Greetings, and welcome to the Chefs' Warehouse Second Quarter 2024 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, our CFO. By now, you should have access to our second quarter 2024 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 second 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 second quarter 2024 earnings call. Second quarter customer demand and pricing displayed typical seasonality as revenue and profitability continued to build as expected, moving from a solid first quarter into seasonally stronger second quarter months. Our operating divisions across domestic and international markets delivered strong unique customer and item placement growth and managed pricing effectively, while providing our customers with high-quality product and high-value service. We are extremely proud of all our teams from sales, sourcing, pricing, operations, and support functions coming together to deliver value to our customers, leveraging our diverse and broad supply chain, value-add processing and culinary expertise to assist our customers with managing menu development as well as product and labor-related costs. A few highlights from the second quarter include, 7.2% organic growth in net sales. Specialty sales were up 7.5% organically over the prior year, which was driven by unique customer growth of approximately 8.2%, placement growth of 11.3%, and specialty case growth of 4.7%. Excluding prior year low-margin customer attrition in Hardies, total specialty cases grew approximately 5.5% year-over-year in the second quarter. Organic pounds in center-of-the-plate were approximately 2.9% higher than the prior year second quarter. Gross profit margins increased approximately 35 basis points. Gross margin in the specialty category increased approximately 50 basis points as compared to the second quarter of 2023, while gross margin in the center-of-the-plate category essentially remained flat year-over-year. Jim will provide more detail on gross profit and margins in a few moments. We remain focused on making progress towards our five-year goals, which include 2028 revenue of approximately $4.6 billion to $5 billion and adjusted EBITDA of $300 million to $350 million. It is important to highlight the key investments we have put in place to provide our teams with the market footprint, product categories, infrastructure, and investment and sales force necessary to grow towards achieving these targets. Regarding infrastructure, since 2019, we have added approximately 1 million square feet of distribution capacity, excluding acquisitions or approximately a 60% increase to the 2019 baseline. These include investments in future growth in high-value markets such as the expansion of our distribution centers in Dubai, Seattle, Southern California, and Florida. This also includes facility expansion to create future operating synergies, such as our recently completed protein processing facility in Northern California. During the second quarter, we initiated processing operations and completed the first phase of a multiple facility consolidation with the move of our Brisbane processing and distribution operation. We expect to complete the next move during the third quarter, with a focus on completing the full consolidation during the first quarter of 2025. We expect to provide route, labor, and technology-driven efficiencies with room for future growth in the region. Regarding our investments in sales and our unique go-to-market strategy since year-end 2021, we have increased our sales force excluding acquisitions by approximately 10% per year. Over the same timeframe in certain of our high-growth investment markets such as Florida, the Middle East, and California, we have grown our sales force by approximately 20% to 25% per year on average. In addition, we continue to invest in category expertise and digital and pricing tools across our markets to support our sales and operating teams' execution, and growing market share via unique item penetration, new customer acquisition, and improved gross profit dollars per delivery. Our investments in acquisitions, categories, infrastructure, and sales teams have given us the marketing and distribution footprint required for growth towards our 2028 goals. We feel we have a balanced portfolio of high-growth markets supported by ample capacity, maturing sales teams with our unique go-to-market strategy complemented by more mature markets focused on category expansion and continued above-average industry growth. For the past 40 years, we have developed a moat in our niche of the food service industry by investing in and developing the talent and expertise to sell to the world's finest chefs, to be logistically nimble and best-in-class to manage just-in-time service and to manage price and margins in a volatile world. We have built a culture and strategy designed to be the unique Foodservice Solution Company, focused on serving quality culinary-driven operators. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity.

