Thank you for standing by and welcome to the First Watch Restaurant Group Incorporated Second Quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Following the presentation, the conference call will be open for analyst questions and instructions on how to ask a question will be given at that time. This call is being recorded today, August 9, 2022 at 8:00 A.M. Eastern Time and will be archived and available for replay at investors.firstwatch.com under the News & Events section. I would now like to turn the conference over to Raphael Gross, partner at ICR, to begin.

Good morning, everyone, and welcome. I am joined here today by First Watch's Chief Executive Officer and President, Chris Tomasso; and Chief Financial Officer, Mel Hope. This morning, First Watch issued its earnings release for the second quarter 2022 on Globe Newswire and filed its quarterly report on Form 10-Q with the SEC. These documents can be found at investors.firstwatch.com. Let me now first cover a few housekeeping matters before introducing Chris. This conference call will include forward-looking statements that are subject to various risks and uncertainties that could cause the company's actual results to differ materially from these statements. Such statements include, without limitation, statements concerning the conditions of the company's industry and its operations, performance and financial condition, growth strategies, and future expenses. Any such statements should be considered in conjunction with cautionary statements in the company's earnings release and the Risk Factor disclosure and its filings with the SEC, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q. First Watch assumes no obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. Lastly, management's remarks today will include references to various non-GAAP measures, including restaurant level operating profit, restaurant level operating profit margin, adjusted EBITDA and adjusted EBITDA margin. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in the company's earnings release filed this morning. And with that, I would now like to turn the call over to Chris.

Good morning. Thank you for joining us today for our Q2 2022 earnings call. I’m pleased to report that First Watch momentum we reported in the first quarter and achieved continued success and sustained growth during the second quarter. We believe the results we’ve shared this morning speak to the strength of our brand, the distinctiveness of our offering, and an increasing awareness among consumers. These attributes reinforce our confidence in our ability to meet or exceed our stated short and long-term objectives. Our second quarter same restaurant sales growth was 13.4% year-over-year and 30.2% when compared to 2019. Increased customer counts continue to be the primary driver of that sales growth. I'm especially proud of our 8.1% same restaurant traffic growth when compared to a strong second quarter of 2021 and 7.4% growth when compared to 2019. This is significant when you consider that in Q2 of 2021, we had already returned to positive traffic versus 2019. Moreover, our traffic has improved sequentially quarter-over-quarter versus 2019 as well. Our average weekly traffic remained consistent throughout the quarter and we experienced traffic growth in all three periods. In June, we achieved 4.2% traffic growth year-over-year. To add a bit of context regarding the strength of that last statement, Placer.ai reported that visits to full service restaurants in June fell 4% year-over-year. Our performance clearly distinguishes us from most others in casual dining and the restaurant industry as a whole. On the back of our sales results, our restaurant level operating profit margin was a healthy , which brings us to 18.9% year to date in-line with our expectations despite a challenging inflationary environment. We continue to stay true to our philosophy of utilizing menu pricing as a means to offset inflation, while continuing to elevate the First Watch experience with…

Thanks, Chris. So, during the second quarter, our system-wide sales of $231.2 million were up $17.1 million over the first quarter of this year. The company's total revenues were $184.5 million, which is $11.3 million higher than the first quarter and $30.5 million more than the second quarter of 2021. Compared to the same quarter last year, our sales grew on the strength of continuing same restaurant sales growth of 13.4%, plus the sales and growth of the 46 restaurants, which have not yet entered our comp group. These non-comp restaurants include the five company restaurants that we opened during the quarter. Chris mentioned that in the second quarter, our same restaurant traffic growth was 8.1% over the same quarter last year and 7.4% over the same quarter in 2019, which predated the pandemic. Increasing our customer traffic continues to be a key indicator of the quality of our same restaurant sales growth. Dining room recovery versus 2019 grew to 93% for the quarter and weekly off-prem sales volumes remained consistent even as our dining room traffic has continued its recovery. Likewise, our franchise revenues grew to 2.8 million for the second quarter of 2022, due to the increase in sales from franchise-owned restaurants and the addition of 11 franchise restaurants opened since the second quarter of last year. During the second quarter of this year, franchisees opened four new restaurants. Food and beverage costs as a percentage of restaurant sales rose to 24.9% in the quarter. That's up from 23.1% in the first quarter. We experienced inflation of 17.7% in the cost of our commodities, which was higher than we projected for the quarter, but we believe this quarter's inflation is the high watermark for our year. Labor and other related expenses as a percentage of restaurant sales were…

Thank you. Our first question comes from Chris O'Cull from Stifel. Please go ahead.

