Good day everyone and welcome to the BJ's Restaurants, Inc. Second Quarter 2020 Earnings Release and Conference Call. Today's call is being recorded. At this time, I'd turn the call over to Greg Trojan, Chief Executive Officer. Please go ahead, sir.

Thank you, operator, and good afternoon everyone, and welcome to the BJ's Restaurants fiscal 2020 second quarter investor conference call and webcast. I'm Greg Trojan, BJ's Chief Executive Officer and joining me on the call today is Greg Levin, our President and Chief Financial Officer. We also have Kevin Mayer, our Chief Marketing Officer on the line for Q&A. After the market closed today, we released our financial results for the second quarter of 2020, which ended Tuesday, June 30, 2020. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Rana Schirmer, our Director of SEC reporting, providing our standard cautionary disclosure with respect to forward-looking statements. I will then provide an update on our business and current initiatives, and then Greg Levin will provide some commentary on the quarter and current environment. After that, we'll open it up to questions and we expect to finish the call in about an hour. So Rana, go ahead please.

Thanks, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, July 23, 2020. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the Company's filings with the Securities and Exchange Commission.

Thanks, Rana. Good afternoon everyone. And while it's only been 11 weeks since our last call, it seems like we've lived through an equivalent of at least three business cycles in that short span of time. I'm proud to report that our teams have quickly and effectively adapted our concepts, business model, and practices over the last four to five months to respond to the many challenges and frequent and sometimes sudden changes in operating environments. Throughout it all, the pandemic has served to confirm much of what we thought we knew about our guests and our concept. The appeal of BJ's to satisfy the basic human desires to dine and socialize with friends and family in an environment like ours continues to be quite powerful, despite all the barriers presented today. They also taught us new things and new ways to address the evolving priorities and needs of our guests, many of which we believe will stay with us long after the demise of the virus. As we begin today's call, I'd like to acknowledge the entrepreneurial spirit of the leaders in our restaurants, and here in our support center, who are driving our flexibility and have the patience so BJ's can stay ahead of today's changing environment. I will share a few of our learnings as we have navigated the evolving landscape of coronavirus, and Greg Levin will follow with more detail on the second quarter and the early trends as we begin Q3. Thus far, there have been three distinct chapters in this story we're all navigating through. The first, of course, is mid-March through early to mid-May, when all of our dining rooms were closed and we were limited to takeout and delivery. During this period, our primary objectives were to operate as cleanly as possible while maximizing off-premise sales in order to keep as many restaurants as possible open and have as many of our team members working as we could, and to maximize our cash flow position to allow us to prepare for the unexpected and take advantage of the opportunities we see coming out of the pandemic. We established new safety and sanitary procedures to create the safest environment we could for our team members and guests. We greatly reduced the complexity of our menu from about 145 items to around 85, which enabled our managers to run our restaurants as efficiently as possible at greatly reduced sales volumes. We added new off-premise friendly menu items at attractive price points and designed new procedures both online and in our restaurants to make it easier and safer to access our food and beverage offerings. During the course of this phase, we tripled our average weekly off-premise sales to the low $30,000 a week range and generated sufficient variable cash flow that we were able to keep all the four of our locations up and running. Our teams accomplished this pivot from regular operations in the span of about two weeks. The second chapter, which began in early to mid-May, saw the steady reopening of dining rooms, which by the third week in June had resulted in over 190 of our 208 restaurants serving guests in our dining rooms albeit at reduced capacities to allow for proper social distancing. Coincident with these dining room openings, we returned some of our more popular center-of-the-plate protein-centric items to our menu, such as our Slow-Roasted Tri-Tip, Double Bone-In Pork Chop, and Atlantic Salmon. Not surprisingly, despite the continued uncertainty of the world in which we live, people demonstrated the fundamental human desire to begin to return to a new type of normal, including gathering and sharing great food and drinks alongside friends and family. By the way, they appreciated and demonstrated a desire to comply with all the safety measures and precautions that we have put in place during these extraordinary times. The size of our dining rooms and available outside space, along with the pent-up demand for some of our best-selling items served us well, as we reached weekly sales levels in the mid to high $70,000 range towards the end of June. Our off-premise business continued to be strong during this period, helped by the addition of our new Family Bundles, which featured our craveable proteins such as Slow-Roasted Ribs, Parmesan Chicken, Atlantic Salmon, and Rib-Eye Steaks at fantastic price points. Off-premise sales remain more than double pre-COVID levels, while our dining rooms trended to approximately half of normal sales levels by the end of June. Despite the significant capacity limitations, our reduced operating hours, and no operating bars, the strength of our off-premise operations