Greetings. Welcome to Shake Shack’s Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Michael Oriolo, Director of FP&A. Thank you. you may begin.

Thank you and good morning, everyone. Joining me for Shake Shack's conference call is our CEO, Randy Garutti and CFO, Katie Fogertey. 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 financial details section of our Shareholder Letter. Some of today's statements may be forward-looking and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our Annual Report on Form 10-K filed on February 23rd, 2023. 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. by now, you should have access to our second quarter 2023 Shareholder Letter, which can be found at investor.shakeshack.com in the Quarterly Results section or as an exhibit to our 8-K for the quarter. As a reminder, during last year's second quarter, our Shack level operating profit saw a benefit of 40 basis points from one-time credits related to our 2022 leadership retreat. During today's call, we will discuss year-over-year Shack level operating profit and cost comparisons excluding these credits in order to provide a more like-for-like comparison. I will now turn the call over to Randy.

Thanks, Mike and good morning, everyone. Our team continued to execute our strategic plan through the second quarter and into July. We grew total revenue by 18% to $272 million with 3% growth in same-Shack sales, average weekly sales of 77,000 and trailing 12-month AUV across our Shacks at $3.9 million. We grew system-wide sales by 21% year-over-year to $426 million as we continue to accelerate the growth in our licensed business across new and existing markets. In the company-operated business, we opened 10 new Shacks with 23 currently under construction well on our way to opening about 40 new Shacks this year. In our licensed business, our partners opened 13 Shacks in the quarter. We target opening 35 Shacks this year representing 17% system-wide unit growth year-over-year. Since the quarter ended, we've seen an uptick in sales momentum with fiscal July same-Shack sales up 4.5% and strong performance around the company. As we strengthen the company for the future, our commitment is to being a profitable growth company. In the second quarter, our teams delivered 21% Shack-level operating profit, our highest level since 2019 and a 240-basis point gain over last year. We are disciplined. We are more efficient across our Shacks’ G&A and CapEx expenses. in our restaurants, we've identified numerous areas for improved process and cost reductions that we executed against in the quarter with the aim of growing profitability while delivering a great guest experience. We are still early days and seeing the full potential from this work, but with these strategies, we'll continue to improve how we run our Shacks all the while still improving upon our already strong returns and great guest experience. While our overall second quarter results were strong, our same-Shack sales slowed in May before rebounding through June and strengthening into…

Good morning, everyone. We are pleased with the results of our second quarter and our continued execution against our 2023 strategic plan. We expanded our restaurant margins by 240 basis points year-over-year to 21%, a function of us producing the highest restaurant operating profitability flow-through on sales growth since 2015 the year that Shake Shack went public. With this improvement and discipline on other expense lines, we generated a record high $37 million of adjusted EBITDA, 13.6% of total revenue marking 370 basis points of adjusted EBITDA margin expansion year-over-year. Before diving into our financials though I wanted to take some time to share progress in the quarter that contributed to our strong restaurant margin outperformance. To start, despite our continued elevated inflationary pressures, we have preserved a good portion of our profitability by taking a strategic approach to pricing and widening the price differential across our markets to match regional and guest dynamics. But pricing alone did not bring us to today's strong results. As part of our work on our 2023 strategic plan, over the past few quarters, we've identified and executed against opportunities for operational improvements that contributed to the significant portion of our year-over-year margin expansion this quarter. Many of these are still early days in the making and we are building on them as we progress throughout the year. So first, we are working closely with our operators on execution improvement plans across our Shacks. Major call-outs here are better alignment on new standards and demand generated labor schedules, further increasing operating hours, driving waste reduction, T&E discipline and other initiatives. We are leveraging fresh weekly sales forecasts in our Shacks to schedule labor incorporating macro and micro drivers. This is helping us be more nimble in our expense management when sales tides turn or…

Thanks so much, Katie. We're really proud of the team and the way they continue to execute our strategic plan, driving sales and better profitability across our shacks. Today, I want to end with a note of special thanks. As you may have seen early this morning through form 8-K, we announced that our long-time COO, Zach Koff will be leaving the company after more than 13 years. Zach joined Shake Shack when we opened our fourth Shack ever in Miami Beach, and he's been a key fixture in all we've done to build this special brand and culture. His heart, soul and leadership sits at the foundation of Shake Shack, and so much of what we've accomplished as a team has been thanks to his contributions. Zach will be greatly missed. but we're excited for him in his next chapter and for Shake Shack as we look ahead to adding new leadership. Zach will be transitioning out of the company September 7th and we will begin an executive search for his replacement. In the meantime, Zach has built an exceptional team, and along with our executive team, we will continue the operational excellence and improvements we shared earlier in this call to ensure progress moving forward. And with that, operator, please open up the call for questions.

