Good day, everyone, and welcome to the Jack in the Box Inc. Second Quarter Fiscal 2014 Earnings Conference Call. Today's call is being broadcast live over the Internet. A replay of the call will be available on the Jack in the Box corporate website starting today. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Carol DiRaimo, Vice President of Investor Relations and Corporate Communications for Jack in the Box. Please go ahead.

Thank you, Christina, and good morning, everyone. Joining me on the call today are Chairman and CEO, Lenny Comma; and Executive Vice President and CFO, Jerry Rebel. During this morning's session, we'll review the company's operating results for the second quarter of fiscal 2014, as well as some of the guidance we issued yesterday for the third quarter and full fiscal year. In our comments this morning, per share amounts refer to diluted earnings per share, and operating earnings per share is defined as diluted EPS from continuing operations on a GAAP basis, excluding restructuring charges and gains or losses from refranchising. Following today's presentation, we'll take questions from the financial community. Please be advised that during the course of our presentation and our question-and-answer session today, we may make forward-looking statements that reflect management's expectations for the future, which are based on current information. Actual results may differ materially from these expectations based on risks to the business. The Safe Harbor statement in yesterday's news release and the cautionary statement in the company's most recent Form 10-K are considered a part of this conference call. Material risk factors, as well as information relating to company operations, are detailed in our most recent 10-K, 10-Q and other public documents filed with the SEC. These documents are available on the Investors section of our website at www.jackinthebox.com. A few calendar items to note. Jack in the Box management will be presenting at the Jefferies consumer conference in Nantucket on June 18, and at the Oppenheimer consumer conference in Boston on June 24. And our third quarter ends on July 6. We tentatively plan to announce results on August 6, after market close, and our conference call is tentatively scheduled to be held at 8:30 a.m. Pacific Time on August 7. And with that, I'll turn the call over to Lenny.

Thank you, Carol, and good morning. Yesterday, Jack in the Box reported a 38% increase in operating earnings in the second quarter. Our results were driven largely by better-than-expected same-store sales growth at Qdoba, margin expansion at both brands and lower G&A. While our sales -- our same-store sales performance at Jack in the Box was lower than our expectations, the system outperformed the QSR sandwich segment by 120 basis points. Sales softened in the second half of the quarter as one of our major competitors began discounting and aggressively promoting value messages. On our sales to date, the third quarter have rebounded, which is reflected in our guidance of 2% to 3% same-store sales growth in the third quarter. Breakfast and late-night, again, drove the overall same-store sales growth in quarter 2, and we continued to see an acceleration in breakfast sales through the first 4 weeks of the current quarter. Restaurant operating margin for our Jack in the Box brand improved 150 basis points in the second quarter, even with the modest same-store sales growth. Strategically, we have chosen not to pursue these discountings at the expense of margins as we don't believe it's the way for us to effectively compete in this segment. Our broad and innovative menu remains an area of differentiation for the Jack in the Box brands. Our focus in this area continues in the second quarter as we introduced the Bacon Insider Burger as a premium LTO and extended our line of Monster Taco with 2 new flavors. We also launched several new products at the beginning of the third quarter, including Jack's Blazin' Chicken Sandwich, which features a hot Ghost Pepper Ranch sauce. In addition, we added 2 new flavors of iced coffee and a Reese's Peanut Butter Cup Pie, both of…

Thank you, Lenny, and good morning, everyone. I'm just going to touch on the highlights for the quarter as I know everyone is pressed for time this morning. Operating earnings per share, excluding gains from refranchising and restructuring charges, were $0.51 in the quarter versus $0.37 last year, up 38% even with the $0.01 charge writeoff for the deferred financing costs in this year's second quarter. Our results for the quarter continue to reflect the transformation of our business model for the Jack in the Box brand and the annuity-like cash flows that refranchising -- that franchising produces. With positive same-store sales growth at both brands and the benefit of refranchising, we were able to leverage margins and SG&A. Jack in the Box margins improved 150 basis points to 18.6% as we explained in the release and benefited from pricing of about 2.5% in the quarter. Qdoba restaurant operating margin increased 110 basis points to 18.3% of sales, Qdoba price increases during the quarter averaged 0.8%. The increase in beverage equipment rental costs mentioned in the press release relates to the Coke Freestyle machines that were recently installed in all company restaurants. SG&A decreased by $3.8 million as compared to last year, as we described in the press release, even with an increase in advertising costs at Qdoba due to timing, the legal settlement of $1 million and a year-over-year increase in SG&A related to mark-to-market adjustments. We continue to make good progress on refranchising and have now reached the 80% franchise level for the Jack in the Box brand. The net gain for the quarter includes a gain on the sale of 14 restaurants in 1 market and the expected loss on the sale of 2 markets in the Southeast for which we have signed letters of intent. We…

[Operator Instructions] Our first question is from Joseph Buckley from Bank of America Merrill Lynch.

