Texas Roadhouse, Inc. (TXRH) Q3 2012 Earnings Report, Transcript and Summary

Good day and welcome. Thank you for standing by. Welcome to the Texas Roadhouse, Inc. Third Quarter 2012 Earnings Conference Call. Today's conference call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Price Cooper, Chief Financial Officer. Please go ahead.

Thank you, Chevon, and good evening, everyone. Before we get started, I wanted to thank everyone for joining us today in light of the storm that impacted many of you. We delayed our earnings release and call it a day, so that everyone can focus on being safe earlier this week. By now, everyone should have accessed our earnings announcement for the third quarter ended September 25, 2012. It may also be found on our website at texasroadhouse.com in the Investors section. Before we begin our formal remarks, we need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC for a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. In addition, we may refer to non-GAAP measures. Reconciliations of the non-GAAP measures to GAAP information can be found under the Investors section of our website. On the call with me today is Kent Taylor, our founder and CEO; and Scott Colosi, our President. Kent is going to start the call off. After which, I'll provide a financial update, then Scott will provide some final comments. Afterwards, we'll all be available to answer any questions. Now I'd like to turn the call over to our Chief Executive Officer, Kent Taylor.

Thanks, Price. We are fortunate to report another quarter of solid revenue and earnings growth with -- both being up 15%. We continue to battle an inflationary commodity environment in a challenging consumer environment. However, our operators are consistently doing a great job of staying focused on our mission of providing Legendary Food and Legendary Service. We're also very proud to be recently named the #1 steakhouse in America by the latest Nation's Restaurant News consumer survey. Looking ahead to next year, we will be facing some cost uncertainty, especially with our beef cost. Later this year, we expect to take some pricing actions to help with the inflationary pressures, but as always, we will be thoughtful in our approach. In addition to pricing, we will look forward to other ways to reduce certain costs without negatively impacting our guest experience. While these cost uncertainties will be challenging, we have the brand, the teams and the discipline to continue growing our business the right way for the long term. And finally, we recently spent time traveling around the country, visiting with all of our managing partners, talking about our current results, future plans and more importantly, listening to their feedback. We do this every fall and it's always energizing to feel the excitement, passion and alignment that exist throughout our company. Price will now walk you through our financial update, and then Scott will provide some additional comments.