Thank you. [Operator Instructions] Our first question is from Brian Mullan with Piper Sandler. Please proceed.

Hey. Thank you. Just a question on top of the bill costs, they're going to be down 10% next year. That's encouraging to see. Could you perhaps separate that between the drive-through format and the more traditional formats? we've known you're looking to get the cost of the drive-through down. Just are you making progress across the other formats as well? And then just kind of related that holding inflation constant. Do you think you could get that down even further in 2025 if given more time and with more focus on the issue?

Yes. Thanks, Brian. I appreciate the question. I think broadly, the answer is yes on all fronts. Our commitment next year is both in drive-through costs and overall. But in our core formats, we're working towards new formats, more standardized, more templated, really optimizing the right size and doing so much to continue to bring that down over time. Teams doing great work on this. It takes time. Right. You've got shacks that are already designed and in place. Some of those will be more expensive drive-throughs. Some of those will be in more expensive places, like I named in New York, California. But overall, next year, we're targeting a $2.3 million average roughly and we're going to hold to that. as we look at years forward, depending on the mix of Shacks we believe and we are targeting lots of improvements in how we build our restaurants the way we do it, but still doing it in the Shake Shack way. So, we believe this is a great opportunity for us long-term, and we're committed to having this be an important fixture of our strategic plan in this coming year.

Okay. thanks a lot. Just as a follow-up, I think a part of the recent cooperation agreement that the companies agree to work with some outside consultants to work at ways to be more efficient. My question is, just given all the various strategic efforts that are already underway internally and yielding progress. do you expect any consulting agreement would yield even more efficiencies above and beyond, and have you kind of entered into an agreement yet?

Thanks, Brian. Yes. first of all, I think the team right now has been and you've seen this in the results of the quarter and in our guide forward, really focused on improving so many things in the company. And that's taking root, as you can see. We will be and we're working with the working group of our board in concert with talking to consultants and thinking about what that scope might look like. And we're continuing to define that and we'll certainly let you know, but we believe that's going to be another exciting opportunity for us to dive deeper into some of the things we're already doing and identify some other things. So yes, we're looking forward to that. That's going to take time and we'll keep you posted as it goes.

Our next question is from Michael Tamas with Oppenheimer & Company. Please proceed.

Thanks. Good morning.

It sounds like you're just getting started on some of the opportunities to expand your restaurant margins above the 20% you're targeting this year. But as your pricing normalizes and hopefully inflation does as well, do you think you have the levers to pull on a core basis to expand margins above the 20% range or do you think you need menu pricing to sort of outpace inflation to do that?

Right. Yes. So, we talked about on the call today, the 240 basis points of margin improvement that we showed year-over-year. The bulk majority of that is coming from our operational improvement plan. And some of these we factored into our guidance; others, we're learning more as time goes along. But we’re really encouraged by what we’re seeing. We’re not going to give long-term guidance at this point. So, nothing beyond what we've given for the full-year target of 19.25% to 20%. But these are kind of really improving the foundation of Shake Shack and helping us to become a more profitable company over the long term.

Our next question is from Brian Harper with Morgan Stanley. Please proceed.

Yes. Thanks. Good morning. I was curious if you could just provide more detail on some of the mix impacts, because I realized that kind of delivery is coming off. You talked about that piece. But are you seeing pretty good attach of some of your new menu items? How much more do you think can kind of come from Kiosks over time if we separate out some of the different mix drivers that you're seeing?

Sure. So really, one of the most important mixed headwinds that we had in the quarter was the fact that we sold out of our highly successful white Truffle LTO early. We think that was about 100 basis points of just mix alone in the quarter. Hard to tell what that traffic impact was, but we know that our most successful are great LTOs. They are traffic and frequency drivers as well. within each of our channels, what we're seeing overall is pretty consistent. We're seeing better mixed trends within our in-shack channel though just as we're driving deeper Kiosk adoption. you're getting that natural uplift on that side. but across the board, we do have higher attach rates of items per protein year-over-year and we're pretty encouraged by what we're seeing there. Now overall, what you're seeing at the company level though is that channel shift mix of more people coming in-Shack. Those tend to be less people per order, especially in our urban markets. And that's that natural shift that we've been seeing since pretty much last year into now.

