BJ's Restaurants, Inc. (BJRI) Q1 2014 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to BJ's Restaurants Incorporated First Quarter 2014 Results Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Greg Trojan, President and CEO. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to the BJ's Restaurants First Quarter 2014 Investor Conference Call, which we're also broadcasting live over the Internet. I am Greg Trojan, BJ's Chief Executive Officer and joining me on the call today are Greg Levin, our Chief Financial Officer; and Greg Lynds, our Chief Development Officer. Wayne Jones is usually on our calls, our Chief Restaurant Operations Officer. He's not with us today as he is visiting restaurants on the East Coast. After the market closed today, we released our financial results for the first quarter of fiscal 2014 that ended on Tuesday, April 1, 2014. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Dianne Scott, our Director of Corporate Relations, providing our standard cautionary disclosure with respect to forward-looking statements. I will then provide an update on our business and current initiatives, and then Greg Levin, our Chief Financial Officer, will provide a recap of the quarter and some commentary regarding the rest of the year. After that, we'll open it up to questions. So Dianne, go ahead, please

Thank you, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, May 1, 2014. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission.

Thanks, Dianne. Before I review our business results for the quarter, I'd like to take a moment to go over our announcement last week regarding several actions that we took to enhance long-term value for the company's shareholders, including an agreement with institutional shareholders who control approximately 16% of our shares. As announced, we have agreed to nominate 3 independent directors to stand for election at this year's annual meeting, including 1 board addition that became effectively immediately upon last week's announcement. The dialogue we have had with both PW and Luxor has been extremely constructive, and they've expressed their support of the company's current strategy, including our recently implemented initiatives to drive growth and increase profitability. We look forward to the benefit of their contributions as we strive to drive long-term value creation for all BJ's shareholders. Our board also authorized the repurchase of up to $50 million of the company's common stock, $25 million of which is expected to be repurchased by the end of 2014. Importantly, BJ's remains committed to the continuation of our restaurant expansion plan as a key driver of creating sustainable long-term value for shareholders. Our objective has always been to execute an operational and financial strategy that represents the best means of building value over the long-term for BJ's and our shareholders. With significant cash flow from operations and our excellent balance sheet, BJ's is positioned with the financial capacity and flexibility to continue our long-term growth strategy of expanding restaurant capacity by at least 10% annually, while continuing to execute the recently announced sales building and brand initiatives and returning capital to shareholders in the form of repurchases of our common stock. Finally, we announced that we retained an outside consultant to assist us in the ongoing implementation of our cost optimization initiative, whereby we are reducing costs that do not directly affect the overall quality and value of the guest dining experience. We saw the benefit of this focus in Q1 and expect to derive further value from this effort in the coming quarters. So let me now turn to Q1. So while our business is not yet where we'd like it to be from both the top line and margin perspective, the steps we have taken to drive traffic and reduce cost in the middle of our P&L began to show results in Q1, particularly in the back half of the quarter. As all of you are aware, January and February were difficult months for everyone in our space. We all know the weather played a big role, as did the ever-increasing early year headwinds from payroll taxes, healthcare costs, et cetera. However, we continue to be focused on the things we can control in our business and specifically, on 5 key sales driving initiatives, which are improving affordability, speed, food quality and innovation, hospitality, and brand awareness. While we started to work on these initiatives in 2013, Q1 marked the beginning of much of our implementation. We were able to play offense as we rolled out a new menu at the end of February, along with a new brand look and feel. We introduced 15 new menu items with a focus on delivering great value, and many of which will also address the increasing demand for lighter, better-for-you choices. We supported the introduction with a variety of media, both digital and broadcast, including TV in markets covering about half of our restaurants. While there is more work and much analysis ahead, we are encouraged by the results in the back half of the quarter in terms of sales momentum, particularly by our continued improvement in guest traffic trends where we continue to outpace the industry by a fairly significant margin. I believe traffic is the best long-term indicator of success as long as it is accomplished in a way which is sustainable from a profitability perspective. Our overall traffic for the quarter was approximately 180 basis points better than the industry as reported by Knapp-Track. However, our sales dollar comparisons lagged the industry as we consciously minimized price increases over the last year and introduced more everyday affordable items on our menu. Our average check for the first quarter was down approximately 70 basis points compared to an increase of over 200 basis points for the industry. In March, as our business strengthened on the heels of our new menu and brand launch, our traffic comparison improved even more as we ended the month 320 basis points better than the industry and actually outperformed the market in sales as well by 60 basis points in the month. In our important California market, we ran 390 basis points better than Knapp-Track and if it were not for a record-setting rainstorm in the first weekend of the month of March, we would've run positive guest traffic for the period. LA, as many of you know, is our largest market, and this is the first time we mounted a TV campaign here, backed by solid product news. It clearly responded as we saw about a 6.5% sales lift during the 3 weeks we were on air in LA, with ongoing strong follow-on results as well. TV moved the needle in all of the markets we placed it but as always the case, some more than others. We also have seen incremental gains from our digital campaigns in markets where we employed digitally embedded video content, personalized retargeting and social campaigns. It is notable to mention that we're able to create this improved momentum while taking a significant step back in the level of promotional activity, i.e, discounting versus the last half of 2013. We anticipate leveraging what we have learned in terms of media mix in the second quarter and the back half of this year, and expect to continue to refine our media model to optimize the effectiveness of our marketing spend. I am also encouraged by the success of many of the new items we rolled out in our late February menu. New, crave-able items like our Mediterranean chicken tacos, chipotle cherry salmon, kale and Brussels sprouts salad are sustaining among our top mixing items and looks like they will be winners on our menu for a long time to come. Strategically, they strengthen our appeal to more health-conscious guests as well. Collectively, our new menu items introduced in February represent about 10% of our food sales today. Also, our value oriented Brewhouse Burgers, which we introduced late last November, are sustaining really well, another example validating our menu strategy of innovative flavors combined with compelling price points work really well. At the same time, we did not ignore the indulgent part of our menu with the introduction of a new Salted Caramel Pizookie, which has vaulted to our second highest selling Pizookie flavor. While the awareness building media support along with the menu innovation early results are encouraging, we also continue to work hard at making BJ's dining experience faster for those guests on occasions where dining more quickly is important. Our Project Q kitchen complexity project has helped improve our kitchen cook times year-over-year, and we continue to work on operationalizing our mobile-based order ahead and pay at the table capabilities. We have soft launched pay at the table in all restaurants and order ahead in Southern California. They both currently operate as mobile websites and we're very pleased with the operating performance from both a technical and a restaurant operations perspective. Before mounting any meaningful marketing behind them though, we've wanted to shake out any operational issues while making access to these functions part of an overall app to be available for iPhone and Android devices. Our app will also enable guests to add their names to our call ahead list without calling our restaurant, as well as perform many basic loyalty reward tracking and administration. We plan to commence some test marketing messages around our new app and these benefits to determine the best messaging and media combination in the upcoming quarter. We're seeing a 20- to 25-minute reduction in dining times when these tools are used by guests. So we think we have a real benefit to tell those who want the quality of our dining experience but just don't have the time that has typically taken in the past to experience it. I think this has the potential to make us very competitive with fast casual in terms of speed and convenience. Driving our top line is our #1 focus. However, our close second is making our cost structure inside our restaurants and among our support services even more efficient. We've been working particularly hard on the middle of our P&L operating costs. This includes our restaurant supplies, repair and maintenance, plate-ware, linens, et cetera. This category has cost defined about 4.5% year-over-year, reflecting the impact of a number of our initiatives in this area. Our efforts go well beyond just telling our operators to spend less. We actually are focused on doing things differently, such as sourcing differently, evaluating necessary steps and frequency of service in some cases. We saw some of the success of this initiative in the first quarter, which Greg Levin will touch upon in his remarks. While our labor percent of sales de-leveraged with our sales decline, we actually used about 2% fewer labor hours in our comp restaurant versus last year, with the greatest decline, about 3.5%, coming from our kitchens, a positive testament to our ops team's work on reducing kitchen complexity through our Project Q initiative. We've also taken this cost savings mentality to reducing the investment costs required to build and open our restaurants. Going forward, the majority of our restaurants will be about 15% smaller in size and cost approximately $1 million less to open. We know from our current portfolio of units that around 7,400 square feet is the optimal size in terms of guest experience, as well as operating efficiency in most trade areas. As we announced in today's press release, we have decided to take down the number of new openings this year to 11 restaurants, in part to ensure we're able to build them with our new design and square footage, which will achieve a higher cash-on-cash return for our new restaurants. As we noted in the past, we believe this new prototype should increase our cash-on-cash returns from our historic target of around 25% to 30% going forward. We also believe taking some of the operational energy behind these openings and applying it to executing our sales building initiatives is the right call. This number should enable us to grow restaurant weeks this year at around 11% and pushing the number of them into early part of next year should enable us to open a greater number next year so that we can continue to achieve at least a 10% increase in operating weeks per year. So overall, I'm encouraged to see our strategy to improve value and affordability along with out-of-the-box food innovation while we refine our ability to efficiently drive awareness starts to improve our top line trend, particularly traffic. However, I continue to believe the consumer spending environment is not going to get appreciably better in the near-term as is evidenced by yesterday's Q1 anemic GDP tally. As such, our cost savings work will be paramount as we look for ways to allow us to moderate future pricing and restore margins closer to our historic high double-digit levels. As we head into a couple of our busiest months of the year, we're planning on continuing our sales momentum through some incident and guest check building initiatives, namely introducing new starter salads and higher-priced but still great value seafood and steak offerings, which give our guests the opportunity to celebrate the upcoming special events season with more indulgent than normal menu choices. I also believe the power of word-of-mouth, especially driven by social media, about our well-received new items will provide positive viral momentum. At the same time, we plan to reinforce our fundamental value messaging by driving a 30 entrées under $10 message through a variety of digital and broadcast media. I'll now turn the call over to Greg Levin, our Chief Financial Officer, for his financial recap of the quarter. Greg?

