Good day, and welcome to the BJ's Restaurants, Inc., Second Quarter 2019 Earnings Release and Conference Call. Today's conference call is being recorded. At this time, I'd like to turn the conference over to Mr. Greg Trojan, Chief Executive Officer. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone, and welcome to BJ's Restaurants fiscal 2019 second quarter investor conference call and Webcast. I'm Greg Trojan, BJ's Chief Executive Officer, and joining me on the call today is Greg Levin, our President and Chief Financial Officer. We also have Kevin Mayer, our Chief Marketing Officer and Greg Lynds, our Chief Development Officer on hand for Q&A. After the market closed today, we released our financial results for the second quarter of Fiscal 2019, which ended July 2nd. You can view the full text of our earnings release on our Website at www.bjsrestaurants.com. Our agenda today, we'll start with Rana Schirmer, our Director of SEC Reporting, providing our standard cautionary disclosure with respect to forward-looking statements. I will then provide an update on our business and current initiatives and then Greg Levin will provide a recap of the quarter and some commentary regarding the balance of Fiscal 2019, and after that, we'll open it up to questions. So, Rana, go ahead, please.

Thanks, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance, and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, July 25, 2019. We undertake no obligation to publicly update or revise any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise, unless required to do so by the Securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission.

Thanks, Rana. BJ's record second quarter revenue reflects our continued success in driving positive comparable restaurant sales and further progress with our off-premise sales, menu innovation and unit expansion initiatives. Our Q2 comparable sales of 2% extended our trend of materially outpacing the industry in both sales and traffic. Our second quarter sales outpaced the competition as measured by Black Box by 210 basis points. While traffic outperformed the industry by 150 basis points, particularly impressive when you consider that we were lapping outperformance of a year ago above 400 basis points on both measures. In fact, for the quarter ended July 2, our two-year accumulative sales growth rate was 7.6%; the highest level in over six years. BJ's has now outperformed Black Box sales over the last eight quarters or two years by 280 basis points on average per quarter and by 250 basis points per quarter in traffic. There's no better evidence of the sustainable competitive advantages we are building when it comes to guest preferences and are consistent ability to gain share in today's incredibly competitive environment. As encouraged as we are about the continuation of our sales momentum, we continue to face an inflationary cost environment including weather related increases in cost of sales, wage rate pressures and the incremental cost of growing our off-premise business. Commodities, primarily driven by produce, increased by approximately 2.3% in Q2 as weather impacted California crop yields and supplies of Mexican avocados. Effective wage rates continue to increase by mid single digits this year and Q2 labor of 36% came in slightly higher than the level we discussed on the Q1 call. The labor increase reflects these higher hourly wages as well as our discretionary investments in labor for our new check building slow-roasted items and the initial rollout of…

All right, thanks Greg. Before we get into all the details of the quarter, let me remind everyone that beginning with Q1 of this fiscal year, we adopted Accounting Standards Update 2016-02 which is Topic 8 -- 842 for Leases which requires us to put the present value of our lease assets on our balance sheet as a right to use asset with a corresponding lease liability. The new lease accounting standards also require us to make that one-time non-cash cumulative adjustment to retain earnings of approximately $29 million of sale leasebacks gains that we were amortizing in occupancy and operating costs over the term of the existing leases. This results in an annual increase in our operating occupancy cost per year of a little over $2 million. As a result, this new accounting standard impacted our restaurant level margins in the second quarter and our overall operating margins by approximately $700,000 or 20 basis points which equates to $0.03 a share for the quarter. And a full reconciliation related to this new accounting standard is included in today's press release. Our total second quarter revenues increased 4.7% to $301.1 million and that was driven by our 2% comparable restaurant sales growth and a 2.6% rise in operating weeks. We have now driven positive comparable restaurant sales for seven consecutive quarters. From a monthly trend perspective restaurant sales improved throughout the quarter. At the end of our Q1 earnings call in late April, we noted that comparable restaurant sales were trending in the mid-1% range and were impacted form Easter shifting from Q1 in fiscal 2018 to Q2 this year. As expected, the comparable restaurant sales trend improved into the mid-2% range for the rest of the quarter. Overall, we saw an increase in our average check of around 3%…

[Operator Instructions]. And our first question will come from Brian Bittner with Oppenheimer.