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 June 28, 2024, increased approximately 8.3% to $954.7 million from $881.8 million in the second quarter of 2023. The growth in net sales was a result of an increase in organic sales of approximately 7.2% as well as the contribution of sales from acquisitions, which added approximately 1.1% to sales growth for the quarter. Net inflation was 3.3% in the second quarter, consisting of 2.7% inflation in our specialty category and inflation of 4.3% in our center-of-the-plate category versus the prior year quarter. Gross profit increased 9.9% to $229 million for the second quarter of 2024 versus $208.4 million for the second quarter of 2023. Gross profit margins increased approximately 35 basis points to 24%, and our procurement, sales, pricing, and operating teams delivered strong gross profit dollar growth across categories during the quarter. Selling, general and administrative expenses increased approximately 8.8% to $194.8 million for the second quarter of 2024, from $179 million for the second quarter of 2023. The increase was primarily due to higher depreciation and amortization, driven by acquisitions and facility investments, and costs associated with compensation, facility costs, and distribution costs to support sales growth in the current quarter. Adjusted operating expenses increased 9.8% versus the prior year's second quarter. As a percentage of net sales, adjusted operating expenses were 18.1% for the second quarter of 2024. Operating income for the second quarter of 2024 was $33.9 million, compared to $25.3 million for the second quarter of 2023. The increase in operating income was driven primarily by higher gross profit, partially offset by higher selling, general, and administrative expenses versus the prior year quarter. Income tax expense was $6.7 million for the second quarter of 2024, compared to $3.5 million expense for the second quarter of 2023. Our GAAP net income was $15.5 million or $0.37 per diluted share for the second quarter of 2024, compared to net income of $9.9 million or $0.25 per diluted share for the second quarter of 2023. On a non-GAAP basis, we had adjusted EBITDA of $56.2 million for the second quarter of 2024, compared to $51.1 million for the prior year second quarter. Adjusted net income was $17 million, or $0.40 per diluted share for the second quarter of 2024, compared to $14.4 million or $0.35 per diluted share for the prior year second quarter. Turning to the balance sheet and an update on our liquidity, at the end of the second quarter, we had total liquidity of $208.3 million comprised of $38.3 million in cash and $170 million of availability under our ABL facility. During the second quarter, we continued to make progress towards achieving our year-end 2025 capital allocation goals of 2.5 times to 3 times net debt leverage and repurchasing $25 million to $100 million of equivalent outstanding shares. As of June 28, 2024, year-to-date, we have repurchased $10 million of our outstanding common shares, resulting in a reduction of approximately 264,000 shares outstanding and repaid $14.5 million of outstanding debt. As of June 28, 2024, total net debt was approximately $661 million inclusive of all cash and cash equivalents and net debt to adjusted EBITDA was approximately 3.2 times as compared to approximately 3.3 times as of the first quarter of 2024. Turning to our full year guidance for 2024, based on the current trends in the business, we are providing our full year financial guidance as follows; we estimate that net sales for the full year of 2024 will be in the range of $3.665 billion to $3.785 billion gross profit to be between $874 million and $902 million and adjusted EBITDA to be between $208 million and $219 million. Please note for the third quarter of 2024, we expect both convertible notes maturing in December of this year and those maturing in 2028 to be dilutive for reporting purposes, and therefore, we expect the fully diluted share count to be approximately 45.9 million shares. For the fourth quarter and for the full year of 2024, we expect the remaining convertible notes maturing in 2028 to be dilutive, and therefore we expect the fully diluted share count to be approximately 45 million shares for the fourth quarter and full year reporting periods. Thank you. And at this point, we'll open it up to questions.

Thank you. We will now open the floor for questions. The first question comes from Alex Slagle of Jefferies. Please proceed.

Good morning. Hi, guys. I wanted to ask on the case growth opportunity for the back half and maybe if you could just talk to some of the drivers and pipeline visibility you have that give you confidence being able to continue driving the organic case growth like you have recently. I know consumer demand in the restaurant industry more broadly seems to have gotten a bit choppier. So I just wanted to get your thoughts and things that give you confidence into the back half.