Thanks, Kent. During the review of the quarter, many of the numbers I'll mention are included in the schedule of supplemental financial and operating information included in the press release. In the third quarter of 2012, revenues increased 14.7% as a result of a 10.9% increase in store weeks and a 3.3% increase in average unit volumes. Net income was $18.1 million or $0.25 per diluted share, which represented a 15% increase from last year. Comparable sales increased 3.6% during the quarter, with our average check increasing 2.9% and traffic increasing $0.07. As was mentioned on the last call, our July comps were positively impacted by 1.5% to 2% due to the timing of our 4th of July holiday. This benefited the third quarter traffic in comp sales results by approximately $0.06. So excluding this, traffic for the quarter was flat to slightly positive, which is really in line with where we've been this year, excluding holiday shifts and weather benefits. By month, comparable sales increased 5.5%, 3% and 2.5% for July, August and September, respectively. Excluding the holiday shift just mentioned, our traffic trends were very consistent throughout the quarter. On the margin side of things, restaurant margins profit dollars increased $6.8 million or 14.2% versus the prior year, which was close to in line with our revenue growth. Restaurant margins on a percentage basis decreased 8 basis points for the quarter compared to the prior year as we overlapped approximately $1 million of credits from last year that did not repeat themselves. Factoring this out, margins would've expanded slightly. Pressure on the cost of sales continues to be driven by food inflation outpacing our pricing actions. For the quarter, our commodity inflation was 5.4% versus our check increase of 2.9%. While we did continue to benefit some from favorable mix shift, this was not enough to offset the net pressure. On the labor line, costs were up 33 basis points. 70% of this or about 23 basis points of the pressure was due to the fact that we overlapped a $600,000 credit recorded in the third quarter the prior year in conjunction with favorable workers' compensation claims experienced. The rest of the de-leverage really resulted from the fact we have opened many more restaurants through the third quarter this year versus last year, and we tend to run a little more inefficiently at newer restaurants. If you look at our same-store group, we were able to leverage labor costs this quarter. On the other operating cost line, last year's third quarter included a $400,000 one-time property tax credit. However, we're still able to generate solid leverage this year as a result of our increasing sales and continued low utility costs. Below the restaurant level line, G&A for the quarter ran about flat as a percentage of total revenue compared to last year. While we were ever able to leverage what we would call our core G&A costs during the quarter, it was offset by a higher share-based compensation cost as a result of the executive turnover last year. For the year, we continue to anticipate being able to leverage G&A, excluding the one-time related -- the one-time charge related to the legal settlement. In terms of cash flow, we continue to generate increased amounts of free cash flow, pay out a dividend and remain conservative on the share repurchase side of things. As a result, our cash balance increased $7 million from the prior quarter. We finished the quarter in a net cash position with $84 million in cash and $52 million in debt. Since we did not repurchase any shares of stock during the quarter, as of the end of the quarter, we had $100 million still available under our board authorization. Now onto our outlook for 2012 and 2013. Full-year 2012, we continue to assume 4% to 4.5% comp sales growth based on produce and dairy costs continuing to come in lower during the third quarter and slightly moderated our estimated commodity inflation to 6.5% to 7% from approximately 7%. Lower food inflation for the third quarter led to higher earnings than we had anticipated. This was the driver behind increasing our estimate for 2012 GAAP diluted earnings per share to the high end of our previous range of $0.94 to $0.96. A couple of additional comments regarding 2012. On the sales front, comparable sales for the first 4 weeks of the fourth quarter increased 3%, with traffic increasing 40 basis points. This was pretty much in line with what we have experienced this year, again, excluding the holiday shifts and weather benefits. It's worth mentioning that we do expect to see some traffic benefit from Christmas shifting from a Sunday to a Tuesday. We estimate this will positively impact the month of December by a little over 1%. With regard to margins, we do anticipate more margin pressure in the fourth quarter due to higher commodity inflation than the third quarter having less pricing in effect year-over-year, and overlapping another $600,000 credit in labor from the prior year. While it will definitely be tough to leverage margins in the fourth quarter of the year, for the full year, it is possible that overall restaurant margins could be flattish compared to 2011. Moving on to 2013, at this point, there are too many unknowns to feel comfortable giving a meaningful range for diluted earnings per share. However, we're comfortable with the following 3 assumptions: first, we expect the continuation of positive comparable restaurant sales. We will take some pricing, which we hope to have in place before the end of this year. Second, we expect approximately 28 company openings. We do expect our development to be much more back-end-weighted in 2013. The third, we believe 5% to 8% food inflation is a reasonable range based on what we know today. We have begun locking several of our proteins, as well as items such as shortening, oils, fries, and some potatoes. However, given that we do not have much of our beef pricing locks, it is difficult to give a very tight range at all on overall commodity inflation as beef represents just over 40% of our commodity cost. A few other items to mention relative to 2013. As a reminder, 2013 will be a 53-week year for us. As such, the fourth quarter of 2013 will have 14 weeks versus our normal 13. While this will certainly help store weeks in net sales, we anticipate the benefit of the extra week will be largely offset by increased spending on our 2013 Managing Partner Conference during the second quarter, which is being held in Hawaii in March, our 20th anniversary. Also recall that comp sales in January and February of 2012 were positively impacted by the fact that we experienced very little inclement weather. This probably helped first quarter comps by a couple of points this year. And finally, it's worth noting that we are taking an active stance towards inflation. While our partner compensation model naturally encourages the management of expenses, over the last 6 to 9 months, we have significantly increased our efforts to identify non-guest interfacing opportunities to save money. We're starting to see the benefits of some of these already but expect to capitalize on much more of the benefits in 2013. Much of this effort revolves around various supplies and services, which we believe can lead to a few million dollars worth of savings. While these initiatives alone will not completely offset the impact of inflation, it's just indicative of our continued focus and attention to detail and not just sitting back and letting inflation happen. And with that, I will turn the call over to our President, Scott Colosi.

Thank you, Price, and good evening, everybody. We're excited about the momentum that we have in our business. We are growing same-store sales, we're opening profitable new restaurants and increasing our number of new openings in 2013. In fact, this will be our fourth consecutive year of increasing our development plan. Something else we're also very excited about is that in addition to our increased U.S. growth goals, we're also beginning to accelerate our growth internationally with as many as 4 openings planned in 2013. And while we are accelerating our growth, we will also continue to spend some of our cash on remodeling older restaurants and adding seats to a number of restaurants. We'll also remain very focused on new restaurant investment returns, returning capital to our shareholders in the form of dividends and share buybacks and protecting the strength and flexibility of our balance sheet. Certainly, we have cost challenges ahead, probably for the next couple of years. And I believe Kent said it best with "We have the brand, we have the teams and we have the discipline to continue growing our business the right way for the long term." So that concludes our prepared remarks. So Chevon, please open the line for questions.