Thanks, hey guys. Greg, just on the third quarter line item margin expectations that you just gave, what same store sale trend are you assuming for the full quarter within those -- those margin expectations?

Yeah, Brian, we don't give guidance on our -- on our comp sales. We kind of give you where we are right now and we kind of look at different ranges from that standpoint within our business. So, not only that, we're a few weeks in and kind of flattish. I think you can kind of assume that it's flattish to up in regards to where we're thinking comp sales go.

Okay. And as you kind of analyze your trends so far this quarter and you're able to look back to last year, is there any reason to believe that your trend will improve throughout the quarter? Is there any reason to believe that the California market will begin to perform more in line with the rest of the system or should we all be assuming flat trends for the quarter is the base case to think about?

Brian, I don't know if we have an exact answer for you. I mean, when we look at our numbers we were somewhat surprised because there's actually fairly -- fairly -- it was a fairly quick change in the sales trends, meaning, we finished P6, let's just call it the mid-2's and every week in P6 was pretty solid. We thought the first week, and I do still believe the first week is a little bit of a July 4th flip from that standpoint, but as we started looking at some of our numbers, we did notice last year that we had the Miramar fires down in the San Diego area and that impacted a lot of our San Diego restaurants. We had a Madera fire, we had a Yucaipa fire out in -- Empire [ph] hitting some of our restaurants. So, I think as -- as we get through that, that should be cause for an -- an improvement in our California restaurants but, as we say, and we always say this kind of on the calls, we kind of give you the information that we have to-date and I know that sounds like sometimes not enough but even as we were looking at our business in June, we weren't expecting all of the sudden it to change from what we saw, literally the last week of June, to what we've seen the first couple of weeks of July. So, you know, I'm planning that it's going to improve and I think we've got good initiatives and things we like in our business from that standpoint. We feel very comfortable at least three weeks in how the rest of our portfolio is doing. We're -- we like the strength that we continue to see in those markets. As we said, that would be up in the mid-2% range, that's including in Texas, Florida, Ohio, etc. It's just California has come out of the gate a little bit softer here and as we went through and tried to analyze it and isolate it down, those are the things that we've seen a little bit softer in the Bay area. We're going over against some high comp sales of a year ago related to some fires and then as we've mentioned on the call, maybe while still growing in healthy double digits, not having quite as strong a tailwind maybe as third-party delivery was a year ago but still a tailwind for us.

Okay, thank you.

And next will be Will Slabaugh with Stephens.

Yes, thanks guys. First I had a question on value. Curious how the Brewhouse Specials mixed versus what you've seen in prior periods and is there any sense that the customer is either gravitating toward or away from value in your menu at this point?

Well, when we look at our Brewhouse Specials they've continued to perform well for us and I think when we look at the number, in fact I was just looking like at our Pizookie incident rate and frankly that number was flat with a year ago that tells you that our guests are still liking it, obviously, but it's not necessarily increasing in this quarter from that standpoint which means that we're not necessarily seeing people just gravitate towards that specific day. I think when we look at our other specials in regards to our Brewhouse Specials, they continue to do really well for us but at the same time, as Greg Trojan mentioned in some of his formal remarks, our prime rib continues to do well which is kind of -- we -- we still think it's of value even though it's a higher check item, our -- and light entrees continue to do really well with the zoodles that we put on, so those are all higher items. I don't think we're seeing a movement just towards Brewhouse Specials if that's kind of the --

I think Will, not to put words in your mouth, I think you were thinking of maybe the opposite that we're seeing a shift away from those value items, and we're not, is the short answer, is we're still seeing, you know, good popularity. Brewhouse Specials are not, you know, losing momentum. In fact, I would say, not I say -- our -- our mid-week sales performance is stronger due to Brewhouse Specials than if there's a softness, you know, day of the week-wise, it's been more on the weekends than during the week and I think the value offerings of Brewhouse Specials and happy hour during the week are really helping -- helping keep -- healthy --

I guess I would also add, Happy Hour, or Happy Hour daypart is doing very well, as well as the combos or Tri Tip has been doing well which are both value priced.