Thanks. Good morning, guys, and congratulations.

Good morning, Chris. Thank you.

Constant traffic accelerated sequentially relative to 2019, compared to the first quarter, can you talk a little bit more about or provide some more details around what drove that acceleration, whether there are any meaningful callouts in terms of just geographies or customer segments that would help us understand the strength of that performance? And then how do you gauge the durability of what you're seeing right now in terms of that top line number?

So things come to mind. One, our increase in both traffic and sales has not been limited in a particular geography, it's been fairly consistent across all the markets we operate in. And the company's history has been that we – I mean, we've grown traffic for decades, but for the pandemic environment. So, I guess in terms of the stamina of our growth, we got a pretty long history of doing it. So, we're confident we can continue to build it.

Yes. And I'd also – I think it's the sum of all parts, frankly. I think it's the continued work we do around our menu and having constant menu news through the seasonal menu program. It really is our hours, our focus on service, our teams. I mean, there's – it's everything. You know all the work we've done to reposition the brand over the last five or six years and all of that's really resonating with the consumer. And that and obviously the recovery for us has been more rapid than others and we see that sequential improvement. Obviously, we're still – we're not in what I would call a pure environment yet where we're comping over normalcy every single period. So, you do have those ups and downs, but I think if you strip all that out, the trend line is where we want it to be and we're really pleased.

Great. And then just one other one. I wanted to touch on just the performance in the units, particularly the ? And any updates you can provide around the unit economic performance there relative to your targets? And then maybe some of your learnings have been about the optimal trade area placement going forward, based on those stores?

So, our 2021 class of restaurants have all outperformed the average unit volumes of the rest of the system. What we've seen, Chris, actually over the course of the last several years, is that we are reaching more mature performance more quickly. We generally plan on doing that within a year or so and we're doing it in seven or eight months. And that's really a testimony to our trainers getting out early, our use of veteran managers when we open new restaurants. And frankly, the system has got a history of improving the restaurant performance quickly in our new restaurants. And so we've had a great deal of success and our development team is observing a pretty data driven process when we do site selection. And so, by observing that, we have – they're back in a thousand in terms of selecting restaurant sites that proved to be good performers for us.

Yes. And it’s Chris. I would add that just like you see in our mature restaurants in our markets, the same holds true for new restaurants where we're seeing broad success across different geographies. It's really not any kind of regional differences. And you specifically asked about the site selection and things like that. And I would just reiterate what Mel said about the discipline that we apply to that and the learnings that we take from every opening. And so, it's great to see that consistency across geographies with the new restaurants because that levels out our ability to do our openings like we talked about where it's equally balanced between core emerging and new markets. We don't have to balance more in core markets to offset slower starts in new markets and things like that. So, it gives us a lot of flexibility and gives our real estate team a lot of runway to bring sites to real estate.

That's great to hear. Congrats again. Thanks.

Thanks Chris.

The next question comes from Jared Garber from Goldman Sachs. Please go ahead.

Good morning. Thanks for the question and congrats on another really strong top line quarter.

Good morning, Jared.

Good morning, Mel. Just wanted to just get just a one point of clarity on the pricing. So, I think you said you took 3.9% pricing in July. So, you'll be running, if my math is correct, close to 8% in the back half this year, if you combine the two pricing actions. So, just want to get a sense and obviously the traffic trends have certainly been strong, but want to get a sense of what gives you the confidence that you can, kind of take that now with the incremental macro pressures and just how you got comfortable with taking that in and also maintaining that high level of traffic performance?

Yes, I think as I stated, we've been conservative in our approach pricing. And I still think again relative to what our industry has taken and what we're seeing in grocery and food away from home, we still feel really good sitting at 8% for the rest of the year or just under 8%. And so, again, the comment about we don't expect any negative impact on our traffic. This is one where we feel like we can take this price, do what we've done in the years past, which is take it to offset the inflation that we're seeing and then hopefully that subsides a little bit and we're in a good place, but we're very cautious about taking price, not because we don't believe we have pricing power to do so, but we do like reserving that and we also like to really highlight our value as we go forward here.

