Good day and welcome to the BJ’s Restaurants, Incorporated Second Quarter 2021 Earnings Release and Conference Call. Today’s conference call is being recorded. And at this time, I would like to turn the conference over to Greg Trojan, Chief Executive Officer. Please go ahead, sir.

Thank you, operator and good afternoon everyone and welcome to BJ’s Restaurants fiscal 2021 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 and incoming CEO and Tom Houdek, our VP of Strategy and Financial Planning and Analysis and incoming CFO. We also have Greg Lynds, our Chief Development Officer and Kevin Mayer, our Chief Marketing Officer on hand for Q&A. After the market closed today, we released our financial results for the second quarter of fiscal 2021, which ended Tuesday, June 29. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Rana Schirmer, our Director of SEC Reporting, providing our standard cautionary disclosure with respect to forward-looking statements. Both Greg and I will then provide an update on our business and current initiatives. And then Tom will provide some commentary on the quarter and current environment. After that, we’ll open it up to questions. So, Rana, please go ahead.

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 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 29, 2021. 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. Greg?

Thanks Rana. It's been an incredible experience leading BJ’s for almost nine years ago, and all my [indiscernible] ever gone quickly. As the old adage goes, time flies when you're having fun and fun for me is defined by the ability to grow and evolve our business in many ways. I remember when I first came to BJ’s in 2012, meeting some of you in person and on calls early on, I made mention of the fact that I was attracted to BJ’s for a number of reasons, all of which are as relevant today as ever. First and foremost, I was attracted by the strength of the concept. The original founding group of BJ’s, then succeeded by Jerry Hennessy and Paul Motenko, and further iterated and evolved by Jerry Deitchle each contributed in their own ways to create a truly compelling and unique concept, as evidenced by the industry leading traffic and sales volumes in the casual dining space. I was also drawn by the strength of BJ’s management team. Our operations leadership, along with our senior leadership team at our restaurants Support Center is made up of a majority of folks who are part of BJ’s before I even arrived on the scene. This longevity and depth of experience, the most importantly the talent level, our of our team is an important competitive advantage and one we probably don't talk enough about. And the dedication, resilience and focus of our restaurant level teams at all levels from dishwasher to general manager has been a stalwart of our success throughout the years, and never been on display more than through the pandemic challenge past year and a half. So a great concept together with a first class team is a combination that's hard to beat. But when you add…

Thanks, Greg. Before I move into my remarks on the quarter and our initiatives, I want to take a moment to thank Greg Trojan for his nearly nine years leading BJ’s growth and progress as a concept, and personally for being a great mentor to me. During Greg's tenure, we expanded from 127 restaurants to 212, while setting our pathway for continued national expansion, with a goal to more than double our current platform. We also initiated Project Q and a host of efficiency initiatives, while bringing innovation to our menu with offerings such as our healthy enlightened menu, our loaded burgers, and more recently, our highly successful slow roasted protein platform. During Greg's tenure, we emerged as leaders in developing and implementing a mobile app for casual dining and to this day, we may be the only national chain using handheld server tablets in our restaurants to improve the guest dining experience. Greg will remain a guiding light as a BJ’s board member. With so much growth potential I'm excited and look forward to building on this platform with the entire BJ’s team. Switching to our recent performance, I'm very pleased to report that the positive momentum in our business continued throughout the second quarter of 2021. Driven by both improving dining room seating capacity and key markets and guests eager to return to our restaurants, our sales are continuing their steady recovery. The quarter began with weekly sales per restaurant averaging 102,000 in April, as indoor dining restrictions remain in place with less than half of our locations, seat up to 100% capacity. In May, our weekly sales average rose to 106,000. At certain states loosen restrictions and we had Mother's Day and the start of graduation season. In June, our sales accelerated even further with our weekly…

Thanks, Greg, and good afternoon, everyone. Before I begin, I wanted to take a moment to share my excitement for being named as BJ’s next CFO. Greg Levin is a true leader and mentor and I couldn't ask for a better leadership team to continue partnering with in my new role. And to all of our analysts and investors participating on or listening to this call, I look forward to spending more time with you in the coming months. Now on to the details of the quarter and some forward-looking views. Please remember, this commentary is subject to the risks and uncertainties associated with forward looking statements as discussed in our filings with the SEC. As Greg just outlined, our sales improved sequentially and meaningfully throughout the quarter, which we believe was driven by both capacity and demand. On the capacity side, we began April with more than 70% of our dining room still operating with some form of dining room capacity limitations. In late June, our last remaining markets with capacity restriction fully reopened and we're once again allowed to fill every seat in each of our restaurants. The staffing is now the governor for us operating at our true full capacity. On the demand side, guests are clearly eager to dine out again. COVID cases declined throughout the quarter as vaccination rates increased, giving more guests comfort dining out. Anecdotally, we are seeing more regulars returning to our dining rooms and bars, which is fantastic. On a more macro level, household balance sheets are stronger than ever and guests in general have more to spend on experiential dining such as BJ’s. Total revenues for Q2 were 290.3 million and we reported net income of 6.4 million in diluted net income per share of $0.26 on a GAAP basis.…

