Chefs' Warehouse, Inc. Q4 FY2020 Earnings Call

Greetings, and welcome to The Chefs' Warehouse Fourth Quarter 2020 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone. With me on today's call are Chris Pappas, Founder, Chairman and CEO; and Jim Leddy, CFO. By now, you should have access to our fourth quarter 2020 earnings press release. It can also be found at www.chefswarehouse.com, under the Investor Relations section. Throughout this conference call, we will be presenting non-GAAP financial measures, including, among others, historical and estimated EBITDA and adjusted EBITDA, as well as both historical and estimated adjusted net income and adjusted earnings per share. These measurements are not calculated in accordance with GAAP, and may be calculated differently in similarly titled non-GAAP financial measures used by other companies. Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures, appear in today's press release. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements, including statements regarding our estimated financial performance. Such forward-looking statements are not guarantees of future performance. And therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's release. Others are discussed in our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are available on the SEC website. Today, we are going to provide a business update and go over our fourth quarter results in detail. Then we will open up the call for questions. With that, I will turn the call over to Chris Pappas. Chris?

Thank you, Alex, and thank you all for joining our fourth quarter 2020 earnings call. In October and November, business trends remained relatively stable at approximately 70% of prior year revenue. On a fiscal comparison basis, sequential growth in certain markets was offset by declining outdoor dining in colder weather regions, such as the Northeast and Midwest. The surge in COVID-related shutdowns in late November, along with the absence of holiday-related events and gatherings, drove volume lower towards year-end. Despite the increased restrictions, December revenue remained above 60% of prior year, and we continued to see an increase in the total number of active customers sequentially versus the third quarter of 2020. Similar to our previous reporting, I will compare sales and gross margin results of the current quarter sequentially to the third quarter of 2020. Jim will provide the comparison to the prior year in his comments later in the call. During the quarter, net sales were 10.9% higher versus the third quarter of 2020. Specialty sales were up 3.3% organically, driven by an increase in unique customers of approximately 5.4%, higher placements of approximately 2.8%, and an increase in specialty cases of 3.6%. Organic pounds in center-of-the-plate were approximately 8.2% higher than in the third quarter of 2020. Gross profit margins decreased approximately 297 basis points compared to the third quarter. Gross margin and specialty category decreased 460 basis points compared to the third quarter of 2020, primarily due to COVID-related inventory adjustments that Jim will describe later, while gross margin in the center-of-the-plate category decreased 90 basis points. As mentioned in our recent press release, during the fourth quarter, we are shifting our Northern California center-of-the-plate brand strategy, to leverage our Allen Brothers Great Steakhouse Steaks and World's Finest Seafood brand. We are extremely excited to bring this premier brand and product line, recognized for best-in-class master butchering and aging methods, to our customers. We look forward to introducing the incredible suite of Allen Brothers products to the entire West Coast culinary community. In conjunction with this, we will discontinue sales under the Del Monte Port Seafood and Bassian Farms trade names. Now to move on to an update on recent business activity: sales in January were trending at approximately 62% of prior year, despite the worst of winter limiting outdoor dining demand, even in moderate climate markets. Very recently, we see some loosening of restrictions in both indoor and outdoor dining, including major markets like New York, Chicago, and California, and are beginning to see early impacts of that increased capacity. 2020 was by far the most challenging year in our company's 35-year history. No industry was impacted more by the COVID crisis than the hundreds of thousands of independent restaurants and hospitality establishments across our nation. The impact on families, careers, and business owners has been on a scale that is both devastating and immeasurable. Since March 16, 2020, the day the nationwide shutdown of indoor dining was mandated, our primary focus has been on working with our customers to help them continue operating and pivot to new business models, providing flexibility on credit and maintaining the high-touch service and high-quality product model that they have come to depend on us for. We supported our customers, our teams, supplier partners, and the broader industry through coordinated lobbying efforts, delivered our fine dining experience product lines to people's homes, donated food totaling approximately $8 million to charitable organizations and food banks across the country, and rightsized the company and strengthened the balance sheet in order to manage through the volatility and unknown timing and nature of the COVID crisis. Our goal is to emerge from this challenging period in a strong financial and strategic position, enabling us to invest in growth and take advantage of business development opportunities in the next few years. While we paused certain projects during 2020, we continued to invest in both sales and operations talent, enhanced our technology infrastructure and digital platform, and expanded category growth in seafood and produce. We will continue our path of investing in growth markets. To that end, we have restarted the process of building our new LA facility and expect to complete our Florida expansion in the first half of 2022. I would like to thank the entire Chefs’ Warehouse team, along with our customers and supplier partners, for their dedication and hard work throughout 2020. Our industry is filled with amazing people of every gender and ethnicity who all love the culinary world. The level of innovation and agility displayed during this period has been inspiring to all of us. At Chefs’ Warehouse, we look forward to building our industry back together and stronger than ever. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity. Jim?