Our next question is from Peter Saleh with BTIG. Please proceed.

Yes. great and good morning. Katie, I wanted to ask on the Kiosk, I think you mentioned a high single-digit Shack lift. Can you elaborate a little bit on that? Are you seeing that just more customization add-ons or is it -- are you seeing more group sizes? Just trying to understand what's driving that high single-digit lift.

Great. Yes. So, it's really exciting. What we're pretty consistently seeing in our Shacks as we're accelerating our Kiosk retrofit program here is that once we kind of shift that cash from the cashier into the Kiosk channel, they tend to -- we have a high single digit at least checklist right there. And what that's coming from is really, I think, people being able to sit with the visual merchandising of our product, we see a higher instance of LTO sales on that. And I think that when you get to see the very exciting items that we're promoting up there, guests are interested in that. I think it comes across a little bit differently on the Kiosk channel than on our traditional menu boards. You're also seeing greater instances of sales of our premium cold beverage as well and shakes, which has obviously very nice margin on that side. So that's most of what we're seeing. But what's really exciting also is that we're still in the very early days here. There's a lot of opportunity for us to invest some money around driving more upsell in the Kiosk channel. Our priority today is driving just that greater adoption of it. But you're going to know, you'll expect to see from us continued strategies to drive more upsell in that channel.

Our next question is from Andrew Charles with TD Cowen. Please proceed.

Great. Thanks. Two questions from me. First, I know beef obviously remains pretty volatile. but 2Q beef inflation high single digits was more favorable than your low double-digit forecast. I know you don't contract beef, but is there any mitigation strategy that contributed to that or was that strictly more favorable spot rates? And then just kind of the question on the 3Q guidance. Appreciate the disclosure for July, up 4.5%. If I look at the guidance for low-to-mid single digits, is there a reason to believe same-store sales would decrease from July such as harder comparisons in August and September? Or would you just label the guidance to be conservative?

Great. So, let's take beef first. So, as we progressed throughout the quarter on beef, it was a little bit more favorable. I mean, we're talking about high single digits versus low double digits kind of very much on the cusp there. And we really started to see beef, though, pick up more in July. So that is something that we are watching very closely and we've reflected that view into what we're seeing today into our guidance. And then on the comp, we're running a 4.5% in July. We ran a 4.5% in July. Think about the mid single digits range as being kind of around that 4.5% to 5% range. And how we typically progress throughout the quarter on AWS is. August is a little bit lower than July. And then we do see a more significant drop-off in September. It'll be interesting to see how this year's September behaves. Last year, we had a more muted decline in September versus August. But in pre-COVID times, that was a little bit more pronounced.

Our next question is from Jake Bartlett with Truist Securities. Please proceed.

Great. Thanks for taking the question. My first one is on the consumer. In the past, you've made some comments about whether there's any specific movements in lower income or higher income. Any comments you can say in what you're seeing from just underlying strength of demand?

Yes. Jake, I think you've seen this kind of broadly in our industry and a lot of industries. generally, I think we're all surprised at how resilient the consumer has been. at Shake Shack, I think what we've said in the past has stood true in this last quarter, which is we generally benefit from a higher-end consumer. You're seeing that also in the strength of some of our LTOs. People being willing to spend a little bit more. but we're not immune to the lower consumer trading down, and you'll probably see some of that in our numbers in this quarter and moving forward. Right. There's going to be more battles on discounting and your kind of traditional fast food that we're going to compete against from time to time. And that's going to be a pressure, I think, during this uncertain time. And we expect that and that's built into the guide as we go. It's built into how we're thinking about things. But I think in general, the consumer has been pretty resilient. So, we're happy with that and we're looking ahead to continue to build on the strategies we've employed so far that you heard a lot about today.

Our next question is from Brian Vaccaro with Raymond James. Please proceed.

Hi. thanks and good morning. I just wanted to ask about the labor improvements and Katie, I think you said wage inflation up in the mid single digits, if I heard correctly, and you saw cost per week, at least on our math down year-on-year. So, could you just provide a little more color on the benefits you're seeing from Kiosks and also the dynamic labor scheduling? Just more perspective on that, I'm curious if the hours of where is that during the day, during the week, is it clustered in a certain set of stores that were significantly underperforming? Just any incremental clarity there would be helpful.

