Red Robin Gourmet Burgers, Inc. (RRGB) Q1 2015 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Red Robin Gourmet Burgers, Incorporated first quarter 2015 earnings call. Today's call is being recorded. As a reminder, part of today's discussion will include forward-looking statements within the meaning of federal securities laws. These statements are commonly identified by words such as anticipate, continue, plan, expect, intend, should, will, and other terms with similar meanings. These statements include, but will not be limited to, statements that reflect the company's current expectations with respect to the macroeconomic and competitive environment, the financial condition of the company, results of operations, plans, strategy, objectives and future performance, including the company's traffic and revenue-driving initiatives, sales growth, operating margin and operating weeks, costs, expenses, expense management, deployment of capital, restaurant development and remodels, performance of acquired restaurants and other expectations discussed within the course of this call. Although the company believes the assumptions upon which preliminary or initial results, financial information and forward-looking statements are based on are reasonable as of today's date. These forward-looking statements are not guarantees of future performance and, therefore, investors should not place undue reliance on them. Also, these statements are based upon facts known and expected as of the date of this conference call, and the company undertakes no obligation to update these statements to reflect events or circumstances that might arise after this call. Participants on the call today should refer to the company's Form 10-K and other filings with the SEC for a more detailed discussion of risks and uncertainties and other factors that could impact the company's future operating results and financial condition. The company has posted its fiscal first quarter 2015 press release and supplemental financial information related to the quarter's results on its website at www.redrobin.com in the Investors section. Now, I'd like to turn the call over to Mr. Steve Carley, Chief Executive Officer of Red Robin. Please go ahead, sir. Stephen E. Carley - Chief Executive Officer & Director: Thank you, Eric, and hello, everyone. Thanks for joining us this morning. I'm here with Stuart Brown, our Chief Financial Officer, and we'll kick off by each sharing commentary on the business, and then we'll open it up for questions. Denny is not able to join us today, but I want to publicly congratulate her on a well-deserved promotion to Executive Vice President and to a newly created role here at Red Robin, the Chief Concept Officer. She'll oversee franchise operations, marketing, menu innovation and implementation, and is also serving as the President of our Canadian operations. Let me begin with an update on our strategic priorities which we've organized under the headings of engagement, efficiency, and expansion. As you know, these provide us with a roadmap through which we are strengthening our brand, gaining market share, and enhancing shareholder value. Related to engagement, we continue to provide our front-line team members with the training and tools necessary, so that they can efficiently engage with our guests and deliver what we term Triple R service, which is recognizing each guest individually; recommending something they're proud of; and then reassuring the guest that they made a great choice. Having a great Red Robin experience begins with our team members because when they deliver, they have the ability to build frequency and expand upon the number of distinct occasions that our guest can now associate with Red Robin, everything from a great family dining experience to adult occasions including date night, coming in with your buddies after softball practice, guys or girls night out, et cetera. Of course, critical to guest engagement is the breadth and quality of our food and beverage offerings, as well as our ability to bring innovation and creativity to the market on an ongoing basis. Some recent examples of that include our Cure Burger that launched as a secret menu item January 1 and was positioned as the perfect remedy for guests that needed some post-holiday relief. Of course, The Wild Pacific Crab Cake Burger was the first premium seafood offering to join our finest lineup and at $14.29 continues to build trial and deliver strong repeat. We have a few other great things coming up this summer, which we'll review with you in our Q2 call. In addition, we continue to have an opportunity to grow our adult beverage category. And with our new Senior Vice President and Chief Marketing Officer, Lee Dolan, on board who reports today, we believe we'll get there. Lee brings to us nearly two decades of experience at MillerCoors and Coors Brewing Company, and his responsibilities encompass menu innovation and implementation, along with key marketing strategy and tactics, and particularly believe he'll be a vital asset in evolving our positioning as Red Robin Gourmet Burgers and Brews. In terms of our brand transformation initiative, guest reactions and satisfaction scores from the transformations have been excellent. We are not only doing a much better job sorting at the door, which means matching each guest to the part of the restaurant where they'll get the best experience, but creating a unique and fun environment in our bars. We're also bringing in guests who haven't tried Red Robin for a while, and we're reintroducing them to the new concept. Our guest feedback and research shows meaningfully higher ratings and facility attributes, service and atmosphere, resulting in a significantly higher overall guest satisfaction score. Based on the guest feedback we've received, we now expect to complete at least 150 remodels this year, up from the 125-plus we stated previously, and we should be able to complete the entire company store base by the end of 2016. Another element of engagement is the company-wide rollout of the Ziosk tabletop device, which we are still on track to complete by the end of this year. Ziosk will also further enhance our ability to customize the Red Robin guest experience with the added convenience of paying at the table, ordering refills on demand, improving speed of service, and of course, the option for game entertainment on the table, too. As for marketing, we continue to advertise our $6.99 Everyday Value offering of Red's Tavern Double with Bottomless Fries. That's featured on television and continues to meet the needs of our value-conscious guests. We also featured a movie ticket tie-in in Q1 with that cinematic gem, Paul Blart: Mall Cop 2, which our research showed had significant appeal with our guests. We'll continue to do movie screening research to ensure that our guests are interested in the movies we do movie ticket tie-ins with. We also continue to grow the Red Robin Royalty program. And we send each Red Robin Royalty member occasional offers to maximize their incremental visits in addition to the base frequency reward program. Let's talk about efficiency for a second. You can see that our operating margins continue to expand. We have savings from repair and maintenance costs as we've consolidated vendors, which will include janitorial and inventory management. Our acquired restaurants are performing well, and we continue to find other opportunities in the business to consolidate vendors and offset inflation. Regarding our Canadian operations, we are developing a labor management system, and we believe we can achieve additional improvement in the middle of the P&L this year in Canada. Looking towards expansion, in 2015 we plan to open 20 Red Robin restaurants along with five Burger Works, while our franchisees are expected to open two locations. Interestingly, we're seeing more development opportunities as the macro environment improves. This should enable us to pick up our development pace in 2016 and 2017 relative to this year, and we are actively working on our pipeline. Burger Works is also gaining momentum. We're very pleased with the kitchen and the heart of the house and its ability to turn out customized, hot gourmet burgers with hot crispy fries in a time that meets and exceeds our guest expectations. We're encouraged that the downtown Chicago and Washington DC locations continue to do well and the original Colorado locations continue to comp positive. If you haven't been to any of our latest locations in Chicago and Washington DC, I encourage you to do so. They represent the branding, menu, and real estate strategy that we believe is the right formula for our use going forward. These includes further penetration of new restaurants in Chicago, Washington DC, and Denver, and we are planning to open a fourth market. With that, I'll turn it over to Stuart.