and the other changes I've just referenced has established sustainability for this revenue stream and continues to be an important driver of our overall performance. Our current reality and third chapter in all of this is characterized by dining rooms closing again in several states, but most notably in California, with increased capacity restrictions in many other markets. As a result, we are currently operating indoor dining rooms in about 70% of our restaurants, as compared to the peak of 95% in late June. Fortunately, we had already begun adding and expanding outdoor dining in many of our restaurants prior to dining room re-closures, as we recognize that many guests felt safer and preferred BJ's outdoor dining experiences. We have added or expanded outdoor dining spaces in approximately 90 of our restaurants. We partnered with landlords, local municipalities, and liquor licensing authorities to obtain space and proper permitting to open and operate expanded outdoor dining at breakneck speed. We now have a total of 150 locations that can provide outdoor dining for our guests. Our operating team undertook this endeavor with incredible entrepreneurial enthusiasm, and as a result last week, we drove approximately $26,000 per restaurant in incremental sales where we recently closed dining rooms or added or expanded patios. Together with strong off-premise growth, we have averaged weekly sales in the low to mid $60,000 range inclusive of dining room closures in California and several other localities. Maximizing safe dining experiences where we can, along with continued growth in our off-premise revenue remain our highest sales growth priorities at this time. Soon, we will have exciting menu news to help to fuel these efforts by way of reintroducing more of our bestselling items. Our current plan is to bring back our popular Prime Rib for both dining-in and take-out in mid-August. We're also building upon our Family Bundles with our very popular Slow-Roasted Tri-Tip that we recently added back to our menu and we're in the process of developing single-serve catering options, which will address the need to provide larger groups individually wrapped meal solutions for party sizes of eight or more. We know that in this environment, constant innovation and flexibility is our best strategy for maximizing sales, as there are still a large number of workplace and social interactions which are looking for an affordable solution to these occasions, which we can address. In addition to our outstanding dining reconfigurations, health and safety initiatives, our ability to leverage our large restaurant footprint for social distancing, and our variety of menu advantages, we continue to press our proprietary and internally developed technology capabilities to address new opportunities, both in our restaurants and with off-premise. We were among the first to utilize QR code technology for both menu browsing and mobile payment to provide a touchless experience while dining at these days, and mobile payment is now used for approximately one-quarter of all our dining transactions, further amplifying for our guests BJ's commitment to health and safety. While one of our earliest initiatives was to offer disposable paper menus, the majority of our guests are now using their mobile devices for browsing and ordering from our menu. Soon, we will enhance the menu experience to transition from the current PDF form factor to a dynamic HTML version, which will permit colors and pictures to be followed quickly by dynamic promotions and guest-driven navigation. In addition, we have implemented an online reservation solution to accommodate a better limited capacity dining experience. We also improved the quality and frequency of our off-premise order status and are in market testing two-way testing capabilities to further enhance the convenience of our guests' take-out order experiences. We anticipate permanent changes in consumer expectations and behavior, now that guests are accustomed to a digitally enhanced, more convenient dining experience both on and off-premise. BJ's has been a consistent early innovator of dining room and digital consumer tech, and our investments and capabilities in these areas are paying dividends during this period of accelerated change. Speaking for our entire management team and all of our stakeholders, we want to send our sincere gratitude to our team members on the front lines in our restaurants and in our support center for their dedication and sales building mindsets during these challenging times. As previously reported, we were forced to temporarily reduce staffing levels across our business when dining rooms closed in late March, and this impacted approximately 16,000 team members. As a number of dining rooms have reopened and sales have grown, we are glad to report that we have now brought back over 10,000 of the impacted team members. We look forward to inviting even more of the team back to support the business as we move forward to regaining sales levels commensurate with the pre-COVID environment. At the end of the day, we continue to be focused on the same objectives since the pandemic became an unwelcome reality in early March: maximize our sales by utilizing our unique strengths, the distinctiveness of our brand, concept, and iconic food and drinks, the flexibility of our varied menu, the size and layout of our physical spaces to accommodate safe social distancing, our technology infrastructure and innovation that support on and off-premise sales growth, and the trust we have earned from our guests to do the right thing and never sacrifice quality, most of all, our amazing team members. As I noted when we started the call, we are leveraging our flexibility to address the current environment. And based on what we've accomplished with the challenges we face, I'm confident that BJ's will be one of the true winners in our sector as a country and the world overcome this wicked virus. So, Greg?