Yes, absolutely. So, just a kind of reminder of what we're doing on that side. So first of all, working with our operators very closely, and digging in and building bespoke labor schedules for the shacks that are kind of the most pressured. and that has been a really helpful way of managing kind of our lower performing shack base and working with them to help make those more profitable. On the dynamic labor scheduling side, this is an important point. We switched to a more demand based, more real-time what we're seeing on the ground forecast that's leveraging both micro and macro variables across all of our shacks in the quarter. And this is a really hard one to measure the full benefit. But what I will say is that if sales tights turn in either direction, you're able to be much more nimble and react much quicker to changes in consumer behavior, where we can staff up and staff down to reflect that change instead of being a little bit more lagged and delayed. We're also working closely to audit labor schedules as well and just make sure that we're adhering to our standards, which has really helped kind of reduce that overall. and then Kiosk overall with the 250 shacks that we have in place right now and continuing to drive Kiosk adoption. we're starting to see some early signs of labor savings on that and that's been helpful, and we're going to continue to leverage that over time. The number that we gave in my prepared remarks is that we're running 50 fewer hours this year versus last year. So, a pretty good clip of savings on that side and that's helping to offset some of the other pressures that we're facing in labor. And that plus our higher price contributed to the delivery that we produced in the quarter.

Our next question is from David Tarantino with Baird. Please proceed.

Hi, good morning. My question is more about kind of the strategy with respect to kind of optimizing the model to lower costs and shift the behavior towards Kiosks. And my question is really related to how are you measuring the guest experience as you go through this transition? It seems like you're making a lot of progress early on the cost side. But I guess what are you doing to make sure that you're not changing the guest experience in a way that you don't want longer term?

David, I love that question. I'm so thankful you asked it. Because that's at the core of everything that we think about, right. And as we think about improving the operating model, we need to do that through ways that only increase and improve the guest experience. That's a part of our strategic plan. you heard me talk about it earlier. and it'll be a part of our strategic plan next year and evolved in new ways. So, a couple of things. What we're learning is as we do these digital tools like kiosk or app or whatever we need to build them, so guests prefer it and that they really enjoy those experiences. What we're seeing in our guest scores that we track a lot and get more and more data from is that they're improving. They're improving through the time that we are improving as operational execution. I know that part of what we need to do better as well is just consistency, standardization, so that guests can count on what they need to count on for Shake Shack day after day. you can know when your food's going to come out. You can know that it's going to be ready and you can count on it being exactly the same. Standardization and us doing that better is going to lead to better guest experience. We know that we're doing that. But in the Shacks as well, we're actually ramping up efforts of the things that we do. For instance, in most shacks now, when you come in and you used to have kind of that stress of waiting for your buzzer or waiting for us to text you now, in most shacks, most of the time, we're going to run your food to you. We're adding that added level of service. We've been doing that for about a year now. That's all part of the shift in the way we can optimize our labor instead of taking an order, where guests would prefer to do it themselves and our Kiosks benefit in all the ways you heard. we can spend that time and effort and put our hospitality towards a different part of the experience. And we found that people are really enjoying that. That has been just a destresser and an added experience. And as we think about cutting costs and bringing things down, we got to do it in ways, as I said, that improve. So, if we're going to have a smaller dining room, it's still got to be a great dining room, that has the right amount of seats and all the things that we're doing are going to add to that. So, thank you for that question. You can assure and our shareholders can be assured that we will not do anything but work to improve the guest experience as we talk about also improving the economic model.

Our next question is from Jeffrey Bernstein with Barclays. Please proceed.

Great. Thank you. One clarification and then a question. Just the clarification, the acceleration you saw in July from a comp perspective. I'm just wondering if there's anything you specifically attribute that to any new drivers or perhaps changing consumer behavior to drive that improvement. Otherwise, my particular perspective just on G&A --

Go ahead, go ahead.

yes. Katie mentioned the 75 basis points of leverage in '23, which is obviously impressive. I'm just wondering what the biggest buckets of savings are, whether you think there's more opportunity for leverage in '24 and beyond. Maybe, it's who you benchmark yourself against. Just trying to figure out how you define what the right ultimate level is. Thank you.