Thanks, Steve, and good morning, everyone. As you've seen in our earnings release and our supplemental filing, Red Robin's first quarter operating and financial results were quite strong. Our marketing programs together with our operations teams performed extremely well, with great execution and cost control. Additionally, our results benefited from favorable changes of gift card breakage estimates and lower benefits claims, which we believe are largely one-time related, and we'll talk about it more in just a moment. EBITDA increased 27% to $47 million for the first quarter, adjusted to exclude the impact of the additional gift card breakage. As a percentage of total revenues, adjusted EBITDA increased to 11.9% from 10.9% in the first quarter of 2014. On a trailing four-quarter basis, our adjusted EBITDA totaled $132.9 million, an increase of $19.4 million or just over 17% compared to the same period ending a year ago. Earnings per diluted share on a GAAP basis was $1.16, or $1.10 excluding the change in gift card breakage estimates. Further, first quarter earnings per share benefited about $0.07 from the timing of the benefits claims compared to a year ago. We continue to take market share in the quarter with revenue and guest count growth that exceeded our casual dining peers. Red Robin's comparable revenue increased 3.1% comprised of 2% of price mix and 1.1% of guest count growth. According to Black Box Intelligence, our guest count growth outperformed the casual dining industry once again this quarter by 2.1%. Restaurant level margins of 23% were an increase of 60 basis points from a year ago. This would have been 22.2% or a decrease of 20 basis points if excluding the year-over-year reduction in benefits claims. The margin performance was better than expected not only from favorable commodity and labor inflation, but also from our operations teams' leveraging a favorable mix and capturing a strong profit flow through of the sales increase. Workers' compensation and healthcare costs were together about $2 million or 38% lower than the first quarter of 2014 due to fewer claims in the quarter, and we expect these costs to revert back to normal in the second quarter. Results of restaurants acquired from franchisees last year continued to perform at or above expectation, absent some slowdown in Edmonton, Alberta where lower oil prices are hurting the economy. Depreciation and amortization was in line with expectation at $23 million, having increased to $4.1 million from a year ago due primarily to the restaurants acquired and opened in the last year as well as investments in restaurant remodels. I often get the question why our depreciation rate is higher than most other casual dining chains. We have about $4 million annually of amortization related to franchisee acquisitions which we believe is unique when compared to our peers. The $50 million balance of reacquired franchise rights relates mainly to acquisitions in the mid-2000s and the related $4 million of amortization in 2015 reduces our EBITDA margin about 30 basis points and earnings per diluted share by about $0.17. Turning to capital expenditures, we increased our expected investments for 2015 to be approximately $170 million from $140 million previously. The $30 million increase relates mainly to the additional 25 remodels which we expect to complete this year. The decision to complete 15 major remodels of over larger units and our plan to relocate three units which was not contemplated when we provided our original guidance. The average cost per remodel of our standard prototype has increased to a bit over $400,000 due to construction inflation and cost of additional signage. Further guidance includes about $5 million of capital per restaurants that will open early in 2016. Regarding new restaurants, we've been impacted by several significant delays in landlord deliveries and permits this year which is resulting in a decreased and expected operating weeks associated with new restaurants and has pushed the majority of openings into the fourth quarter. This, together with the continued weakness in the Canadian dollar has reduced our 2015 outlook for non-comparable restaurant revenue growth. Other changes to our 2015 outlook relate mainly to the strong first quarter operating performance, some of which we expect to carry through for the year. While annual restaurant-level margins for 2015 are expected to approach 22%, about 50 basis points higher than 2014, second quarter margins are expected to decrease and should be about 100 basis points to 120 basis points below the first quarter as workers' compensation and benefits costs normalize. Restaurant-level margins are expected to expand, though in the back half of 2015 after we cycle over last year's lower margin acquisition, the increase last year in California minimum wage and then the spike in ground beef prices. Remember also that as a percentage of revenue, selling typically increases in the second quarter, while general and administrative costs typically decrease. So, combined, these costs as a percentage of revenue should be relatively flat in Q2 compared to last year. As Steve mentioned, we continuously look for ways to increase efficiency through better procurement, more efficient use of marketing dollars and improved product mix. Our success is dependent on our continuing to build on our strong guest engagement initiatives while also investing in our team members so that they are better for being a part of the Red Robin team. Some portion of our improved operating results will be used to offset inflation, but also for team member engagement initiatives such as enhanced training and building our bench strength to assure that we are positioned to accelerate new unit growth that we choose as our remodel program winds down in 2016. With that, let me turn the call back over to Steve for a few comments before we take questions. Stephen E. Carley - Chief Executive Officer & Director: Thanks, Stuart. In conclusion, we are forging ahead and executing on the key items that we believe will sustain and grow our business and strengthen our brand. We've set ambitious goals across all three of our strategic buckets: engagement, efficiency and expansion. I look forward to providing ongoing updates as we move closer towards achieving our goals. I'd like to thank our great Red Robin team members for their hard work and dedication this last quarter and continue to transform the Red Robin brand. Operator, let's open it up for questions now.