Thank you. And curious also on the plans for cash, you mentioned the $91 million left on the buyback authorization, you have $23 million, I think, on the balance sheet not to be generating cash as well. Just given where valuation is, how aggressive can you plan to be on the buyback here?

Well we always, I think, look at our business, Will, and you hit it at the end there, on kind of an enterprise EBITDA and we have a, obviously, very solid and strong EBITDA of $136 million or so, I think I said, on a trailing 12-month. So, we have that pattern there, we'll probably deploy it accordingly going forward.

Got it. And just to follow-up on your July 4 comment, if you were to exclude the July 4th shift, is there any way to kind of parse out what that trend would look like?

I don't have the exact weeks in front of me to kind of normalize for it, but I would tend to say that the shift obviously improved coming out of July 4th week from that standpoint. I -- I would tell you -- I would say, to add to that though, even pulling out the July 4th, I don't think we are where we were, in let's call it, P6, in June where we were seeing comps across the board in the mid-2's.

Okay, fair enough. Thanks, Greg.

And next will be Alex Slagle with Jefferies.

Thanks. I wondered if you could talk about check growth. It sounds like you're getting the 3% check that you had previously discussed as the level you wanted to hold margins but the commentary seemed to suggest that you might need more than this to hold the line? How much of this is sort of commodities or labor or traffic, if you could sort of parse through those pieces?

Alex just to be clear, really we were targeting, we think around a 3% comp sales level of sales growth is -- gives us, you know, a good shot at -- at holding margins, as we've said -- said before. We did not mean to imply we need more check growth than that. What we did see is some weakening in traffic relative to Q1 and the trends. So, you know, all of the things that we're working on, you know, we'd rather see, you know, the balance between check growth in that 3% range, which as you -- you'll recall, we fell short of that in Q1 for a variety of issues for most -- most prominently the promotional calendar and some of the interactions of loyalty with some of our beginning of the year promotions. So we're happy that, you know, Tri Tip has helped us a lot. We've continued to be wiser, if you will, around the balance of -- of promotions. So, you know, in a perfect world what we'd like to see is, you know, maintain 3% check growth. Ob -- obviously, as long as it's productive check growth, we'd take more but we're not sitting here trying to drive checkup further, we're trying to drive traffic.

Makes sense and, I don't know if you have any updated thoughts on development for next year, just whether you might reaccelerate or whether you'd sort of like to hold off on thinking about that given the traffic environment and some of the other issues like labor and construction costs?

You know what, it's still early for us to make any predications or pronouncements. I mean, we are really, really enthusiastic about how our new restaurants are performing and coming out of the gate and -- and a lot of new trade areas for us. So, you know, certainly we'll balance that with what we think is going on in the environment but, you know, we haven't made any decisions at this point.

Great, thank you.

And next will be Matt DiFrisco with Guggenheim Securities. Matt, go ahead sir.

Can you hear me?

Again, go ahead. Yes, we can. Thank you.

All right, thanks. I just -- this is actually Matt Kirschner on for Matt. I have a quick question on the GSKS rollout and then a question around the -- the digital and delivery sales. But can you quantify the GSKS rollout impact during the second quarter?

It's probably somewhere in the neighborhood of 10 to 20 basis points, Matt. It still came in line with about 125, maybe a little bit more of hours per restaurant. At the same time, I think we were probably around 160 to 170 restaurants that got completed in Q2 with the remainder coming here in Q3 and when I think about that, 125 or so hours, it's not all one week and then it's done. It takes time to kind of implement this, get the sea legs under -- under each restaurant team and then drive efficiencies out of it. So, it spans over a few weeks.

Okay. And is it possible to also give us an updated number for percent of total sales on off-premise delivery and then also catering? I know you mentioned pushing that more in the third and fourth quarter with some new marketing but can you quantify that as well now?

Well, our off-premise is right around 10% or so and it's still pretty evenly split between delivery and takeout. In fact, one of the things that we're encouraged to see is that our takeout business lately has been growing and obviously we like takeout a little bit more because you don't pay those commissions to the delivery companies. Our catering is small. I believe I want to say it's less than 1% of our sales and we think that's where we've got an opportunity to grow that, it just rolled out with some of our changes here in the May timeframe and as I mentioned on our call, we're going to do some more marketing or some new marketing around that in Q3. We originally were going to do it in Q2 but frankly the catering packages and things we put together took a little bit longer to get out so that's some of the shift in the marketing side of things. But, it's a small amount and we're going to go after that for the second half of the year and we think we've got a great opportunity to grow that part of our business.