Hi, thank you, Greg. As we noted in our press release today, first quarter revenues increased approximately 9.1% to $205.8 million, and our net income and diluted net income per share were $4.6 million and $0.16, respectively. During the first quarter, we incurred approximately $1.6 million in pre-tax charges or around $0.04 per diluted share for professional fees related to our shareholder settlement. Therefore, excluding the settlement charges, our adjusted net income and adjusted diluted earnings per share is $5.8 million and $0.20, respectively. And you can see that reconciliation on our press release today. Our 9.1% increase in the first quarter revenue reflects an approximate 13% increase in total operating weeks, and that's partially offset by a decrease in our weekly sales average of about 3.3%. Our comparable restaurant sales decreased 2.9% during the quarter, and that's compared to a positive 0.4% from last year's first quarter. Our 2.9% decrease in comparable sales for the quarter consisted primarily of a decrease in traffic of about 2.2% and an increase in our average check of approximately 0.7%, driven primarily by mix and incident rates and not driven from any significant increase in discounting. As we mentioned on our fourth quarter call, the first part of the quarter was impacted by weather, which ultimately impacted comp sales by about 40 basis points for the entire first quarter. We also are comping over mid-teen increases in comparable restaurant sales in the Dallas, San Antonio and Oklahoma markets from our TV test last year that ran in March and April. These markets were not included in our TV run this year as we decided TV dollar returns were better spent in our California market where we have the greater penetration of restaurants. In the first quarter, we had approximately 1.1% of menu pricing. As Greg Trojan mentioned, we finally got to play some offense, and it allowed us to exceed our initial expectations for the first quarter in terms of sales and operating profit. Our restaurant level margin was 17.1%, sequentially improving from Q3 and Q4 of last year when our restaurant level margins were 16.3% and 15.1%, respectively. As we discussed at our Analyst Day, our target is to get our restaurant level margins back to the 19 plus percent. So while we have quite a lot of room to go, we are off to a good start as our restaurant operators did a good job of controlling those items within their control, coupled with the start of our cost savings initiative focused on our nonstrategic restaurant operating cost and support. Specifically, our cost of sales of 24.9% was up about 40 basis points compared to last year's first quarter and sequentially down about 30 basis points from the fourth quarter. The increase compared to last year's first quarter is primarily due to commodity cost increases and changes in menu mix, while the decrease sequentially is due to less discounting compared to the fourth quarter of last year. Labor during the first quarter was 36.1%, that was up 110 basis points from last year's first quarter, which was a result of the de-leveraging from lower sales on both hourly labor and our fixed management wages. However, as Greg Trojan mentioned, our restaurant operators did a good job managing labor productivity during the quarter, despite the choppiness from the severe weather in the first half. In fact, our hours used were down approximately 2%, as we mentioned, compared to our guest count, which were down about 2.2%. Our operating and occupancy costs were 21.9% of sales for the first quarter, an increase of 40 basis points from last year's first quarter. The increase in operating occupancy costs is a result of an approximate 70 basis point increase in marketing spend, which went from 1.8% of sales last year to 2.5% this year. Overall, we spent approximately $5.2 million during the first quarter on marketing, as compared to approximately $3.3 million in marketing spend last year. Our increase in marketing spend was offset by an approximate 30 basis point decrease in the other operating and occupancy cost. Therefore, excluding marketing expense from operating and occupancy in both years, we averaged about 21,000 per operating week this quarter compared to 22,000 last year, that is a decrease, as we mentioned, of about 4.5% year-over-year. At our Analyst Day, we said we are targeting to remove at least 100 basis points from our operating and occupancy costs, excluding marketing over the next 3 years. So while we're off to a good start, it's just the beginning. We're pleased to see that 30 basis point reduction in cost and we're looking forward to the ability to gain some additional leverage on these costs going forward. And we're frankly, very happy with the 30 basis point reduction despite the soft sales. Our general and administrative expenses for the quarter were approximately $12.9 million or 6.3% of sales, in line with expectations. Actually, the $12.9 million is about 6.2% of sales, not 6.3% of sales -- excuse me there. Depreciation and amortization was approximately $13.4 million or 6.5% of sales, and it averaged a little over 7,000 per restaurant week, which is in line with our most recent trends regarding depreciation and amortization. Preopening was $1.1 million during the quarter, that represents costs primarily for 2 restaurants we opened during the quarter and some opening costs for restaurants that just recently opened in the second quarter. Our cash rate for the quarter was 24.6%. It's a little lower than what we anticipated due to some additional WOTC or work opportunity tax credits during the quarter. Before we open the all call up to questions, let me spend a couple of minutes providing some commentary on our outlook for 2014 and the second quarter. All of this commentary is subject to the risks and uncertainties associated with forward-looking statements as discussed in our filings with the SEC. As you know, Easter Sunday last year was in the first quarter and this year, it moved to the second quarter. Easter weekend is very slow for us, so taking out the Easter weekend and trying to normalize for spring breaks, which seem to be all over the calendar this year, as well as difficult comp comparisons in Texas that I mentioned earlier, I'm estimating that our sales trends currently are running in the negative 1.5% to 2% range. Most importantly, guest traffic trends continue to improve meaningfully and are running a bit ahead of our sales as we invest in making our concept even more affordable. Remember, our average check is down year-over-year as our new menu items like our Brewhouse Burgers and kale and Brussels sprouts salads are proving to be very popular. In regards to menu pricing, we have about 1.6% of menu pricing currently on the menu. Our next menu is expected to roll out in July and we are currently evaluating additional menu pricing in select markets. For the second quarter, I would expect around 1,945 or so restaurant operating weeks. I'm expecting cost of sales to be around the 25% range. We've locked in about 60% of our commodities for the rest of 2014. The commodities on shorter-term contracts include cheese and ground beef and steaks. I'm expecting labor to be in the mid to upper 35% range in the second quarter, and that's based on our current sales trend. However, as I mentioned before, labor is significantly influenced by comparable sales increases or decreases. We're going to make sure labor is set up to take care of our guests because the bottom line of great food and great service and hospitality ultimately results in improved top line sales. We have seen too many restaurant companies eliminate the ability to build sales by trying to save on labor by cutting their sales force, reducing the number of hosts at the front desk and minimizing kitchen staff. Therefore, we must and we will hold our line in labor so that we continue to provide great service to our guests and not make rash labor decisions that could tarnish our brand going forward. During the second quarter, I'm expecting total operating and occupancy costs to be in the range of $25,000 a week. Included in this number is about $2,400 per week or $4.7 million in marketing spend. For comparison purposes, last year, our total operating and occupancy costs was also about $25,000 per week and that included about $2,200 related to marketing. Therefore, excluding marketing, we continue to target savings in our restaurant operating costs. I would anticipate G&A in the second quarter to be around $13.5 million or so. It will be up over Q1 as we currently have more managers in our training program for new restaurants. Also, we will see increased support cost related to new restaurant openings as compared to the first quarter. I anticipate opening cost in the $1.5 million to $2 million range in the second quarter, and that's going to be for the opening of 3 restaurants, plus we'll incur some opening costs per restaurant that are going to open later in the year in Q3 and Q4. Income tax should be around 27% for the quarter, and our diluted shares outstanding should be around 29 million. In regards to our liquidity, we ended the first quarter with a little over $45 million of cash and investments. Our line of credit for which we have no funded debt or funded draws is for $75 million and does not expire until January 2017. Our gross CapEx budget for 2014 before expected tenant improvement allowances and sale leaseback proceeds is now expected to be approximately $90 million, and that's based on 11 new restaurants and the purchase of the underlying land for up to 4 restaurants. As we mentioned in the past, our expansion strategy is predicated on leasing our restaurant locations, however, from time to time, we may purchase the underlying land for a new restaurant that is the only way to secure a highly desirable site. In these cases, we generally will sell the underlying land once the restaurant is closed. In 2014, we expect to receive proceeds from tenant allowances and sale leaseback transaction of approximately $10 million. In addition, we will continue to invest in our core restaurants to make sure our restaurants remain in a like-new and first-class manner and remain relevant with our guests. In today's challenging operating environment where casual dining is more central component of the enjoyment as opposed to just pop-in dining, it's extremely important that we continue to raise the bar to provide a higher quality, more differentiated dining experience for our guests, and this is reflected in our planned net CapEx expectation in the $80 million range. Again, that's the net CapEx of $80 million, gross CapEx of about $90 million. We currently expect our -- to fund our expansion and capital expenditures from our cash and investments on our balance sheet, our cash flow from operations and from the proceeds from our tenant improvement allowances and sale leaseback transactions. Finally, while we are happy with the quarterly sequential improvement in restaurant-level margins, they are still not where we believe we can get them over the long run. We're off to a good start in cost-saving initiatives, but there are more to come. We have also had a good start with our new menu and branding, but we're not yet where we want to be on sales. We just started playing offense about 8 weeks ago, and we are excited about the initiatives around affordability, speed, hospitality and menu creativity. In summary, we are taking a holistic approach to strengthening our business and operating practices with the first quarter reflecting some of those initial benefits and this focus. We have established organization-wide initiatives that build on our strength by cultivating new efficiencies. Our corporate and operating personnel are on board with our direction, and we believe that our expansion and our operating plans, combined with prudent management of our capital structure, is a proven formula for sustaining long-term growth and appreciation of shareholder value. That's all for our formal remarks. Operator, let's go ahead and open the line up for questions.