Great, thanks. That's helpful. And then just one other one for me. The labor environment, Mel, I think you said you're about 93% staffing versus the 2019 level, but obviously the top line performance is really impressive. So, I'm wondering if there's a, sort of a scenario here in which the efficiencies, maybe it's gaining through the KDS system rollout or maybe it's just some benefits of that one shift model where you had less turnover over the last couple of years, which is driving some greater level of efficiency? Is that allowing you to maybe operate at a lower staffing level, but still drive the top line or should we expect to sort of recapture that remaining 7%?

Well, obviously, we have been operating at a lower staffing level with it and driving the top line. So, that's true. I still think we're learning – we're still learning about what the KDS system is going to do. We have a very small sample size, I would say, right now with regard to that, but I think the combination of things and kind of working together to squeeze out more efficiencies may be an outcome we'd look for, but we do that all the time regardless of what is going on. I mean, that's just part of the restaurant businesses that you're constantly looking for basis points of savings and labor and input costs. And so, I think what you're getting at is, are we seeing more of a permanent shift in our labor environment. And I don't think we'd be ready to conclude that just yet. We're still operating in a labor market that is improving, but it's still affected by what I would call pandemic or post-pandemic, kind of the different workplace.

Awesome. Thanks so much. Congrats again.

Thanks.

The next question comes from Jeffrey Bernstein from Barclays. Please go ahead.

Good morning, Jeff.

Good morning. Thank you very much. Two questions. The first one, just on the momentum that you saw from a same-store sales perspective, it seems like you're confident, I guess that momentum has continued thus far in the third quarter leading you to raise that guidance. I'm just wondering you mentioned no sign of slowing traffic, no pushback on the price. Can you just talk about why you believe brand resilience is going to hold-up during what seems to be likely economic slowdown over the next 6 months to 12 months, whether it's historical data to prove that point or trends you've seen more recently just because it does seem like most in the industry are acknowledging that there will be a slowdown in the back half, just wondering how First Watch will be able to navigate better than others? And then I had one follow-up.

Sure. Good morning. It's Chris. I'll say two things. One, we really believe in the differentiation of the brand and our offering. And the fact that we're an affordable luxury. Again to – for consumers to get the kind of food and experience that we're offering for, call it, $15 really sets us apart. And going back to my time here in 2008, 2009 and 2010, I think in times like this, it's when the consumers quality, consistency. If they are going to reduce the number of times they go out to eat, they want to make sure they get it right. And all the steps that we took coming out of COVID to communicate that quality and that consistency whether it was the fact that we didn't take anything off of our menu when we returned or the conservative approach to pricing or some of the improvements that we've made and some of the – frankly, the culinary additions that we've had, really we think will carry us through that. So, we also know, Jeffrey, that we've got unmet demand. So, that gives us confidence as well. And that's the reason for our focus on improving throughput because we've got sitting at our front door that if we can unlock that that's an even greater opportunity.

Understood. And then just on the cost side, it was interesting, you mentioned on a couple of occasions that you think the – maybe the commodity outlook or inflation has peaked, I'm just wondering maybe you can share whether you think that's broad based across all commodities or is it something specific to what you are sourcing? Any color you can provide in terms of maybe what percent is locked or what gives you the greatest confidence that we're now in for less inflation going forward? Thank you.

So, based on just talking with my peers and what I see in the industry, our commodities, which our 5 or 6 commodities remain – the top items remain pretty , avocados, bacon, our bread, our eggs, our coffee beans. Those stay fairly consistent in terms of our usage across time and at least within that commodity group, I think we expect to see the – as we'd be particularly begin to roll over more inflationary periods from last year, that the ascent of inflation for us would not continue at the same rate. I don't think that that's true in all proteins that I know others are dealing with, but at least for our group, I have some confidence that we would see that soften a little bit for us. And then in terms of pricing, I think I'm right when I say roughly 50% of our market basket has at least fixed price formulas or fixed prices through much of the rest of the year now. So, we have some pretty good line of sight to what we believe is going to happen at least for that 50%.

Understood. So, you'd expect going through the back half of the year that the basket inflation number, I think you said it was like 18% in the second quarter.

17.7% in the second quarter. Frankly, Jeff, I've proven to be a bad predictor of the amount of inflation. It was more than I expected at the first part of the year. So, I feel absolutely certain that we're not going to duplicate that.