Thanks, Greg. As Greg pointed out, there are three distinct chapters of the story so far, and our results from the second quarter reflect the first two chapters of this story regarding the closure of all of our dining rooms in late March, and then making great progress, methodically reopening the dining room in 95% of our restaurants by the end of June. We are currently going through the third chapter here in July with the recent state and local restrictions rolling back dining reopening and the satisfaction of our team to help mitigate the sales impact of these restrictions by expanding patios at new locations. As such, my commentary on Q2 and Q3 today are really a reflection of where we are in the ever-changing national, state, and local restrictions regarding dining room limitations. Please remember this commentary is subject to the risks and uncertainties associated with forward-looking statements, as discussed in our filings with the SEC. From the Q2 perspective, as we noted in today's press release, our comparable restaurant sales were down 57.2%, and we reported diluted net loss per share of $1.38 on a GAAP basis. During the quarter we took a non-cash impairment charge of 10.9 million, of which 9.7 million was related to three restaurants and 1.2 million was related to a reserve for beer spoilage due to the sudden decrease in draught beer sales caused by the restrictions in our dining rooms. Excluding these charges, our diluted loss per share would have been $0.99. Our comparable sales improved throughout the quarter. They were down 74% in April, 63% in May, and 40% in June. By the end of June, approximately 95% of our restaurant dining rooms were reopened with capacity limitations, and our weekly sales volumes improved for mixed 70,000 a week range and nearly 80,000 in the week that included Father's Day, demonstrating that there continues to be a strong demand for sit-down dining. Additionally, our off-premise sales excluding over 30,000 a week in April, when our dining rooms were closed, we maintained about 80% of that business in June, when the majority of our dining rooms reopened. From a cost and margin perspective, a significant decrease in sales has impacted our Q2 margins. Looking at a few highlights, cost of sales in the quarter came in at 25%. We experienced higher costs of sales in April and that was in the mid-25% range, as we transitioned our business to off-premise only and worked through excess inventory in the restaurants. After we worked through the excess inventory, costs of sales for both May and June went to mid-24% range, primarily due to menu mix from our limited menu, which focused heavily on our deep dish pizza and our family menu offerings offset by lower alcohol sales. As we look out towards the balance of July, and the rest of the quarter, I'm expecting costs of sales to be slightly higher in Q3, probably in the low to mid-25% range, as we have seen an uptick in commodity costs, especially in protein. Labor came in at 40.2%, and there was significant deleveraging of the six manager labor costs and benefits derived from the lower sales volumes, and this was offset by left dining room and kitchen hourly labor, most of our sales need to be off from this channel coupled with the efficiencies from our limited menus. In April, when all of our dining rooms were closed, hourly labor for BJ’s was within the mid-range as a percent of sales. By June, with the majority of our dining rooms reopened, hourly labor was in the 20% range, which was still 300 basis points below the last year's June hourly labor run rate. Operating occupancy costs per week decreased by about 50% as our team's focus on managing costs. This was done despite incurring approximately $500,000 related to personal protective equipment and additional cleaning supplies necessary for our team members and our guests to dine safely in our restaurant. Following our sales trends for the quarter, our restaurant-level operating margins also improved sequentially throughout the quarter. The margin was negative for April and May due to the deleveraging mentioned earlier in my remarks, but turned positive in June. We reached a 13% restaurant-level margin in June, showing the amount of cost management and leverage we were able to deliver, with sales still well below pre-COVID levels. Echoing Greg, I really admire our operators who did an excellent job in driving sales activities and off-premise only business, and then shifting back to dine-in business, with limited capacity while at the same time managing our costs. What we're describing to you this afternoon, in our very short