Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Shake Shack First Quarter 2018 Earnings Call. At this time, all participants have been placed in a listen-only mode and the lines will be opened for your questions following the presentation. Please note that this conference is being recorded today, May 3, 2018. On the call today, from Shake Shack, we have Randy Garutti, Chief Executive Officer; Tara Comonte, Chief Financial Officer; and Josh Omin, Vice President of Finance and Investor Relations. And now I'd like to turn the call over to Mr. Josh Omin.

Thank you, operator. And good evening to everyone. By now you should all have access to our first quarter 2018 earnings release, which can be found in investor.shakeshack.com, in the Financial Info section. Additionally, we have posted supplemental first quarter 2018 earnings materials, which can be found in the Events & Presentations section on our site or as an exhibit to our 8-K for the quarter. Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements, which are not guarantees of future performance, and therefore, you should not place undue reliance on them. Actual results may differ materially from those indicated by these forward-looking statements, due to a number of risks and uncertainties, including those discussed in the Risk Factors section of our annual report on Form 10-K filed on February 26, 2018. Additionally, any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release, and the appendix of the aforementioned supplemental materials. Now I'd like to turn the call over to our CEO, Randy Garutti.

Thanks, Josh, and good evening to everyone on the call today. I'm pleased to report that 2018 is off to a strong start as we build upon our fourth quarter momentum, delivering solid top and bottom line growth. During the first quarter, we opened five domestic company-operated Shacks and four international licensed Shacks. We delivered year-over-year revenue growth of 29%, including a 1.7% increase in same-Shack sales, and grew adjusted EBITDA by nearly 33%. These results were supported by continued evolution of our digital initiatives and the strength of both new and existing Shacks as we execute on our strategic growth plans. Shake Shack is a growing, loyal, connected community, relentlessly focused on excellence, experience and hospitality. To deliver on these guiding principles, we are committed to continuously elevating our performance and accountability, deeply understanding our guests, executing the basics with brilliance, building our business infrastructure and driving smart and profitable growth. We believe we've built a solid foundation upon which we'll continue to expand and grow, leveraging the strength of the Shake Shack brand globally, to capture the significant opportunity ahead. Today I want to provide an update on some of the key strategies we're focused on to achieve our growth plans. First, our development pipeline, which remains healthy both domestically and across our international license regions globally. We're also investing in continued digital innovation across our business to better connect with our guests and to make it easier than ever for them to experience Shake Shack whenever and wherever they wish. We're also constantly innovating our menu, focused on executing the core better than ever, while considering and testing expansions of our existing menu as well as into new categories. And we're working to ensure our foundational infrastructure, both our people and our systems, to support the significant…

Thanks, Randy. Total revenue for the first quarter 2018, which includes sales from both company-operated Shacks as well as licensing revenue, increased 29.1% to $99.1 million. Sales from our company-operated Shacks increased 29.6% to $96.1 million, primarily due to the addition of 24 new domestic company-operated Shacks since the first quarter of 2017. Licensing revenue increased 16.7% to $3 million, driven by net increase of 17 Shacks since the same quarter last year. Within our license business, we remain thrilled to see ongoing strong performance of some of our newer Shacks in South Korea and Japan, balanced by the continued pressure on some of our Middle East operations. You may remember that the implementation of the new revenue accounting standard has an impact on the timing of recognition of revenue in some of our licensing agreements. We'll include a comparison in our 10-Q footnote to show our revenue as reported under each of the new and old methodology, the impact of which was a reduction of approximately $120,000 in revenue for the first quarter. We expect the impact over the full year to be approximately $500,000 less revenue recognized, which is incorporated into our 2018 guidance. Same-Shack sales increased 1.7% during the first quarter. This increase consisted of a 5.9% increase in price and mix, including the 1.5% to 2% price that we took in December, partially offset by a 4.2% decrease in traffic. As a reminder, we lapsed the free burger promotion we ran in the first quarter last year in connection with the launch of our mobile app. Excluding all transactions associated with the free burger promotion, our same-Shack sales, would have been positive 2.1% in the first quarter, with traffic declining 2.2%. While we're pleased to report another sequential quarter of posted same-Shack sales, it's important to…

