Ladies and gentlemen, thank you for standing by and welcome to the Papa John's Third Quarter 2019 Conference Call and Webcast. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Steve Coke, Vice President of Investor Relations and Strategy. Please go ahead.

Thank you, Michel. Good morning. Joining me on the call today are President and CEO, Rob Lynch; and our CFO, Joe Smith. Rob and Joe will have comments about our business and provide a financial update. After the prepared remarks, both will be available for Q&A. Our discussion today will contain forward-looking statements involving risks that could cause actual results to differ materially from these statements. Forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our SEC filings. Please refer to our earnings release and the Investor Relations section of our website for a reconciliation of non-GAAP financial measures discussed on this call. Finally, we ask any members of the media to be in a listen-only mode. Now, I'd like to turn the call over to Rob Lynch for his comments. Rob?

Thank you, Steve and good morning everyone. Today is a very exciting day for me speaking to investors and analysts about Papa John's progress and our future and as the company's CEO and President. I want to thank everyone for joining. Papa John's has had a strong third quarter, in line with our fiscal 2019 plan. Just as importantly, we have a clear path to a much stronger future. As reported this morning, domestic comp sales were positive 1% last quarter. This marks our first positive year-over-year sales growth in eight quarters. After a great amount of effort and dedication from our team, the work to stabilize and rebuild the brand and consumer sentiment is gaining traction. We've begun to turn the corner on last year's challenges. International sales grew at a healthy 10% rate as we continue to add new restaurants and have positive comp sales growth. In addition we opened our first restaurant in Portugal and are now operating in 49 countries and territories worldwide, demonstrating the strong global appeal of Papa John's pizza. Joe will discuss Q3 in more detail in a moment, but first I want to report what I've learned in my first two months as a member of the Papa John's team and share with you how we will realize the strong potential of our brand and our company. Since joining the company, my top priority has been to listen and learn from the many Papa John stakeholders. I visited a number of our U.S. markets and I've met with many of our franchisees, large and small. I've enjoyed spending my days in our restaurants across the country, especially the time spent making pizzas and working the oven. I've talked to many of our largest shareholders and our sell-side analysts and I appreciate the…

Thank you, Rob. In the third quarter, we reported a loss per diluted share of $0.10 on a GAAP basis compared to a loss per diluted share of $0.42 a year ago. The improvement in our earnings per share was primarily attributable to prior year special charges and the benefit from positive North America comparable sales for this quarter. Excluding special charges and refranchising transactions, we reported adjusted earnings per diluted share of $0.21 on a non-GAAP basis compared to $0.19 a year ago. The special charges incurred during the third quarter totaled $14.2 million, which was primarily comprised of support to our North America franchisees through royalty relief and an incremental $5 million contribution to the national marketing fund per the incremental investment in marketing and franchise support, we announced this summer. Special charges in the year ago period were $24.8 million. Excluding the impact of special items in both periods, pre-tax income was $13.1 million compared to $4.6 million for the corresponding quarter in 2018. Looking at sales. Consolidated third quarter revenues increased $18.5 million or 4.8%. The increase occurred due to our positive comparable sales in North America and with our commissary sales reflecting higher pricing from increased commodity cost. Now turning to business unit results for the third quarter. Domestic company-owned restaurants pre-tax income increased $7.6 million, primarily due to the impact of positive 2.2% comparable sales, favorable insurance cost and expiring customer loyalty points. North American commissary pre-tax results increased approximately $600,000, due to higher pricing, partially offset by an increase in new equipment incentive costs which were previously reported in the North America franchising segment. North America franchising pre-tax income improved $1.2 million due to positive 0.6% comparable sales, favorable G&A cost and the previously mentioned reclassification of new equipment incentive cost, partially offset…

Thank you, Joe. I want to end my comments by reiterating gratitude for the warm welcome and honest conversations I've had with so many of Papa John's stakeholders. The last two months have confirmed the reasons why I joined this team and why I think Papa John's can be the best pizza company in the world. As last quarter's results demonstrate we are moving in the right direction. We have a lot of work to do over the coming months as we prepare our budget for fiscal 2020, welcome the new team members of our leadership team and start moving forward with the critical workstreams outlined by our strategic priorities. That being said, the Papa John's team empowered with clear purpose and priorities is ready to deliver. I look forward to providing a full update on our strategy and outlook on our year-end call. As always, we appreciate your continued support. I'll now turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from Peter Saleh of BTIG. Your line is open.