Certainly. I believe our clientele performed strongly in the second quarter. Compared to last year, the beginning of summer was somewhat uneven. However, it seems to be turning into a more typical summer where many people from the U.S. are traveling. Last year, we saw a significant rebound in September. We're monitoring bookings, hotel reservations, conferences, and corporate events, and we're in touch with our customers. We anticipate a standard third and fourth quarter similar to last year, which we hope will come to fruition. We've made substantial investments in what we call hybrid sales, deploying many teams, cross-selling, and increasing the number of trained salespeople in the field. We've also expanded our warehouse capacity. While outcomes can fluctuate, we are optimistic about our investments, our presence in the market, and our distinctive product mix, which I believe is unparalleled in the industry. We continue to see new openings, which is where we are excelling. It’s important to note that restaurateurs are focused on opening new establishments, while those in the hotel industry are eager to build hotels. Reports indicate that restaurant headcounts have declined by 2% to 3%, depending on the sector, but there are still many openings. Chef is particularly succeeding in the new openings, which may compensate for any challenges with customer counts.

Yes, Alex, I'll just add that we're reporting first half of the year. New customer acquisition close to 10%, just under 10%. Item placement growth double digits 11% to 12%, and that's been making up for a little bit of the moderation that Chris mentioned that you're seeing in terms of demand or volume especially during the summer. And some of the investments that we've made in those areas and category growth in sales force and some of the tools we're giving them are paying off.

Got it. And Jim a follow-up if you could provide any color around potential cadence of the margin leverage we have in the back half. I know the 3Q lapse there were some unique headwinds and some timing dynamics at play as you roll off like the increase from some of the new facilities now.

Yes. The guidance implies obviously in the first half of the year our organic growth was closer to 8%, but the full year guidance implies kind of 6% to 7% organic revenue growth. So we had already built in a deceleration, a moderate deceleration in the back half of the year in terms of organic revenue growth. But that's really driven by the comparisons because if you remember last summer we really had a margin issue driven by the protein markets. It wasn't a volume issue. We had really good year-over-year volume and revenue growth. And so we're comping to a little bit of a tougher comp in the back half of the year. But that's really just driven by last year's cadence versus this year.

Okay. Thanks for the help.

The next question we have is from Mark Carden of UBS. Please go ahead.

Good morning. Thanks so much for taking my questions. So I want to dig in a bit more on sales your customers are holding up pretty well overall. I know last quarter you talked about some pressure at some of your casual customers. Does it remain pretty constrained to this customer segment? Or are you seeing it creep into a broader swath of your customers' restaurants?

I'm trying to remember what you're referring to. Our customer base is very diverse. We intentionally employ large, trained teams to target various types of businesses, including caterers, upscale fast casual dining, hotels, cruise ships, and high-end fine dining. This diverse clientele helps us mitigate challenges in specific sectors. The second quarter performed well, and we believe our customers are navigating the market effectively, gaining insights on where to enhance promotions and provide more value. In the high-end sector, there are mixed trends; some areas have slowed down, as indicated by reports from other distributors and restaurant industries, while other parts of our clientele are experiencing growth. This balanced strategy has allowed us to achieve strong results.

Great. And then inflation appears to be pretty healthy. Any unusual dynamics to call out on that front? And just how are you thinking about it now for the balance of the year?

Not really anything to call out. I mean if you look at the first quarter and second quarter together, roughly 3% type of average inflation. I would say, there's a couple of categories on the specialty side that are driving probably the difference between kind of 2% and 3%. I mean, I think everybody is aware of what's happened with olive oil and some categories like chocolate driven by weather in different parts of the world. So excluding those, you're kind of in that normal kind of 2% to 3% range. And we don't really expect anything materially different at this point going forward.

Great. Thanks so much and good luck, guys.

Thanks.

The next question we have is from Todd Brooks of The Benchmark Company. Please go ahead.

Hey, Todd.

Hey, guys. Congrats on the results in the quarter. A couple of quick questions for you. If you look across your customer base, just wondering what you're seeing as far as geographic disparities and performance. If you look at the California market, I don't know if some of that angst that we're hearing about broadly in the category has crept into the fine dining end of the sector there. And then we also hear that Florida remains a challenged market. So just wondering, if you look across the base, maybe strong versus weaker markets, and thoughts on that.

We haven't noticed a significant difference across regions. As we mentioned in our first quarter call, some higher-end steakhouses have experienced a decline in traffic compared to last year, leading to a shift where we're selling more high-end burgers instead of prime steaks, but we continue to maintain good margins on those. There are various dynamics at play across our regions. Our international markets are performing well, and several domestic markets are showing strength, while some are experiencing moderate performance. Overall, I wouldn't highlight any specific markets as being drastically different, but rather, there are areas of moderation throughout the regions.