commentary, radically understates the effort, commitment, and innovation of our teams, and these qualities will serve us well as we continue to adapt to the changing environment and as importantly in the future as a nation overcomes the pandemic. For the quarter, our restaurant level cash flow was basically flat, which is significantly better than what we were expecting earlier in the pandemic, despite comparable sales starting quarter down 74% in April. As a result, we finished the quarter with $86.7 million of cash on our balance sheet with another $50 million of availability, and others should be needed on our line of credit. This gives us over $136 million of access to capital to manage, protect and grow our business. As a reminder, during the second quarter, we took decisive action to bolster our liquidity position by raising $70 million to a common equity offering and extending the maturity of our line of credit to November 2022. Shifting forward to today, as Greg Trojan mentioned, the entrepreneurial spirit of our restaurant operators has resulted in the opening and expansion of approximately 90 patios around the perimeter of our restaurants under large and lighted signs in our parking lot. In total, we have 155 patios available to our guests. These new seating accommodations have allowed us to continue to serve our guests and locations where indoor dining is currently permitted while increasing our seating capacity in markets where dining capacity is limited. Additionally, our teams are continuing to make off-premise sales as easy as possible to view family bundle contactless curbside pickup, including new SMS text and email technology to guest inform of their menu order and allowing guests to notify the restaurant when they arrive. Reflecting these factors, and most importantly, the significant short-term rollback of open dining rooms, our sales for the first three weeks of July are about 60% of last year's sales levels. To put that in perspective, in last year's Q3, we averaged approximately $104,000 a week in sales. If we maintain this current run rate, our average weekly sales would be approximately $62,000 for the current quarter. At this sales level, I would expect our cash burn rate, inclusive of restaurant level manager bonuses, rent, interest expense, and CapEx to be in the range of $500,000 to $1 million a week. Our CapEx for the quarter is expected to be around $5.5 million, which includes adding glass dividers to the majority of our restaurants to increase seat counts in our dining room once they are permitted to reopen and CapEx to complete the construction of our restaurants in the Cleveland market in Orange Village, Ohio, which is scheduled to open later in the fourth quarter, as well as some CapEx for other sales and productivity initiatives. We have the flexibility to pull back on these cash expenditures based on the operating environment as a significant amount of these expenditures are discretionary and our variable. So to recap before we turn it over to questions, the hard work and problem-solving creativity of our team members, the main key competitive advantages today and will be drivers of future success as we reconnect with our loyal guests and introduce new guests to our fantastic food and beverages, whether in our dining rooms, our outdoor seating areas, or in the comfort of their homes with our takeout and delivery services. From a balance sheet and income statement perspective, we have taken appropriate measures to further strengthen quickly as we entered the pandemic already possessing one of the industry's strongest sound sheets and modified costs, operating practices, menu items, and other factors to optimize sales and cash flows during this time. Our leading-edge investment in technology has enabled us to provide our guests with digital check-ins, digital menus, digital payment options, and other contactless optionality but have not reduced the service levels guests expect from BJ's. While the current environment has brought unprecedented challenges, BJ's is improving its ability to maneuver quickly to preserve the food, drink, and dining experiences our guests have come to know and love while adapting our business models and practices to drive cash flows during this time. For these reasons, we remain confident that BJ's is poised to take advantage of the opportunities to prosper in the casual dining industry for years to come and deliver shareholder returns that reflect our industry leadership, brand strength, and incredible teams. With that operator, we finished with the formal remarks and we will open it up to questions.