All right, thanks and congrats on a great quarter. Rob, I just want to come back to your second core pillar of improving unit-level economics particularly for the franchisees. Can you give us a little bit more detail on where you see some of the low hanging fruit? And do you feel like you need to get traffic back in the stores right now to get the margin improvement? Just some detail given we know franchisees are kind of struggling after a couple of years of decline in sales.

Yes great question, Peter. What I would tell you is our franchisees are more positive than I would have expected them to be given the challenges that they have faced over the last few years. They still believe in this brand. They still believe in our place in this industry and they have shown great confidence and as we've shared our plans for the future with them. In regards to the unit level economics, we are very fortunate to have Jim Norberg come on as our Chief Restaurant Officer a few months ago and he is doing an amazing job. We just made him our Chief Operating Officer for North America and he is leading that effort. He has been working both with our company restaurants as well as our franchisees to implement a number of tests on things that are going to improve the productivity of our restaurants. Now, that's both the production of our pizzas, as well as a lot of the opportunities that we're seeing and increasing productivity with our delivery services. So, Jim, owns those workstreams and is making a lot of progress and we are absolutely counting on some of the output of that testing to improve unit-level economics in 2020 and beyond. In regards to your question regarding revenues, it absolutely is both. We need to improve revenues and that will definitely improve operating margins, but we feel like we can accelerate bottom line profitability by also improving the productivity of the restaurants while we increase the revenues and transactions coming into those restaurants.

Great. And then just on menu innovation, I think you've mentioned some innovation especially around the cross that you guys launched earlier this week. How are you thinking about the menu I guess going forward beyond pizza? Are you anticipating launching products outside of that core entre or are you going to stick to innovation around pizza? Just some thoughts around that would be helpful.

As I outlined in the call, we have literally taken the guard rails off the innovation team. This team has an unbelievable amount of latent creativity and similar to some of the work that we did right out of the gate at Arby's, we are pushing the limits on what we can do from a food standpoint both from a core menu as well as LTOs and other innovative offerings. And that stretches both across pizza and our other items. This first product launch, we really brought to market in less than two months. This wasn't on the plan two months ago and it really is something that we all feel great about, not just because we think it's a great product, but it's indicative of where we're going. As I mentioned in the -- earlier the dough has been something that this team was never really permitted to innovate against in the past and we feel like that is our core point of differentiation from our competition. And so bringing out a new innovation that highlights our dough and makes our dough the hero of our product is really a signal to the types of things that we're -- in the way we're going to stretch what's been done in the past moving forward.

Great. And then just last question from me and I'll pass it on. Can you talk a little bit about the sales trends throughout the quarter? I know the Shaq campaign didn’t really begin till late August, early September, just give us a little bit more detail if you will in terms of how comps progressed through the quarter and how that Shaq campaign performed please?

We don't typically talk about how the sales flowed through the quarter, but what I can tell you is that we're very happy with the Shaq campaign. This brand is in a unique situation where we not only need to highlight the great quality of our food and how good our food and our service is, we also have to convince people that we're great company with great people and that they can feel good about being our customer. And that's unique. Our competitors don't have to do that. So we have made investments in doing that. That's what the Shaq campaign is all about and we're very happy with the performance. We have seen since launching that campaign, a positive movement across almost all of our consumer sentiment metrics that we track. That's a long-term investment that we've made in the health of the brand and that's an investment we're going to continue to make alongside continuing to advertise and promote the innovation and the products that we're working on currently.

Thanks. Very helpful.

Thank you, Peter.

Our next question comes from Brian Bittner of Oppenheimer & Company. Your line is open.

Thanks, good morning. Congratulations Rob on the new role and Joe congratulations to you on 20 years of success with Papa John's. I want to ask a question regarding the changing of the Chief Marketing Officer role. Rob, how does this impact or alter the existing strategy, which seems to be working? Can you just help us better understand this change a little bit better? And I have a follow-up.