Thanks, Tara. I do want to close today sharing just some of the incredible atmosphere I experienced at our Hong Kong opening this week.Our international and domestic teams worked for nearly 4 years on this launch, and their hard work was executed beautifully. As I spoke with our partners and team members just before we opened the doors, I reminded them the message I share at nearly every opening. On this day, we may or may not see a line of people greet us at the door. And regardless, we don't deserve that line. Every day, we must earn it. One guest at a time, in every Shack around the world. Now luckily, yet again, on that opening day in Hong Kong, hundred strong lined up for the 12 hours we remained open without a moment of letting up. And on that day and every day forward, I remind our team we're going to work hard to earn it. Beyond these gratifying results, what remains our greatest point of pride is that the hospitality culture of our team is stronger than ever. That is what will always guide and drive our continuing growth. This is a special company with a special opportunity ahead, and we're thankful you're on the ride with us. With that, I want to thank you for joining today's call. And operator, you may go ahead and open the line for questions.

[Operator Instructions] And we'll take our first question from Nicole Miller from Piper Jaffray.

I had 2 questions this afternoon, please. First how, are your guest satisfaction scores looking? And do you get any different kind of feedback from a kiosk or delivery user, albeit early on?

So I'll take a little bit. We haven't really had anything, in particular, in guest satisfaction, that we have shared, Nicole. We do a lot of different surveying, both internally, a little bit externally, and obviously, through social channels that we follow. I would say, without any particular data-based backup on this, we're pretty happy about it. I think it's similar to how it's always been. It ranges. We always have different openings, and there's excitement, and then, there's mistakes that we make and we hear about those. And I guess, the best way to just say it is that we continue to listen and learn quite a bit. As it pertains to the kiosks, it's too early to keep sharing just yet. It's really a young project for us. I stood there myself often. We talk to our operators all the time about it. We think people really like it. But what we have learned, and why we're doing the next rollout, we'll probably do about 4 or 5 Shacks in this next coming quarter. What we want to do now is some of the things we've clearly seen is that our guests do often want to pay with cash. In the first rollout at Astor Place, we did not accept cash at all. And there are people who have told us very clearly, "We want to pay with cash." So in this next phase, we're going to go ahead and have cashiers as well as kiosks. And there's going to be a lot of learning for us, too, there. It'll be interesting when you're not forced to use a kiosk like here at Astor, how that works. So we'll keep Astor as it is. We have a number of Shacks testing otherwise. We'll keep listening and learning. But I think the whole point of the digital evolution of the company is that we want to put the power in your hands. If you want to be a person who orders on the app, we got you. If you want to have it delivered, we got you. If you want to talk to a human being, we can't wait to greet you with a smile. But it's your call. And we want to make sure that we're doing that in so many different ways. So that is the best way I can answer it without any particular data backup.

And just, that's understanding the guests, which is helpful. I want to understand the employee satisfaction. So growing 40% or nearly 40% unit growth is a big task, and you could talk about real estate barriers. But the real hurdle is the people. So in this kind of labor market, what kind of things are you doing to be uniquely positioned for hiring, training or retention?

Yes, Nicole, it's so important. You know us very well, and our culture precedes everything. As I said multiple times in my remarks, we got a few things. Starting with our leaders. That's part of why we're doing our retreat this month. It's one of the best ways we all come together. We reinvigorate our team. We constantly look at our pay and our turnover versus the industry. We're real proud of where we sit in that. This year, we even added some enhanced benefits to our program to make sure that we're offering the best package we can. All of that said, this is a tough industry, and it will always have high turnover. And we think we're pretty good at it. But my sense is 10 years from now, when you ask me that question, I'll have the same answer. It's the toughest thing we'll ever have to deal with, especially during such big growth. But it's also our sweet spot as Shake Shack's culture, and it's the thing that we focus on the most. We've got incredible training teams led by Peggy Rubenzer and her team. And I was just in Hong Kong with about a dozen of our US trainers who moved over there for a month and instilled the culture of Shake Shack. And Hong Kong culture, it's an amazing thing to watch, and I'm so proud of how our team does it. But it will always be a battle. It'll always be a challenge no matter what.

And we'll take our next question from Sharon Zackfia from William Blair.

A question on delivery, and then, a clarification on Project Concrete. On delivery, could you talk about the benefits or advantages of potentially doing kind of a single provider versus doing kind of a multi-pronged approach, which is what you're testing right now? And then, secondarily, on Project Concrete, I'm a little confused. Are there going to be ongoing operating costs that are excluded from adjusted EPS this year or are you going to exclude the onetime elements and include the ongoing elements, just try to figure out how adjusted EBITDA is going to work?