Thank you. [Operator Instructions] And we will go first to Alex Slagle of Jefferies.

Thanks and congrats to all of you when you're respecting next adventures. I wanted to follow up on the comments on the staffing levels, yes, on the fully staff units are driving meaningfully higher same-store sales, if you could provide any color on sort of what that gap looks like, and also how different the guest satisfaction scores are, what you're seeing there?

Alex, first of all, thank you for your introductory comments there. In regards to the range, it's a pretty significant range. And we've kind of broken it down to tears and without getting into specifics. I would tend to tell you that restaurants that are at that 100% level, we can see up to high single and even double-digit comps in there and then some in those restaurants. So it's a pretty high number from that perspective. And then, obviously, a different staffing levels, it comes down. And then because we have really as we said on the call, really made sure that we're providing the gold standard level of execution. Even in restaurants that have lower staffing, we are not in a position of basically giving a server 15 tables, or if we're limited with a certain amount of cooks trying to open up all of our tables out there and just not give the right hospitality and execution service to our guests from that standpoint. So because we've been able to do those things, our NPS scores don't have quite the dispersion that you see on the comp sales side of it when all of our tables are open.

Okay, make sense. And then, with the outlook on the third quarter, trying to think what kind of assumptions generally you're making on volumes and capacity. And I guess there's a little more uncertainty Now, given unknowns, the virus and potential restrictions, but any color here would be helpful and also on the patios just your ability to be flexible there and reopen if you need to?

Yes, so let me answer a couple questions, since probably, I think others might have the same thoughts or comments on that. And one is, we have not seen really any changes in our business right now despite some of the increases on the Delta variant. Even in Southern California, where at least in the Los Angeles area, where mask mandates have come back into place, we haven't seen the change in the positive comp sales trends of the Los Angeles market in that regards. And same thing with as we look at other states. We did make the comment, I know Alex, you're up in the area, the Bay Area, just with people not back in their offices is really, frankly, the softest market for us, overall. And we've seen tech companies continue to push out their opening days in regards to bringing team members back or in their case, employees back. So we'd expect that area to stay soft. And I think like we've always done we kind of provide you where the comps are at the time of our earnings and kind of use that as really just a springboard of how we think about the quarter I guess. And then, I'm sorry, your last comment on patios, while we pull down patios, we do have the flexibility to introduce them if needed. And we would do that, we would have to obviously work with our landlords and make sure that we got the permission, but our landlords have been very helpful with us, or the majority of them have been very helpful with us. They'd like to see us, continue growing sales as well.

And we'll go to our next question at this time from Drew North of Baird.

I wanted to ask about the pipeline for unit development in the context of the outlook for eight to 10 units next year, what you've had out there. I’m wondering if you could comment on the factors that may be holding back that number from being even higher exiting the pandemic? And just does it take time to rebuild the pipeline and pausing for a bit. And as a follow up or related question, I believe the brand has opened as many as 16 to 17 units in years past. So could you see the company getting back to that type of growth in the out years?

Yes. Again, this is Greg Levin. And I'll let Greg's comment on some other comments from that standpoint. But Drew, we have always prided ourselves at BJ’s in the fact that we've opened restaurants with high quality and consistency in that regard. We and at least my time here and for those that follow BJ’s have been here a long time. We have not ever put out a press release saying that we're closing, 15 of the last 50 restaurants that we've opened over the last couple of years, because we decided to grow for growth sake, we want to make sure there's quality and consistency in that. And when you think about building new restaurants, it's making sure that not only do you have the real estate pipeline, but really as even Tom said about our current restaurant sales environment, the governor to that is going to be around team members and really managers. So as we exit the pandemic and we build up our manager pipeline, we are not going to sacrifice on our manager pipeline in regards to not having the people that can operate frankly, $6 million averaging volume restaurants. So for us to get back to where we want to grow our business, we're going to do it in a very deliberate manner that allows that quality and consistency. So as we think going from eight to 10 next year, that's still going to be a lot of investment into our business in regards to hiring managers, making go through our training program, as well as hourly team members, and so forth. So when we think about that part of our business, we want to do as I said, very deliberately, and over time, we'll continue to step that number up, so eight to 10 will continue to increase. And as you noted, we have done 16 restaurants before and I think our goal would be to getting back there and becoming the ability of driving that 5% plus increase in operating weeks as we continue to build this business. And I don’t know Greg, if you see anything from a pipeline standpoint that you want to add?