Sure, this will not alter our strategy. We are committed to bringing to life what I just laid out for you and really bringing -- making our pizza and our food the hero and bringing that to life across all of our commercial platforms. This change is really indicative of our efforts to create a holistic go-to-market strategy. We are bringing culinary, our consumer-facing digital platforms and our traditional marketing efforts all together underneath one leader and that's Max Wetzel. And Max has -- I've had the opportunity to work with Max in the past and see how he thinks about business challenges and how he operates and I've watched his career over the last 10 years where he’s continued to progress and really become a transformational leader. And I think Max is uniquely well equipped to take on that challenge and to make sure that our product innovation and culinary efforts are in sync and being delivered in the most compelling way through both our traditional and digital marketing channels. So that's really the impetus behind the changes on the marketing side.

Understood. And just my follow-up, Rob for you again. Two months at the company, you've traveled, you've met with a lot of people, you've gotten your hands dirty in the business. You talked a lot about the opportunities to improve the business from better highlighting, better ingredients, better pizza to menu innovation to improved operations. But just what's the most obvious low hanging fruit to you after two months of diving in that you're most excited about over the next 12 months? If you could pick one and pick the lowest hanging fruit what is it?

I believe the work that we're doing to establish relationships and partnerships with the aggregators is probably the lowest hanging fruit. They already have their delivery networks in place. They are already servicing customers that we are not reaching today. And so we are integrating those platforms into all of our technology and POS systems. And so once those are integrated both our company restaurants as well as our franchisee restaurants will be able to take advantage of that integration and be able to seamlessly except orders -- profitable orders that are coming through our aggregated partnership. So of all the things, I think that that is probably the lowest hanging fruit. I think the work that Jim is doing on the operation side, we've seen a lot of progress in a short amount of time and so I do think that we will benefit from those efforts as early as 2020 as well.

Very interesting, super helpful. Thanks.

Our next question comes from Alton Stump with Longbow Research. Your line is open.

Great. Thank you for the call. And sort of good job on the quarter from me as well. And I'll miss Joe. Great 20 years at the company. I do want to ask about the updated range of EBITDA 1.5 to 3.5 with Griffin comps, so that implies awfully it was wide range here for the fourth quarter, is there any reason behind that? Or is it just being conservative? But how big of kind of range and if you were to point to the upside-downside that number do you think here for the fourth quarter based on what you've seen so far?

Yeah. I think our guidance is consistent with where we've been over the last couple of quarters. I can tell you that this -- in November and December, we are launching a new product that we've never launched before. And so we obviously believe that it's going to be beneficial to our system, but that's probably a driver of that 200 basis points and the range, but very consistent with where our guidance has been in the last couple of quarters.

This is Joe another couple of things to think about, last year we did introduce the Papa Rewards program. So we're going to have to hurdle over that and we'll have to see how that goes. So there is just a couple of things like that that's why we left it as we did.

That's helpful thanks. And then if I could follow-up at of course I'll hop back in the queue here, but just kind of think about always change going out as new products coming out with marketing strategy. What do you think is single most important driver Rob heading into 2020 behind getting comps back?

Without a doubt, we have to make our restaurants more productive. I mean, we have to make sure that as we turn the corner on sales that every dollar in sales that we're delivering is driving more profitability for our restaurants and our franchisees. So I can't overemphasize the focus that we have on that and the focus that Jim and his team are putting up -- and the resources that Jim and his team are putting up against those efforts. Some of the -- like I said, some of the initial testing on some of the platforms that the team is working on are showing some really strong results and our franchisees are excited. The ones that have been in the test markets with us, testing some of these ideas can't wait for us to start rolling these out and scaling these opportunities nationally.

Great. Thank you, Rob, Joe.

Thank you, Alton.

Our next question comes from Will Slabaugh of Stephens Inc. Your line is open.

Great, thanks. And I would to like to my congrats to you Joe on a great and long career at Papa John's. Rob, a question for you. How are you thinking about approaching value versus what has been done in the past at Papa John's? And can you give us your thoughts on the value tests that have been out there? I guess we've had a few different trials going. I know there 4-6 out there currently. So curious and your thoughts there if we should expect more tests or something fully different before anything is launched?