Thank you. And we'll take the first question from Joseph Buckley, Bank of America.

Hey, this is Greg Francfort on for Joe. Just can you talk a little bit about the increasing number of remodels, maybe how they're performing? I think in the past you've talked about, I guess, sales mix as of roughly – or sales lifts of roughly 4%. You guys have seen maybe sales lifts coming a little bit better than that or is that sort of how we should think about it still going forward? And then, I guess on the increased guest satisfaction scores, what are you seeing there that's driving, I guess you guys to take out that remodel mix?

Good morning. This is Stuart. I'll start off with the financial results of the BTI remodels. Now we've been – and really pleased with the performance. Historically, we've been able to talk about 3.5% to 4% sales lift relative to control group. As we've remodeled more and more restaurants, we're losing that control group, so I think the easiest way to talk about it is if you look at how those remodeled units are comping versus the non-remodeled base. And I think the key point there is the remodels that we completed in 2012, 2013 and 2014 are all comping better than the non-remodeled base. So we're getting the lift in year one and continuing to see that in the second year. The 2,000 – the original base that we did is pretty small, so I hate to read too much into that. But we still feel good about the sales growth numbers and I'd like to turn it over to Steve to talk about guest sat. Stephen E. Carley - Chief Executive Officer & Director: Greg, recognize that many of the Red Robin restaurants had not been meaningfully remodeled for sometimes up to 10 or more years. So when we talk about guest satisfaction, the first thing the guest experience is a totally new exterior and a signage package, along with the Brews label. Secondly, they come into a completely transformed restaurant, not just paint and wallpaper, but a restaurant that's been dramatically transformed into several separate sections designed to maximize that guest experience given what they're looking for on that visit. And our research is showing that that's paying off first and foremost in higher ratings for the facility, also improvements in service and atmosphere. And those all add up to higher guest satisfaction scores overall, which is exactly what we want to see, so combined with continuing to comp and great overall guest satisfaction scores, we're going to take the total remodel target this year up to 150.