Yes. I know. Drew, thanks for the question. I do think on our last conference call, we had mentioned that, our pipelines very strong. We are seeing more D type sites and C type sites and the A sites are harder to come by. I will say in the last two months or so we have noticed an increase in deal flow. And we're pretty bullish and confident that over the next 24 to 36 months, they'll even be more A sites available to us. And as you know, we have plenty of whitespace available with still a lot of states, we haven't penetrated with only 212 restaurants in 29 states today.

That's sound very helpful. I wanted to also circle back on the staffing topic. I was wondering if the challenges there are concentrated in any particular region or market and just maybe stepping back? What are the company's specific initiatives that you have in place that could help accelerate your ability to fulfill those staffing needs, as opposed to needing the labor environment to improve?

Yes, Drew. We tend to see -- there's always going to be pockets that are more challenging than other pockets. They've been that those days that way ever since I've been in this business. As retros imagined back going back to California Pizza Kitchen days. Generally, the Bay Area tends to be a more challenging area always has been even back in the 1990s from that perspective. And then it's just, again, pockets throughout the country versus very specific regions. In regards to incentives, we've gone down the path like many other restaurant companies have in regards to job fairs and other incentives out there. I think the best thing that we tend to look at is, really is how do we incentivize and reward our current team members? We don't think it's the right thing to do is to offer bonuses for somebody new joining us when we've had somebody working for us for 5, 6, 7 years. So our general viewpoint is really make sure we're taking care of our current team members building on that culture within the four walls of our restaurants. And that in of itself, feeds on itself to bring other people into BJ’s.

And last one from me, I was just wondering, and maybe I missed it, did you share the off premise either sales mix, or average weekly sales for Q2 and/or July? That'd be helpful.

Sure. For off premise in total, so for Q2, our off premise WSA was 24,000.

And your perspective on July?

Yes. We've seen the off premise, we're still sitting above 20,000. So we -- so yes, we're sitting somewhere in that kind of low 20,000 area.

Yes. So we've come down seasonally, which we'd expect from about 24,000 more dining rooms have opened up to right now in July, summer is right around 21,000.

We move to our next question from Nicole Miller of Piper Sandler.

Thank you. Also want to say congrats to everyone. It couldn't be happening to better people and just such an awesome team. So excited. In prepared commentary, you had mentioned doing some guest research and talking about finding the most valuable guests and what are their needs? So I was curious, what did you find out? What do the most valuable guests have in common? Who are they? And what are they looking for?

Yes. So Nicole, I'm going to let Kevin Mayer, our Chief Marketing Officer probably handle a good portion of it. But as we've always said at BJ’s, we provide this kind of higher quality energy dining experience, which is very experiential, and I would unplug stealing over the thunder from Kevin, it's that whole experience, which is really important. And I'll let Kevin build on that. He's the guy that's really been leading it up inside BJ’s.

Thanks, Nicole. I guess just from a methodology standpoint, we did a number of different things in our research, one, starting with a most valuable guest survey, which our guests that came in some cases 40 more times a year. So we can really understand what why they had such a magnetism for our brand. We did expand that into a larger segmentation study. And what we just found is that, as Greg was saying, there's an energy that they're attracted to when they walk in the door, there's a consistency of the execution. And there's ultimately, like the social aspect of the concept that they just love, whether it be the team members they are connecting with them. They have plenty of stories of our team members knowing their drinks when they walk in the door to actually, being able to work through them with the menu, to the people that come into fact -- come with and the fact that they can for any occasion ultimately come to BJ’s. Through the segmentation, we found there's two core guests. And what they have really in common is the social aspect. They love to come for the energy, for the aspect of sitting back and feeling kind of welcomed and comfortable. And then there's definitely nuances in terms of demographics and other needs, but a really good start to the research.

Awesome, we'll continue to follow up on that. And then, just making sure we assign the appropriate level of understanding or I mean, risk is definitely too strong of a word, I'm sure but eight to 10 stores next year. If we want to model and over under -- I'm sure they're obviously all identified, are they all otherwise? Are they all signed leases? First half, back half, just want to get it right.