So Will in my experience in the restaurant business value is obviously a key component of the restaurant industry. But sometimes value gets interchanged freely with low price. And that's not always the meaning of value, right. I believe that value is a function of delivering a fair price for what you're selling. And as we called out earlier, here at Papa John's we don't believe that all pizza is created equal and we don't believe that we're a commodity in the marketplace and that we can only compete on price. So we will continue to explore price pointed offerings that we think are going to allow us to profitably grow our business. But that's one tool and there are a lot of ways for us to generate sales and we are focused on driving profitable sales for our franchisees. So we're not going to rely exclusively on that tool. And we're not going to chase our competitors down that road. Once again, if it makes sense and we believe we can profitably grow then that's definitely something that we'll continue to explore but we spend a lot of money and invest a lot of dollars in the quality of our ingredients and the quality of our items and we feel like that gives us a reason to be preferred versus our competition and garner price points that commensurate with the quality of the product that we're serving. So innovation is where we're focused right now making sure that we're continuing to differentiate ourselves from our competition as I mentioned. We are a food company and we're going to focus on the food, and we'll use low price point strategically, when it makes sense, as a tool to drive trial amongst prospective customers and drive greater frequency with our current customers, but we're going to rack and stack that up against the other opportunities at our disposal. In regards to the specific tests that we've run over the last year, we have seen some positive results in those tests in some of those markets and we'll continue to evaluate how those opportunities and those validated programs can benefit our business relative to the other things that we're also working on.

Got it. And just a follow-up as well to your comment on the aggregators, which is fairly different than what many of your competitors especially in pizza are saying. So can you help us with how the orders might be handled in-store in terms of if an in-house driver might take this order versus if you pass it on to an aggregator? So just the operational complexity of that and then also around data sharing and the impact to your loyalty program as you incorporate these partners.

We don't see operational – significant operational challenges partnering with the aggregator. That's why we're integrating their systems with our system so that those orders can come in seamlessly and show up specifically as a DoorDash or Uber Eats or Postmates order and we've found that for the most part their drivers show up in a timely manner and deliver our products in a way that's consistent with how we would hope our drivers deliver our products. Now, it's not all the way to bright, but it's early days and so we're working with them to make sure that they are meeting our standards and that we are operating in a productive way together where we both benefit. In regards to data sharing, the reality is that about 85% of our customers have an aggregator app on their phone already. And so the idea that the only way the aggregators are going to get our customers' data is through seeing what our customers are ordering. Frankly, doesn't ring true for us. They are already getting that data. You look out two years three years from now almost everybody will have an aggregator app on their phone. So we don't believe that idea of their stealing our data and they're going to use it against us is what's going to transpire in the future. We believe that there is an opportunity for us to partner with these aggregators and for us to mutually benefit from this relationship and that's why we're investing in these integrations and that's why we're working with them at the most senior levels to make sure that we're supporting each other in these efforts.

Got it. Thank you.

Our next question comes from Alex Slagle of Jefferies. Your line is open.

Thanks for the question. Just an update on – follow-up on the previous questions, if you could give us an update on the stores – the number of stores you've sort of partnered with that are partnered up with the delivery service providers at this point and any color on the magnitude of the contribution to comp in the third quarter?

I would tell you that we have a large number of our restaurants and our franchisee restaurants already working with aggregator partners. Obviously, expanding with Uber Eats we'll just allow that to grow. I will tell you that, it's still a relatively small part of our business and I would not attribute our disproportionate sales growth this quarter to those partnerships. We're investing for the future. We think that they can help us both through customer acquisition as well as productivity and throughput during our highest peak periods as they offer more drivers to be able to take our orders, but this quarter was not driven by those partnerships.

That's helpful thanks. And then on the re-franchising. If you could offer some perspective there? Should we read the recent transactions as just opportunistic or this represents a strategic shift in the company's longer-term approach maybe toward being more of an asset-light model and if you have any metrics on the company units that were sold there?

Yes, I believe that our balance sheet provides us a lot of optionality. We – obviously, you know, we own around 600 restaurants and I look at that as an asset that we can use to both help us move our initiatives forward within the system, but also as an opportunity to seed markets for new franchisees as an opportunity to help us make franchisees that are currently in the system more productive through refranchising restaurants back to them. So I believe that we will continue to look opportunistically at how to leverage our portfolio of restaurants to most productively drive profitable sales throughout our system

Great, thank you. Thank you.

Thank you.

Our next question comes from Chris O'Cull of Stifel. Your line is open.