Okay, that sounds great. And then I guess just to follow up, I think you talked about having the whole system done by 2016. How many restaurants would that include if you get 150 done this year? How many more would be remaining in 2016 to complete?

So if you look at where we'll be, we'll be somewhere probably just short of having 300 of our restaurants to our new brand standards by the end of this year, so that includes to what we remodeled previously. The new stores we're building obviously have the new brand standards as well as in the 150 this year. That will leave us a little bit shy of 300 or almost 70% of the system done, so that will leave us, whatever, 125 or so to complete next year, for corporate. And then the franchisees, those will probably go into 2016 and 2017 until they're getting all theirs done.

Okay, thank you and congrats on a great quarter. Stephen E. Carley - Chief Executive Officer & Director: Thank you.

Our next question is from Alex Slagle with Jefferies.

Hey, thanks, a question on the development outlook. I'd like to get some more perspective on the more favorable real estate opportunities you're seeing. And is this going to be for both the mid-sized Red Robins and Burger Works, and then any other clarifications regarding the potential acceleration in unit growth in 2016 and 2017, whether that's just potential increase in number of units or percentage growth?

Alex, if you look at the number of units that we're putting into the pipeline next year, we're working hard and have a great relationship with a number of our landlords. So that as conversion opportunities come up and things like that, we're trying to be sure we're getting the first bite at the apple. And even the relocations this year where opportunities that came up where we had sites that were the leases were off and we were negotiating with the existing landlord and the new landlord to decide where we wanted to stay, and so we're getting in some cases a choice of locations. So that said, we're taking it this year from 20 to a number higher than that as we're going to really position ourselves for the economy is ready and make sure that we've got a lot more flexibility going forward than we've had in 2015 and even in 2014. The Burger Works sites, those continue to be the highest in demand. We're really focused on dense urban area and a few markets. Now that we've got some built and really performing strongly, it makes it much easier for landlords to go and buy in and see those to say wow, this is great. This is going to increase the value of my overall real estate property, and so while that building is still a really tough space to define and get over the goal line.

Got it. And then I just want to get your thoughts on the same-store sales outlook for the year now that you've passed the toughest comparison of the year. What are the things do you see out there that keep you a bit tempered and reluctant to raise the comp guide a little more than you did?

If you look at our guidance of 2.5% to 3% comp growth, it's really got traffic and mix about 1.5%, and price will be somewhere probably a little bit under 1.5%. I would say I'd be more optimistic if I wasn't when I'm looking at the industry trends. We got really excited with the strong January. And pretty much every month since then, it's gotten softer. And you look at the consumer confidence numbers, and if just the consumer continues to say skittish, if the economy and the industry does for the last three quarters what they did for the first quarter, I think Black Box has got comp traffic, I think it was negative 60 basis points or so in the first quarter, and that was after a very strong positive January. Our guidance assumes that the industry for the rest of the year is down, call it, around 2% traffic. If the industry is better than that, then our guidance will prove conservative.

Got it, thank you.

Our next question is from Will Slabaugh with Stephens, Incorporated.

This is Billy on for Will and thanks, guys, and congrats on another great quarter. To follow up that last one, I was wondering if you could speak a little bit to some of the geographical trends you might be seeing from the comp. I know that anecdotally, we've heard that the West Coast continues to outperform at least from other companies that are exposed there. And perhaps you've seen a snap back in the Northeast, from another year of unfavorable weather. Is there a noticeable difference in Texas? Just overall, I was wondering if you can give a little more color on what you're seeing and maybe where most of that traffic outperformance versus the industry is coming from.