Yes. I think right now, somewhere in the kind of three to five unsigned leases, I don't have the signed leases in front of me. From that standpoint, I think from a timing, it's still pretty much spread out fairly evenly, within the next year, some mores in the kind of two in the first quarter, somewhere around three to four in the second quarter and in the back half of next year. So that's –

Yes, that's pretty accurate.

Great. And I'll sneak in this last one. It's annoying, but I think everyone's tempted now to take these average weekly sales of 2019 and go up, you know, 2% on the comp. But I'm a little nervous if I'm not going to get the seasonality right, especially since you mentioned the tapering of the off premise. So is there any caution against taking the -- I think it was 104,000 plus 2%? I don't know what you would say to that as a last question, and thank you.

I think that's a reasonable way to think about it. I mean, as we look at our numbers internally, we hope that obviously, as we bring on more team members and make sure, we're doing everything right from that standpoint, that allows our effective capacity to expand that, frankly, would allow our comp sales to increase. When we talk to our operators and ask them where they feel they're operating, they will tell you that they think our capacity today is, somewhere is in kind of the 80% range, even though we have technically all the seats open for all of our restaurants. But just when we think about the staffing levels, and so forth, we're not necessarily seating or serving all of our -- seating all of our -- seating our guests, all of our seats in that regard. So we're always a little cautious from that standpoint, as we bring team members on. But I do think, given the current environment and assuming there's not major changes related to COVID. I think looking back in 2019, from a comp sales perspective, that's how we were tending to look at it. And then, how the comp business is moving from there.

And so we will go next to Sharon Zackfia at William Blair.

This is probably a tough question to answer. But I'm curious on your line of sight to getting fully staffed. Is that something that you're hoping to get to by year end or even sooner? And then, curious whether the back of house or front of house is proving more challenging?

Yes. Sharon, so -- first of all, it's a great question in that regard, because obviously, it's so key to driving sales and giving that gold standard level of execution to our guests. And ideally, we'd like to be fully staffed tomorrow. And we talked to our key members and Tom alluded to it a little bit in today's call. And that is, we're going to continue to invest and hire those team members. And what generally happens in our business is, you get into Q3 and you get lower sales, weekly sales averages, as Tom mentioned, you go from 114,000 down to 104,000, clicking back in 2019. So generally your operators are going to adjust their staffing levels because of that, that's just what happens if you come off the high watermark of June with the graduations. We have told our team members that while we need to be productive and efficient, it's more important to make sure you bring on people and you train them and you get ourselves ready to take on the holiday period from that same or the holiday timeframe in November and December. So our goal would be to have fully staffed before we get into the fourth quarter but it's going to be a challenge out there especially with still the unemployment levels. The fact that people have this Tom said solid balance sheets. They're getting the refund that supposedly are going to end in September and we'll see how that plays out. But, as you said, it's a difficult question, but our goal would be sooner than later. And our goal is not to hold back on Q3 when seasonally weekly sales averages do come down, we'd rather make sure the staffing levels correct. And have those team members in there. So we can go into the fourth quarter when our weekly sales averages start to increase again, it would be ready to go.

That's really helpful. I know, you also mentioned the late night business is still a bit of a drag. But has that started to improve? I mean, did you see an uptick there, as a second quarter went on into July?

We did that that business has improved. We have talked in the past that late nights somewhere between 13,000 and 15,000. It's moving in the better direction, we're still a good $1,000, a few $1,000, less than where we wanted to be there. But it has improved. I think frankly, the sporting calendar helped a little bit in that regard with NBA Playoffs and things like that. And then, removing the social distancing made a big difference here and Southern California for the longest time, you couldn't seat at the bars. Now you can seat at the bars and we're getting those regular customers coming back, both in the mid-afternoon, which is Tom mentioned, or I think I mentioned actually, our sales are higher now in mid-afternoon. But we're seeing those regulars come back at late night as well. So it's moving in the right direction, I would tend to say the two areas for us right now would be that late night. And frankly, the Northern California area, I think that kind of maybe two bigger areas that are keeping comp sales from even accelerating greater, taking staff and putting staffing aside.

And we'll move to our next question from Jeffrey Bernstein of Barclays.