I wonder if you could elaborate a little bit more on the Jack in the Box sales trend in the latter part of the second quarter and then in the third quarter? Were there actions that were company-specific behind this program reacceleration? Or was it more just changes in the competitive environment? Just any color you could give on what caused the slowdown and then what led to the reacceleration would be helpful.

Yes, this is Lenny, Joe. Thanks for the question. I'll maybe add even a little more color than that. We were featuring the Bacon Insider Burger. We're also featuring the Monster Tacos throughout most of the second quarter. And about midway through the quarter, just prior to the launch of Taco Bell's breakfast, we started to see competitive discounting and free offerings that started to impact our sales. We kept a close eye on that and decided toward the last couple of weeks of the quarter the switch-off of the Monster Tacos, a secondary message to breakfast items, as a secondary message. Although we were not necessarily seeing the Taco Bell launch of breakfast negatively impacting our breakfast daypart, we felt that the offering that we could put in place was more of a value bundle and we get some attention in the marketplace to compete against some of the other messages that were out there. And keep in mind, Jack in the Box serves breakfast 24 hours a day, so when we put those messages out there, they're not necessarily just daypart-specific sales that we're driving. So that was essentially the adjustment that we made. And then going into the third quarter, we have planned promotions that are in place that we did not change and those included the Jack's Blazin' Chicken Sandwich, as well as some new breakfast griller items. So a few slight adjustments that we made to just make sure that we were putting some messages out there that we're value bundle-oriented so that we could make sure that our voice was being heard on the value side of the scale, so to speak. But ultimately, what we didn't want to do is create so much focus and primarily messaging around deep discounting that we sacrificed…

Our next question comes from Brian Bittner from Oppenheimer.

The Qdoba sales acceleration in the quarter, can you just talk a little bit more about that and the buckets that drove that? How much of it was truly just product-driven and the trial of that product, and how much of it is more strategic than what you're doing with the brand?

Maybe, Brian, I'll speak a little bit about the strategic nature of what we're doing and then let Jerry give a little bit of color on what we can share about the numbers. But what essentially we did is we took our strongest equity in that brand from a product perspective being the 3-cheese Queso and we brought attention to the brand by leveraging that equity. So that part of it is what is strategic. And what we saw within that promotion is that we had a much higher percentage of our transactions, including one of the Quesos or the sampler. So we know that, that equity was driving traffic because we saw in the attachment rate to all of the transactions. So that gives you sort of just the very simplified view on strategically how we approached it.

Okay. And just want to ask another question on just the G&A opportunity. As we kind to start peering at fiscal '15, I know it's still a ways away, but just simply thinking about the G&A, you're going to have another market that you're going to refranchise by the end of this calendar year. Can you just talk to what your initial thinking on maybe how much left there is under the hood on the G&A opportunity and maybe start to kind of make you think a little bit more about how fiscal '15 could start to look from G&A? Could it be another down year?

Yes. So Brian, this is Jerry. Let me tell you what I can tell you about G&A. It probably won't be everything that you'd like me to tell you about G&A. But with the sale of the 14 restaurants in the one market and also the sale of the Southeast, we would expect the field-level G&A to be reduced as it has been when we have sold other markets. I would expect that to be down on a permanent basis there. Also, with the sale of those markets, the advertising load then shift from the company to the franchise operator also, so that will be a reduction of the SG&A within that -- within those transactions. Then what I want to talk to you a little bit about is where I think we have room under the hood, if you would, or what's left under the hood for some of the G&A. We talked about in the end of 2013 that we had completed the integration of the Jack in the Box and the Qdoba offices and support and created a shared service model such that we have 1 accounting department, 1 HR group, 1 IT department as an example and obviously others. We also described that what that integration created was the organizational structure and the people element of that. It didn't necessarily integrate systems, so it should be restaurant-level systems. And so while that people on organizational change had a significant impact on G&A, what you're seeing here in fiscal 2014, the opportunities exist and which is really related to our restructure charge this quarter, is if we look at the IT systems that we have within the restaurants, while the Jack in the Box brand and the Qdoba brand each have a single platform suite of restaurant-level technology within each brand, they're different across the brand. So what that means is that we are supporting, say, 2 POS systems, 2 back-office systems, 2 other items, all of which that we have in the restaurant level are 2. So that obviously creates some additional IT and infrastructure required to support and maintain all those systems. So what we're beginning to look at now is how we can integrate those restaurant-level technology systems that we can have, say, one of those systems and reduce not just the G&A cost but also reduce restaurant-level operating costs going forward. I can't give you a lot more detail than that as we're in the beginning stages of that analysis, but I think there is some significant opportunity on the G&A side as a result of that.