[Operator Instructions] Our first question is from the line of Brian Bittner with Oppenheimer & Co. Brian J. Bittner - Oppenheimer & Co. Inc., Research Division: Just a clarification, so are you saying that the start of the second quarter, that same-store sales are in the negative 1.5% to 2% range, is that basically what you said?

Brian, they're actually a tad higher than that because of the Easter weekend. That weekend is, for us, and going into -- is extremely slow. In fact, Saturday and Sunday, generally, the weekend is about 60% of our sales. So you think about how that mix is through the week. And that Saturday before Easter, and then, the Easter Sunday are slow. When you add it up from an entire quarter perspective, it's fairly immaterial, we probably got about maybe a 10 basis points improvement out of it in Q1, if you think about it over 13 weeks. But with only 4 weeks of sales data currently, that Easter weekend slowness is pretty impactful. If you try to isolate that out, it's probably about 1.5% to 2%. However, I would tend to say that our more recent trends are probably more positive in what we're seeing kind of in late April, and again, into May, it's only May 1. As you get further away from some of the kind of craziness, for lack of a better term, in trying to find the -- how spring break calendar has kind of lined up. So if you pull away from that, I think, we're in that negative 1.5% to 2%, but we're seeing probably better trends more recently. Brian J. Bittner - Oppenheimer & Co. Inc., Research Division: Okay. And the average check is running at a negative what currently?