Got it. So, we should expect easing in the third and fourth maybe getting down to single-digits? Or do you think that's too aggressive in terms of the ?

I think that'd be too aggressive. I think we're going remain in the double-digit territory for the remaining two quarters, which will, kind of balance out our year, maybe just higher than I predicted, but more along the lines of maybe 15% for the year or something like that.

Got it. Great to hear. Thank you.

Thanks, Jeff.

The next question comes from Nicole Miller from Piper Sandler. Please go ahead.

Thank you. Good morning.

Good morning.

You talked about mix shift, kind of qualitatively, and if we put together the pieces of comp and what you gave us on price and traffic, basically mix is again up low-single-digit. So, I just wanted to confirm that. And then also, previously, I think consumers were, like, adding on bacon and adding on beverage. I guess the question is what the heck are they adding on now?

Well, we have certainly had some well performing limited time offers. So that into our mix. And you may follow our menu. We've offered some premium items that frankly have been very well received by our guests in the restaurants. So that's adding to the mix as well. So, I think that continues to be one of the big drivers.

Yes. The other point I mentioned in my comments was that beverage incidence is up and that's not a small contributor. So, between the juices and then like Mel said, the LTOs and the attachment on those, that's really what's driven our mix.

Okay, great. And then you also made a comment. I found very interesting around your value proposition and even affordability as opposed to some degree versus food at home, and I was just curious if there's any way, you know, if that's just like your intuition and I can see how that makes sense, or if you think that's even more important for the cuisine and even the time of day that you're offering food away from home? Do you compete a little bit more with someone saying, gosh, I can replicate this and taking that into account or is it just more of an observation?

Well, despite the incredible sales of our cookbook, I would say that most people would prefer to eat out for brunch really because of the occasion aspect to it. I mean there is a component where it's not the easiest, you know, meal to prepare at home if you want to get, you know, creative per se. And so, again as an affordable luxury and as an experiential type brand, that's what we think is the differentiator there. And then as it relates to the inflation and my comment about 2008, 2009, and even into 2010 is, we just saw that families were trading going out for a steak dinner on Friday night for getting together for brunch over the weekend and spend a lot less and have the same kind of social engagement, but do it during the day and now with all that we've done on the menu from the alcohol and the juices and things like that, it's just very appealing across all demographics to take part in that. So that's what gives us comfort there.

And just really quick with the increased application, are those happening anywhere in particular or for any position in particular?

I'd have to look at that and see. I think it's across the board, but let us get back to you on that.

Thank you so much.

Thank you.

The next question comes from Andy Barish from Jefferies. Please go ahead.

Hey, guys. Good morning.

Good morning.

Just trying to kind of contextualize a little bit of revenue guidance increase, is a lot of it from the outperformance in the 2Q and then the additional pricing, is that kind of what you're layered in just given how consistently you've, sort of seen demand trends out there?

Well, it's our expectation about our continued growth in traffic, as well as what you saw in – but what we've seen in the first half of the year, not just the second quarter.

Yes.

And have you continued to see, kind of weekday lunch outperform just given that was – it's an important daypart, but obviously one where there's more probably flexibility and capacity. And I think there's been some menu focus as well, just give us an update there, please.

Yes. Our weekday traffic in general trends have improved and they're above weekends. Obviously, we have more capacity during the week, but it's actually spread out pretty nicely between breakfast and lunch at – on weekdays. So, that's been a nice one for us. You're right. We had talked pre-IPO about a focus on launch and it's actually spilling over into weekday breakfast as well, which is great.

Fantastic. And then just a couple of just quick expense questions on that, on the higher inflation and the egg contract you had, did that, I assume just kind of looking at making sure you had some supply during that tough period cost you a little bit more in the quarter outside of the contract? And then secondly, can you just refresh my memory on kind of other operating expense what the pressure there has been recently?