This is Stuart. Overall, we outperformed everywhere. I think again, looking at Black Box, they show, to your point, West Coast, particularly California and actually Southern California, performing quite strongly. And some of that I think is just still strengthening from the 2008. So Southern California continues to build and that's probably one of the strongest. To your point, we've rebounded up in the Northeast, particularly New York. New Jersey is continuing to improve for us as we continue to build there, get more units, more into consideration set of guests, that building that critical mass is, we think, is continuing to help us there. I think if you look at the weakest places for us on a comp basis, New England itself is quite small, but we're having some cannibalization there. We've opened up a couple of units. I think New England is only – it's less than 10 units for us. And Florida continues to be a little bit tougher than we like as well. But other than that, other markets are all performing better or on the industry.

Great, thanks, and a follow-up, if I could. Commodity cost inflation for the year. I know we're hearing some – at least a little bit more positive commentary from a lot of companies, particularly when they speak to back half of this year. Can you maybe talk about what you're seeing currently, and I guess mostly on ground beef, and then kind of what you're looking at for the balance of the year?

Our original guidance on COGS we thought would be coming in around 4%. We're probably now looking at about 3% COGS inflation, and first quarter was actually a little bit even less than that. So with that, we're actually going to take a little bit less price this year than what our original guidance was. That said, we're having a pretty strong flow-through of the price that we took last November. But COGS inflation continues to be fairly favorable, and given the amount of rain we've had in Colorado over the last couple of weeks, hopefully we'll have another good crop this year.

Good. Great. Thanks, guys. I appreciate it.

The next question is from John Glass with Morgan Stanley. John Glass - Morgan Stanley & Co. LLC: Thanks very much. Stuart, just on the full-year cost guidance, there's a number of little line items that add up to a higher G&A. Maybe some of that was reflected in the first quarter or higher D&A, I guess, that's explained by the remodels. The advertising kicked up. Can you maybe – they're all small things, but they add up a little bit. So can you just maybe – were there any unusual items that they were going forward in those line items, or is this just running through what you saw in the first quarter for the full year?

That's really running through we saw in the first quarter. G&A was a little bit higher, some of that was incentive compensation. Selling is more, to some degree, sort of timing and actually gift card expenses as we continue to sell more gift cards and the programs continue to do well. It's really the biggest issue in selling, so selling is almost a rounding error. And so really, I mean absent, a little bit of lower COGS, maybe a little bit less price, it's really flowing through from Q1. So the last three quarters of the year, I wouldn't expect any dramatic changes from what we've guided originally. John Glass - Morgan Stanley & Co. LLC: And you assume in your guidance the healthcare and worker's comp benefit that you got in the first quarter reverts back. What does that mean? Are you sort of – I mean why is that a conservative assumption, it doesn't necessarily have to revert back? Do you know about expenses now in the second quarter, for example, that will do that or is that just kind of trend-lining which your annual spend is or annual expenses?

It's to some degree trend-lining. I mean the worker's comp and benefits costs together, and claims were down in the first quarter. Together, if I look at what it was together for the first quarter, those two lines was – I'm sorry, in 2014, it was about 1.6% to 1.7% of sales. We were at 90% of sales in Q1. And we do – so there's no reason to think that fewer benefits claims for some reason is going to drop off, nothing dramatic if that dramatic has happened in our business. There's actually risk that goes the other way, if for some reason, it gets some volatility. This is a little bit more favorable than we'd normally see in terms of what normal quarter-to-quarter volatility is. So right now, our guidance, assume it goes back to normal, not that there's even a catch-up from the favor of Q1. John Glass - Morgan Stanley & Co. LLC: Got it, okay. Great, thank you.

And we'll go next to Alton Stump with Longbow Research.

Hey, thank you. Good morning and great job on the quarter, guys.

Thanks. Stephen E. Carley - Chief Executive Officer & Director: Thanks, Al.

Just a quick question on the franchise side of the business. Obviously, it doesn't come out too often because you guys are mostly a company-owned model. But, looking at the comp growth, it looks like an almost mid-teen two-year stacked comp growth in the first quarter. I would guess that there's probably not a lot of franchise stores that have done a remodel yet. So can you talk a little bit about what you think having the key drivers behind that performance? Stephen E. Carley - Chief Executive Officer & Director: First, Texas is almost exclusively a franchised market for us, and they are doing very, very well. Effectively each one of our major largest franchisees has a transformation complete or in the process, and so they're seeing obviously future opportunity there going forward. And I think that some acquisitions we made may have taken some lower volume restaurants out of the franchise base, which again helps on a year-over-year basis.