What we saw in the first quarter was down about 70 basis points compared to the traffic trends. It's probably not as much now because we rolled out that new menu, instead let's call it March, and about 1.6% of pricing. We're seeing about 40 to 50 bps of that pricing go away with menu mix, meaning, kale and Brussels sprouts that we put on, chicken fajita tacos, all those items are under $10. So when we think about menu mix impact on our total pricing, we're probably seeing more of about a 1% to 1.2% effective pricing when you take into account the menu mix for the new items. Brian J. Bittner - Oppenheimer & Co. Inc., Research Division: Okay. And then, just one question on cost. You guys talked about and you've kind of been talking about the elimination of certain nonstrategic spending that's going to really allow some acceleration in earnings growth. Can you just dive into that a little bit more, really kind of rip that apart a little bit and tell us what you're going to be focused on from a cost perspective as it relates to that?

Well, I think, we lined up one of those things at Analyst Day. But some of the specific ones that haven't taken place yet will be how we source our China silverware and glassware. So there's some big savings coming from that going forward. We made some supplier changes in regards to R&M from a geographical and regional supplier standpoint, getting some leverage as we built more restaurants in certain areas. The other side of those things is we've got demand management in place, both on utilities, as well as facilities side. We're doing more preventative maintenance with our facilities department coming out to our restaurants. So as we go through and look through some of those strategic or nonstrategic operating cost that don't necessarily affect the guests, that's where we're kind of hitting those things. So our facilities department will work with our kitchen managers in making sure they understand what's the right preventative maintenance program to have in place there. And then, at the same time, can we do better leveraging our restaurants in regards to hourly rates with our service contractors and other suppliers.

Our next question is from the line of Matt DiFrisco with Buckingham Research.

Just a follow-up on that question also. I just was trying to clarify as far as what the actual reported comp would be quarter-to-date just so I presume, when you report the quarter, for our modeling purposes, if you could just give us what it is quarter-to-date now, and it does sound like, obviously, there's some impacts in there and adverse things from the holiday, and it does sound like you're doing, I think, you said positive comps as early as 1 day into May, but that's obviously a nice encouraging sign. Can you just give us what the actual comp is quarter-to-date?

It's about negative 2.5 quarter-to-date, and as I mentioned, we're probably seeing more in the negative 1.5%, 2% range if you try to pull out specifically kind of that whole Easter weekend.

And then, you're encouraged now by even more recent the last couple of days or weeks you're saying, if I did not hear mistakenly, positive.

Yes, Matt, I think, what we're seeing -- and this is going to sound kind of -- it just sounds different than maybe more recent trends, is we're seeing greater choppiness in regards to comp sales. Well, we'll put us some low single-digit positive comps, and it will come back with some low single-digit negative comps. Where I would tend to think -- I shouldn't say think, I tended to see in the fourth quarter and early in the first quarter, just consistent negative days. So we're seeing a little bit better traction, I think, on looking at our menu items and how they're working, and as we pull ourselves away from some of the spring break flip flops and some of the things around Easter, we're starting to see a little bit better traction.

That's great. And then, I guess, as far as the new menu, can you talk about that or is it too early to tell? But any sort of time analysis on table turns? Are you seeing -- you spent a lot of time at the Analyst Day about some of the taking out some of the complexity in the kitchen and it sounds like you did that on the actual dollars spent on labor. But how about table turns and preparation of bringing dishes to the table and is that part of the traffic recovery that we're beginning to see?

Yes. We mentioned on the call, and I don't know on -- we would call it run-time. So it's one of the things on -- specifically on the run-time. We definitely saw improvement in what we call key cook times as we measure the cook times at both lunch and dinner, and that's one of those key metrics that we look at and we've seen that improvement there, which is one of the first parts that you want to see is obviously the improvement in the cook side of the business. I don't have in front of me specifically our guest duration metrics. I can't necessarily comment on that. I don't know how much they've changed. But that Project Q initiative that we talked about, as well as some of the newer menu items, go after the key cook times. So if we can cook it a little bit quicker, obviously, we're going to be able to run it out to the rest of the guests a little bit sooner. The other side of that, that we continue to work on is obviously things that we talked about regarding global pay and mobile ordering, and we're getting some traction there. The people that use it love it. We get great feedback coming from our guests everyday, it's something called Direct Connect, they're just, what a great device this is for our restaurants. But we still need to do better in regards to telling our guests the benefit of those 2 items that, I think, ultimately, can prove out to driving capacity in our restaurants.

That's great. And then, the last question I had, with respect to Texas, I know, at the Analyst Day, you spent a little time talking about some of the legality and changes there, the brewing process. Where do we stand in that? Is that all behind us now? Or you had to start bringing back in some of the beer that was being brewed outside? How is that and what's -- will that have any margin impact throughout '14 benefit or adverse?

It will not. It shouldn't have any benefit going forward. So let me kind of step back, your question had a lot of parts to it, Matt. It's behind us in regards to the fact that we have reached a legal settlement with the TABC, or the Texas Alcoholic Beverage Commission. As a result of that settlement, I think, we believe, we talked about that at the end of the fourth quarter, is we will actually be building a brewery in Texas to take care of our Texas beer going forward, and that will take place early next year in 2015. So that's part of our CapEx number this year, and we're talking about $90 million in CapEx, part of that is going to be investing in that brewery from that standpoint. Ultimately, when we run those numbers, because of the scale that we have in Texas, we'll be able to produce beer in Texas cheaper than what we do -- what we contract for it now. So I think, we'll get some benefit there going forward. But again, when we think about beer in general, we think about it in our total cost of sales, beers got high margin, and we're not going to necessarily pick up 50 or 100 basis points by this change from that standpoint, but it could help us a little bit going forward, but we'll start to see that next year and not really this year.

Could you just remind me how much of the $90 million is associated with that?

I think, we have about $2 million in the budget, maybe $2.2 million related to a land purchase in the Texas area, and then, to build out the brewery. And it's going to be -- I believe, I got Greg Trojan -- Greg Lynds here, it's going to be 20,000 barrels, which gives us the ability to add a lot more expansion into Texas and really take care of our Texas brewery needs for a long time.

Our next question is from the line of John Glass with Morgan Stanley.

Greg Levin, first, I just want to clarify the mix question. So if your traffic was down 2.2 this quarter and your check was down 70, but you had the 1.1 in pricing, so your mix is down like 180, right, 1.8%, is that right, from mix?

I think, it's mix and what we call incident rates. We've seen the lower incident rates around nonalcoholic beverages, your traditional carbonated soft drinks, but if you kind of put those there, that's probably about right.