I’d like to provide a bit more detail on that. We are noticing some softness in same-store sales across the board, but we are also gaining many new customers in Southern California, where we have set up a state-of-the-art facility and increased our local presence. The situation is similar in Florida, where we started off on a small scale but have just opened our new facility, and the numbers are looking great. We are optimistic that any softness in same-store sales is being compensated by our ongoing success in attracting new customers each day. Our relatively small size compared to major players in Florida is also helping us. Additionally, our Chef go-to-market strategy and our product offerings are addressing any softness. Over the years, we have successfully navigated challenges, even when consumer demand has been weak.

That's great. And my second question and Jim, you pointed to the international markets doing very well. Can you just remind us on the distribution facility expansion timing for CME? And maybe a sense of what the old facility could handle capacity-wise? And what it should be able to handle post the expansion being done? Thanks.

Thank you for the question, Todd. We are expanding the size of the facility. They were using a significant amount of off-campus storage and freezer space, which is quite costly. We expect to complete the project by the end of the third quarter or early fourth quarter, and then we will move in phases throughout the fourth quarter. Most of the growth and benefits will materialize in 2025 and 2026. We are increasing our space from about 100,000 square feet to 200,000 square feet, allowing for substantial growth in a dynamic market. We're excited about this development, and even in their current space, they have been performing well in that market as they continue to grow.

Okay, great. Thanks guys.

Thanks.

The next question we have is from Peter Saleh of BTIG. Please go ahead.

Great. Thanks. Congrats on the quarter. I did want to ask, it sounds like you guys are continuing to win with new restaurant openings and new restaurant formation. I think you mentioned new customer acquisitions up about 10%. Is there any reason to believe that new restaurant formation will slow or that this trend will slow at all over the coming years? Is there anything that leads you to believe that this trend won't continue?

That's a great question. If I had a clear prediction, I'd feel more confident. However, based on our past experiences and the changes since COVID, I recall mentioning that there would be an increase in openings due to delays during the pandemic. We are witnessing significant changes in cities, particularly in real estate, as people seek to transform office buildings into areas that can accommodate more housing. Additionally, there’s a noticeable shift in suburbs as people are working remotely a few days a week. I believe restaurant owners are pursuing opportunities and opening new locations where foot traffic is promising, especially with real estate developers creating dining options to draw people into those neighborhoods. I don't anticipate a slowdown; rather, I see the restaurant industry adapting to new circumstances. There's an increase in takeout options and a rise in diverse types of eateries and food offerings. People are increasingly busy and prefer convenience, as evidenced by their purchasing habits at markets where they opt for more prepared meals. Many talented chefs and restaurateurs are also diversifying into this segment. This shift is compensating for any decline in traditional sit-down dining experiences. The growth in different food options, whether for takeout or dine-in, is substantial, and we're seeing many new channels to serve our customers.

Great. And then just on the investment in the sales team, 10% annual sales growth or sales team growth over the past several years. Given your targets into 2028, are you anticipating to accelerate that or keep that kind of pace of investment in the sales team the same?

Yeah. I mean, I think the pace is what we budgeted and forecasted to spend. We're looking at the dynamics of our business. There's been so much talk about online will replace salespeople, which we think online is making salespeople more efficient and giving them more time to do what we really want them to do, which is be consultants. And I think I've been beating that drum for the last four or five years that the crystal ball says that online is going to get better and better. Younger people as they come into the industry are going to use a lot of those tools because they're so used to it being on an app and researching. So we are investing in better information, more information, online being a partner to our customer, assisting them in menu development, assisting them and chefs are curious, they're constantly wanting to learn and constantly wanting to invent. So we're trying to be that partner, that's supplying that information. And again, we continue to add people because we see that for what we do, and it might not work for everybody's business, they want to see somebody who is talking to them and we have a tremendous amount of talent that mans the phone still. And obviously, we could chat, if you want to be just online. So we like to give our customers choices and we think that we found a winning balance for now. It can always change but that really works for our customers and it's driving more volume to all our Chef customers, all our chef OpCos.