Okay. I just had to sneak one more in on top of that. Would this ever -- this allow you to separate Qdoba? Would this kind of stop you from being able to spin it off or sell it down the road, this integration of systems?

No, not a lot, I mean, there's people, separate divisions or other operating entities all the time, and whether you're operating on the same system or not, it really doesn't have an impact on that. So it's not our intent to do that, but this isn't limiting in any way.

Our next question comes from Alex Slagle with Jefferies.

Had a question on the Qdoba labor leverage, about 70 basis points. Wondering how much was due to the better same-store sales growth or have you started to lap the increased staffing levels that went out last year?

Alex, this was almost entirely due to the improvement in the same-store sales but most of that was in the -- most of the favorable impact of the sales was in the management level comps, so that was all leverage. But we also have -- but offsetting some of that, we did pay higher restaurant-level bonuses as a result of the restaurant driving higher restaurant-level sales and restaurant margins, that offset some of the leverage on the production labor or the management labor side.

Okay. How should we think about your ability to keep leveraging that, like Qdoba going into the second half? Do you kind of need these mid-single-digit same-store sales? Or is 3%, 4% sufficient?

I would say -- look, same-store sales will obviously help with that quite a bit. I would say some of this, in terms of the leveraging on the entire restaurant operating margin side, some of this will depend on what commodities do. But I would suggest that if we are able to continue, say, mid-single digits, perhaps even maybe a little bit lower than that within the range guided as an example, we would expect to be able to leverage labor.

Our next question comes from John Glass with Morgan Stanley.

I just first want to make sure I understand and maybe clarify your comments around the competitive environment, particularly given you're sort of at the epicenter of this breakfast launch. Did your breakfast daypart -- is that the piece that weakened during the breakfast launch of Taco Bell [indiscernible] covered? Or was it other parts of your business because you just saw an ambient, higher competitive discounting? And if you're not getting the breakfast impact and your next store does improve, who do you think Taco Bell is taking share from? Because it would seem like you'd be the most obvious candidate.

First, let me clarify the breakfast results. We did not see a negative impact to our breakfast daypart with the launch of the Taco Bell breakfast. In fact, late-night and breakfast continued to drive the improvement in our comps. In addition to that, as we progressed into the beginning of the quarter, we have -- we've seen an acceleration in both breakfast and late-night. So don't think that that's where it was coming from. But certainly, a lot of the competitive discounting that was taking place, although seem to be in conjunction with the timing of the Taco Bell launch of breakfast, the items that were being promoted were actually across all dayparts. And so we were seeing the impact in other dayparts outside of breakfast and late-night. And then as far as the impact that Taco Bell is having on the industry, I would just emphasize that our breakfast has always been 24 hours a day, which I think is a huge equity and then we also do serve a very freshly prepared breakfast with fresh cracked eggs. Not everybody does that. We think it's a differentiator that does change the execution of that product. And so breakfast is 22% of our mix. It's a strong daypart for us that we think is driven by those differentiators. So I would -- I can only assume that folks that are selling more heat and eat and sort of not freshly prepared foods are getting impacted by Taco Bell more so than the ones who are serving more freshly prepared foods. And at this point, we'll have to wait to see how that shakes out in everyone's results. That's sort of the assumption.

That's helpful. And then Jerry, as you've gotten to the end of your prescribed refranchising and you've got it all but done, have you given now incremental thought? Is 80% the right level? Others have taken it further. Or when do you reassess it? Or is it going to be dynamic from hereon in that might be 1 or 2 offs, but there'll be no new goals set?