[Operator Instructions] We will take our first question from David Dorfman with Morgan Stanley.

I wanted to just ask about the sort of inflation and pricing dynamic going forward. I think you've mentioned more pricing to be taken this year. So I guess, first, how much are you thinking about? And it seemed like pricing was ticking down from 4%, which was high this year, earlier this year to maybe something more consistent in the 2% range. Is that what you have in mind? And are you're managing partners, do they have an appetite for pricing after they saw how necessary it was last year? And then when you think about how that pricing dynamic works with the -- with your inflation assumptions, obviously, it's not close to even the bottom end of what you suggested for inflation. So if inflation next year turns out to be similar to inflation this year, with maybe a point or 1.5 points lower pricing, is it -- does it make sense to think about that cost of sales line increasing -- the same incremental increase that -- you still have 50 basis points incremental increase this year, and then add another point to that, or are you thinking like 150 basis points of incremental cost of sales?

David, this is Price. I'll try and start off on this. The pricing we're looking at taking in December would be in the neighborhood of about 2% sometime in the month of December. We will continue to evaluate -- we gave you a pretty broad range on commodity inflation. So we'll continue to evaluate further actions, potential pricing actions later into 2013 as we get more clarity around what exactly is inflation going to be, what's going on with the overall consumer environment, what's going on with our traffic. Because we will stay -- we'll continue to stay focused on driving traffic. To help offset inflation, we'll stay focused on driving traffic and trying to gain some benefit from these cost-savings initiatives as well. So it's really tough to say exactly what food cost would end up being next year at this point.

But do you have a sense of how the inflation may come in over the year? I mean, we've seen sort of short term, the herd reductions sort of helping food costs now. And talking to your procurement teams and the experts you talked to, do you have a sense of how it may -- when the sort of upticks are expected to come in?

No, not exactly at this point, unfortunately, because we're in a lot of those discussions with our packers right now. And so, it will depend on what kind of arrangements we set up with them, project-wise for next year.

We will take our next question from Jeffrey Bernstein with Barclays.

This is Aroon, on for Jeff. So if I heard correctly, I think you said that you're not locked in, in beef yet. Maybe you can talk to us about what's going on in the beef market and maybe what's preventing you from locking in, what kinds of increases you're seeing or maybe what your expectations are for next year.

Right now, we're in constant talks with our packers. You are correct in the fact that we were not locked in on much or all of our beef as we sit here today. We're trying to evaluate what we think the market will play out to be. It could be a situation where we end up floating a certain percentage of our beef needs for next year. We're working through all that right now. And the biggest clarity I can give you on that is our range of 5% to 8% inflation. It does incorporate what we think is reasonable to expect in terms of beef inflation for 2013.

Okay. And can you also -- I don't know if you mentioned this, but can you talk to us about what you already locked in and for -- I guess, for how long and maybe what you're plan within floating for next year?

Beef-wise, we're really, we're locked on about 90% of our beef needs for the remainder of this year, and as we look out into 2013, we're locked on, at this point, probably about 20% of our cost of goods. We have locked up some of our other protein needs. We have locked up various breading and oils, those type things, but our biggest commodity still outstanding is really beef.

And we will take our next question from Will Slabaugh with Stephens.

I'm just wondering if you can talk a little bit more about the traffic trends that you saw throughout the quarter. I know there were a lot of kind of noise, events around everything, the Olympics and then some over debates. So just kind of curious some of the core traffic trends as you saw them progress throughout the quarter, and as you would speak to them in the end of the current quarter.

Yes, throughout the quarter, really, by month, our traffic in July was up 1.9% but we've been -- we believe, the benefit of the July 4th holiday was about 1.5% or 2% on that number. So it's really more like flat to 0.5%, I would say. August was up 0.2%, September was up 0.1%, and October came back to be and up 0.4%. So it's really hard for us to say if we saw any benefit. We didn't see any discernible impact, I would say, from the Olympics and/or the elections because that's a pretty tight range. It's really been a pretty consistent traffic trend.