Exactly. And then just as we look at the pricing mix part of the equation, it would appear that you're still getting a good lift from the Finest launch even though they started – as you guys started to lap that back in mid-4Q. How much of that is just due to new products that you've launched with the seafood offering coming here in the first quarter versus just overall consumers becoming more aware of your Finest product?

Yeah. If you look at sort of overall what we're cycling over is really, I think, where I'll start with. The benefit of mix last year that we had from – particularly from Finest was over 2% of our comp increase related to mix. So the mix benefit that we had in the first quarter was a little bit Finest and Crab Cake, but also continuing with some more appetizers and alcoholic beverages. Our alcoholic beverage mix continues to grow as well. So if you look forward, we're cycling over a pretty strong growth. As Steve said, we're trying to put menu items out there for our guests so they can enjoy and add on and themselves and not trying to force mix all to itself, right? If we put great menu items on there, our guests will come into the restaurant. They may see the $6.99 Everyday Value menu item, come in, trade up to Finest or other entrees on our menu, and that will continue to drive mix for us. Driving mix this year is not going to be a big driver of sales. It's going to be really primarily comp growth associated with the brand transformation remodels.

Got you, makes sense. And if I could just slip one last in and I'll hop back in the queue. Obviously, there's a lot of news flow about last summer being a terrible box office. You had the Tier 1 promotion with Hercules. Could you just talk about heading into this summer? It would sure feel like we're going to see a much better box office. So what's your strategy is, if there will be any more Tier 1 promotions or if it will stick with the Tier 2 heading into summer? Stephen E. Carley - Chief Executive Officer & Director: Alton, as you know, we began screening our movie titles this year. And so we have a high level of confidence that that product that we picked this summer is going to do very well. We'll give you some more details about that at the Q2 call. But we do think the box office does have momentum, which is also good. So we think we've got a good program for Q2 as it relates to this Burger and a Movie promotion.

Got you. Thanks, guys, for your time. Stephen E. Carley - Chief Executive Officer & Director: Thank you.

Thank you.

We'll go next to Brian Vaccaro with Raymond James. Brian M. Vaccaro - Raymond James & Associates, Inc.: Good morning and thanks for taking my call, just a couple quick clarifications. Stuart, did you say what menu pricing was in Q1 on a year-over-year basis?

Menu price in the first quarter was about 1.4%. Brian M. Vaccaro - Raymond James & Associates, Inc.: 1.4%, okay. And as we think about – moving over to the cash flow statement, what was CapEx in the first quarter?

Hold on just a second. Total CapEx was about $31 million – $32 million. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay, great, and then just last quick one. You talked about gift cards and the tie-in with the promotions with Mall Cop 2, et cetera. But can you give us a sense of how gift cards were looking year on year, both in the first quarter and maybe remind us how your gift cards were up in the fourth quarter during the holiday season? Thank you.

We continue to see a lift. If you look at our guidance this year, we've assumed that we're going to get a gift card lift continuing of about 10% to 15%. As Steve mentioned, Mall Cop 2 performed from a sales standpoint as well as Godzilla, which from a profitability standpoint, does really well for us. So we're continuing to bring new news into our gift card program and it just continues to grow. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay, thank you.

The next question is from David Carlson with KeyBanc.

Hey, guys. Real quick question on the $30 million increase in CapEx. I understand the 25 additional units at $400,000 a piece and then the three locations. It gets me about two-thirds of the way there. I was hoping you could touch on what the remainder of the increase is supposed to come from. And then as you look to close out the remodel campaign next year, should we expect the cost to creep higher than $400,000 per store?

I think the piece you're missing is, and I touched on it in my remarks, is you've got about $5 million of new restaurant CapEx related to 2016 openings, so that's probably the other piece of it.

Got you, that's exactly what I missed. Sorry about that. And then one of the...

And then the cost per remodel, I think if you look at overall construction inflation, and you saw the housing numbers this morning, that construction inflation I think is going to continue to pick up. And as we move more towards the East Coast to Northeast, we're going to be impacted by more union labor areas, so I'd expect there to be probably 4% to 5% inflation on that.