Thank you, Chris. And good morning, everyone. I’ll now provide a comparison of our current quarter operating results versus the prior year quarter, and provide an update on our balance sheet and liquidity. Our net sales for the quarter ended December 25, 2020, decreased approximately 34% to $281.7 million, from $426.5 million in the fourth quarter of 2019. The decrease in net sales was the result of a decline in organic sales of approximately 41.7%, along with the contribution of sales from acquisitions, which added approximately 7.7% to sales growth for the quarter. Net inflation was 0.5% in the fourth quarter, consisting of 0.4% deflation in our specialty category and inflation of 1.6% in our center-of-the-plate category versus the prior year quarter. Gross profit decreased 42.5% to 58.9 million for the fourth quarter of 2020, versus 102.4 million for the fourth quarter of 2019. Gross profit margins decreased approximately 311 basis points to 20.9%. Gross profit dollars and margins were significantly impacted by additional reserve adjustments for inventory valuation loss of approximately 4.8 million due to the expected extended impact of COVID-19 on certain market segments and customer openings through the first half of 2021. Excluding the impact of the reserve adjustments, gross profit margins declined 140 basis points versus the prior year quarter. The primary driver of net specialty deflation was significant price decreases in the dairy and bakery categories, partially offset by inflation in the cheese and chocolate categories. Inflation in the center-of-the-plate category was driven by higher pricing across most beef categories, as well as product mix changes attributed to strong growth in our Allen Brothers direct-to-consumer business. Total operating expense increased approximately 27.5% to $107.1 million for the fourth quarter of 2020, from $84 million for the fourth quarter of 2019. The non-cash impairment charge of $24.2 million related to the discontinuance of the Del Monte and Bassian Farms trademarks was the driver of higher total operating expense. On an adjusted basis, operating expense decreased 6.5% year-over-year. Excluding the impact of acquisitions, adjusted operating expenses decreased approximately 20.3% versus the prior year quarter. As a percentage of net sales, adjusted operating expenses were 24.6% for the fourth quarter of 2020, compared to 17.4% for the fourth quarter of 2019. The operating loss for the fourth quarter of 2020 was $48.3 million, compared to operating income of $18.4 million for the fourth quarter of 2019. The decrease in operating income was driven primarily by lower gross profit and increased operating expenses inclusive of the $24.2 million impairment charge in the quarter. Income tax benefit was $16.6 million for the fourth quarter of 2020, compared to an expense of $3.2 million for the fourth quarter of 2019. Our GAAP net loss was $37.1 million or a $1.02 loss per diluted share for the fourth quarter of 2020, compared to net income of $10.9 million or $0.36 per diluted share for the fourth quarter of 2019. On a non-GAAP basis, we had a negative adjusted EBITDA of $10.5 million for the fourth quarter of 2020, compared to positive adjusted EBITDA of $28.2 million for the prior year fourth quarter. The adjusted net loss was $19 million or $0.52 per diluted share for the fourth quarter of 2020, compared to adjusted net income of $12.1 million or $0.39 per diluted share for the prior year fourth quarter. Turning to the balance sheet and an update on our liquidity. As of February 5, 2021, we had total liquidity of $232.2 million, comprised of $193.6 million in cash and $38.6 million of availability under our ABL facility. Net debt as of February 5, 2021, was approximately $210.2 million, inclusive of all cash and cash equivalents. At this time, due to the continued uncertainty regarding both the pace of broader economic recovery and the lifting of in-room dining restrictions across our key markets, we will not be providing guidance for 2021. We hope to provide more color as we gain more clarity on the length of the economic downturn and the pace of reopenings. Thank you. At this point, we will open it up to questions.