Great, was there anything that you guys did differently to kind of hold up the takeout business versus the delivery business?

Just in general, I mean, we've been working hard. Our ops team around -- you know, we've been putting some capital in our -- in our restaurants to make it easier for both our team members and our guests. We've done a lot of work online in terms of an ordering perspective to make ordering takeout more -- more convenient. So, you know, this isn't something, although we've launched this next generation pretty recently, we've been -- we've been working on, you know, off-premise and the operations piece, you know, for quite a while, over a year now, and as I mentioned in my -- in my script, the -- it's really good to see our MPS scores both improve -- they -- I would say from an absolute basis they still lag dine-in which doesn't, I don't think surprised anyone on -- on the line here, but they're not drastically different and -- and we're heartened by the fact that we're seeing the fruits of all of the improvements and we're making from a restaurant perspective -- because fundamentally, if it's not a great guest experience, it's growth on on-premise is not going to last, right? So, you know, it's not -- again, it's not perfect but I think it's headed in the right direction.

Would you say it's fair to characterize that your most loyal customers skew towards the takeout and then new kind of incremental customers tend to try the delivery?

You know, I think that makes logical sense, but I can't tell you we -- you know, we looked at our -- have looked at the data to support this statement, but I think that's a pretty good guess.

Okay, and then just one last question around the new store development. Obviously you highlight this strong opening. I just had a question around the stores when they drop into the comp base. I think there were two this quarter, I think one next quarter, but I mean, how do the honeymoon periods look? You're entering newer kind of Tier 2, Tier 3 markets specifically in Connecticut for the first time. You know, how do these stores hold up after 18 months?

Yes, we tend to still see really the same trends in our business and that is at 18 months they generally come into the comp base a little bit in the negative because the honeymoon timeframe and then from there they start to flatten out and start to move ourselves better overall. And I don't think we've seen any real change of that. I accept the fact that our new restaurants are opening strong and as a result, when they come off the honeymoon, they're not coming down nearly maybe where they were in some of the other markets. So, I think as we look at it and see it as they come into the base, maybe there's a little bit less of a drag on them then maybe where they were -- the classes in the past years.

Okay, thank you very much.

And the next question will come from Nick Setyan with Wedbush Securities.

Thank you. You know, there was some TV advertising I think that was planned for Q2, can you kind of maybe talk about, you know, the plans around Q3 and Q4, maybe whether you can maybe put some TV advertising in some of the softer California markets to help out?

Yeah, in general, Nick, our medial lineup is pretty similar than -- than what it looked like a year ago, you know, from a TV perspective we are -- we are -- listen, we're going to react to -- to these trends and, Kevin, who can maybe speak in a little bit more detail here, but we are looking at, you know, options of moving other elements of our media mix, you know, digital, what we're doing through loyalty. We have more levers than we've had in the past and -- and we are certainly looking at options to move some more guns where they're needed more than not, right?

Yes, I guess just from a media perspective, you know, we have a lot of levers to pull. We've got both on and off premise marketing. We have digital marketing really that's targeted around all of our restaurants that we're able to adjust at times and then from a mix perspective, you know, we're always able to play with reaching newer guests as well as retargeting existing guests. So we still need adjustments with California, we have considered both a media mix adjustment to maybe targeting more of our -- you know people that have visited our Website in the past as well as maybe heading up more towards California at the expense of some other markets. We're still evaluating some of those opportunities right now.