Thank you. [Operator Instructions] We'll take our first question from Jeffrey Bernstein with Barclays. Please go ahead.

Great. Thank you very much. Two questions. First one, just thinking bigger picture, if we're trying to find a silver lining here in a very difficult time, but it does seem like you're getting a benefit from accelerating technology introduction, maybe consumer adoption to it. I'm assuming there'll be some potential real estate availability benefits. I'm just wondering if you would see similarly and maybe what you think has been the most favorable to your business or maybe what do you believe will be the greatest sustainable driver to long-term market share gains coming out of this crisis? And then I have one follow-up.

Sure, Jeff. This is Greg Trojan. Look, I don't say this necessarily totally happily, but I think the biggest benefit is going to be a fact that from a capacity perspective, I think we're going to see meaningful and real reductions in the number of restaurant seats coming out. So, I put that as the number one driver of sales and market share opportunity. But within the dynamics of the business, I think the, as you mentioned, the acceleration of adoption rates around technology, which will I think, not just today but in the future benefits the fundamental experience of our guests and our team members. We view as a real positive and that it's not just the world of off-premise and third-party delivery. I think it's also what we're seeing in terms of the speed and convenience of ordering in our restaurant and see the receptiveness or ability of our servers to have information about when our guests needs and wants etc. So, I put that as a long-standing sustaining benefit of the times before going through. And you mentioned it out of the one in terms of growth and unit growth opportunities. We are going to see and I think higher quality sites and availability across even some of the tougher markets historically to find quality real estate I think there's going to be some vacant space to take advantage of even in tight real estate markets like the Northeast.

I mean, you mentioned the real estate. I'm wondering whether there's perhaps a different approach to you, as you think about your restaurant real estate. I know you're not doing much this year, but between real estate and design as you think about doubling your new account in this new world? Is there different real estate you'd be looking for different designs? How would you change things or look to the second half of your growth story?

Yes, no, that's a good question. Clearly, accommodating eating or not we were already thinking about this and then made some investments in off-premise, and in making that easier to execute and more accessible to our guests, but I think this has taught us some things and have us thinking about doubling down in terms of true convenience. And then in terms of off-premise, sales and curbside etc. So, I think that's where you'd see some of the bigger changes.

And I think, Jeff, everybody is getting used to delivering off-premise, there's a lot of discussions around how you make the takeout area within the restaurant more convenient for people to come in and grab their food. I think as Greg mentioned, it's nagging me how do you make it more convenient to bring food out to the curbside. So, that's a subtle difference there. But it does become a difference in the way we're thinking about designing restaurants in the future, where we're going to get to know long longer are going to be coming out of their cars to pick up their food. And I think the technology that we worked on helps in that perspective and thinking about where you want to position maybe the solid for the cars to come for into maybe do you actually even think about it as a drive-thru type setup in regards to giving the food. So, there's definitely changes or any timing, I think within BJ's and probably others within the industry as they think about how to really optimize the outcomes as part of the business.

I know you've talked about the June talk versus margin, which I thought was quite impressive. I think you are saying your costs are down 25% to 30%-ish and yet your restaurant margin was up 13. So I'm just trying to assess whether it which line item generated ethical favorability or as we think of the back end for the year maybe, if you're consequently down in the 40 percentage range, how do we think about the margin for the third and fourth quarter based on that very impressive result you did in June?

Well, it's a great question, Jeff. I think June gets the benefit still with some Father's Days and graduations and things like that, that helped drive up sales average up in that perspective. I do think though as we look at that, we're the benefit that we get in June, and thinking about this business going forward, is one year we were still doing and continue to do a large portion of your business in off-premise. So off-premise really allows you to leverage your labor. And as I mentioned in our call, you think about those margins. I did say that our labor in June, hourly labor was 300 basis points better than it was a year ago. So, that's one of those leverageable areas in our business. I think our menu mix helped out the time, so cost of sales was relatively low in addition to that. And then as we continue to do a lot of times, you just have a left, but I would call daily controllable costs within the four walls of the restaurant. So that gives you the biggest benefit there. The challenge that we have, and even trying to think about margins and giving some guidance for you and everybody out there and even for our business internally, is it really comes down to consistency. So as we go started July there and all of a sudden had to go back from an off-premise business. That's a challenge for us. It almost becomes a little bit like early or late March, early April, where we set our teams back up to take care of people in the dining rooms, and then 62 of our dining rooms get closed down in California, and we have to absorb some of that cost and work our way through it. So when I think about our business, if we stayed in a steady state, I think we can optimize our margins. I don't know if they necessarily be where June was, because we're our sales levels were. But that's the challenge is really the ups and downs that go on in regards to the dining room and you lose that consistency. So I don't know if that helps you, Jeff, or confuse you more, but really, it comes down to the ability to be consistent in regards to how the sales come in, because then we could think about really how you optimize the business.