Thanks. Good morning, guys. Rob, the company laid out a significant investment in the form of royalty relief and advertising contributions for this year and next. First, do you believe these investments are at the appropriate levels and what level of improvement do you think you need to see in franchise profitability for the company to be able to avoid making similar type of investments after 2020?

Great question, Chris. You know I am coming on to this business about two months ago right after these investments were made. One of the first things that I sought to understand was why and how impactful those investments have been and I give a lot of credit to our Board and to the management team for making that decision and showing their commitment to the success of our franchisees. I can tell you having been out in the marketplace with our franchise partners that commitment to their success is appreciated and is helping them. Over the next 12 months it's imperative that we continue to improve the profitability of our restaurants both through increased sales and revenues, but also through more productive operations. And so we'll be focused on that throughout the course of 2020. As you know these agreements end at the conclusion of 2020 and our goal is for our franchisees and their restaurants to be viable and sustainable at the conclusion of these agreements without us having to extend these agreements.

And just for perspective when you think about the improvement that you think you need to see does the company expect to provide guidance for next year that would implicitly assume that the sales growth would be targeted to be able to take you off those or that that investment after 2020?

Yes, I mean, we'll be obviously providing our 2020 guidance at the conclusion of fiscal year 2019 and late February. And that guidance will be consistent with where we think the business is going and I can tell you that our goals are to take these strategic priorities that we've laid out and improve the business to a point where our franchisees are in a great situation and are happy about what the future holds.

Okay, fair enough. And then you've obviously had some experience working with the franchise system that's fairly distressed in your previous role. How is the health of the Papa John's franchise system and their franchisee's willingness to either try new initiatives or invest in their system compared to your prior experience?

Chris, I can't emphasize this enough. I am blown away by the positivity and the commitment that these franchisees have shown. I have spent a ton of time out in the markets with some of our largest and some of our smallest franchisees. I recently went down for a meeting with over 80 of our franchisees and spoke with them and shared with them the vision that we have for where we're taking the business and how we're going to get there and I was 100% transparent about my thoughts on the current situation that we're in and how we're going to improve that situation. And I can tell you that they were very energized very excited and very committed to working with us collaboratively to get the system where it needs to be. Relative to my experience in the past I will tell you that it's a similar situation. But I think we're starting here from a position of strength in regards to the franchisees being collaborative and really wanting to work with us to get where we need to go collaboratively.

Okay. And then just lastly, I apologize if I missed this in your five priorities. But are there any considerations and identifying G&A savings or even considering strategic options maybe for the commissary segment?

I think that -- any responsible leadership team is going to constantly challenge themselves to get more productive. We're absolutely doing that I think some of the realignment that we just announced today is intended to do that. We have moved from a much larger leadership team that was in place to a much more refined leadership team with refined priorities. And by doing that, we should be able to focus our efforts up against the biggest opportunities and that should make us more productive. So, I think G&A, I do think there are G&A opportunities, but it's primarily going to come from our strategic priorities and choosing what not to work on that may not be as impactful as some of the things that we need to work on. So, that's how I'd frame-up the G&A discussion.

Great. Thanks, guys.

Our next question comes from Brett Levy of MKM Partners. Your line is open.

Great. Thank you for taking my call. If you could share a little bit on what you're seeing within the competitive landscape, obviously a nice step-up in sales. Are you seeing that from new customers, lapsed customers or is this a greater frequency? And then also, if you could share a little bit on -- you've talked a lot about innovation and newness, how should we think about that in terms of a cadence in terms of frequency, the number of items when we should really start to see in the meat of that? And then I have a follow-up.

So our growth is a good balance of new customer frequency as well as ticket average. We're happy with the rate of growth across all of those components. Obviously, as we continue on our journey, launching new products and marketing them in a compelling and engaging way, we definitely want to increase the number of customers that come to us and we want to increase the frequency with which they come. So that -- right now, I think that there is an opportunity for us to continue to focus on the things that are driving the business today. And as we look forward, we'll continue to explore new opportunities to bring in new customers.

When you think about the gap between company and franchise, what do you think were the major driving forces? Was there anything geographic you were seeing anything from your direct major competitors? And then also can you share a number of reward members out there and the percentage growth in the quarter? Thank you.