And Greg mentioned, Greg Levin, mentioned the testing on the third-party delivery, you know, trying some different things that maybe haven't had as much traction to date. Is that something that you're planning to continue or are there changes coming there as well to maybe improve that--

Thanks for asking that question, Nick, because this is -- obviously, in general, this growth in on-premise and third-party delivery is still new to everyone, right, including -- including ourselves although we were in there a little earlier than a number of folks. And it's -- it's changing rapidly just by virtue of its growth rate and we look at the promotion efficacy of some things that we ran a year ago versus today. There are a lot more competitors and attendees in the third-party delivery order platform. So when they're running and we're participating in certain promotions, it's -- it's more difficult to stand out and they're just not as incremental, frankly, as what they were even a year ago. So we're working with third-party partners and putting, you know, Kevin's teams creative hats on to look for ways where we can stand out and differentiate more than just the standard offers. And -- and, you know, it's going to take some -- some trial and error but I think we're not going to -- you know, we're not going to spend our way to buying sales at levels that we don't think really make margin sense either. So, if that's going to take some trial and error to -- to find that right balance and what we highlighted is -- that some of the softness that we're seeing, and this is national, that it is a slowdown. Now, when I say slowdown we're still in healthy double-digit growth rates here so, just be -- to be clear about that. But given the high growth rate that we've been seeing, part of the impact -- you know, it has impacted comps a bit when that rate has slowed down a bit as we've lapsed some of the offers of a year ago that worked really well.

Thank you, and just last question, you know, for Greg Levin. You know, on the margins, quarter day comp in Q2, you know, was sort of that one -- mid-1 and then the trends improved but relative to your commentary, the margins or expectations, I guess you kind of ran through, you know, in terms of labor inflation and the third-party delivery fee, aside from the COD, which is very understandable, you know, on labor and other OpEx, what surprised you the most in terms of the negative impact there?

In Q2?

Q2.

Thank you. I think the biggest surprise in Q2, if you -- and, again, I want to make sure you're talking in Q2, was, I think the avocados, you know, avocados are in our top ten of spend and that probably was a little bit more of a surprise for us than I was anticipating there. I think the success of Tri Tip, which has been really, really successful, has actually challenged our operators a little bit in regards to maybe just making sure they're prepping it and so forth so there's maybe some -- a little bit more inefficiencies around getting Tri Tip in place in Q2 and I think we've worked ourselves through that but those are probably two things going into Q2 that maybe were a little bit more challenging than maybe we were anticipating going in.

Thank you.

And the next question will come from Mary Hodes with Baird.

Good afternoon, thanks for taking the question. I just want to follow-up on Matt's earlier question regarding the cost pressure you saw in Q2 related to the GSK implementation. Does that 10 to 40 basis point drag that you highlighted for Q2 from implementing that also include the drag from introducing Tri Tip or what would you say that the total drag on restaurant margin in Q2 was from those one-time initiatives?

Yes, so when you think about it, and I don't think, Mary, I said that the GSKS was 10 to 40 basis points, I think GSKS is probably more in the 10 to 15 to 20 basis points. It's about 125 hours per restaurant on that. I would probably, just thinking about how Tri Tip rolled out and the adjustments that we had to make, there is probably another 10 to 20 basis points related to Tri Tip in regards to how we roll that out and the additional hours from that. I think we're continuing to work out -- work our way through those things and we expect, going into really, I think, into Q4 and later Q3, that will reach our efficiencies around both of those changes there. In fact, I would probably say Tri Tip is a little bit more behind us and GSK, GSKS, is in front of us a little bit.

Okay, got it. Thank you very much for that clarification and then can you just talk at a high level about the level of promotional activity that you're seeing in the industry right now and with traffic turning negative in Q2, do you think that there's any changes that you need to make in your philosophy around promotions or value to drive better traffic in upcoming quarters?

That's a lever we look at literally, you know, almost everyday, certainly every week in our business, Mary, and -- and, look, there's always promotion out there, I think I said this on the last -- on the last call, we get asked that question every single time as if, you know, this level of promotion and competitiveness in our -- in our market is, you know, intensifying or wildly different and we don't see that. I mean, I think it's kind of always a constant on and the other element I'd mention is people forget about, we're competing in a very fragmented industry at the end of the day; the number of independent seats out there is much greater than the chains we all think and talk about. So -- so, honestly, I just think that can be a little overdone and over talked about in our -- in our space at times. It's something, obviously, we pay a lot of attention to in general as our business is going up and down and so we'll make adjustments. I think the most pressing activity is making sure we're being more aggressive where our business needs the help the most and right now that would be California.

Thanks very much for the perspective. That's it for me.