Yes. thanks. On the trends, we're really encouraged by quarter-to-date seeing some of the strong that we've seen all year a few things. as we talked about, we had return of a strong LTO with Bourbon Bacon. We had some of the other menu things happening that are really good. I think we're just continuing to see some of that trend that benefits Shake Shack. Some of the things that we were most hit on, whether it's urban or the offices, tourism, travel, the kind of way people move. those things continue to improve in general, mobility for us. We are seeing some hits in the mid distance consumer that are different from last year. but generally, those trends continue to benefit us and it's just been good. It's just been a really good momentum through July. so, we're encouraged by that and really, it's been strengthening since mid-June. So that's good. We'll see where it goes. We've got tougher compares as we go through the year, but we feel good about that. on G&A, look, we need to keep investing, where we need to invest. We're happy that as Katie shared, we're tracking towards leverage this year and we can look at some of that next year as well, but we're not going to fully guide there just yet. We've got to make sure we're making the investments, but we're leading this company with the right amount of people and efforts, and making sure that we can continue to drive all the initiatives that make sense from a return perspective. As I said, we are very much a growth company, leading with percentage sales increases that you don't see in a whole lot of places in the public company restaurant space. And we have to continue to invest to ensure that that continues, but we're going to do it profitably overall.

Our next question is from Andy Barish with Jefferies. Please proceed.

Hey, guys. just hadn't heard about some of the sales impact, I think you mentioned on the coast in regard to maybe some delivery sales. Could you tease that out for us just how much and how long do you think that will last? And is that restaurants as well as consumer behavior or mostly, your development that's impacting some of that sales layer?

Thanks. Yes, I think, it’s near-term and you start to lap some of those. there's going to be always and there has been since the day we created this company at every restaurant. you're going to see from time to time, you're going to see impact when you open a restaurant close to another. And I think we've got a couple of handfuls of restaurants that are in that category. Some in LA, where we opened five new shacks on top of other restaurants. Our whole goal is market share overall and building a strong market, and we have a long runway to do so and we're confident in that. But from time to time in the world, we live in today, you may eat up a section of a delivery radius, for instance and just start to share that portion of delivery sales. That may happen, but we do think we roll off some of those. But let's go back to the important strategy of development. We've got a long runway ahead and part of our strategy is to cluster our shacks a little bit closer together. We know and you're seeing that in our profitability measures that we're continuing to improve. So, we know that from time to time, when you do that, you might impact sales at another restaurant. but you're also going to impact our ability to open better, faster, have stronger profitability sooner and over the long run. So, we feel really good about all those decisions and we'll also keep taking that learning and making sure our development schedule is taking that in and spreading out our shacks as best that makes sense and still building lots of restaurants. I think that thing that I think needs to be said that even we remain surprised by from time to time is Shake Shack has this giant brand that punches so far above its weight. But in reality, there are many places in this country, where our brand awareness still needs to grow, where we're actually still coming up. We're not the incumbent. and that takes time and I think our history has shown that we do that really well over time. But it does take time and we're confident we'll keep doing that, and you'll see us committing more and more to marketing and funding brand awareness. so that we can continue to grow our overall base of guests.

Our next question is from John Ivankoe with JPMorgan. Please proceed.

Hi. thank you. Hope everyone is well. I know we've talked about previously and I was just trying to get to capitalized cost per new unit. I know it's not a fair calculation and I know you'll correct me for the reasons why. but in fiscal '23, just taking your CapEx divided by a number of units, it was around $4 million. in first half of '24 -- that was in '22; in first half of '23, we're actually running a little bit ahead of $4 million. Now, I do understand it does sound like you're doing some projects to convert R&M into CapEx and obviously, kiosk costs some money, but it actually is running ahead of $4 million in the first half of '23. So, as we think about that '24 number and just try to get it as clean as possible. I mean, what do you think the capitalized cost per new unit is going to be in '24? I know you said 10% less, but 10% less of what?

Well, John, I think overall, feel free to jump in here, Katie. I think we're not guiding to '24 today. What we're guiding to is continue to bring down those costs. You have to remember in your numbers that you are quoting, you're not giving credit to the significant digital investments, tech investments, the many other CapEx investments that happen around this company that are not about the individual unit. Those are things that have to happen as you grow a restaurant company, especially at our still small scale. So, some of those may be outsized in total dollars today. But where are we at in committing to this? We're committing to taking down that overall cost to build, and improving the numbers you just said in '24 and beyond. I expect we will, maybe by your measure, certainly by the measures that we share. And that's our goal to improve our overall return on capital for our individual restaurants and our company overall. And I think let's just take a beat. because I don't think we've talked about this yet on this call really, take a look at the adjusted EBITDA growth of this company year-over-year. It is significant. It is materially game changing in the percentage growth of adjusted EBITDA over this year and we expect to continue to generate significant adjusted EBITDA next year and a lot of cash. So, I think it's going to be a good year for all the metrics you're asking about. And those things take time. As I said, you've got a lot of restaurants designed and in flight. You can't change those things mid-flight. But we're putting all the things in place that will improve that next year, and in the years to come.