And then on the – I just wanted to clarify one of the comments from earlier. I think that you mentioned that you guys were impacted by some delays in permitting, things of that nature. Did you say that you would expect the majority of the 20 or 25 openings when you include Burger Works, that the majority of those are now expected in the fourth quarter?

It's more the Red Robin's. Burger Works, we opened up three of those in the first quarter. The other two of those will probably be in the fourth quarter. And it's just – it's amazing the things we had. We had two restaurants delayed this year where a landlord had to get approval from another tenant for us to go in there. And the tenant's general counsel quit, and that added four weeks to getting approvals. So those are the types of things we're facing this year that are a head scratcher. But yes, that's the cause of it.

Thank you, guys.

Thanks.

The next question is from Steve Anderson with Miller Tabak. Stephen Anderson - Miller Tabak + Co. LLC: Good morning. I just have a question on Burger Works. I just want to ask if it's maybe too early to provide any kind of margin breakdown on the Burger Works side of the business and how comparable they are with the full-service restaurants. Thank you.

I think overall if you look at the unit economics, Steve, AUV ranges will be dependent upon the location, call it $1.1 million to $1.5 million. The restaurant-level margins overall what we're targeting will be upper teens. So if we put that together with a build cost of $600,000 to $800,000 depending upon the location, you'll get a cash-on-cash target of somewhere around 30% or mid-teens IRR. Stephen Anderson - Miller Tabak + Co. LLC: Okay, thank you.

And we'll go next to Robert Derrington with Wunderlich Securities.

Thank you. Steve, can you give us a little bit of color on what you've seen in test with the Ziosk and some perspective on how to think about the timing of the rollout of that this year? Stephen E. Carley - Chief Executive Officer & Director: Sure, Bob. We've been testing Ziosk for several years, if you look at our franchisees experience in Lehigh Valley, and it's consistent with what you've heard from other folks there. The single biggest pain point it brings for the guest, which is significant, is the ability to pay at the table. So the guest is not held hostage by their check, which all of us know as consumers is irritating at best and very frustrating at worst. Secondarily, we get some – literally some labor savings as you look at the server not having to go to a remote POS station with a card and then come back. It seems trivial but when you look at all the times that happens in our system, it adds up. We think that one of the things Red Robin has and we're very proud of and we know we have opportunities to reinforce is our Bottomless proposition. We know our Bottomless proposition is really important to guest, whether it's fries, root beer floats or broccoli. And Ziosk gives the guest the ability to order their Bottomless refills on demand and we think that's great because we want our guest to take advantage of that because we know what a powerful value and brand reinforcer that is. And then I think last but not least, there is an opportunity for us to completely engage our service with it and make it part of the Red Robin experience. We've got some basic back of the house work to do from a technology standpoint as a contingency before we can roll Ziosk out that truly drives the Ziosk rollout into Q3 and through the balance of this year.

So that's mostly Q3 and Q4? Do I understand that correctly? Stephen E. Carley - Chief Executive Officer & Director: Yes, yes.

Okay. All right. And then one more thing on the Ziosk. I'm trying to think about how families with kids, gaming, is that an opportunity for you? Have you looked at that? Have you seen much in test at this point? Stephen E. Carley - Chief Executive Officer & Director: Well, remember the old pre-remodel Red Robin's had a bunch of arcade games in the lobby, which is not exactly what you want to see in your match.com first date. And so we think that the ability for parents to engage with their kids in a family dining experience is positive. We need to make it clear that there's a charge for that, and we think that some parents love the fact that they can connect with their kids during the dining experience. Other parents love the fact that they can disconnect from their kids and put them on to a game. So that choice is important, too.

Got you. And, Stuart, if I could, with a quick one. There was a story out, I guess, a month-and-a-half or so ago about some litigation involving one of your franchisees in a minimum wage lawsuit. Can you give any color? Is that a risk exposure for the company? Is that franchise-related principally or how should we think about that?

Yeah. If you look at it, it's some former employees of one of our franchisees, our franchisee in Pennsylvania suing that franchise group. It's litigation that they're involved in, it's not something that we're involved in, and so completely inappropriate for us to comment.

Got you. Okay. Terrific. Thank you.

It appears there are no further questions at this time. Mr. Carley, I'd like to turn the conference back to you for any additional remarks. Stephen E. Carley - Chief Executive Officer & Director: Thanks, Eric. We appreciate everybody's time and attention this morning, and remember, we'll be back in Q2. Thank you.