And next will be Chris O'Cull with Stifel.

Yes, thanks, good afternoon guys. Greg, I understand you're pleased with this new store sales performance but can you talk about the average investment in those eight locations?

Yes, I have to almost parse that a little bit because I want to say I'm -- I'm looking over at Greg Lynds a little bit. I want to say four of those restaurants were Seritage or Sears deals from a year ago. So like all the New York -- New York was, [indiscernible], Rhode Island was and as a result, those investments were in the $4 million or less range because we were delivered a shell and we were delivered some of the utilities and stuff forward. I would tend to say that, and I'm going to let Greg -- Greg Lynds jump in here in a second, I would tend to say though, looking a little bit going forward that we continue to see labor inflation in the construction world as well as some material inflation and we tend to see our standard prototype probably closer in the 4, 8 range or greater; so $4.8 million plus range and so it's a mixed bag. I know the eight, we have some that we got in at a really low investment cost, I think overall, but I think if you're thinking about going forward, it's a little bit higher. Greg, do you want to add to that?

No, I think you've covered it. I mean, we're seeing price increases in steal, asphalt, concrete, like everybody. In probably 2018 versus 2019 we're seeing total price increases in the range of 8% to 9%.

That's helpful, thank you. And then just to follow-up on that, I mean, with the restaurant margin and even profit dollars coming under so much pressure, has the sales to investment hurdle rate changed in order to justify a compelling return?

Not really. I understand your question, Chris, and we tend to look at these really kind of at the -- at the longer-term from that standpoint. There's going to be inflation that comes up and then there's going to be times when it starts to modify and come down. If we had to look at our business ten years ago, we were spending at that time, $5 million to build a restaurant. And then through some value engineering and other things that made sense for us, we brought it down to $4 million. I think ultimately when we look at our business and we think about the fact that we're doing, in this quarter, $116,000 weekly sales average out of our eight new restaurants that you're looking at, somewhere in the neighborhood of close to $6 million AUV's. I think you tend to bring in a really great strong cash flow that still tends to be the place where we would want to invest our money and build our restaurants. We just come to the fact that we've always been this way, that we're going to build quality over quantity. We're going to make sure we can do it with high quality as well which means making sure that we have the right team members in place. So, I don't think there's any necessarily change in our view in regards to hurdle rates for investing in the new restaurants and so forth, because we still think it's the best place to invest BJ's money. But we're going to do it at quality over quantity. We've never been on an investor call saying that we're going to close 20 out of the last 40 or 50 restaurants we've opened; something we're very prideful on the fact that we go out and select great place, great locations, and execute them well.

Yes, that's helpful. And then just the restaurant margin was down, obviously, a couple hundred points this quarter with the two comps. So -- and it looks like it's going to be down, based on your guidance, another 150 on a -- on a softer comp. So, how do you keep margin flat with a 3% comp?

Well, we think with the 3% comp and you start to come back and take out some of the initiatives that we rolled through, it's probably going to be a little bit of a challenge from that standpoint, I think, as you look at it. But I think there's some efficiencies that we can go after. I also believe, as we look at this, some of it is transitory, you know, avocados are starting to come back in line from that standpoint. So, we would probably pick up the basis points there. We've got the basis points in some of the investments that we're rolling out in labor that's started to help us. And then, as always, we're going to go after that operating occupancy line and make sure there's areas that we can get more efficient at in our business. I think there's a challenge -- we think -- Chris, real quick, the challenge we face, frankly, and I try to make this clear short-term, is Q3 is just our lowest weekly sales average quarter and that with, you pay some utility rates, we start to pay for the NFL package in our restaurants. There's just little things that kind of hit us in Q3 but I think when we look at our business longer-term, we like where we are, we like the menu, variety that we have, the fact that we can have value on one side and we can have higher priced items or center plate entrees on other, but that will allow us to drive sales, drive check average and provide a great guest experience that frankly will allow us to drive margins.

Okay, and maybe just one last one. Are any stores that have hit a stride with the new kitchen systems seeing any labor savings benefit from the new systems?