Thank you very much.

The next question we have is from Kelly Bania of BMO Capital Markets. Please go ahead.

Hi. Good morning. This is Ben Wood on for Kelly. Thank you for taking our questions. So first we just wanted to dig in a little bit more on the unique customer growth and the placement growth and are there specific regions or markets that are driving that? Or is that fairly consistent throughout your markets? Just hoping you can help us frame how maybe high growth markets are comparing to your mature markets and if those high-growth areas you're investing in how they are tracking against your expectations?

Yes. Thanks for the question, Ben. Yes, we always have – like Chris mentioned in his prepared remarks, we always have in our portfolio a mix of more mature markets like the Northeast and other areas that we've been operating for 40 years. And then our newer higher growth investment markets that we've talked about, as we're coming out of our heavy investment cycle like Florida and Southern California, Dubai, Seattle, and some of our smaller markets like Nashville and Michigan that we're making investments in and we have higher growth. So yes, I mean it's like any portfolio of businesses, where your high-growth markets are going to contribute more to unique customer acquisition, your mature markets, you're growing more through category expansion and growing more relevance with your customers through item penetration, selling more items, as well as growing in the outlying markets, call it the higher income suburbs around the major cities, and that's how you grow in your mature markets. So we have 54 locations in 32 or 33 operating markets now. So there's always a good balance between your more mature markets and then your high-growth markets. And I think we expect that the big investments that we've made in capacity in infrastructure and sales force that we talked about are going to drive a lot of our growth going forward.

Okay. That's helpful. And then just a follow-up on maybe some of the new restaurant openings you're seeing for your core end customers. Do you guys have an estimate on the pace that you're currently seeing in new restaurant openings? And how does that compare to maybe the current levels? It sounds like Chris has mentioned that it was faster than normal potentially but just wanted to make sure I understood that correctly.

Yes, I believe our growth in new markets is evident through our new accounts. Our systems may not distinctly separate new customers from new openings, which might make the numbers a bit unclear. As Jim previously mentioned, we saw a 10% increase in our overall customer base, which includes both brand new openings and many new customers for Chef. Anecdotally, I can share that we are observing significant development. For instance, in Florida, there is remarkable growth in new neighborhoods and buildings, all of which are adding restaurants. Developers are leveraging restaurants as a draw for potential tenants. I notice this trend particularly in the American market, and in Dubai, we are seeing a constant stream of openings. In the U.S., there is still a noticeable shift in where populations are choosing to live, and I wouldn't categorize the current situation as normal—I'm not even sure what normal means anymore. People are working in a hybrid model, and there's uncertainty about whether they will return to the office five days a week. Restaurateurs and developers appear to be aligning with where people are moving, constructing restaurants, apartments, and homes. I don't anticipate this trend slowing down; while anything is possible, it seems to be progressing at a healthy rate.

Great. Thank you very much.

Thanks, Ben.

The next question we have is from Andrew Wolf of C.L. King. Please go ahead.

Hi. Good morning. thank you. I wanted to ask about margins. First the gross margin at Specialty expanded nicely. I think you said 50 bps and I think it was kind of flattish last quarter. Could you just give us a sense of what accounted for the nice increase in the margin? And is it sort of forward buying inflation back or mix or German or just kind of randomness in the inventory management? And sort of a feeling for sustainability?

Yes. Thanks for the question, Andy. I think it just goes back to kind of the improvement we started to drive coming out of the summer last year into September in the fourth quarter. But it's also the fruition of a lot of work that our pricing and procurement teams and our sales management teams have been doing around margin management. We've invested in a lot of tools, a lot of technology, and a lot of focus on margins after we experienced some of that volatility last year. And that's just continued. And so it's everything from reducing errors in inventory management that lead to waste that impact your margins. It's everything from further integration of our acquisitions and driving the cross-sell. Texas is a good example, as we further integrated our sales teams and our inventory with our CW specialty business and Hardie's, the produce business, we've been able to improve overall margins there as we're selling more expensive specialty boxes on their trucks, as we're growing relevance with our customers by having the produce category. And then, obviously it's not specialty related, but we invested and built an Allen Brothers processing plant in Texas, and we're selling more expensive protein boxes on those trucks through our processing facility there. So it's really a combination of things and a lot of really good work by a lot of our teams coming together, and we're just seeing that continue.