That's good to hear. And then last question on the guidance. Just a clarification really. It looks like it implies a slight deceleration in 4Q year-over-year even whenever I use an adjusted number from last year's 4Q versus more of a clean 4Q '12 number. Is this just more sort of choppiness in the consumer environment and maybe, some labor headwinds you talked about or is there some more conservatism baked in there that maybe I'm not thinking about?

Okay. And to be clear when you're saying slower trend, are you talking sales wise?

EPS-wise.

Oh, EPS-wise. Part of that for our fourth quarter is, last year, our income taxes, it's a change in the income tax rate being up considerably this year and fourth quarter versus last year. That's the largest part of it, or a large part of it, I should say.

And our next question is from Jeff Omohundro with Davenport & Company. Jeffrey F. Omohundro - Davenport & Company, LLC, Research Division: My question goes to capital allocation. You didn't buy back any stock in the quarter, choosing to build up cash. Just curious, maybe you can talk a little bit about your thinking about the share repurchase authorization, that's my first question. And then my second one is related, and that goes to the capital expenditures target for 2013. It's a pretty big step up considering the change in unit growth. I'm just curious if maybe you can talk to other users beyond CapEx or beyond unit openings baked into that CapEx target.

Sure. On the share repurchase side, we just consider to be -- or continue, rather, to be a little conservative on that. So overall, our philosophy on that is we'd like to buy in on average dilution every year. I think we'll see some years where we buy in more than dilution, we'll see some years where we buy in less than dilution. But on average, we want to at least target buying in the overhang from our equity compensation arrangements. And then on the -- in terms of CapEx, part of the reason it's up a little bit more than restaurant growth for next year is a little bit of a shift in the timing of the openings. So we're a little more front-end loaded in openings in 2012 than we will be next year. For instance, we expect to open, say, 30% or 40% of our stores during the first half of next year compared to more like 60% this year. That has a little bit impact on CapEx. I think the last part of your question was what else is in CapEx besides new restaurants. And generally, we plan to spend, I'd say, $20 million to $25 million a year, and that would be on additional maintenance CapEx cost in addition to the repairs and maintenance that hits our P&L. Just maintaining our restaurants, some of that is certainly adding seats in additional restaurants is incorporated in that as well. Jeffrey F. Omohundro - Davenport & Company, LLC, Research Division: And Price, you mentioned some cost savings initiatives that the company is pursuing. Where would those flow in the income statement? I assume that's not baked into the food cost inflation. That's going to be in some other line items, I would presume, right? It's not a net number.

That's correct, Jeff. We're looking at it -- that would be in the other line. We're not sitting here focused on reengineering the plate or trying to figure out how to take labor out of the restaurants. So most of these items do deal with things like supplies, chemicals, some equipment. It's more down in our other operating costs. Jeffrey F. Omohundro - Davenport & Company, LLC, Research Division: And the timing of realizing these benefits, how should we think -- there were some questions earlier about the magnitude of a potential increase in cost of sales. Do you think it's pretty steady during the year? Do you see a kind of a ramp up through the years, somewhat offset by these cost savings? How do you see that evolving?

On the cost saving side, I would say it would be fairly steady, but we'd hope that it would continue to ramp up throughout the year as well because we are focused on it. So I would expect it would continue to find more opportunities as we move throughout the year.

Our next question is from Jeff Farmer with Wells Fargo.

Looks like the February menu rollout continues to provide a mix in margin tail end for you guys. So as you look forward to the next menu rollout, not quite sure when that is, do you think there's an opportunity to engineer additional mix and margin benefits heading into 2013?

The biggest benefit from the margin side came from the addition of the pictures. So we'll continue to evaluate -- I would expect that we'll continue to have pictures.

Yes, we're tweaking some of the pictures, try out some new items that might give us some more benefits. And in addition, we're going to roll out our porterhouse to the whole system, whereas, it's about half of the system today.

Okay. And then coming back to sort of the CapEx dollars, can you just give us sort of a rough expectation of what the cash investment cost for new restaurant is in 2013 versus what you're looking at in 2012?

Jeff, this is Scott. I would tell you from a cash perspective, it's up about maybe $100,000. All in -- the way we would look at that CapEx, you're probably looking at just short of $2.5 million in CapEx. So probably, $2.3 million, $2.4 million in that range of CapEx.

