
We just think that we're interested in trying a second site to initially expand the concept beyond the southern California market.
We believe we've identified a good candidate for 2017.
Do you want to add anything to, that <UNK>.
We had property that we could expand on, and we wouldn't put a Grand Lux there, and so we decided that this would be a perfect time to have Rock Sugar grow.
We had the property, it was there.
We controlled it, and we decided this would be a perfect site.
That's why we're doing it.
We would like for it to be in every location.
As our partner continues to expand into new markets, we will expand with them.
There needs to be a density of population for them to expand, but we should be close to 100 restaurants by the end of the year, and we will continue moving forward next year, as well.
Our hope would be that we could get to all of the restaurants by the end of the year.
Well, we can look at the current restaurants today and monitor whether or not we feel like there is cannibalization.
We could look at our percentage of to-go sales in general, and see if they are growing in those restaurants.
We have seen some to-go sale ---+ we have about 10% of to-go sales on average, and we have for a long time.
We've seen some incrementality to that, and we haven't seen cannibalization in the restaurants that have seen those increases.
That gives us insight into understanding exactly what's happening with those guests, and whether or not they are trading off one experience for the other.
No, it's purely something that now impacts the tax line, the tax expense line, when previously that tax benefit, we put ---+ we went through paid-in capital.
It went on the balance sheet.
The new accounting rule says you can't put it on the balance sheet any more.
You've got to take that tax benefit on the income statement.
It's not necessarily always going to be a positive.
I mean it's a positive for us for next year in that the tax rate is going to be a lot lower, because of the fact that our stock price has increased since these equity awards have been made.
We're recording actually in the income statement the tax benefit on that difference in what the options or the restricted shares were issued at, and what they're ultimately redeemed for, if you will.
It's pure GAAP impact.
Well, labor is a big part of it.
We're ---+ 5% wage rate inflation is ---+ we have, we expect the comp-store sales for the year at 1% to 2%, as we've talked about.
We've been managing through the industry labor pressure, and continue to believe, as I said earlier, that we have pricing power in 2017.
We have a 53-week year, is one of the big things this year, comparing to a 52-week year next year.
If you look at that, that represents probably 3% or so.
Instead of say 5% to 10% growth over 2016 at the mid-point, that would make it like 8% to 13%, because we have again a 52-week year.
The labor rate, wage rate inflation, you can look at it as being largely offset by that tax accounting change.
No, we're still deciding on it.
I did talk about it, and it's going to depend on what is the commodity environment and the traffic trends and other costs actually doing at the time we make the decision about that.
We talked about believing we did have pricing power in this market given our differentiated positioning, and we could take pricing similar to the pricing levels we took this year, if we felt the need to do that.
We are not, really.
One of the markets that we have had the most government-regulated wage rate increases has been California.
Then when I talked about geographies, California is actually one ---+ is our best-performing market.
I don't think we're seeing a lot of impact from that more regionalized type of pricing.
Sure.
Well, as far as MasterPass goes, the campaign was very limited in the period.
It was probably a handful of ads that ran during that time.
The majority of them are going to be running in November and December.
It would be hard to attribute the benefit of the sales to anything that had to do with MasterPass thus far.
We look forward to seeing what's going to happen in November and December.
The early adoption of CakePay is promising.
It's still early, however.
As mobile payments become more popular, I think CakePay will continue to be used more frequently by our guests.
We do now have a full-page ad that's running in our menu to increase awareness within the restaurant, once guest do arrive.
It's still early, as it is I think with mobile payments in general.
But we feel good about it thus far, and we think that the master pass will give us also more awareness of CakePay, because the ad itself does show the phone and a mobile payment process.