Okay. So eggs, yes, we did see the new egg pricing or the pricing that we had to go through in the second quarter was elevated as a result of the avian flu. And we move, kind of the worst thing that can happen is for us to run out of the eggs altogether, right? So, my focus and our team's focus is on securing supply. We do it a little bit cost favorable to the market and we had a – and we're still a little bit favorable to the market price, but not nearly as favorable as we were in the first quarter. So, we did pick up a good bit of cost there. And it'll probably be that way for much of the rest of the year as the are repopulating and growing so that they deliver the, kind of eggs that we serve in our restaurants, which are – we're pretty the high quality of the eggs that we use in our restaurants. In terms of what's in other operating expenses, really the thing that tends to shift around in there was, kind of the variable cost, the larger variable cost is the delivery fees associated with our third party premises business. We also had packaging materials that are captured in that number. And then the rest of it are the things that we do to maintain the restaurants or cleaning materials and supplies for the wash machine, that sort of thing, , it's kind of a broad range of stuff that doesn't wind up on the plate of the restaurant or in the pocketbooks of the staff in terms of payroll.

Understood. Yes, nice results guys.

Thank you.

Thanks, Andy.

The next question comes from Gregory Francfort from Guggenheim. Please go ahead.

Hey, thanks for the question. My first one is just on the pipeline maybe for units into 2023? I think you're probably starting to put that together now, given how strong the comps have been, is there an opportunity to accelerate that at all or site selection still on acquiring new sites, I’m just curious what you're seeing on that front as we start to build that up?

So, for almost all year the sites that we're looking at, that Eric Hartman’s teams delivering to us are really related to next year and the year following since we're, kind of inside the window of the restaurants that will open this year. In terms of accelerating, as I've mentioned before, we kiss a lot of frogs, right? We look at a lot of sites and we have some – we're very strict about the selection criteria on the restaurant. So, in terms of accelerating right now, we're going to continue to build out at the pace that we promised long-term, which is about a 10% growth in the system every year. And I feel like there's, you know we'll be looking back on that eight years from now and not really apologizing for that, kind of unit growth story.

That makes sense. And just on the pricing, any quantification how value scores have been and I would imagine that that's been building pretty well as you've underpriced peers and just quantification that would be helpful?

Yes, our value scores have remained very consistent through the price increase and actually that's been our historical perspective as well. So, again, we feel like our pricing relative is conservative, but as we look at the qualitative metrics too, our NPS scores are solid, our value scores are solid and obviously the biggest indicator of that is traffic. So, with those three things, plus others that we look at, we just – that's why we feel like we've actually improved our value proposition. And the other thing I, kind of mentioned it, but it's worth calling out is, we're also doing things to enhance the customer experience when we do this. So, it's not just taking price on a like-for-like product or even experience when we're doing ingredient improvements and things like that. There's some behind the scenes things that we're doing to ensure consistency in execution, but then to also again make continuous improvements, which we've done for a very long time.

You know, just conversationally, Greg, I don't know if you ever tried our Crab Cake Benedict that we had on the menu in the first LPO of the quarter, but that was simultaneously one of the most popular LTOs and I think it was as pricey as anything we've ever put on our menu. And customers consumed it to the point where we every bit of crab we could find. So, frankly, our – it's we have a customer who seems to see value in a lot of our items even when we take the price up.

I'm usually a chocolate chip pancakes guys, but . And maybe just a last question for me. Where do you think on the menu, I mean, you've done a lot of work on alcohol and preserve the appetizers on the last couple of years and where are the biggest opportunities on the menu from here? Well, as you're looking, kind of for what you want to redesign or what you want to expand to try to mix going forward? Where are the big, sort of buckets of what you're looking for opportunity?

We've got a lot of runway to maximize the items that we have there now, but culinary innovation is part of the DNA of the company. I don't know if we'd announce what it's going to be on the call.

What I will say is, and we've talked about this before, we haven't innovated around alcohol yet. We're rolling out what I would call to be entry level platform. And when you think about what we did with the Juice platform and how that went from 3% mix to 15% mix, we're really excited about the opportunities around alcohol and around beverages in general. I think there's opportunity for us in the beverage category too. To Mel’s point, nothing that we're ready to announce yet, but things that we're – that are in our process that have us really excited.

Like the chocolate chip pancake line.

Yes. Thanks guys. Appreciate the thoughts.

Our next question comes from Brian Vaccaro from Raymond James. Please go ahead.

Thanks and good morning.

Hey Brian.

Just to circle back on the alcohol program, can you just level set how the program performed here in Q2 either, kind of percent of sales mix or guests that are ordering from the platform? And then where is overall awareness on the program and any plans in the second half to add marketing support that can move the needle further or is that more of a 2023 dynamic?