Okay. And then just one final question. Just again, everyone's very aware of what the competitive landscape looks like right now. But I just see this increasingly promotional and sort of value-focused landscape out there, you guys are value positioned, but how can you keep that at top of mind? How can you compete when everyone's out there on national TV making a lot of noise about that? So I'm just, again, curious, you offer similar value but how can you communicate that in an environment like this?

It's the same thing we've done over the last 20 years. We just do it one store at a time, one server at a time, waiting on each of our guests. And we haven't really changed how we do business in that regard.

We will take our next question from John Ivankoe with JPMorgan. Shaurja Ray - JP Morgan Chase & Co, Research Division: This is Shaurja, filling in for John. I just wanted to follow-up on the last question about the trends. Regarding October, it seems like the industry was pretty weak as a whole. Could you just give us a sense on how the steak category performed and kind of what your sense is around the casual dining environment through October?

We don't really know how the steak category performed in October, specifically. I mean, you have our sales from our report. We feel like we do have a lot of momentum in our business. We continue to outperform what we see as the industry averages over time. And I think, going back to what Kent said, we kind of really just focus on one store at a time, and as kind of what we talk about internally is just staying focused and consistent in running our own stores. Shaurja Ray - JP Morgan Chase & Co, Research Division: Great. And just one follow-up. You haven't grown your franchise fees, your domestic franchise fees since 2005 or so. Do you think deploying franchise capital, that kind of further development in un-penetrated markets could be an opportunity in the future?

We're growing a little bit in California. We've -- we're increasing our growth internationally, and that's about it at this time.

We're still getting really good returns on opening company restaurants. So to the extent that continues, we're going to keep putting a lot of our cash flow in the company restaurants and certainly, we -- we're an operations-driven company, we like to run stores. So we very much -- we find that to be a strength of our business.

Your next question is from Grant Robinson with Robert W. Baird. Grant A. Robinson - Robert W. Baird & Co. Incorporated, Research Division: It's Grant Robinson, on for David Tarantino. I just wanted to ask, maybe about the total inflationary outlook for 2013. I know we have the 5% to 8% food cost. But maybe at this stage, what are you guys thinking about on the labor and other costs front?

I would say, on the labor side, probably something in the 2% to 3%, maybe 2%, 2.5% range. And then on the Other side, that could be an area where potentially, those -- we talked about a little earlier, those where we could save some money, see some savings there. So hopefully, we could possibly see a little deflation in the Other line, depending on how much of cost savings we can come up with and then what natural gas or utility prices are because that's a big, big driver in the Other category. Grant A. Robinson - Robert W. Baird & Co. Incorporated, Research Division: That's helpful. And then maybe following up on that, as you think about that total inflationary outlook, what level of comps do you think you might need to maybe hold restaurant level margin flat for next year?

It really depends on what the composition of those comps are, in addition to knowing what the commodity inflation is because sitting here today with 5% to 8% commodity inflation, that's a pretty broad range. I would tell you that. So if you had -- say, you've got 3% to 4% of overall inflation, depending on what you assume for commodities, you would need, in that case, generally, you need about twice much traffic as you do pricing. I guess that's the best way to put it. So it's whatever your assumption is for overall inflation and then you need twice as much traffic as you do pricing. Does that help you out?

Our next question comes from Conrad Lyon with B. Riley & Co. Conrad Lyon - B. Riley & Co., LLC, Research Division: Price, did you discuss how much inflation -- beef inflation is factored into the outlook for '13, the inflation outlook?

No, not specifically. But we're comfortable that based on what we know today, that the 5% to 8% range incorporates -- is a broad enough range to encompass where we think beef will land as we sit here today. Conrad Lyon - B. Riley & Co., LLC, Research Division: And any color -- I mean you can offer, well, it depends on type of cuts and everything, but I've heard things like 5% to 10%, in that range?

It really depends on what -- we're not going to get specific on the ranges, because there's so many other factors, not the least of which being what base we're all coming from. And we paid last year and the year before that. So yes, not real comfortable going into specifics on percentages. Conrad Lyon - B. Riley & Co., LLC, Research Division: Okay. A different question on menu pricing. Is there a particular area that you feel you can take more price? And I say that in this-- and I'll give you guys props for this. I was in the Dallas marketplace and your team members there have -- are just ingrained with the value proposition and really sell some of your core items that way, so I'm just wondering how much opportunity or how much ability do you have to take price on your core items or do you plan to take it -- different areas on the menu?