Thank you. We will now begin the question-and-answer session. Our first question today is from Alex Slagle from Jefferies. Your line is now live.

Thanks. Good morning. On the Allen Brothers, if you could talk about the successes you're seeing with that business and how you think that could evolve over time.

So are you referring to our B2B or B2C, Alex?

Yes. The B2C, but just kind of broader thoughts on that brand and the actions you're taking.

Right. Sure. So when we bought Allen Brothers, I think it was five or six years ago, it was one of really the only brands in food service that had a national presence. This was really what drove me as I have always been in love with the brand. It stood for incredible quality. You see it on menus and it always had a catalog for the B2C world. It was really unique in that it brought B2C and B2B together. We have been slowly investing in the brand and we really saw the payback during COVID where the B2C sales exploded, and thousands of new customers discovered that they could get steakhouse quality steaks and other products delivered right to their door. We are really excited about this discovery process of what I call our regular customers’ customers. As we started to open up more protein processing facilities around the country through acquisition or greenfield development, we acquired many brands over the past five to six years. We just took the first big step in rebranding our West Coast operation, which is a significant protein business under many different flags. We purchased multiple companies, and we thought it was the right time now that we had the team, quality, and ability to deliver and protect the brand - the image of being the best. We have now opened Allen Brothers Steak and Seafood in Northern California, and we think that that will continue. We think that New York will probably be an Allen Brothers Steak and Seafood, and probably New England as well. We will just keep building on the brand. We have such a great following now with our customers, steakhouses, and our 50,000 independent restaurants. This positioning is a differentiator and it will only continue to grow.

Great. Thanks. And then it looked like the November activity held up pretty well with the help of outdoor dining in some of the off-premise business. I imagine, with all the pent-up demand and weather hopefully starting to warm up in the coming weeks heading into spring, there's some more optimism and excitement you're hearing from customers in the Northeast and Mid-Atlantic. I just wonder if you can kind of talk about the role of outdoor dining in your business and how much this could offset the indoor dining restrictions, which probably continue for a bit here.

Sure. Obviously, we're very excited to finally see New York, Chicago, and California start taking the first steps towards indoor dining. We are really excited about what we saw with the explosion of outdoor dining and how it reinvented the dining experience in so many cities and suburbs across North America. Optimistically going forward, I think that will become part of dining. I always say, when you visit Paris or some European cities, you see so much outdoor dining, gardens, and tables. The restrictions were very strict in many of our big cities on outdoor dining, and with the relaxation of many other restrictions, our customers were able to build incredible settings to accommodate customers who wanted to be outside during the pandemic. We expect this trend to continue and believe it will be a real addition to our customers’ business going forward after the pandemic. Therefore, we are really optimistic about 2022. We think that 2021 is a rebuilding year. I have been saying this for the past several months. Living in a cold environment and traveling back and forth to warmer climates, when you come to Florida, you can see the future - indoor and outdoor. People are a lot more comfortable for many reasons, and you just see the pent-up demand with restaurants that are full. We can feel the momentum building, and it's very optimistic.

That's great. Thanks.

Thank you. Our next question today is coming from Peter Saleh from BTIG. Your line is now live.

Great. Thank you, Chris. I know there’s a lot of discussion and theories out there that post-pandemic, some of the larger chains will be taking market share. I recognize that the majority of your customer base, 80 to 85%, are independents. Do you anticipate any mix change going forward post-pandemic? Do you think you'll garner some more chain business? Can you just give us an update on where you stand today with some of the chains?

Sure. I think the term chain can sometimes be misleading. Many of our customers have become what I call groups. The predominant larger customers are all part of some sort of group, whether it's five restaurants, 10 restaurants, or 20 restaurants. One of our biggest customers has around 52 restaurants. We have a large customer with 600 to 700 restaurants, but we only service about 100 of them that fit into The Chef model. I do think they are grabbing some significant market share during the pandemic. We will benefit from their acquisitions as the lower-end and massive chains take advantage of their balance sheets. I conduct a latency test; I go back to where I want to eat when all of this is over. I've been eating out every night during COVID and canvassing our markets and talking to customers. The overall sentiment is that people want to support the underdogs - I call it the little guy, the restaurants that are 100-seat, chef-owned, family operations. I saw this happen after 9/11, and I think it will happen again. Yes, some of the bigger operators are expanding and taking advantage of their balance sheets, but I don't think any really good independent operator is giving up prime space. Many of them are hanging in there, negotiating their leases, and securing PPP money. I'm hearing from customers that they're receiving significant amounts of money, which is lifesaving. Therefore, we are really excited to hear that this assistance is flowing, but don't discard the little guy. The sentiment of the American and Canadian consumers in the markets we serve really wants to support independent restaurants, and I believe they are going to come roaring back.