So, in terms of mixing, when we launched the program in the restaurants where we served it in the dining rooms, it was just under 4% of the mix. Currently in the dining rooms, where we serve it, it's about 6.5% of mix. So, it's been improving over the course of the last 16 months that we've been purchasing licenses and installing it in the restaurants.

Okay. And just in terms of plans in-store marketing to build awareness further, to what degree have you already done that or are there plans in second half or is that more 2023?

Yes. We're still purchasing licenses. So, until we have it in as many restaurants as we believe we can get it out. I don't think we're actually trying to move the number up so much. So, it probably is just in terms of timetable, you say 2023, that's probably a pretty good time table.

Okay. Thank you for that. And on the KDS rollout, I understand it's small sample size, but in the units that have had it for a little longer and optimizing the system, I'm just curious what benefit? Can you give us any more color, the benefit you're seeing on throughput or table turns during peak periods?

Yes, we're seeing benefits on ticket times, also KDS is one part of an overall improving throughput strategy that we have. KDS gets all the talk because it's sexy and it's technology, but there's a lot of other things we're doing. And so, to measure the benefit specifically of that is – it's part of a broader initiative for us, but everything that we expected it to do is doing from helping us focus sooner, reduced training time because of it. Again some of those behind the scenes benefits and our accuracy is improving it, but obviously the most important factor for us is improved throughput during peak hours and we're seeing that and that's why we're so – being so aggressive in the rollout so that we can get that rolled out and start talking about it in terms of its impact on the organization.

All right, great. And last one for me. I just want to ask about labor inflation. I think you said around 8% to 10% in the second quarter. Mel I'm just curious how you expect that to trend moving through the second half? Could you start to see wage pressure abate with staffing levels coming back, etcetera? And are there any outsized training costs or other costs that have been associated with this tight labor market that could start to ease from what we've seen in the P&L in the last few quarters? Thank you.

So, the 8% to 10% is kind of what we projected for the full-year in terms of our inflation and I do think that it's, I do think that that wage inflation is probably here to stay through the balance of the year. Our applications are up in terms of just the number of people applying for positions and that's always a good sign for us. It's helpful. Haven't seen a lot of increase in training costs, there's probably an increase in the frequency of most of the staff level positions are trained in the restaurants by veteran managers. And so, it's probably let's say, it probably adds complexity or a physical strength to do it as often and we get some – we do a lot of listening to what goes on in the restaurants. And so, that frequency of training shows up when it becomes more complex or more frequent, but it hasn't added a lot to our overall cost.

All right. That's helpful. I'll pass it along. Thank you.

The next question comes from Andrew Charles from Cowen. Please go ahead.

Great. Thanks guys. Good morning.

Good morning.

Mel, just one final point just on commodity inflation. The 10-Q calls out 15% to 17% COGS inflation, is that the anticipated level for the full-year or just for the back half of 2022?

That was for the full-year.

Great, thanks. And then you guys obviously called out strong reception of the brand in new markets, strong class of 2021 openings, and as you can see this expansion path in the Northeast, as well as Midwest, is Canada something that's on your radar? Is that an opportunity for growth here, as well as just broader international expansion? If you were to pursue it, would that be through a company operated angle or perhaps something that we can see franchised?

I would say, it's not on our radar right now. We still got so much green space in front of us in our core emerging new and then markets we haven't even entered into yet. So, not something that we're thinking about. We actually get quite a few in-bounds on international expansion and we're just – we're really focused on bringing our unique breakfast brunch and lunch to the contiguous 48 for now, but I think obviously down the road that's an opportunity for expansion, but not in the near-term.

Very good. Thank you.

This concludes our question-and-answer session. I'd like to turn the conference back over to Chris Tomasso for any closing remarks.

Great. Thank you for joining us today. Thanks for your thoughtful questions. We're certainly aware of the obstacles and the macroeconomic uncertainty around the world and here at home, but First Watch has overcome its fair share of challenges during our nearly 40 years in operation. So, if you can't tell by the call in our tone, we're confident in our unique positioning and our value proposition and most importantly, I'm really confident in the leaders throughout our organization who continue to adapt and thrive. As we look ahead, we continue to invest in our people and soon to invest in our growth. And I want to thank everybody for joining us here today. With that, we'll close it out.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.