Do you want to take Project Concrete first?

Sure. Sure. I'll take Project Concrete first. So yes, to the extent that we incur costs this year and that one time, then we will adjust for them in our adjusted EBITDA numbers, and therefore, in our EPS numbers. And we'll obviously identify those as we report.

Sharon, just moving on, on the delivery thing. We can jump back if you have questions on that. On delivery, we're -- this is why we're testing. We've done tests for the last, really, six months on some being exclusive, some being nonexclusive. And we're in those conversations now. We're learning the regional differences between partners, their willingness to make this a good long-term relationship. And everybody -- I think what everybody has shown is that there's great demand out there. But that's still wide open for debate, whether we would go exclusive or nonexclusive. So from a delivery standpoint, we're going to keep testing, learning, and keep going there based on what we learn.

I mean, Randy, how wide are the economics that are offered to you, depending on the provider?

Well, I think that's a competitive thing that we wouldn't share. I think Shake Shack has a great brand calling, and has an opportunity to build this the right way for the long term. And every company's got their metrics that make it work. Ultimately, it needs to work for everyone. Like any relationship, it's got to be a good cost for the carriers, for the company, and for our team. So we'll land on that once we choose. But again, we're in no rush to do so.

And we'll take our next question from Jake Bartlett from SunTrust.

I had a question about the comps and kind of suffering through four nor'easters last March drove comps up negative 8% that month. How did weather impact you? I would have thought it would be a pretty large impact. But if you can help quantify that. And then, at the same time, if you can talk about how much the Easter shift impacted you in the first quarter? And I guess, so we can kind of anticipate the negative effect in the second quarter. And then, as well, on this comp question, if there's any way to quantify what kind of lift you're getting from these delivery pilots, that would be helpful.

Yes. Jake, all good questions. Without breaking out each piece, which I don't think we're going to do, I could say if you look at our supplemental materials we gave on Page 5, the continued story of our comp base, which we will say whether it's up, down, sideways or anything, don't get me wrong, we're happy when it's positive as it was this quarter. But more than 70% of our comp base is on the Amtrak corridor from Boston to D.C., with a huge portion of that in New York City. So yes, when we have 4 Nor'easters, we're certainly impacted by that. But look, those things balance out over time. I think, as we've said, delivery was actually always, of course, a positive. We're excited about that. We had some of the strength of some of the new Shacks was good, and just continued regional performance balances these things out, which we're hopeful, over time, as this comp base gets less than 70% over there, that, that'll balance out more. In terms of the Easter question, it's really just a few days. It's a little bit hard to quantify because what Easter means really depends on school schedules for us, right? And then, particularly, in New York in the Northeast, those things shift, sometimes related to Easter, sometimes not. So we're not really sure. We do believe that last few days of the period saw some positive uptick because of that shift, because of some schools out and some travel, which we usually benefit from. But it's hard to say, and then you had the responding shift happening in April. So lots to watch there as we come in, in the second quarter, but we're not going to give any guidance on the second quarter right now.

Got it. Got it. And then, for the -- just the composition of the comp, the check growth and the negative traffic. What was driving the check growth? And I guess, even kind of backing out the impact of the free burger giveaway last year. Looks like you have about a 4% check with 1.5% to 2% of price. So is there

Yes. A few things going there. Yes, as you talk about last year, but you have price, which we got about 1.5 points to 2. And then, you've got all the digital initiatives. We've been clear, Jake, and this is an important thing to note, on all our digital channels, we have generally seen a higher average check. So that contributes through the app, through delivery channels. We're still working on what the kiosk will mean long term there when we look at more tests. So all those things continue to drive it as well as some good menu innovation. We already started to engineer our menu to innovation to be accretive, and we've seen a good increase in the price of mix because of that.

Got it. So it wasn't an LTO that it wasn't the good old chicken or something like that, that might hits quite?

Mostly the digital. It is mostly the digital. But again, all those factors play into it.

Okay. Thank you very much.

And we'll take our next question from John Ivankoe from JP Morgan.

Actually, just a follow-up on that, and then, a separate question. If digital's already driving check, could you say what percentage of your orders or your total sales currently is digital? I apologize if I missed that.