Great. And Jim, can you just - in light of the cash position and the reopening now of New York and most recently, California, how are you guys thinking about inventory planning? And should we expect you to start drawing down on the cash position to fund future demand in the first quarter?

Well, we expected, as we were coming through - before the recent shutdowns post-Thanksgiving, to see some level of cash burn as the business kind of steadied around 70% from September into October and November, then started to drop as COVID surged post-Thanksgiving. We expected that if we were on that path, we'd start to invest more in accounts receivable and inventory, and see a level of investment in working capital. We still expect that to happen, but we built a decent cash cushion and kept debt relatively level given some moving parts pre-pandemic and then post-pandemic. But as that occurs, it will be a good problem to have - generating free cash flow while investing in working capital. We expect to continue having a strong liquidity position, giving us some 'dry powder' to add pieces that could really help us moving forward.

All right. Thank you very much.

Thank you. Our next question today is coming from Kelly Bania from BMO Capital Markets. Your line is now live.

Hi, good morning. Thanks for taking our questions. Chris, I was wondering if you could just talk a little bit more about the customer acquisition trends that you highlighted and just expand a little bit more on what type of customer, under what circumstances, categories, regions. Just help us understand what's happening there.

Sure. I don't think it's a one-size-fits-all, Kelly. We saw significant numbers of new credit applications during the pandemic. Our industry typically experiences turnover in restaurants, and our attrition rate was usually around 7% to 15%. However, it was higher than that during the pandemic. The message I received was that many clients with solid balance sheets said, 'You know what? I always loved that space, and it's now available.' There's great opportunity since the infrastructure is already built - hood systems are in place, and instead of spending $3 million or $4 million, they can execute a $700,000 renovation. Even in areas like Wynwood in Miami or parts of Brooklyn in New York, opportunities abound. It feels almost like a new company is beginning, with plans to open perhaps 1,000 restaurants in a year—that's truly the atmosphere we’re experiencing. While many of our clients have faced challenges, a substantial customer sector approaches the latter sign of COVID like a startup. For instance, I just read about one of our popular customers who signed a new lease to build a multi-million dollar restaurant in an excellent space. So, while there has been a lot of hardship in the industry, we see numerous customers seizing real estate opportunities and reduced rents. I think this sets the stage for what you will observe heading into 2022.

Okay. That's helpful. And I have another question regarding preparedness for the recovery in the next several quarters. How do you feel about your salespeople and their ability to pursue new customers as they rebuild? What capacity do you expect to have for warehouse employees and drivers in the next quarters?

Absolutely. I think I mentioned in the last earnings call, and in some of the conferences in recent months that companies had two choices during this pandemic. The first was to cut all costs and focus on a few more pennies to earnings, if they had earnings. The second was to prepare to be aggressive and seek to grab market share. We chose door number two. Yes, we did cut back; however, we found we could operate leaner and we plan to continue doing so. If anything positive came out of this, it was a chance for us to grab talent. Many routes were consolidated, but we are running operations that are geared for recovery. We maintained a lot of trucks, even if some are half-empty. As business comes back, those trucks are road-ready with drivers on their routes, waiting for their business. The same situation exists with the sales force. We successfully attracted a lot of talent that was looking for new opportunities for various reasons. I view this period as a once-in-a-lifetime talent acquisition. Those salespeople with established books may not be performing at the levels they were before the pandemic, but we’re already starting to see signs of recovery in certain parts of the U.S. and Canada. These salespeople are hungry after a long and challenging year—they have utilized this time to target new clients and sales in different categories, developing various avenues to capture business. Necessity breeds invention, and that’s precisely what salespeople do; they’re driven to find new customers to sell to. Therefore, we are excited about the talent we have and the capacity we are prepared for as business starts to rebound. Once we reach a point where demand exceeds capacity, we will consider expanding our workforce.