So, the difference between our franchisee rate of growth and our company rate of growth, there is not significant differences between the operating model or how they're running the business and how we're running the business. There are some unique geographical challenges, obviously, with wage inflation and some of the other things that face specific markets that requires those markets to manage their pricing and their promotions a little bit differently. And that can be having an impact on some of the sales growth percentages. But fundamentally, the franchisee businesses and our company operations are very consistent and operating on the same level. The reward details -- we're not currently sharing all the specifics associated with that. As you know, we've launched a new reward program this year. We're happy with the benefits that we're seeing from that reward program, that loyalty program. I think that we will need to continue to optimize that as one-to-one marketing and other data-driven initiatives become a bigger part of the go-to-market strategy, and we'll continue to focus on that. I don't think I answered your question on competitors. Obviously, we think that the competitive environment is very aggressive. We track it very closely. Obviously our strategy and partnering with the aggregators is very different than some of the other industry leaders. But, we love our positioning in this marketplace. We love the fact that we are focused on our food that we believe that through better quality food, we can differentiate ourselves and continue to succeed. And we're going to focus on food and delivering great service and we're going to support those focus areas with our technology platforms.

If I could steal time for one more, on the franchise side, we've heard some of the burger chains have shared a little bit more on the unit economics in terms of either flattish or growing monthly trends. Can you call out at all the magnitude of other improvement or, if they're just seeing leveled off franchise level profitability and then I'll turn it to you. Thanks.

I'm sorry Brett, can you clarify that question a little bit. I don't think we've got it clearly?

Sure. What I was saying is the burger chains have shared what their unit level profitability is at the franchisees not actual numbers. But like magnitude one of them talked about seeing nearly a year's worth of monthly growth of their franchise level profitability and other talked about how they had flat profitability last year. Would it be possible to share what you're seeing in terms of your franchisees profitability? Has it stopped declining? Are they leveling off? Are they seeing sequential improvements either on a core or including the benefits you're giving them? Thank you.

Yes I don't think I can speak to the specifics of our franchisee profitability. But what I can tell you is that, obviously as our revenues grow and we get more productive and efficient in our operations their profitability will absolutely be positively impacted.

Our next question comes from Lauren Silberman of Credit Suisse. Your line is open.

Hey thanks for the question and Rob congrats on the new role. So on the delivery aggregators is the profitability of the delivery transaction through an aggregator at parity with the direct delivery transactions? I'm assuming you're not offering the promotions to the aggregators?

I wouldn't say, it's exactly the same but I would say that we're very happy with the profitability associated with the aggregator orders.

Okay. And then on the delivery driver shortage is this more reflective of a broader macro challenges or specific to the company and should improve over time as sales recover?

I would say it's much more broader macro issue, but I also think as we continue to improve the revenues and we continue to grow transactions which is absolutely our focus, we will be able to give more incentive to drivers -- and drivers will be able to make more. I think it's both right now. It's the macro factors that are primarily impacting us. But I think our business improvement will also help us attract and retain drivers.

Okay. And then just my final one on company restaurant margins, a lot of improvement there, any color on what's driving that improvement whether it same-store sales, cost savings is there anything one-time we should be aware of?

Hey Lauren. This is Joe Smith. There's a couple of things as you look at it. Last year obviously we had the events of the third quarter and kind of impacted our sales and it took a while for our operations team to adjust about staffing and some operations. So it was a little bit lower. As you look at this year, we do get the benefit of 2.2% comparable sales. So you get more efficient and I think as you've seen throughout the year, our operations team is really focused on improving some efficiencies with the labor cost. So I think you see the benefit of that as you get the improved sales. Our advertising was a little more efficient this quarter and also we did get some favorable insurance cost which again, it's been one of the initiatives that we started a year ago and hopefully starting to see some benefits from some things that we can do to keep our insurance cost lower than we've historically seen.

Great thank you.

Our next question comes from Jim Sanderson of Northcoast Research. Your line is open.

Hi thank you for the question. Just want to get a better sense of what do you think has been working best to improve same-store sales in the back half of the year? And what I'm hunting for is trying to understand, how the consumer has changed the way they use Papa John's today versus the earlier half of the year? What's driving that improvement?