We're comfortable with the 80% to 85% target. I think the real limiter for us would be the level of volume sales and the high margins that the restaurants that we would continue to operate -- generate. So we would -- we always look at this as where do we get the best cash flow bang for the buck and also we don't want to create a bunch of dilutive refranchising transactions here. So we always look at that, and I think that 80% to 85% range is probably the right number where we sit today.

Our next question comes from Robert Derrington with Wunderlich Securities.

Jerry, if I could hit you with a bookkeeping question first. I'm pretty simpleminded around a lot of things, but can you help us understand the million-dollar legal settlement, worth about $0.01 in it, roughly up $0.015 to your EPS? And then the charge for the deferred financing write-off, you told us on March 30 that was coming. I'm just curious why these things didn't get excluded from the EPS, the $0.51 that you reported.

Well, I think our practice is to -- if it's continuing operations, we have a definition of what we consider to be continuing operations and we like to maintain what that level of definition is. I think it creates comparability across year-to-year so our definition is it's EPS from continuing operations, excluding restructure charges and gains or losses on refranchising item. What we also want to do is, to your point, this creates some transparency about what's in the numbers and then allow investors and the sell side folks to decide what they want to include or exclude from those numbers. And I would say both of those items though would be -- would not be considered to be recurring on an ongoing basis, so I don't know whether that helps.

No, that does. That's tremendously helpful. And then secondarily, if you could give us a little bit of color around your dividend program, we're really encouraged to see you initiated that. Can you kind of give us some sort of strategy around whether there's a targeted payout that's planned? Should we anticipate that it likely would grow along with net income, free cash flow? What kind of -- what can you help us there?

So let me tell you how we thought about the dividend and why now as an example. So I think when you look at the progress that we've made on our refranchising strategy and hitting the 80% level in the quarter, also having 2 letters of intent signed for 2 Southeast markets, you look at that, the confidence that we have in our growing free cash flow as well as the new credit facility, which is -- which creates a tremendously more flexible return of cash to shareholders' options for us, we felt now is the right time to implement a dividend. We would look at that if that is just part of our strategy of returning cash to shareholders and the dividend allows participation in that strategy for long-term holders who may not be trading in and out of the stock. So we want to be able to do that. The level that we set, we looked at -- was created -- as we looked at the folks in the restaurant industry who pay dividend, we excluded those who were paying on the high end and we also included some who were paying on the low end. What we saw in our analysis was that an initial dividend yield in the 1.4% to 1.5% range with the right -- was a good sweet spot. That's where we landed. So that's how we thought about it. It also enables us to continue to invest in growing both the Jack in the Box and the Qdoba brands. What I would say with respect to would we intend to raise it over time, I think it's probably a little soon to talk about that. We haven't written the first check, but we will have dividend news as we go forward here.

Our next question comes from Jonathan Komp with Robert W. Baird.

Maybe just first, Jerry, a follow-up to your last answer there. As you look at the balance sheet and the pace of repurchase activity, I know year-to-date and the first 2 quarters, you repurchased over $200 million of stock and then also taking the debt balance up by more than $100 million. So as you look forward with the transformed business model, what's your current thinking longer term about the right degree of financial leverage for the business and maybe tie that into the pace of repurchases going forward?

Sure. So on repurchases, I would expect us to have a two-pronged approach. One would be we just have a regular ongoing share repurchase program, but we would also expect to be opportunistic given where the stock may be at any point in time. So I think we'll look at the share repurchases in that way. We have -- currently, at the end of the second quarter, we were levered 1.71x debt-to-EBITDA ratio, which is as defined in the bank agreement. You won't be able to calculate that from the financials. There's pluses or minuses within that. But -- and the maximum leverage ratio is 3 within the credit facility. We're very comfortable in the 2 to 3 range, which is about one turn of debt higher than what we've historically been comfortable with. So that's where we are.

Okay, great. That's very helpful. And then just one other question related to the pricing outlook for both brands. I know you pointed to, Jerry, expectations were a little bit higher commodity inflation, especially in the third quarter with these inflations a bit higher. And so -- and you also -- I think you have also pointed to potential for labor pressures in the fourth quarter tied to minimum wages. So can you just talk about Jack in the Box and Qdoba and maybe the outlook for pricing in the near term?