And is that -- just, I guess, a go forward question, is that about the way you see it going forward? You're going to be doing, I don't know, less promotion of high-end items or maybe more moderate price? So that's going to be a counterweight to comps throughout the year? Or is that more isolated to the first quarter?

Well, I think, if you listen to -- I'm not saying you didn't listen. John, in our formal remarks, we made a comment that we're going to introduce some things called starter salads and a couple of other areas in our menu. And actually, our goal is to increase incident rates on those. So you think about the areas that are probably more, for lack of a better term, discretionary items, they're going to be around alcohol, they're going to be around starter salads, appetizers and those areas. And just last year, we spent a lot of time working on what we would call center of the menu, affordability in that $10 area. We think, we've got an opportunity to go back after appetizers to drive incident rates. So again, kind of start to move that positive mix. It's very, very reminiscent of what we did with Snacks & Small Bites coming outside of recession. We put Snacks & Small Bites on and we saw our incident rates go up, specifically in appetizers, that helped drive our average check up greater than just pure menu pricing, and obviously, added some pretty successful comp sales. And we think, we've got that opportunity going forward there. So we're looking at that. The other thing, as we mentioned today, as we go into the holiday season here in the second quarter, when I say holiday season, I'm talking about Father's Day, Mother's Day, graduation, some of the things we are going to concentrate from an outsourcing standpoint, and Greg Trojan mentioned it, and I'll let him comment here in a second, relates to steaks and other things that help drive up maybe not necessarily incident but might help drive mix to the positive side of things as we continue to work on the everyday affordable. Greg?

Yes, the thing I'd add, John, is particularly, appetizers is sort of the next -- one of the next area similar to the middle-of-the-menu where, frankly, it's been an area we haven't innovated in a while. We think there are some price point room because you look at most of our appetizers are large, shareable appetizers but their price points -- we need some more entry price points that are more accessible and more tempting, if you will. So we think, the formula for some newer, exciting flavors, a couple of better-for-you items at some price points that are really attractive, like I said, just like we have had success in the middle-of-the-menu with those items we'll work on, on the incidence front and help build average checks. And everybody is facing the non-alcoholic beverage challenges. But I think, getting aggressive there certainly is going to help.

Can you also just comment, you said you hired a consultant that's going to help you with some of these cost issues. So what specific items are they working on? What's your schedule deliverable if you fully engage and then you're starting to hit your stride, or is there a lot more work to be done in the back half and maybe what line items are they working on the most?

It's early there. I'm not going to go into tons of detail there. But I'd remind you, we've had this focus since at least the middle of last year. And frankly, as we've seen some of these opportunities, we just don't have the level of internal resources to go after them as fast as we're finding the opportunity. So -- and then, it's always helpful to have some objectivity of outside experience, perhaps to help us see things that we're not. So I -- we're viewing it as a way to supply more resources and more focus on something that -- where we think there's some real opportunity in.

Our next question is from the line of Jonathan Komp with Robert W. Baird. Jonathan R. Komp - Robert W. Baird & Co. Incorporated, Research Division: Greg Levin, first, just a clarification question on the trends that you've indicated, so far, to date in April or early Q2. I think, you said, you think you're tracking down about 1.5% to 2% on the comps when you adjust for all the noise. Could you maybe just clarify the check and the traffic component that you think is included to get to that number?

Jonathan, I don't know if I can do that. I don't know if I have it lined up from that standpoint. I would tend to say, if I thought about our business, and as I mentioned earlier, we're seeing about a 1% menu pricing stick in that regard. So if you kind of did the math, you can probably -- then you're okay if you're seeing a negative 1.5% there or 1% of pricing in there. You can kind of work it from that standpoint. And you're still seeing that negative incident rate on there. I don't think anything's changed materially from what we've talked about from the first quarter.

Well, the other thing I'd add is the improvement is continuing by and large, and look, this is -- we don't have a lot of data on the quarter, but continues to be on the traffic front. So I think, that's important and encouraging to us. And I think, we're looking at our businesses, we've got to continue to drive traffic. Jonathan R. Komp - Robert W. Baird & Co. Incorporated, Research Division: Got it. Okay. That's helpful. And then, maybe just following up on the traffic trends you're seeing in the last couple of months and tied into some of the marketing activity that you had more recently, could you maybe just sum up -- I know some of the comments seem pretty encouraging about the improving or less negative traffic trend line you're seeing. But could you maybe tie that into your original expectations for some of the marketing activities? A lot of the activities that you've done seems like they could build over time in terms of the traction with the consumer. So would you characterize the marketing thus far as meeting your expectations? And kind of how do you expect the trend line to play out going forward?

I mean, the short answer is, yes. I mean, frankly, I'm quite encouraged to see the kind of movement, particularly in a significant market like Southern California and others where we met or exceeded our overall expectations. So -- and then, we're also -- to remind everybody, we have to try elements of this marketing mix to understand which components are being more effective than others. So it's not just about TV. We've been working and trying different forms and different mixes and levels of spend on digital at the same time we're doing this. We tried a very new format in terms of our FSI delivery, which worked really well. So along the way, wherever we can, we're doing test and control groups here so we can understand which components are driving the most efficient results. So as a matter of that test and learn process, we clearly are seeing some things that are working better than others. So some things are meeting our expectations and some things are not. TV is working in some important markets, but TV didn't work everywhere from an ROI perspective. It moved the sales needle everywhere, but we're looking at it as -- from an ROI perspective. So I don't know if that answers your question, but that's how we're looking at the marketing. And look, when we're driving kind of traffic improvement, it's not where we want to be overall. We -- I leave that experience being encouraged. Jonathan R. Komp - Robert W. Baird & Co. Incorporated, Research Division: Got it. That is helpful color. And then, maybe just 1 last clarification on one of the cost ratio, Greg Levin, that you mentioned. I just want to clarify, I think, you said the labor ratio in the second quarter could be in the mid to upper 35% range. First, if I could maybe clarify that, that is the case. And then, related to that, I think, that implies a little bit more de-leverage on a year-over-year basis than what you just saw in the first quarter, so even now, the sales trend line is getting less negative. So could you maybe just clarify that, that is what you said and maybe why you're anticipating a little more de-leverage in the second quarter?

Yes. I mean, as I look through the numbers here, the main reason for that is where we are today. While we're seeing improvement in our trend lines and things like that, we still have basically 4 weeks behind us right now. And while there was a lot of ups and downs that happened in April, and it was difficult to ascertain current trends, we still, as I mentioned earlier, finished negative in the negative 2.5% range. So while we're seeing things a little bit better in that regard and generally our weekly sales average goes up in Q2 versus Q1, so we should be able to bring labor down from 36.1% here in Q1 down in Q2 to the mid-35. I'm still taking the assumption that we're going to be running some of those negative comp sales from there despite the fact that we're seeing some improving days. And as I mentioned on the formal remarks, labor, as much as we can manage certain aspects of it and we're actually very happy with the ability of the things we've done from Project Q and managing the volatility, the fact is labor is going to be heavily influenced based on comp sales, especially when you think about the fixed nature of some of those costs related around managers, the hospitality desk, kitchen and so on.