We have not, John. We're not breaking that out just yet. Again, we continue to be encouraged by it, but not a number we're ready to break out just yet. Obviously, growing as we add delivery to that category that we didn't really have last year outside of delivery services coming in that weren't integrated. So with the combo of app and delivery, kiosk, that's an opportunity that we think has a lot of chance to grow over the future, and we're heavily investing in that.

Can you at least say how much higher the digital check is than, I guess, the walk-in check or walk-in ticket? Is that [indiscernible]?

Yes, it's been about 15%. That we've talked about, sometimes more. But roughly 15-plus, depending on the channel.

All right, that's helpful. And then, from a modeling perspective, but I think it's actually a more important question than just plugging a number in. You kind of talked about 20% to 25% of your new units are in new markets, but the rest are in fill in. So you're not having some experience in terms of that average unit volume between new and fill-in. And I was just hoping as you think about '18 as opposed to just giving us kind of a total average, a volume number and some implicit comp guidance and allow us to kind of solve for new unit volume. If there's any kind of guardrails if you will, that you can put around your expectations for average unit volumes in a new market versus average unit volumes for a fill-in market as we look at fiscal '18 and going forward.

John, I think the reality is it's really hard to do that. I'll give you an example why. A new market doesn't always necessarily mean a high-volume restaurant. And a fill-in doesn't always necessarily mean a lower-volume restaurant. I'll give you a couple of examples. We continue to grow, as I said, our eighth restaurant in Southern California. That, as we've shown in the past, is a high AUV region for Shake Shack, but that would be considered a fill-in, right? And then, we might add something in a smaller town. This year, we're going to go to Nashville, we're going to go to Birmingham. I don't know what those will be, but I don't think they're going to equal when we go to San Francisco, right? Probably. Denver? Interesting, interesting question. So it's just so hard to do that. As we've said, we think that low $3 million average will be our average as we go. And at the end of this year, we expect that full AUV to be just over $4 million, which we're really excited about and proud of. But again, really balanced all through the spectrum. We generally have these kind of big starts. We've had that in a number of places, which was encouraged by, both in Q4 and the early openings in Q1. But we expect those to balance out. But with some of the openings towards the end of this year, hopefully, we'll continue to show strong openings there, too. So I know it's hard to give you that for your model, but again, those low $3 million over the long term is probably the right bet.

Okay. Understood. And I'm sure your Nashville unit, that sounds like a market that will be perfect for you guys. So certainly, we look forward to seeing that. And then, finally, are you guys beginning to think about, kind of longer-term G&A leverage? I mean, I know you know, when we talked about this, that your G&A is very high percentage of revenue there's a lot of reasons for that. But again, as you guys have been nice enough to kind of layout some 2020 objectives. When does that begin to leverage? And how much, maybe, on average per year in basis points of an opportunity do you think G&A can be as a contributor to your overall margins?

John, yes, I mean, as you know, we haven't given that level of forward-looking guidance as it relates to G&A. I'm -- we're not about to on the call today. But I would say that, of course, we're looking at G&A guidance, and of course, we expect G&A guidance for the long term. And I think that, that's very much top of mind as you see us invest in the shorter term. So I think while we're in such an early stage of our growth journey, the right thing for us to do right now is to be focused on continuing to get to that 3-year and then longer-term target, with strong returns on cash, healthy operating margins and investing across the business to make sure we've got a strong foundation to execute against those plans. Longer term, so within that further down that growth journey, we would expect to be delivering some G&A leverage. Project Concrete is a really good example. Project Concrete will help that, will enable growth, and will also enable cost leverage, both over the long term. So I would say it's very much top of mind, but it goes with short-term investment. And so you'll see us continue to spend where we believe it makes sense. And in fact, as we quantify returns, as we continue to test and experiment with our digital agenda and various personalized marketing initiatives, for example, you might see us spend more where we're really happy with the returns. And again, it'll do one of 2 things. It'll drive long-term, sustainable growth or long-term G&A leverage.

I guess, I apologize for pushing such a big issue on the call. But I mean, do you think '19 can show leverage versus '18? Or do you just want to continue to assume that you're going to remain a high-investment company based on what you think is a very long-term kind of tailed opportunity?