Jon, this is Lenny. A couple of things there. First, for competitive reasons, we don't foreshadow pricing, but what I will just point out is for the Qdoba brand, specifically, we've spoken about the work we've done to reduce discounting and that certainly is having a favorable impact on the business, while at the same time we've been able to drive transaction growth. So that's probably about as far as we could go as far as foreshadowing price, but at least it gives you an indication of the types of things we're doing to balance out sales margins.

Our next question comes from Jeff Farmer with Wells Fargo.

Just following up on Qdoba. I was wondering if you guys could discuss the media weights in the second quarter versus what you saw last year and then moving forward over the balance of '14, what you expect your media weights to look like relative to F Q2?

We don't really discuss media weights, but for Qdoba, one thing to think about is we don't use traditional media television advertising, so we do a lot of social. We do a lot of outdoor advertising and radio, which doesn't get measured quite the same way as television. But we've had some increases in those methods of advertising related to some of the strategic initiatives that we launched in new product innovation. Keep in mind, it's been years that Qdoba was on a core product strategy, and as part of the brand positioning, we really have started to ramp up the development of new products and focus on innovation.

All right. Then just to follow up, it's really -- you're getting at the heart of my question, which is you have a lot of this new product news. We see the radio -- we hear the radio, see the billboard, but how are you best communicating that there is new food news, that there's a new reason to go to Qdoba now? How are you guys making that happen for the consumer?

I would say social media is probably one of the biggest areas where we see a push. And what we're finding in some of the new initiatives that we're testing is that the activity that's best driving with our loyalty program and then the consumer-generated voice that we're seeing in social is really helping to spread the word on the things that are happening at Qdoba. So we're quite pleased with what we've been able to create primarily through social media.

Our next question comes from Nick Setyan from Wedbush Securities.

There's a lot of focus on the cost impact from the minimum wage increase in the second half, but not there's much focus on the potential to drive some incremental comps as your potential customers have more money in their pockets. I mean, maybe if you guys could contextualize historically how have minimum wage increases in California historically impacted or benefited your comps. Have you guys ever taken a look at that?

Nick, this is Lenny. What I would say, in general, is that when we have a minimum wage increase, and I don't know if this is just for California, but when there's a statewide situation, all of the competition are impacted by it. We will sometimes see it reflected in price. We'll sometimes see it reflected in discounting or how aggressive -- aggressively things are moving with promotional activities. But we also see that there are other periods in the business that have to be balanced out in relation to minimum wage increases and that's things like commodities or utilities. And so although we will experience the increase in cost, especially with labor, there are other lines that we're also going to have to look at to understand the full impact. And I know that all the other competitors will do that as well. So with that as a backdrop, we don't experience typically some cliff-type events that negatively impact our comps when we have a minimum wage increase. So if I look at the third quarter and just sort of reflect back on the 2% to 3% guidance we've given on the Jack in the Box brand, it's reflective of a high degree of confidence that we have based on what we're experiencing right now and what we anticipate happening.

Got it. And then just kind of longer term, as we look at Qdoba and the momentum that we're seeing in the brand, with respect to unit growth, you guys floated down a little bit this year. What are you looking to see going forward in the second half year to potentially reaccelerate that unit growth rate in 2015 or beyond?

I think the way to look at it is we're -- a lot of the work that we've done around the brand positioning sort of exploration has gotten us to a place where we've got some early initiatives here that are mainly product related. We're going to be looking at many other facets of the business in association with this brand work and some of it may require some improvements or changes to dining room or decor or things like that, that we think will tie to the positioning that we're trying to establish. All of those pieces of the puzzle haven't been finalized yet and so we don't want to accelerate growth at this time because we know that we have to backtrack and make adjustments to all those locations. And I think that since about half of our system is franchised, in order to drive growth through that channel of the business, we really do need to have things sort of buttoned up and well tested before we would step on the accelerator. So we've mentioned on our last call that we will have some concept tests that we'll be getting very active with later this year, toward the end of the year and then at the beginning of 2015. We're going to read those results. It's going to take us many months to work through what we learned and how to come to the final concept that we'd like to start evolving the brands to. That's going to take the greater part of 2015. So I think expectations should be that as we start to bring some of that learning to fruition in the middle of next fiscal year, that's when we'll be able to talk more about what we think growth in units will look like going forward.

Our next question comes from Peter Saleh of Telsey Advisory Group.

I wanted to ask about Qdoba, the strength that you saw in the catering. Can you just elaborate a little bit on what drove that strength? And has that strength continued into the third quarter as well?