Conrad, this is Scott. We don't really look at it as we've got ability to take price. We're kind of like, "Okay, we're dealing with inflation, so we're going to do something in reaction to that." And the pricing we've talked about is more throughout the menu. We're always striving to protect some of our key value price points, but you've got to take a certain amount of pricing throughout the menu to have a certain amount of a flow through your menu. So that's kind of what we're looking at. And I think everybody will see more when we actually get it done in December.

We have competitors on the call, so we don't want to kind of give everything away. Conrad Lyon - B. Riley & Co., LLC, Research Division: That's the first answer I was expecting. Last question, just on the outlook of actual sites. I've been hearing there's more competition for sites. Are you seeing that as well? Or is it any more challenging to get sites?

It's only more challenging because we've kind of taken the low-hanging fruit, and we're kind of going to the second tier cities at this point. As far as more competition for site, I would not say anything more competitive than last year.

Our next question is from Justin Marshall with Deutsche Bank.

This is Justin, on for Jason West. I assume you guys have been testing the pricing out over the past few months here. Can you talk about-- you already said you were planning on taking like 2% in December? Can you talk a little bit about maybe some of the pushback you've seen for consumers on that, or if any?

Justin, this is Price. Really, from what we saw in the price tests, we didn't see any discernible differences in traffic trends with those 16-or-so restaurants that we tested the price end versus our system.

Okay. That's helpful. And also, you said that you benefited a little bit from the mix. Can you talk a little bit about consumers and how they're utilizing the menu? I mean, are they -- obviously, there's some benefit there, but I mean, are they trading more up to just these better value-engineered entrées? Or are they just kind of holding where they were? Or any sort of change in their buying patterns.

Yes, I would say, in general, I haven't seen a discernible change in consumer buying patterns. For us, we are seeing a little more negative mix now, but more of that has to do with the fact that we overlap the rollout of our Bone-in Ribeye at the end of the second quarter, and that's really what's driving a little bit more negative mix, which is -- the negative mix for us has been and continues to come namely, from the alcoholic beverage side of things and then a little bit on the soft bev. But those 2 have been the trend all year.

And we will take our next question from Chris O'Cull with KeyBanc.

I don't know England has been an area where you've had some pretty weak sales in the past. Is that -- was that the case this quarter?

Yes, it was positive. But yes, it continued to be a little bit softer than the rest of our system.

So it is comping positive, that area?

Yes, it did for the quarter, yes.

Is there anything you're doing to try to keep that momentum going or keep that trend going?

Nothing specifically in the Northeast. We're doing the same thing. Kent mentioned early, it's one store at a time locally, focus on that local store, marketing a local store approach. But nothing specific to the Northeast region, no.

Okay. And Scott, how many stores -- and I apologize if you said this, how many stores will be remodeled and how many will see expansions?

I don't know how many will be remodeled as we're sitting here today. But expansions, probably around 20 to 25.

How many did you do this year?

Expansion wise, we've done over 30 this year.

Room additions, probably.

Between 30, and I think we'll end up closer to 40 by the end of the year.

Is there opportunity -- when you do these expansions, do you change to do more to 2-topped tables in there as well? Is there an opportunity to improve just capacity utilization when you do these?

Yes, inside, we'll take -- in some cases, we'll take 3 4-tops out and create 6, 2-tops to better utilize our weights, depending on the store and where it's located. Some stores have more 2-tops show up and then you go out to some areas where they have larger families and they'll have more 6-tops.

Ideally, how many opportunities do you think you have in the system?

Additionally? To do room additions, is that what you're talking about?

Right, right, yes. If you could do them all next year, how many do you think you have that you could...

I think that's an ever-developing number. And so I don't think we've set a finite number for that yet, Chris. We're still kind of working our way through the system starting with the highest-volume stores. But there's other factors and everything from parking to the can even -- can you even add on to the store permitting wise and stuff. So we continue to work, work our way through the list, and we can't tell you there's a specific number yet, that we said we can only get to.

Yes, I can just say that, say 2 years ago, there are some people on the list that we said no to, that we're seeing yes to this year. So as they continue to increase their sales and now their kitchens get better at the flow-through.

[Operator Instructions] We will take our next question from Steve Anderson with Miller Tabak. Stephen Anderson - Miller Tabak + Co., LLC, Research Division: I know you were asked this question on the last conference call. I know last time on the call, you said you said no to expanding to weekdays. Now one of your big competitors is targeting weekday lunch for expansion. I know you don't want to look at weekday lunch expansion on your own. Right now, I about 40% of your units, you do have a Friday lunch. And is that something you just consider tiptoeing into the weekday lunch market?