Our next question is from the line of Jeffrey Bernstein with Barclays Capital.

A couple of questions on the unit opening side. One, I mean, I think, it sounds like you've got 11 that you're locked and loaded on for '14, I know you also mentioned in the press release at least 15 in '15. I'm just wondering whether that is predicated on the improvement in comp? I know, last quarter, you talked about the comps don't get materially better, we'd be inclined not to so reaccelerate the unit growth, so I'm wondering whether you would now define these comps as materially better to say with confidence that 15 or more is happening next year or it still we need to see the comps improve from there to reaccelerate that unit growth rate?

Jeff, it's Greg Levin. I think, based on where we're currently seeing trends and some of the improvements that we've seen, I think, we feel pretty good about '15. We've never been as specific in regards to the comp sales environment. We change a lot in regards to an increase in our units. Even when we were showing 5% and 6% comps, we've always kind of talked about a low double-digit number because, really, we want to make sure we can open them with quality going forward. And that's a number that we feel good about with regards to the complexity of the BJ's concept. And I think, we're going to kind of continue with that. If we saw a huge deterioration in our business, I think, there's always the ability to kind of pull back from that because we want to make sure that we continue to balance cash flow from operations with the ability to open new restaurants, and it's very important for us going forward having that financial flexibility, especially considering there's so much whitespace for this concept. So I think, we feel good on the 15, especially the fact that those restaurants will be opening earlier in the year, in the first half, that allows us to achieve kind of that 10% capacity growth, which is something that we've talked about in that regard. If things markedly change, could we open 16 or 17? We could but it doesn't mean we would accelerate above that low double-digit number because I think, again, that's that governor to really driving business with quality going forward versus anything else.

The other thing I'd add is the other important determinant of how our new restaurants are doing and how they're performing, and we are liking what we're seeing from our recent openings and that gives us a lot of confidence as well.

Got it. And just on those new openings, it seems like now going forward, the focus is really the small prototype, which if I caught the details correctly, it's $1 million less to build, it's 15% smaller, which I guess, is that $1 million dollars savings. I'm wondering what's different about it if you're expecting no change in sales level? Where is the $1 million coming out of and where is the square footage coming out of that the sales would still be there?

Well, the -- when we look at that, taking down that square footage, the cable fees go down from, I think, somewhere in the neighborhood of about $260 million down to $220 million, $230 million. We kind of lay that out on our Analyst Day presentation. And you can pull down, I think it's in our website still, that kind of lays down those changes from that standpoint. There's also things that we continue to evolve in the kitchen in regards to what we call the Kitchen of the Future. That helped adjust those numbers as well from kitchen savings. But Jeff, when we look at our restaurants and when we look at the productivity of our restaurants, we already have restaurants that are about 7,400 square feet. We've kind of lined up some of those restaurants in our Analyst Day presentation. There's one out by me I always talk about in Del Amo, California -- or Torrance, California, Del Amo mall, it does $120,000 to $140,000 a week in sales and it's only 7,400 square feet. So to start, to look to rightsize our prototype to make those adjustments, we realize that 8,500 square feet works in certain areas, areas that have high density. So we'll probably continue to build those. But in the areas that we're going into, like at Tallahassee, Florida, we talked about, at Corpus Christi, Texas, those areas, based on their densities versus California, 7,400 works really well, and we get the same sales productivity. And that's really -- there's a big difference in that change. And by shrinking the box, you get some of that million dollars savings, as well other things we're doing in regards to value engineering the business.

Actually, we're only missing a couple of tables in that layout.

Oh, okay.

Yes, just probably to fit the demand.

Most importantly, our sales productivity on the smaller restaurants in our chain do very well. In terms of the cost reduction in the $1 million, it's really in 4 areas: One is reducing the size of the footprint, as Greg said. We also reduce the volume, the height of our ceilings a little bit. Secondly, just to simplify finishes and material, our mill work, our floor finishes, some light bars in the restaurant. And then lastly, value engineering our kitchen package, our mechanical systems, where we've actually reduced the A/C tonnage, which increased the efficiency of our A/C units.

So just -- because I always get a little nervous during this conversation, to make very, very clear is we're not taking down the look and feel and the impressiveness of our restaurants, right? I have the expectation, and if I could say this with virtual certainty that we'll walk into these BJ's and be in love with the feel and the ambience just as much, if not more, than our larger 8,500-square-foot prototypes, and that is key here. We're not going to -- the idea here is not to cheapen out on the finishes and the ultimate impression that the guest has of this experience.

Actually, some of -- yes, some of the changes came out of the fact that maybe some of our newer restaurants got to the point where they lost that everyday approachability because of the way it's been brought up so high. So some of the changes are just changes in materials to really get back to kind of just that casual, everyday-type of dining experience that has that uniqueness that I think maybe over the years, we've kind of elevated a little bit to our next step.

Understood. Just one last question, or maybe just a comment. But in terms of guidance in the -- obviously, I appreciate the transparency of the granular detail that you gave on all of the cost lines, but I'm guessing there's obviously a comp assumption there for the full quarter, which you don't share. So I don't know whether you'd want to share what the comp assumption is that leads to all those line items or otherwise. I'm not sure why, maybe you've considered reversing it a little bit, maybe skip giving all those line items and maybe guide more of if the comp was this, the earnings would be that, if we won't get lost in all that cost-specific detail. It just seems like we're missing the most volatile part, which is the comp. And obviously, it's very hard to forecast. But you've given very specific cost line item guidance. I'm just wondering if you ever considered kind of changing that around just because the comp is so hard to forecast?

I think exactly what you just said there, the comp is so hard to forecast that while we do some specific in different ranges in my numbers, and they're usually based on ranges, it's exactly what you said there. If -- and I actually took this out of my formal remarks. Last year, at this time, when we finished April because the Easter flip flopped the other way, we actually had -- April was up 2% -- plus, and we finished the quarter to basically flat. So it's hard for me to frankly give you guys a comp guideline from that standpoint. It's easier to give you a little bit more of some of the ranges that we're seeing in the things that we're doing in regards to our business. I don't disagree with what you're saying. It's just a different approach that we take, and we'll always consider and look at different ways that we can be in regards to helping the investment community.

Our next question is from the line of Will Slabaugh with Stephens.

I wonder if you could talk just a little bit about the media weight throughout the quarter and what the customer response was, what that looks like in the quarter versus previous quarters? And then also, on the back of that, what your media weight will look like if you have the visibility for the rest of the year versus what we saw in 1Q?

In the actual...