So let me just speak to -- when we brought in Tim Casey as the new brand President for the Qdoba brand, we spoke a lot about the brand work that we were doing and also that we were bringing in new talent into the organization to start focusing on areas of the business that we thought we had opportunities to grow. We added resources and brought in some new talent into the catering business that we believe created a much greater focus and emphasis on that side of the business. In addition to that, we then aligned the management, restaurant-level management compensation, bonus programs to driving sales in all areas of the business, including catering. So we think we have been able to create a greater level of focus, both from a corporate infrastructure standpoint and then also at the restaurant level. And then keep in mind that we just went experiencing a very strong catering season for us in Cinco de Mayo and also graduation and it's the highest catering month that we experienced. So we are tracking currently above our 3% to 4% guidance and that's probably an indication of some of the strength that we're seeing in overall sales, including the catering business.

[Operator Instructions] Our next question comes from Joseph Buckley from Bank of America Merrill Lynch.

Just wanted to circle back to the Southeast letters of intent. Can you show to us which of the 2 markets are covered by that or tell us maybe the number of restaurants included in the 2 agreements?

It's -- Joe, I won't share you the markets because we haven't necessarily had the employee meetings yet, if we want to do that. But I can tell you it's about 30 markets that was -- 30 restaurants over the 2 markets. 30 markets will be a lot, but 30 restaurants across the 2 markets that we have letters of intent on.

Okay. And what is the status of the third Southeast market?

Currently, the -- currently talking to prospective franchisees. There is interest.

Okay, okay. And then are you thinking, at the Southeast, there is a lot of progress in Southeast for a very long time, potentially being accretive immediately? Does it still feel that way to you?

Yes. We expect all of the Southeast markets to be immediately accretive and then growing over time just the same-store sales increase.

Our next question comes from Jake Bartlett with Morgan Stanley.

I had a quick question on the 14 units solds in the second quarter and whether they were accretive or dilutive and then also whether the guidance for kind of pro forma impact over the refranchising in '14, how they're going to impact '15. It looks like they're a little bit later than expected.

Okay. So the first part of the question is on the 14 restaurants, they are accretive. They're not as accretive as, say, the Southeast would be, as they have better levels of margins, but they will be accretive. And as far as the second question, Jake, I think the question was pertaining to the Southeast impact on '15 margins?

Right, right. I think before you mentioned it, it should be incremental by about 100 basis points or at least...

Exactly right. So the Jack in the Box brand margins, we said at least 100 basis points. So I think with the -- we expect 1 of these 2 LOIs to close this fiscal year in the fourth quarter. The markets that we currently have interest in, they also are very well close this fiscal year. And then with the other market closing in the first quarter, end of the calendar year of 2014, I'd expect that to be very, very close to that 100 basis point improvement number.

Okay. Sorry, just to confirm, there's one quarter in the fourth -- or one market in the fourth quarter, one market in the first and then the third market is sometime later than that. Is that correct?

No, I think the third market may actually close before the second letter of intent. So the third market may very likely close this fiscal year.

Okay, got it, got it. And then a quick question on inflation. The 0.9% deflation you're seeing at Qdoba, is this the pure inflation from food? Or is this kind of net of savings from your, kind of, emerging business -- the purchase group and all those efforts?

Yes, it's net, I would say, that a big portion of the Qdoba savings are due to lower discounting as an example. And then also the other piece of the Qdoba savings would be from our supply chain integration where we are leveraging the combined purchasing power and setting up programs that allows us to say if lower cost inflation on avocados than what you're reading about out in the industry, it's still up and it's not up nearly what you're reading out and -- with the spot market pricing.

Got it. And lastly, can you break it down, the 1% to 2% inflation for the different concepts, what it means for Jack versus Qdoba for '14?

I think what we've said on that is, it's about 1% to 1.5% for a full year.

I think what Jake's asking is what the inflation of the 1% to 2% is by brand. Is that what you're asking?

Yes, yes, I am.

Yes, it's pretty similar for both.

It's in the -- it's right in that middle of that range, Jake, for both brands.

At this time, I would like to hand the call back to Ms. Carol DiRaimo for comments and closing remarks.

Okay. Thanks for joining us today. We'll be around all day for follow-up questions. And thanks for joining us, and we will see you on the conference circuits.

This does conclude today's call. All participants may disconnect now.