You said it. I think we expect, it's hard to say, John, what '19 looks like today. We've got to get through Project Concrete. As Tara said, some of that may end up hitting '19 as well. We've just moved into our new office and our test kitchen. Those are in your costs for us. But I think we sit around, and we say, "Are we spending enough?" And we know we have a high G&A, but I believe if you're in this for the long term and you're looking at what we've given guidance on last quarter of doubling our sales, more than doubling our units in 3-year time, I believe our shareholders want us to spend that money. We're doing it prudently. We're doing it responsibly. And we're investing in the people and the things that we need to get there for the long term. So this is a great company. If you just take a look at how we've performed in 3 years since our IPO, we're really proud of the work of the team. And that's what we want to do for the next 3 years, and that costs some money to do so.

And we'll take our next question from John Glass from Morgan Stanley.

I wanted to come back to the average unit volume question and make sure I understand the numbers you're talking about. For the year, you're saying $4.1 million, I think, to $4.2 million. I heard a $4.5 million number as well, but if you take your average weekly sales this quarter, you're already at $4.2 million. So what was the $4.5 million relative to those numbers that if I heard that correctly?

So John, we're trying to give you more of a kind of rolling 12 months update to try and give you better visibility as we go, as we move towards that long-term target, $3 million-ish. So I think, I don't know if it was the first time we gave the number, but certainly the first time in my Shack time that we gave that number we gave $4.7 million system-wide trailing 12-month AUV for Q3 and that first set of supplemental materials of trailing 12 months or of full fiscal at the end of '17. The one and the same thing was $4.6 million. And the $4.5 million number you heard was our trailing 12-month AUV system-wide at the end of Q1.

Okay. And then, how does that relate to the $81,000 average weekly, which would have come out to $4.2 million? What is the difference between that $4.5 million and the $4.1 million, or $4.2 million that, that will come out to be? That's just in this current quarter, not a trailing number. Is at what it is?

John, this is Josh. The $81,000 is just for the 13-week first quarter…

Versus the trailing 12 months.

Versus the trailing 12, which is the $4.5 million. So it's quarter 2 '17 through quarter one of 2018. Again, by the end of the fiscal year of '18, we expect that trailing 12 or the full fiscal year by that point, to be between $4.1 million and $4.2 million. So the $81,000, by the way, for the quarter, remember that, historically, from a seasonally prospective, quarter one is generally a little bit of a slower quarter. We tend to see a ramp-up in quarter two, three and then, kind of back down in quarter four just from a historical seasonality perspective.

That probably makes sense. There's one to foot those three numbers. And on the traffic question, I understand you don't want to talk about, maybe, weather. But is there another way to look at traffic, excluding weather? For example, if you were to look at the 30 stores, roughly, they're not in the Northeast, was that traffic positive or is there a way to look at traffic in the non-comp stores and suddenly they've been opened more than a year then less than two years and talk about that pattern to some way to give a broader measure of how footfall is on a normalized basis?

Again, John, we really have never broken that out, and we don't intend to at this moment. Trying to give us much a clear guidance as we can on the overall here. But again, similar stories to what we've always talked about. There's regional variations that have differing impacts based on other Shacks, based on weather, based on price and all the other things that we continue to talk about over time. So apologies, but not something we're going to break out on a regional or Shack-by-Shack basis just yet.

Would you at least maybe just say whether cannibalization played any role in the traffic this quarter? I know in one quarter or two quarters that you mentioned it. Was there any call out there?

I think it's a similar to what we've mentioned in the past. There's always going to be some group of Shacks that are impacted by others. That is often by design when we really want to capture a total market share is what we're after. As we've said many times, we're less concerned about percentages, and we're much more concerned about dollars. I mean, when we go after larger regions and we add Shacks, they sometimes have an impact on other Shacks. But that's a Shack-by-Shack question. It's not a hard and fast rule and it differs. There are many that grow when other Shacks enter the market, and there are some that are impacted. So we're going to continue to make those decisions that give us ultimate market share for the long term.

And we'll take our next question from Alton Stump from Longbow Research.

Just quickly to harp on comps, but is there any kind of breakout or estimation that you can give us as part of -- as you impact both from Easter and also weather comps during the first quarter?