In terms of month to month to month, if you were -- in terms of when you're on air and off?

So in this quarter -- and Will, let me make sure we've got the flow this because we're not out there heavily like some of the other casual dining chains, especially the bar and grill segment. So we were out there for only 3 weeks in this first quarter. And they only covered about, I want to say, 50% of our restaurants. Last year -- last -- so going into the second quarter here, we're still working through some of the details here, you're not going to see that type of media intensity, if you consider that to be intense, versus maybe some of our peer companies. And we're still working out the rest of the marketing budget for the year. We talked about spending somewhere in the neighborhood around $20 million, but we said at the same time that, that is very fluid and we'll continue to monitor the external environment in regards to comp sales. We'll continue to monitor the best way to spend that money or different ways to spend that money, meaning, if it makes a better ROI to spend less money on digital, we will go down that path. So it's not quite as defined maybe as some of the other companies that are on for 13 or on for 6 weeks in the quarter and then off for 6 weeks. Ours are very targeted on some of the media, still testing, as Greg Trojan mentioned. One of the things that we're consistent about is FSI, at least right now, and they will be the same as they were last year from that standpoint. So there's really not much change there.

Got it. And one more quick follow-up on the G&A side, if I could. You came in first half of the year. From what I see here, just over $26 million. You had talked about previously, and I apologize if I missed it, if you updated this, $56 million for the year. And so I'm wondering if we should see a sort of marked acceleration in the 3Q and 4Q, or if I've made it coming in a little bit below that $56 million you've spoken about last quarter.

It'll probably come down a little bit that I mentioned last quarter. Two things there. One is 4 restaurants being moved to next year. So we're going to have a little bit less managers in training, and that will be the biggest change there from year-over-year. It will accelerate. I mentioned in the formal remarks, from Q1 into the mid-13s in Q2. And I would expect this would probably be there for both Q2, 3 and 4 as, really, our -- what we call the Advanced Manager Training Program (sic) [Advanced Restaurant Management Training Program] gets in place. And that's just the manager-in-training program. So that tends to be mostly the biggest fluctuation in our G&A from quarter-to-quarter. It's how many managers do we have in training that makes the biggest difference.

The next question is from the line of Chris O'Cull with KeyBanc Capital Markets.

I just had a couple of follow-ups. One, in terms of the margin decline that you expected for the second quarter. It sounded like that was based on a recent trend in cost, but, I mean, volumes do pick up through the quarter. Is that right?

They do. Our average unit volumes do pick up during the quarter. There'll be probably some higher operating occupancy costs versus Q1, mainly because the volumes pick up. Your variable, of course, kicks in there a little bit.

So shouldn't you see better labor productivity, though, as volumes build?

Well, I think as we talked about the labor number, we just finished in the 36.1% range. Is that correct on labor, 36.1%? And my commentary on labor was, Chris, that it would kind of be in the mid-to-upper 35s. So there would be labor productivity improvement there.

Okay. I was just expecting maybe a little more. And then did you say the media spend would be $7.4 million in the second quarter?

7 -- no. In the second quarter, I think I said it was going to be -- I want to say -- how much? $4.7 million.

Okay, $4.7 million. Sorry, I transposed that. So help me understand in terms of how you think about returns on the TV media spend. For example, in LA, you mentioned the comp was up 6.5% in that market. Does that justify the investment that you're making there? And if so, do you plan additional media spend or TV media advertising in LA later this year?

I mean, there's a little art and science, as you know, Chris, to it, but we do the best we can by looking at control markets where we don't have TV and make that comparison. And we look at kind of both in terms of not just when we're on TV but what the halo effect is on those tail weeks. So the short answer to your question is we -- is yes, and as a result, we'll look at further flights in all the markets where we saw those kind of results.

Okay, fair enough. And then lastly, can you talk a little bit about the usage of the new app for ordering and payment in the stores that you're seeing guest engaged in it?

Yes, let me -- thank you for asking that because I want to make sure we clarify where we are in all of those tools and -- because they are not an app today. They are 2 separate mobile websites and are pretty easy to get to, but still, for a lot of people who are used to accessing functionality on their phones, in particular through apps only, a lot of people don't even know how to get to a website on their phone. And if they do, they Google it. And so we actually have bought BJ's mobilepay.com and orderahead.com and are as quickly as possible, making those Google search terms that work, where we have enough traffic for that to happen. But -- so understand, the difference is we're not incorporating those functions in an app today, but we will be shortly and intend to have that capability in Q2 for those guests that find that a whole lot more convenient to access order ahead and mobile pay. And what I said earlier that I think is important is we're also going to be embedding some other functionality, particularly as it relates to our Premier Rewards program. Because a lot of people are like want to track their points and they also use our -- our restaurants are running significant waits not just on Friday and Saturday nights. And people are in the habit of calling our restaurants to get on our waitlist, which we afforded them a chance to do. They'll be able to do this on their -- do that on their phones, on their app, which will be a heck of a lot more convenient than trying to talk to somebody on the phone in the middle of a rush period. So -- and by the way, we're thinking part of from this and our new -- and our advertising, I found it pretty interesting. We actually grew our Premier Rewards membership about 15% over the first part of this year, which is a lot of growth, as you can imagine. We already have close to 900,000 Premier Rewards members and are continuing to grow that. And people are engaged in this -- in that program. So we think embedding more of this functionality in an app as part of the Loyalty Program. It is good for us and is good for our guests. Now having said all that, the mobile website, we've not marketed it aggressively. All we've done is put some POP on the table tops because we've been hesitant to do so until we've had that app capability and make it really convenient for people to access those -- that functionality. So the adoption rate has been pretty low on order -- I'm sorry, on mobile pay. And keep in mind, we're actually a few weeks in to order ahead and only in Southern California.

Remind me what are your expectations for adoption rate of the mobile pay when you do have it up and running?

We don't have any formal expectations and this is so new to this industry. One of the challenges we found is people don't even imagine that they can -- when they mobile pay, that they can actually pay when they want to. And by that, I mean they automatically come to conclusion of, yes, I can pay in my phone, but I still have to wait for my server to bring me my check, right? And then when we say order ahead, most people are thinking, "oh yes, I can do that for take-out and curb-side service," when we're really talking about it, and we've started calling it order ahead dine-in for that reason. By the way, it's a great advantage to be able to do it for take-out as well. But it's a real paradigm shift for people to think about, hey, I get to save a lot of time and still have a comfortable experience by ordering ahead on my phone for a dining experience, right? So there are some communication challenges. And I just don't know how long it will take, but I know that people -- that time is the most valuable commodity and it's becoming more precious every single year in our consumers' experiences, and this really does solve it. So it goes a long way to solving it anyway. And if you can take an hour of experience and make up 35, 36 minutes comfortably and not feel rushed, I think that's a big idea. But I don't have a crystal ball in terms of adoption rate until we start getting out there and be more aggressive about telling people about the functionality and seeing how long it takes. The only thing I'd add -- just add on that, when you look at the adoption rate of QSR, fast casual or even -- I know the pizza delivery business pretty well and those online adoption rates for ordering ahead for delivery carry-out kind of application are nearing 50%. So people are getting used to that idea. It's a matter of transforming that capability into the mindset of a dine-in experience that's going to -- that's new.