Thank you for the insight. Regarding the adjusted expense ratio, it did increase again, although not as much as last quarter. Given the new facilities, there appears to be some unabsorbed overhead, and it seems that some variable costs have not yet been optimized. What is the outlook in this area? Should we expect slow progress as the centers become fully utilized, or are there other aspects of the business where factors like labor inflation are still affecting overall expense efficiency?

No, we discussed this earlier during the guidance. The operating leverage is primarily focused on the latter half of the year, especially in the fourth quarter. We experienced a bit of it this quarter and expect to see more in Q3, but Q4 is when we anticipate significant gains, as we'll fully recover from the large facility expenses linked to those major investments, particularly in the latter half of the year and extending into 2025. Similarly, our capital expenditures are more concentrated in the first half of the year due to project completions. The operating leverage related to expenses is skewed toward the latter half of the year, and the guidance reflects this. It's essentially just that. Typically, in the fourth quarter, we experience the highest operating leverage because of the robust revenue potential compared to the rest of the year.

Okay, got it. Thank you. That’s it from me.

Thanks, Andy.

The next question we have is from Ben Klieve of Lake Street Capital Markets. Please go ahead.

All right. Thanks for taking my questions and congrats on a nice quarter here. Jim, I had a follow-up question for you. You noted that you are seeing some customers eating nice burgers instead of nice steaks. And I'm wondering if you can comment a bit on kind of the impact of the beef complex on your business, specifically has the kind of persistent increase in beef prices really flowed through your financials as you would expect? And then also looking forward, as the price of beef versus other proteins really just continues to widen, is there anything to call out on a forward-looking outlook specifically related to beef?

I believe the first thing to note is that beef prices overall haven't increased as much as anticipated. While we reported about 4% year-over-year price inflation, prices have been relatively stable compared to the first quarter and the second half of last year. Many middle meats and cuts have actually seen some price moderation recently, and even the higher-end options have softened a bit in the last couple of months. Therefore, the year-over-year figures might be misleading when considering the current market conditions, as we are not witnessing significant spikes in prices. A considerable factor contributing to this situation is the lower retail demand, which directly impacts beef pricing.

Yes. To provide more insight into our customers choosing between a hamburger and a steak, it's important to note that steakhouses represent a small fraction of our total business. Steakhouses are unique in terms of why customers choose to dine there. However, we supply a vast amount of protein, particularly beef, to our numerous customers who are quite innovative. This is why we have advanced cutting facilities and talented professionals to create various options, whether it's changing a steak's weight or offering different cuts to mix and match menus. This flexibility can provide better value options for diverse types of customers. We still observe strong demand for our prime, Wagyu, and Japanese steaks. While demand may not be as robust as it was during the post-COVID surge, we anticipated that decline, seeing it as a unique spike in consumer activity. We are returning to more typical patterns, which I've experienced before. That's why we offer multiple premium options and customized grinding services. We also provide a variety of cuts and smaller portion sizes for those looking to maintain quality while slightly decreasing the price per steak, as often seen with petite filets or increased sales of skirt steaks, among other cuts suitable for customers' menus. Our primary customer base, which consists mainly of independent establishments, is incredibly resourceful and will continue to explore ways to attract customers while maintaining profitability at a price point suitable for their clientele. Although media coverage about economic changes and a slowing economy may impact perceptions, our customer base primarily targets the higher-end market, which is less affected by such changes.

Got it. Got it. Very helpful from both of you. Thanks for the color there. Thanks for taking my question. I'll get back in queue.

Thanks, Ben.

Thank you. At this time, there are no further questions. And I would like to hand the call back over to Chris Pappas for any closing comments.

Sure. Well, we hope everybody is having a great summer and we thank everybody for joining us on our call, and we look forward to everyone joining on our next quarter. Thank you very much.

Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.