No, Chris, I mean, it, A, is still a bit early and, you know, as we've been saying consistently, is we're doing this for quality, you know, team member, great place to work, all of the nerve center of what our kitchens are. We do think that over time all -- all of this process, reengineering and organization will yield some savings but, we're not -- we're not -- honestly, we're not asking for savings at this point and as people are, you know, as our operators are scheduling labor from this perspective, I think we're a bit away from that but, you know, we'll likely see some but it's just too early. We want to make sure these get engrained the right way and we're prioritizing the most important reasons we're putting these systems in place and, you know, think of it as a second -- a second phase of looking at our kitchens once these are embedded in behaviors. And that's the thing, I mean, just to highlight as Greg's been describing, the rollout itself is more around physical organization and retraining. The ongoing part of GSKS is the behavior changes of what people are doing when and those take a little bit more time. So we want those to fall in place and we think those will then evolve into some efficiency in terms of hours.

Great, thanks guys.

And our last question today will come from Nicole Miller with Piper Jaffray.

Thank you. Good afternoon, two quick ones. Earlier in the discussion you talked about softer weekends, I believe, where do you think that customer might be going; at home waiting for you to deliver to them, are they going to a peer group, or is this a broader macro-comment about people staying at home?

You know I don't think we know the answer to that Nicole, to be honest, and I think one of the things that we take a close look at and want to make sure is that our value doesn't get out of balance, right? So, we've been driving so much value both at dinner and during the week with the -- you know, with the one, two punch of both happy hour value and Brewhouse Specials. You know, we've -- we've been with the -- with the introduction of slow roast and prime rib which is a weekend only, you know -- was a weekend only launch and is a weekend only product. We -- we've been balancing that well, historically, right? And so, you know, that's -- that's -- the pushes and pulls of our business is that, you know, we may -- we may need more news or more value on the weekends relative to the investments that we've made during the week. I don't say that with certainty but as we're looking at these trends, that's something that we're looking at.

Okay, thank you, very fair. And then just a second and last question, you also talked about setting aside some additional marketing this quarter to talk about large party ordering. And I want to understand, you know, how will that -- where will you do that marketing and then what can you share in terms of large party ordering? How far will you go in terms of delivering time, what's the price hurdle, what's the margin profile, etc.?

Well, let me do the last part and then I'll ask -- I'll ask Kevin to fill in some of the -- a little bit more of the specifics. We're not going to get too far into those specifics for competitive reasons, obviously, but -- but our -- most importantly is the product lineup that has been, you know, we really have constructed these both a la carte items and these combinations with value in mind. So, you know, at the starting price points you can see large parties at -- at and around $10.00 per person which we think is quite compelling. But there's, I think, if you scroll through these varieties and do a relative, you know, value check, you'll see that we compare, I think, more than very competitively. So, that's been -- since this, again, is, we think, very incremental to our business, we wanted to, you know, frankly be pretty aggressive from a value and pricing perspective. Our delivery radiuses, you know, don't, are not -- don't vary from our normal radiuses which range, you know, based upon drive times, so they -- mileage isn't the best way to think about it but we're usually within 20 minutes of drive time is on the outside of our delivery ranges in terms of those logistics.

From a marketing perspective, you know, and Greg said it in past calls, we've invested a lot over the last couple of years in everything from our digital Web experience to our ability to target guests both to our loyalty guests as well as our digital marketing. We've invested heavily in social and influencers and PR and with this catering campaign, or large party campaign, we plan to use a lot of that, and you know, not to mention that I'd say roughly half of our business, or at least from appeal perspective, we're looking at both business-to-business as well as just to consumers. So we've got a campaign we're developing, a lot of tactics that will allow us to not only reach businesses and business decision makers but also those folks who are planning large parties on a personal level and we'll do some more disruptive things as well that hopefully will get us noticed in at least the casual dining space as one of the few brands that can actually offer something for everyone. So that's really the plan right now.

The only thing I'd add to that Nicole is -- is the power of our operators. You know, large party catering is -- is a relationship business at the end of the day, particularly the B2B portion. So, we have a plan in place to make sure our -- our restaurant teams are involved in making sure people in their trade areas know -- know about this great offering that we have as well.

Thank you so much.

Thank you everyone.

Thank you. And that does conclude today's conference. We do thank you for your participation, have a wonderful day.