And your next question is from the line of Nick Setyan with Wedbush Securities.

It's a question on the small -- on the order ahead and the dine-in. I think the past, you said it's part of the Loyalty Program. Is that still the case or, I guess, kind of making that available outside the Loyalty Program? And maybe just kind of talk about what percent of your transactions are Loyalty transactions?

Yes. They'd be -- you know what, we're -- we haven't made any final decisions there. The emphasis around the app and Loyalty thing makes a lot of sense to us. We have the technical capability to open up the functionality to non-Premier Rewards people. We have to adapt the process because ultimately, we need to identify these folks. But we have -- we will be, as part of our learning process, testing variations where you don't have to be a Loyalty Rewards member. Now a part of what we're doing is making it easier to sign up for Premier Rewards once this app is downloaded, too. So it will be a fairly seamless process. In fact, we don't need -- our plan and our materials don't really talk about you have to become a Premier Rewards member because we don't -- it's much like I think about buying content on iTunes, it's -- you have to sign up and provide just -- submit contact information and even credit card information. People don't think about that as I'm signing up for some other program. You're just a matter of what you need to do to conduct e-commerce. So that's our current thinking. But certainly, pay at the table, we can execute through other identification means, et cetera. Once people order ahead, we have an identification already and can link their order and have them conduct mobile pay without doing Premier Rewards. But our bias is because we value this connectivity and the one-on-one marketing capability of this is to go at it with a perspective that, by and large, it's going to be part of a rewards program. But we'll see how that shakes out.

What percent of your transactions are now Loyalty transactions?

Yes, Nick, I think I'll have to get back to you. I don't have that with me.

Okay. In terms of the marketing again. I know this is been asked in a different way, but just -- I want to kind of focus on Q2 and the second half. Are there are some big markets that are untapped now in Q2 and again, the second half? And sort of what is the cadence of when we're going to come back on TV? I know there's -- I know the LA one. I mean, that was -- that seemed like it contributed a lot. And once it kind of came off TV a little bit, comps seemed to have come back down again.

Well, we didn't talk about the comp in Calgary. It's not as what it was when it was on TV, but it's still continuing to sustain a pretty good momentum. So -- and given that, we're planning on using TV in the future in markets where it makes sense. But for competitive reasons, I'm not going to go into a lot of detail when, where we're going to be on and not on.

Okay. And just kind of on labor, I know in the second half, you had minimum wage increase. And I'm guessing most of your labor is already above minimum wage, but if you just kind of give us a the context around that. And I know there's some seasonality in Q3 and Q4, where is it possible on Q2, you get back above 36% on the labor cost and then back down to 36%. Maybe just kind of some detail around the labor in the second half.

Well, I'm kind of looking at what we could -- where we put in here. Just a couple of things here, Nick. One is, as we mentioned, we haven't determined the exact amount. If any, we're going to evaluate pricing and see does it make sense to do some additional pricing here in select markets, that being California being a minimum wage market from that standpoint. The pricing that we did take at 1.6%, which we'll see a bigger benefit of that, obviously getting more of that through this next quarter. But separate of that, that was taken to offset some of the inflationary pressure we're going to see this year. So we're trying to get ahead of it a little bit in that regard. I would tend to think in Q3, we could see labor get back into the 36% range and that's because of seasonality. I mean, it really comes down to where we think comp sales are going to go and what you guys have put in your models from that standpoint. But generally speaking, Q3 has been our toughest quarter. Sales drop down significantly. We pay a higher summer wage rate -- not summer wage rate. We pay higher utility rates in the summertime for gas and electric. So we see some of those as our higher operating occupancy costs from that standpoint. So there is that possibility, but at the same time, we are looking at how can we be strategic in regards to markets that might be able to absorb pricing. At the same time, we want to continue working on the affordability side of our menu.

And just last quick question. Tax rate for the year?

Tax rate for the year should be about 27% or so. So it came down to 24% and about 2.5% to 3%, a little more than that, I think, where tax credits are very discrete to the first quarter incremental lost fee credit for last year. So we take those in when we found out about them. But excluding those things, we're projecting summer is going to be around 27%.

And ladies and gentlemen, we have time for one final question and that is from the line of Sharon Zackfia with William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: Wow, I squeaked in. Most of my questions were answered, but I just -- there were a lot of metrics given, I think, by Greg about the comparisons versus Black Box. And I just wasn't sure -- were those geographically weighted? I mean, there was a lot of weather in different parts of the country where you're not as exposed?

Sharon, just to be clear. Most of the ones that we're quoting just because they're more consistent were a reverse of Knapp Track, just to -- if you care. But they were not -- we didn't see -- frankly, we didn't see it is a function of weather over the quarter as much as -- I mean, there were some natural and time periods where ice storms in Texas were impacting that side of the business more. But it tended to be -- follow the lines of our media plans and where we were spending and marketing. But we didn't -- maybe because we didn't just see improved traffic where we're using TV, just to be clear. We saw bigger gains there. But these digital campaigns and in combination with what we did differently in print were working well as well. So it's -- I don't want to give you the impression that it's isolated in only a few markets, but we saw the needle move bigger where we've spent more and particularly on TV. Sharon Zackfia - William Blair & Company L.L.C., Research Division: Yes. I guess my question was from the other side. Sorry, I think I heard that you had 180 basis points better traffic than the industry in the quarter. And I'm just wondering if you had weighted that for geography. Because clearly, concepts are more exposed in the Midwest and the Northeast. It had a lot more snow days, than you would have had. Just wondering if that gap -- if you had the gap relative to the regions where you're primarily in, like California or Texas?

We did not. So that's against the entire Knapp Track data. I would tend to tell you, looking at California specifically, because I've just got that information here, we were better in California at least for the quarter in regards to traffic. The Knapp Track in Texas, the other big area, despite the challenge that we went over, at least according to our data, we were also better than Texas. So while it's a total from that standpoint, if I took our 2 biggest markets, both California and Texas, we were better than Knapp Track. Now I will tell you this. On the opposite side, which Greg Trojan mentioned. It's something that we continue to work on. If you look at it from a pure sales standpoint, we were lagging both Knapp Track in California and Texas from a comp sales perspective but doing a pretty good job of beating them on traffic side of things. So we think we're not where we want to be, but we like the improvements we're seeing on traffic. And I think that's given us some good views into some of the other things we're working for the menu and media going forward.

And ladies and gentlemen, that does concludes our conference for today. We'd would like to thank you for your participation, and you may now disconnect.