We'll take our next question from John Glass of Morgan Stanley.

I wanted to follow up maybe on that theme on a longer-term basis. How do you think about those profits, how much cost you have permanently reduced or eliminated from the business, if you think about if you normalize your AUVs over time, you think restaurants how much better, would you think restaurant margins are permanently better and by how much? Some of your competitors have talked about rethinking things structurally, permanent reduction in menu, not just temporary. How do you think about those topics?

John. I can tell you there's, I think the significant benefits, if you will tailwinds going forward is one you mentioned is when I said this early on some rise of the pandemic here is, it's extremely unlikely and certainly not our objective to end up with the same level of menu items that we started with in January and February. We're being very careful about what we bring back and when, and that, I think particularly for us where clearly our varied menu is a really important part and a great part of our concept. But the benefit of us taking that next level jump if you will into complexity reduction, I think is truly significant, and it's something honestly, we're excited about. I think the other element here is, again, it's a function of other parts of the economy that are not so great, but is I think the amount of labor rate pressure in the industry and in our business is going to be very different and less than it was going into all of this for quite some time. And I think, what Greg was talking about, the mix between off-premise and on-premise is going to be another mix advantage here that will help profitability and margins as well. So as much as you know, that is a benefit, I think, look, we're expanding in the number of occasions that people are willing and are going to continue to use casual dining so that's a good thing. And as happy as we are about this, I don't want to lose sight of the fact that the core of our business will still remain dining social experiences like where we're most differentiated is, not that we can't be great at off-premise. But the fundamental, as I said in my remarks, human need to gather with friends and family is our physical four walls of our restaurants and the vibrancy of how our bars interact with the rest of our restaurants' eating, that feel, that emotion, that folks that when they're in our restaurants is something that's still going to be a towering strength of our concept. So I think we all get looked at today's business and in many ways we viewed as a positive in an off-premise and we certainly do. And I don't want to lose sight of fundamentally we're in the sit-down social experience business of dining.

Okay. Thank you. And maybe just to that point. When you consider the additional patios that you've added, all the dividers that you're going to put in restaurants, what percentage seating capacity does that represent? What is the incremental seating capacity that you're being able to add through these pieces?

Yes. The dividers -- it's a great question itself. By putting divider in our restaurants, the way I have to preface it a little bit, John is, it really comes down to one ordinance allow dining capacity to be greater than 25%. That seems to be the benchmark. So, when somebody says you're allowed to seat up to 50% or 75%, there's still to some degree managed by the 60 of social distancing. So, dividers in our restaurants actually should get us somewhere in the neighborhood of 12 to 17 tables on average. So, it's actually a nice increase there and that add would probably get us close to 75% capacity of being able to actually seat in our restaurants where with social distancing, we're limited, probably closer to 50% to 55%. On the patios, we're getting probably patios -- we'll probably get about 45 seats on the union added patios that we've been able to put on there. It looks like years from 12 to 16 tables, depending on if they're two tops to four tops. So, you're somewhere in the 45 plus in the amount of seats that you're getting.

We'll take our next question from Chris O'Cull of Stifel.

Thanks. Good afternoon, guys. I've had a couple of questions. One, Greg, how much deferred rent are you carrying on the balance sheet right now? And can you give us a sense of when maybe deferred payments will start to become due and how long you will have to pay any of those payments?

Yes, it's a great question. I think on the balance sheet, there's two months' worth which is probably two to three months or 7 to 10 million plus range on the balance sheet. We made full payments or whatever we negotiate with our landlord in July. So, we're paying rent going forward. It's a combination of different payment plans on our different properties there. So, I would tend to probably about starting July going forward we are paying rent and some are being amortized this year some would be amortized next year, some will be amortized over 12 months, 18 months it's just across the board.

Just a 13% cash margin in June does that include the actual cash rent payment you made or is it the normal straight-line where any expense that you would typically book on occupancy?

It is a 13%, a GAAP 13%. So, on the Generally Accepted Accounting rules, we're extending rent every single month, whether they pay it or not. So, that 13% is not necessarily a cash number if you think about it from your cash, but it's a generally accepted standard accounting practice in that standpoint. So, rent expense in there and accounting for it like we would get in town for our margins last year or any other time.