This is [indiscernible] on for Jeff. And I'd also like to congratulate everyone on their new role. I had a bigger picture question about restaurant margins, if the current inflationary pressures remain outsize. Greg, now that you're in the CEO seat, how do you think about profitability? Are you willing to take the near term hit to margins to maintain your value leadership? Or would you consider incremental menu pricing above your historical norm? And on the flip side, are there incremental cost saving opportunities that are still out there? And if so, where in the PL, do you see them coming from? Thanks.

That's a great question. And I'm going to be working with Greg Trojan and the rest of our Board of Directors and frankly, our senior executive team, as we just continue to evolve around Greg Trojan strategies and the things that I would like to do that might be different or just a little bit of a change from that perspective. As we tend to think about your question, overall, one is, as I mentioned earlier, we have to get ourselves fully staffed to drive sales. And everything I've seen in this business over my many years, if you're not driving top line sales, you're really not going to be able to save your way to success. Now, it doesn't take away being productive and efficient. The Project Q initiative that Greg Trojan put in place today lives on in BJ’s and is a great example of us always going after efficiency within our restaurants. And we'll continue to drive that. But I think secondarily, looking at that, one of the things that we did, not going to get into specifics here, as we took a look at our restaurants that are driving positive comp sales in both May and June and we compared them to May and June of 2019. And we have noticed that those restaurants that are driving comp sales are able to manage margins, some of the restaurants have improved the margins dramatically from that timeframe. So there's the ability that as we drive comp sales positively, we can move those margins. Secondly, one of the things we looked at as well is, how is the throughput in our business. And frankly, the throughput in our business on the incremental sales is still just as much as it always was. And that is, if we can…

That's very helpful. I appreciate it. And congrats again, everyone.

We'll go next to Todd Brooks of CL King & Associates.

Couple of questions on staffing along with everybody else. Did you share or would you share a kind of number of bodies to fully staffed? I know that I think you talked about 20,000 on the last conference call. And I believe earlier in this call, you said you hired eight, but then again, demand has rebounded sharply. So where do we feel we are as far as additional bodies that we need to hire to get to that fully staffed level that you're targeting?

Yes, I don't know the exact number. I think we said at one time that we were around 23,000 team members. Today, I said our staffing levels is kind of in the mid to high 80% range. So I think if you kind of back into it that way, and again, this is just doing the math off of today's earlier formal comments. It puts you in the high teens in that regard.

Okay, great. And then as the quarter progressed, you touched on this, Greg, use of hiring as far as we've gotten closer to September, as some states have terminated the unemployment benefits earlier in the quarter, kind of the pace of bringing new applicants on board. Can you talk to how that's changed as we've moved into June and July here?

It's gotten better. I think there's a couple things that have played in and this is nothing original, from Greg Levin and for guys. And that is, Tom mentioned, balance sheets are strong for consumers and for basically people that need to get a job. Now, regardless, they're getting the unemployment benefits. And I'll get back to your comment about some of the other states that have started to eliminate the federal but to get the unemployment benefits coming through. You still have childcare on there. And then frankly, as a country, we kind of opened up in June, right in the middle of summer, where people have gone, hey, I've been stuck inside for the last year, do I really want to go out and get a job right in the middle of June? Or can I you know, have a summer before I have to go back and get a job. So I think as we get later into this year, I know unemployment benefits from a federal standpoint, will end in September, that things will get easier. That's what I'm saying it knowing, and then you've got child care that's going to help with people going back-to-school. So I think all of those forecasts a better hiring scenario in the future. But even taking a step back from that, we have heard from our team members that a certain states have eliminated the federal unemployment that they've said it's gotten easier from that perspective. And I would tell you going through the summer months, it seems to get easier every single month from that perspective, as well.

Great. And then a final question, if I may, you talked about slow roast and we're in 30 stores and tests now. And obviously, kind of holding it 30 until we get to staffing levels when we want so probably into the fourth quarter. Is there any interim kind of early read data that you can share with us since we're going to be paused at these 30 units for a while on what you are seeing and incrementality maybe even as we're moving into the summer season from the slow roast brand as we're getting to a more normalized environment? Thanks.

Sure, thanks for the question. Yes, we have a lot of optimism even from the current test with these 30 restaurants out there that have it going. We've seen anywhere in the kind of six or more orders per restaurant per day and solid checks. So it's adding in over a point of comp as we've been testing it. So a lot of things to like about it and even looking at the overlap between the BJ’s guests, which is a key criteria to have how this fits in with our normal customers and it's in the 20% range, which is virtual restaurants go is, is what you want to see. So, yes, we're optimistic but still want to make sure that it's the right time to launch it with staffing levels, as we've been discussing, but also iterating to make sure that we have the best option possible to when it's ready to roll out.