Thanks Jim for the question. What I would tell you is, we've had to overcome this reputational issue as well as focused on our food and I do think that the Shaq campaign and the efforts that we've made in our communities through our diversity efforts last year, we created diversity equity and inclusion capability here at Papa John's. And I think that, that team has done a lot of great work to help reinforce the Company and what we stand for and the kind of company we are and the kind of people that work here. And then the Shaq campaign is kind of the culmination of that. And so I do think that they – we’re starting to turn the corner on some consumer sentiment. I also think that some of the changes that we're making on the operation side are helping us handle our customers' orders a bit better and we'll continue to strive to do that, but -- the better we can get from an operation standpoint the more focused we are on both reputational management as well as food innovation and marketing the more customers we're going to get back.

Just a quick follow-up. Is there anything related to some of the price point promotions you've had in the marketplace in the back half that have stood out as being exceptionally well-performing or disappointing didn't seem to resonate with the consumer as well? $12.99 extra-large promo or two freight dollar that type of thing.

Yes I would tell you that we haven't done any super aggressive price-pointed promotions at scale. I think as the team has been working on testing some of these National Programs, we've kind of run some more traditional value programs locally. So I wouldn't attribute a lot of our sales growth to any type of value programs that have been overly successful.

Very good and if I could just follow-up with one brief question, just wanted to clarify for the third-party delivery aggregators, do they or do they not, are they able to market the promotions and discounts that you see through digital marketing campaigns? Or is it just full-price menu pricing that they offer today?

They don't offer our discounts. They do offer their customers discounts through their channels. So, our digital promotions and discounts are not reflected in their orders.

And do you plan to change that? Or is that status quo?

Right now we believe the model is working pretty well. We're continuing to work with them to optimize that. But we are not currently pushing our discounts and our offers through their channel.

All right, thank you very much.

Thank you, Jim.

Our next question comes from Todd Brooks of CLK & Associates. Your line is open.

Hey! Thank you and congrats on the progress this quarter, one question with two parts. The first, on the $80 million of franchisees support that was announced, the cadence was implied that 50% of that would be used in support in the second half of 2019 and the balance in 2020. Does that cadence of support still hold? And if that's so, with only $5 million of incremental contribution to the marketing fund in Q3? Does that imply that there is a larger bolus of marketing funds being contributed in Q4, possibly across three months of branding campaign with Shaq or the launch of the campaign around the new crushed variation?

Sure. As you recall, that $80 million $40 million of it was marketing. So 50-50 in each year would be $20 million. And as you called out, we spent $5 million in Q3, so staying on track to deliver that plan that, would leave us with approximately $15 million in Q4. Now that being said, that's not necessarily $15 million more year-over-year. You have to take kind of what we had already had in the plan plus what we're layering on top. So, to answer your first question yes, that ratio is still in place. It may not be exactly 15%. But it will be very close. But that shouldn't imply that we're going to have $15 million necessarily on top of what we spent last year.

Yeah Todd just as a reminder last year we also had $10 million dollars from marketing contributions to the plan in the fourth quarter. So it’s quite improving.

Okay. thank you. And then secondly, after the initial launch of the Shaq campaign in September thoughts on how his uses as a spokesperson will evolve going forward, over the next couple of quarters here because he is such a large personality and universal marketing asset.

As I mentioned earlier, we are very happy with the impact that the Shaq work has had on the brand. And we will continue to market that partnership. And continue to leverage him in the best ways possible. That could include ongoing reputational work. But it also could mean that he shows up in some of our more product-focused and promotional work as well. So we're going to continue to explore ways to bring that great relationship to life for our brand.

Okay. Great thanks for the questions.

There are no further questions. I'd like to turn the call back over to, Rob Lynch for any closing remarks.

So, thank you to everyone who participated on the call. Obviously, my first earnings call and I'm extremely excited for the results that we've been reporting. I would also be remiss if I didn't once again thank Joe Smith, on behalf of all of our management team, on behalf of our Board of Directors, on behalf of the Company, for everything that he has done here at Papa John's over his 20 years. He stepped up a couple of years ago, into his current role. And it was a challenging time for this Company with a lot of transition and a lot of change. And he was a guiding force. He is a man of great integrity. And I'm grateful for his commitment to help us through this transition. And I wish him all the best in all of his future endeavors as I know we all do. So thank you, Joe.

Thank you.

And thanks to everyone for participating in this call. I look forward to speaking with you soon. And that concludes our call today.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.