Okay. I mean just given the big shift in business with the close out here, the California's -- the California dining rooms. Can you provide an update on cash burn rate assuming those stores remain closed? And then maybe threat changes?

Yes, I get on the boomer mark. I said, our cash burn rate in, assuming we make a 60% rest 60% of historical sales. So, a negative 40% comp. Last year in Q3, we get 104,000 on our weekly sales average. So, we're basically averaging what's called $62,000 in sales today. At $62,000 we can sell say we're going to be burning cash anywhere from a half a million to a million a week, really depending on our CapEx. Because we want to be providers and we need to have the ability as we just said, to increase sales dramatically for us; we could take our sales numbers up several high ROI from our perspective, and also includes the manager bonuses and other things that we're putting back into our business to continue to drive sales and our sales forward.

We'll take our next question from Drew North with Baird.

Thanks for taking the question. I was hoping you could elaborate a little bit on what you're seeing in markets specifically that we closed in states like California? How consumers reacted following this second trip on the market? How is it different than the first time around if at all? And I assume there is a wide parity of recent trends depending on the market, so just any regional color you're willing to provide related to recent trends or consumer behavior would be interesting? Thanks.

So, Drew, a couple of things to note there because it is interesting second time around and we're largely talking about California, right? So there's a few other municipalities here and there but the lion's share of second time around dining room closures is by far California for us right. And the biggest thing that's different is we're allowed and we're prepared in advance as we mentioned to provide outdoor dining capability for folks and I can tell you, you've probably seen the pictures on the news etc. People are taking advantage of outdoor dining and they're going back into spending their lives inside in their homes is not what people have on their mind. You will see the end of that being legislated or not, but people are out and about. They're being very careful as they do that in our restaurants, but outdoor dining is a big difference. And then just the routine of off-premise, people are understanding the convenience more and more and I mean that is already at a higher level than when we started all of this at $10,000 a week. I think the other thing of note, I think you're asking, but I'll answer regardless is we're not seeing a, at this point, a softening of sales in other states that in some cases have increased the restrictions and in terms of social distancing or whatever, but just even the mental differential of where we are today versus four weeks ago, and I think everyone had a mindset of -- we're on the right path and opening more than going back to, closing some restaurants that has not yet impacted sales levels in states like Florida and Texas. We're still seeing, again that fundamental desire of people wanting to dine in.

We'll take our next question from Matthew DiFrisco with Guggenheim.

Hey there, I had a couple of quick questions. One, it seems like there was either in bringing the transcript on or there was a contradiction here where was June 60% same-store sales? Or was it 70% of the year ago volumes?

June was safely about 70% at the year ago volumes. So, I think I’ve been said in formal remarks that I get comps by quarter. So, you have to follow my formal remarks started 70. I think he said, two we were down about 40% in comps. So again what we were saying though, I think what -- I'm sorry that this is not, I think what we were talking about there, 74, negative comps to negative 63 to negative 40. While we were talking about is by the end of June, when 95% of our dining rooms were open, is when we start to move ourselves closer to 70% of averaging the volumes. So throughout the month of June, as you'd expect, comp sales got better.

So it's the 13% restaurant margin associated with a down 40 comp or is it with 75,000 average weekly sales?

To down 40% of the entire month of June.

And you're doing it down 40 now in July, correct?

Right, but if July is again, July is going to be lower sales because it's going to be nothing to be happy about, your ability to leverage your fixed costs, whether it's managers, whether it's rent. The other thing that I was saying earlier is. We can only maximize margins when you get the consistency and predictability. When already of the sudden on July 2nd, somebody comes out and says, your dining are now shut, that's going to take a little bit for us to absorb in the first couple of weeks of July, before we get back to being able to be a little bit more ability to be able to optimize our visits a little bit better.

I mean, the other way to think about is, the mid to late June, just forget about the comps and think about the sales now. The mid to late June, we were driving sales every week and reaching a level as we said in the last couple of weeks about 75,000 a week as a company, and now we're talking about being in the low sixties. So forget about the comp sales, think about the actual dollars that might help you.

Ladies and gentlemen, this does conclude today's question-and-answer session and today's conference. We appreciate your participation. You may now disconnect.

Thank you.

Thank you everyone.