And our last question comes from Jon tower of Wells Fargo.

Awesome. Great. I have a few, if you don't mind. And first echoing comments from everybody else congratulations, Greg, Greg, and Tom on the new moves. Obviously, Greg Trojan, I wish you the best going forward. Just hoping to dig a little bit on the labor stuff. I know, everybody's been asking about it. But I'm curious, on the one hand, you're going to see elevated costs this third quarter related to recruiting, I am curious to get your thinking on how long that persists. And then going forward, thinking about how some of this -- the menu changes that you did during the pandemic? And obviously, there's some of the off-premise sales coming through and some staffing changes around it. Now, where do you think that can reach maybe as a percentage of sales over the longer term? Do you do you think that, even in the face of higher inflation, you'll be able to see some labor leverage on that line, say, relative to what we saw in 2019 or 2018?

Yes, Jon. I do. I think there's a couple things in here. One is, after next year, California reaches $15 minimum wage. So you've got 30% of our restaurants are now just are going to be kind of a CPI versus this kind of bigger bump that we've taken. And we've kind of proven that we know how to operate our restaurants, in a high labor states. And I think about some of the other concepts out there that don't have to deal with some of the California things, those are coming down the line. And I think there's going to be more challenges, frankly, maybe at other concepts than ours, just because of where we are from a structural standpoint to begin with -- in that perspective. So I think that's one that's going to be a real benefit for us going forward, just having California kind of hit their minimum wages, adjusting it to a CPI perspective. And then, when we start to think about the changes in the business of holding that off-premise, driving that weekly sales average, and then looking at our business, with some of our restaurants that are fully staffed, how they're comping up versus where they were in 2019. And as I said, their margins were in line or better than 2019, just depending where they were on that kind of on that matrix is in different markets. So when I look at that, and I think about it, I think we have a good opportunity to be back in line with historical margins as we kind of work through some of the transitory inflationary pressures in our business right now.

Great, thanks. And do you think this sort of near-term pressure on some of these incentives to get people back? Do you think that wanes in the fourth quarter or do you think it carries over into that period?

Well, if we can get ourselves to -- back to the staffing level, I think what you -- what we end up saying is a decrease in overtime and a decrease in training. And both of those actually have a fairly decent impact on labor margins, in our business and get us back to, again, then, being better from an inflationary standpoint, even we look at our labor rates, there's a big difference between labor rates with overtime and labor rates without overtime. So as that can come down, because we're fully staffed and then training, which is Tom said, is somewhere is in that 20 bps higher than where it's historically been, all of those allow us to be more efficient in the restaurants, just from a pure productivity standpoint. So less hours because we got the right people, they've got their -- for lack of a better term their sea legs under them. And then, we end up eliminating those additional costs around overtime, and around training.

Great. And then just maybe this is a question for Kevin, in terms of the guest research that you've done. Are you starting to implement some of the information that you've learned from this study? Or is it still kind of more of a '22 or late '21type of push? And if so, can you give an example of what you've done?

Yes. There's always more to learn from our guests. So let's just start there that there's a few other steps in this process yet. We're doing some things with some credit card behavioral data that's going to give us another overlay to really understanding our guests on a daily basis in terms of how they behave with us. But going back to your question, we're now -- the whole point of this is to -- as we understand our guests is to continue to create more differentiation within the space. What we found is our restaurant is a place that kind of has the energy of a bar which of course a big part of our business is from the bar and yet we have this -- kind of comfortable bar environment to that people like to come and hang out with. So as we look at differentiation, we're looking at doubling down on some of the strengths we're doing. We're looking by department right now, how we can double down on those opportunities. We're applying some of this into the way we do targeted marketing. We're even looking at the way we look at our loyalty guests. And are there opportunities to continue to drive more frequency and upsell, so kind of across the board. But this is probably I'll call it a 12 to 24 month evolution to get to a point where we're really working on all cylinders with this new information.

Got it. Thanks. And then lastly, Tom, I just want to clarify, I believe you had said earlier that other OpEx expense at the restaurant level 24k per week, is that inclusive of the marketing spend for the balance of the year, I think you're saying or maybe it's just the third quarter?

I think that was just third quarter, wasn't it?

Yes, it should be a good estimate for the balance the year but that's correct.

That's inclusive of marketing. Sorry.

Right.

And so that does conclude the question-and-answer session, as well as today's call. We would like to thank everyone for your participation. You may now disconnect.

Thanks everyone.

Thank you.