You're talking specifically on Friday lunch. No, we have no intention of doing Monday to Thursday lunch, but we evaluate, call it, quarterly on any stores that we want to add the Friday lunch to. But it's typically only in areas that maybe have a big office component. But I would say, majority of our locations are located kind of more toward the homes and not really in the office environments. And those specific locations, we have no interest in adding Monday to Friday lunch.

Our next question is from Bob Derrington with Northcoast Research.

Scott, have you collected information to find out how many actual stores have been closed, how many operating weekdays you've lost due to the storm? Any kind of color you can provide us?

Yes, Price has the list in front of them there and all of our disclosures by day.

Yes, Bob, let's see. Monday we had -- just over -- we had 36 closed, Monday; 6 closed, Tuesday; 3, Wednesday; and we had 1 closed as of this morning. So we've been very fortunate. The good thing is all our teams are safe, which is the number one thing. Most of our stores are, and should be all back up online this week, I would guess. And then we've had no real material damage to our restaurants. So we've lost a few days but typically, you tend to get a little bounce back as things kind of come back up and as you're able to have power for these people.

Have you seen any change, or would you anticipate any kind of change in your sales mix? We've seen some anecdotal stories to talk about, higher alcohol sales, which are good for a chuckle. But I'm just curious if you're seeing any substantial change of any consequence? Would you anticipate any?

I would anticipate -- to answer your question, have we seen it? I haven't seen it, but honestly, I haven't looked at it over the last 3 days. Don't know that I wouldn't anticipate anything material.

In some areas, you have a little more to-go business because people have no power and they're taking food home. That's about it.

I assume that the guidance that you provided, does that include some kind of a assumption about the return to business of those restaurants? How should we think about that relative to your guidance?

I would say we're comfortable with our guidance, given the storms.

It was also a benefit that the storm was on Monday and Tuesday, not Friday and Saturday. So yes, that's a big deal as well.

Our next question is from Bryan Elliott with Raymond James. Bryan C. Elliott - Raymond James & Associates, Inc., Research Division: I was just wanted to come back to the CapEx question and clarify that. So I guess I'm not hearing where all of the bump is coming. So $2.4 million-ish for 28 stores, that's a little under $70 million. We're going to do fewer expansions this year than last. And I think you -- unless I heard the wrong things that the maintenance was going to continue around 2025. So where is the extra coming from?

Really, 2 places, Bryan: one on our 2014 development. Hopefully, it will be in a situation where we're opening more than 30% or 40% of our 2014 stores in the first half of the year. So that would bring up your new store CapEx. And then probably on the -- you are right on the bump outside, but as far as it may be down a little bit on that side. But we could be in a situation where the 25% to 30% will be what we'll spend this year on kind of maintenance and remodel. We continue partnering with and challenging our operators to invest in their restaurants, so we can certainly see that continue to increase as we're continuing to add stores to the base -- to the base of our restaurants.

[Operator Instructions] We will take our next question from David Dorfman with Morgan Stanley.

I just have a quick follow-up, Price. Just on the pricing. If you take the 2% in December, can you just remind us, let's say you took no more next year, sort of in the fourth quarter and through the end of next year, what the roll-off would be?

Really, we'll roll off next year in February is where we took a little over 2% of pricing this year. So that would be -- that's all we've done this year.

Entering the fourth quarter at over 4% -- entering the first quarter over 4%?

We would be, yes, for 1.5 months, yes, yes. You're right. And so as we -- we'd have a couple of $0.1 that in effect basically throughout the year and then approximately 2% assuming we didn't come back and do something else later in 2013.

So it would be -- bear with me, it would be like something in the -- it sounds like first quarter would average out to something a little over 4% and then drop down to 2% and change through the back half?

Yes, I'm not sure it would be -- I'm not sure that it will average out to 4% for the first quarter, but we would enter the quarter -- we would have a little over 4% for the 1.5 months of the quarter and then we would drop down to 2% basically.

For the remainder?

Yes.

That does conclude today's question-and-answer session. I would like to turn the conference back over to the management team.

All right. Well, thank you, all for joining us and please give us a call if you got any questions. Have a good night.

Ladies and gentlemen, that does conclude today's presentation. We thank you for your participation.