Alton, we're not really breaking it out. As I said a little bit earlier, we had a few days at the end of the quarter that were impacted, probably, by the Easter shift. It's always hard to say. I talked about that a little bit earlier. But in terms of breakdown of the comp, not something we're going to do as we've reported that. We're excited to be positive 1.7% and all the factors we talked about, whether its weather, delivery, new Shacks, recent openings impacting that, are all part of what blended into a 1.7%. But again, we'll say forever, you got to be careful with the comp base of Shake Shack. We've got to continue to grow into a much broader base that is a lot more indicative of trends over time, of which this continued base is not.

That's helpful. And then, could you remind me how many of the stores that are in their comp base are actually in Manhattan? If you have that number handy?

How many of the existing comp base stores are in Manhattan?

Yes.

11.

There was a -- we had 44 stores in the base in the quarter, 11 of which were in Manhattan. You can see this in the supplemental deck. We do a buildup both New York City, and then, the Northeast and Mid-Atlantic and all other. So again, Manhattan represented 25% of the units and about 36% of the actual sales.

And Alton, what you'll see also highlighted in the supplemental materials that of the 18 Shacks that get added to the comp base in 2018, only 4 of them are in New York City. So they're still heavily dominated by that Mid-Atlantic corridor that Randy mentioned. It is gradually diversifying. So we have, for example, with California, with Arizona, among others, entering the comp base for the first time this year.

Great thanks there.

[Operator Instructions]. And we'll take our next question from Karen Holthouse from Goldman Sachs.

Hi. I want to dig back into the -- for traffic versus checks dynamics. So looking at the mixed growth that you saw this quarter, is that something you had been anticipating? And it sounds like if that's really driven by digital and some things like that. There's no real reason we should think about check growth coming in -- or falling as we move through the year, right?

Well, every quarter is different. Every initiative is different. Karen, as we said, part of that was a number of things. There was some price, it was comping against free burger promotion of last year, the digital initiatives that we talked about earlier were all built into that as well as a little bit of menu innovations. So that changes with each LTO, changes with each menu innovation in each quarter. So that's what it was for the first quarter, and those are the reasons.

Well, I guess, I'm trying to understand if the comp guidance for the year embeds positive check growth or that was -- was that in the plan at the beginning of the year? Or sort of, as you pointed out, these things can be different quarter-to-quarter. Was this quarter sort of an upside surprise?

Yes. Based on our -- as we said, we had flat comp guidance at the beginning of the year. We're going to guide now sort of 0 to 1 after the 1.7% quarter. And embedded in that, that we know, is the price of 1.5% to 2% that we took at the end of December. But it's hard to say. Everything we believe is embedded in our guidance that we gave you on the zero to 1 in the comp base for the rest of the year.

Alright. Thank you.

And we'll take our next question from Jeffrey Bernstein from Barclays.

This is actually Jeff Priester on for Jeff Bernstein. I have one clarification question and a follow-up. The raise in the comp guide from zero to 1, that is just purely a flow-through over the 1.7% in the first quarter? And there's no change in your view for the second, third, and fourth quarter, correct?

Correct. Yes. I mean, at this point, we're obviously pleased with the positive first quarter performance. But as we've laid out many times and have again on this call, this is one of the most volatile metrics in our business. It's impacted by a number of factors, and it's still a very small base representing less than half of the total Shacks. So absolutely. And indeed, on top of that, the compares throughout the year get harder. So yes, your summary is correct.

Got it. And then, to ask the traffic question a little bit of a different way. What do you guys kind of view as the hindering factor to positive traffic? And more specifically, is the kitchen size or kitchen layout of your current comp base hindering that?

Well, I think, there's nothing that hinders it. As we've said many times, the comp base is a small group of restaurants regionally connected that are incredibly high-volume restaurants. So when you add in some of the digital initiatives with larger average checks, those have an impact on that base. And it's something we're constantly looking at. We're constantly looking at kitchen design. We're testing new kitchen designs at some of our new Shacks, and we'll continue to test that. But the mature Shacks are built, and they make up the majority of the base. So all of that is what gets into the traffic here. But it's obviously something we're looking hard at and always want to continue to improve on whenever we can.

Got it, great, thanks.

And there are no further questions. I'll turn it back over to Randy.

Again, thanks, everyone. We really appreciate all of your support. Thanks to our team for another strong quarter, and we're looking forward to a good year. Thanks for taking the time with us on tonight's call. Take care.

That concludes today's conference. Thank you for your participation. You may now disconnect.