Thank you. Our next question is coming from Todd Brooks from C.L. King & Associates. Your line is now live.

Hey, good morning, gentlemen. Hope you're well. If we can talk about, you've kind of given us phases for what the recovery looks like. As we're emerging from this winter period and getting back towards outdoor dining and spring, and markets are reopening, you've discussed the strength of your balance sheet and your interest in strategic M&A opportunities following the pandemic. Can you touch on the priorities and focus areas for the initial strategic M&A and the status of your pipeline or potential deals?

Sure. The pipeline was extremely robust pre-COVID, and I would assert it is even more so now. Although we are still in COVID, we've been disciplined; we are not prepared to chase volume with low margins that don’t fit our company. We have an exceptional culture and a significant platform offering extensive growth opportunities. This discipline is crucial as we nurture partnerships, allowing us to remain a high-margin, high-touch superior product company—a differentiator from other national companies. The current environment might lead to a flurry of M&A activity. The industry was already consolidating prior to the pandemic, and as unsettling as this past year has been, it did unveil the potential assurances that our brand can thrive in various ways. This awareness is crucial as we continue advancing our advantages to get back to the levels we achieved in 2019. Regarding our M&A strategy, we must prioritize acquiring talent and companies that align with Chefs’ and match our capacity, as these will represent our most accretive acquisitions. Southern California is set to receive a large new warehouse at the end of this year, alongside a new facility in Southern Florida, where we are also bullish. We launched a seafood business and acquired a business in Northern Florida during COVID, and we expect that success to continue. As these facilities come online, they will present the opportunity for fold-ins and acquiring new categories. Our focus has been gearing up New York, Chicago, and Texas—increasing capacity in these regions as we're seeking to maximize the opportunities associated with reopening restaurants and hotels after pandemic restrictions are lifted. While the future remains uncertain, I genuinely believe that 2022, 2023, and 2024 might outperform what we would have anticipated pre-COVID.

That's super helpful. Thanks. My last question is regarding the indications of pent-up consumer demand you're observing in warmer weather markets, like Florida and Texas. When communicating with your hotel and country club customers, are you sensing similar consumer interest for events as you look to the back half of fiscal 21? What are your thoughts about event-based business returning?

Yes, absolutely. I think everyone's being careful with dates. You don’t want to schedule and then cancel. However, during my trips to Florida, I'm already observing weddings taking place. My wife even remarked how incredible it is—there are about 150 people attending a wedding on the beach while observing social distancing. We're hearing more and more about those events starting to take place. However, I believe different cities, like Vegas and even other urban settings, may be more cautious about booking events just yet. Nonetheless, I can confirm that outdoor venues are beginning to book up. Our caterers and several of our clients are already hosting smaller events for parties of 20, 50, 75 people or more. I’m not aware of any limitations that vary from state to state, but the pent-up demand we’re gathering from the wedding planners and caterers indicates that people are ready to celebrate. Many events were postponed, particularly weddings, and our understanding is that people have plans for real wedding celebrations as soon as they feel comfortable. We also witnessed trends from the Super Bowl where individuals, either vaccinated or showcasing negative tests, could still attend events. I perceive this gradual ramp-up leading toward a return to normalization, but events will be hosted with some limitations and a controlling testing component at first.

Thank you. Our next question is coming from Ben Klieve from National Securities Corporation. Your line is now live.

All right. Thanks for taking my questions. Many of my inquiries have already been addressed, but I have one for this morning. It’s encouraging to hear your remarks on investments that were paused during COVID. Specifically, regarding your plans across Los Angeles, Texas, Florida—are the decisions you present today still aligned with your original expectations pre-pandemic? Or have there been adjustments in the scale of investment you're intending to put into these markets due to changing dynamics over the past few quarters?

Jim, would you like to address that?