Our next question is from Jim Sanderson with North Coast Research. Please proceed.

Hey. thanks for the question and congratulations on the improvement in store level margin. Wanted to dig into the detail on the labor hours per week. Is that only for stores that had the kiosk, or is that a system-wide number that you cited?

Hi. Yes. No. that's system-wide. And it's not just Kiosks that's driving that. It is a blend of higher retention. It's more of what we're doing on the scheduling side. Kiosk is certainly a little bit of a help, but we're definitely learning more and more as to what kiosk can bring us in terms of labor savings as we drive deeper kiosk adoption across our shack base.

Our next question is from Jeff Farmer with Gordon Haskett. Please proceed.

Great. Good morning and thank you. I have a follow-up and a question. So, just following up on Michael's earlier question, which was one of the first on the earnings call, you guys made some huge strides, or have made some huge strides driving improved restaurant level margins. Long list of initiatives have helped you do that. But as we look out into 2024, do you see additional opportunities to drive further improvement?

We're not gotten there just yet. We're always looking for further improvement. Let's celebrate for a moment that being up 240 basis points from last year and looking ahead at our guide, being significantly up from the guide for the quarter for next year from last year. So, we'll start there. We're continually committed if you hear our comments on strategic plan towards improving our restaurants overall profitability cost to build and the metrics that we use. So, we'll keep you posted on what '24 looks like as we get closer to that year.

Our final question is from Brian Vaccaro with Raymond James. Please proceed.

Yes. thank you. Just one last big picture question. and I guess, it's tied to the mix a little bit as well. But I guess as you've expanded into new markets and you're reaching a different consumer in the suburbs, Randy, maybe some that are a little older, different stage of life, more modest income levels, what have you. I'm just curious what you've learned about the brand and any differences you've noticed in customer perceptions around value, quality, anything along those lines, and just how you're sort of adjusting or planned to adjust your strategy, your go-forward brand proposition et cetera, as you adapt to some of those differences.

Yes. that's great. We think about that a lot. Big picture long-term. And it goes back to a little bit what I said earlier. When we have strong brand awareness in the very many markets, where we do. we generally tend to capture all types all the time, strong AUVs, strong shacks, right. where we enter with lesser brand awareness and consideration, we've got more work to do and those take time. Our evidence for us has shown that over time, we continue to build that and build that and build that, and it's really strong, but we're not immune to opening in a place, where people don't really know us. So, what do we do with that? A couple of things. We've gotten better and better in our pricing. When you think about the geographic disparity of our pricing and our ability to take price in our more expensive, but also higher brand awareness markets, we generally tend to take more price there and we're generally more cautious in those lower brand awareness. So, we think having the right price, having the right opportunity is really important as we look across shacks. but we've also got to optimize other costs in the restaurants, right. And we've been able to do that on down the line and you're seeing that in the improvement. I think what's always amazing to me even almost 500 shacks into this journey is that even when we open in four shacks in Texas in the last two months all drive-throughs, it's amazing to me how many people come out, celebrate with us and really continue to start with a bang. And I think that says something for the continued probably stronger than ever brand we have. But you're hearing me acknowledge loud and clear that we've got to also build brand warehouse. The other thing we haven't done a lot of in the history of the company we've never really done traditional mass media advertising. We've done a lot of local Shake Shack style guerrilla marketing if you will. And in the coming years and you'll see this probably next year, we're going to commit to increasing our overall marketing spend. So that we can drive brand awareness and drive all kinds of guests in the places, where you talked about. But look broadly, when you can execute a 21% operating profit, there's few restaurant companies in this country that have ever done that and for us to do that at scale in this quarter, I think that's where we end. And I hope that's the note that people hear a lot going forward as we've grown sales, as we are materially growing this company. We are a profitable growth company and it's a really exciting time for us. So with that operator, I think we finished the questions. I just want to say thank you to everybody on the call and we look forward to being in touch. Thanks.

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.