Yes. It's more about delay than any cutback. We had expected to finish the LA buildout this year, having started last year, and now we're pushing back timelines. Florida was already in early construction last year and remains in that phase. Thus, a majority of that capital will be spent later this year when we anticipate a stronger recovery. So I would characterize it as more of a delay in CapEx investments rather than a scale-back. We have also discussed previously our strategy of consolidating facilities to reduce our cost structure in several markets like Texas, New England, and the West Coast. This will provide the necessary funding. I affirm that Southern California, Florida, and Texas are key growth markets that we intend to keep investing in.

Okay, perfect. Thanks, Jim. That's helpful. That does it for me. I appreciate you taking my question. Best of luck navigating what we hope is a reopening in the coming months, and I'll jump back in the queue.

Thank you. Our next question is coming from Nicole Miller from Piper Sandler. Your line is now live.

Good morning. Thank you. My first question refers to the dialogue around independents, which was very helpful. It doesn’t just involve a single operator with a single restaurant. So, two parts: Number one, on the topline, it seems like some have closed, but for those that remain open, are they recovering at the same pace as larger chains or scaling? What do you think about that? Secondly, I understand your views on the occasion transfer aspect. For me, I ponder how to inform this outside of personal perspective. If an independent restaurant closed, where do you think that guest went? Did they stay home? Did they turn to grocery shopping? Did they transition to a national chain with a different experience? How do they come back?

Sure, Nicole. I can address that. Let’s recap: New York City was closed. No one was open - that's a critical factor. It was an unusual year where, given takeout availability, many people discovered restaurants they had never previously visited. However, if you dine in a phenomenal restaurant like Le Bernardin in Manhattan, you're unlikely to shift your loyalty to an Olive Garden just because dining options dwindled. Different scenarios occur at varied price points. Certain high-end restaurants have closed entirely, while others pivoted, launching catering or other services. You’ll hear about various entrepreneurial movements; some opted to simply say, 'We will see you in the spring.' For small independent restaurants, particularly in suburban areas, I believe they’ve managed navigate the turmoil. While they saw drops in volumes, they were able to manage their overheads and master an effective takeout system. In my experiences with restaurants in the towns I visit, they were doing remarkably well with high volumes of catering, far exceeding the numbers of pre-COVID days. As indoor dining resumed with limited capacity, it was encouraging to observe customers returning. I can't assert the same sameness across all cities and states, but we are getting reports of increased orders from independents. While many will not survive this crisis, I see a surge of new openings and innovative concepts on the horizon. In cities where we see operational strategies of 25% and 50% capacity, the fundamental demand appears to be returning. I acknowledge that larger chains are performing better overall, as they possess substantial balance sheets, marketing prowess, and infrastructure, enabling them to promote takeout effectively. However, I don't believe that the independent operators are entirely absent in the future’s dining landscape.

Could you also discuss the deflation aspect? Jim, you mentioned a couple of categories driving this, including dairy and another. Additionally, the industry hasn’t viewed inflation in a long time. What’s your perspective on that, and if inflation does return, how do you typically pass those costs to the customer?

Yes, absolutely. The best way to characterize this quarter, along with the entire year, is that it was filled with volatility primarily driven by product mix—both from us and from producers—and swayed by the demand environment. Unpredictable reopenings and closings, as well as variable weather conditions across various regions, intricately shaped product demand. I mentioned earlier that dairy and bakery products were experiencing deflation, while we observed varying levels of inflation or deflation within various categories. Recently, we witnessed inflation on the center-of-the-plate side that began in the fourth quarter and has persisted into the early phases of the current quarter. Regarding pricing, our model allows us to pass on most costs since we do not engage in fixed price contracts with significant chains. We have pricing aligned with the market and can generally transfer the cost back to customers. However, in times of extreme volatility, when prices swing rapidly, we are unable to pass all costs to consumers and must collaboratively manage this with our customers as we work to maintain pricing consistency.

Thanks for the update. I appreciate it.

Thank you. We’ve reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any final or closing remarks.

Listen, I'm really happy everybody could join our call today. Clearly, 2020 was an extremely difficult year, but we are grateful that we can rise above this challenge. The team is more engaged and has worked together more than ever. We are excited to witness the openings and gradually return to a sense of normalcy. America loves their restaurants and values the social aspect of dining, and we are really excited about the progress we are seeing. We hope the vaccinations will accelerate recovery and renew our industry back to where it was pre-pandemic. Thank you for joining today. Stay healthy, and I look forward to our next call. Thank you very much.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.