Good day and thank you for joining us. Welcome to the Papa John's Second Quarter 2024 Conference Call and Webcast. I would now like to introduce your speaker today, Stacie Shirley, Vice President of Investor Relations. Please proceed.

Good morning, and welcome to our second quarter 2024 earnings conference call. This morning, we issued our second quarter earnings release. A copy of the release can be obtained on our Investor Relations website at ir.papajohns.com under the News Releases tab or by contacting our Investor Relations department at [email protected]. Joining me on the call this morning are Todd Penegor, our President and Chief Executive Officer, and Roddie Waller, our Chief Financial Officer. Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from these statements. Our forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our SEC filings. In addition, please refer to our earnings release for the required reconciliation of non-GAAP financial measures discussed on today's call. Lastly, let me thank you in advance for asking only one question and getting back in the queue for more follow-ups. And now let me turn the call over to Todd.

Thank you, Stacie, and good morning, everyone. I am honored to be with you today. As I begin, this journey is to see that Papa John's brand is synonymous with delivering the best pizza in the industry, and I am excited to learn from and work with our Board, Ravi team members, and our franchise community to build on this legacy. As we move forward together, our number one priority will be to create great experiences for our customers and employees in our restaurants while also ensuring the restaurant economic model is very strong. My immersion into the culture is well underway. We have a passionate team, a system committed to ensuring we become the best Papa John's we can be fitting with the pizza business. You'll hear some of this from Ravi today because they have begun to share with our organization. I believe in winning as a team and will be collaborative yet quick and decisive. As we focus on growing this premium QSR brand together, we need to move quickly to build on our strengths and execute today as we evolve to be even better tomorrow. I've enjoyed talking with our stakeholders this past week and look forward to meeting you all in the coming months and updating you on our progress. Ravi, I'm going to turn the call over to you to discuss the current state of the business and our second-quarter results. But before I do, I want to give you my sincerest thanks for the work you have done over the past five months to lead this organization through this transition period. We are deeply grateful for your leadership and dedication to Papa John's. Thank you, Ravi.

Thank you, Todd, and welcome to Papa John's. It has been a pleasure getting to know you over the past few weeks. I look forward to partnering with you as we unlock the full potential of Papa John's and together continue to create value for our stakeholders. Turning to our results, as you read in our earnings release this morning, the challenging sales trends we experienced in the first quarter within our North America restaurants have persisted into the second quarter. Our core product pizza and the quality of our brand remains paramount. The macro environment continues to be challenging as consumers pulled back on their spending and increased focus on value. Despite these challenges, I'm very proud of the team's discipline in managing the P&L, which helped to completely offset the softer sales in the second quarter. On today's call, we'll provide context for our results and highlight the decisive actions we are taking to sharpen our focus, improve unit economics, drive unit development, and provide an excellent consumer experience. In the second quarter of 2024, North America comparable sales were down approximately 4% from a year ago, similar to our first quarter. This was primarily driven by lower transactions as continued growth in our aggregator channel was more than offset by a decline in our organic delivery. Additionally, a lower estimate year-over-year shift in channel mix created an approximate 100 basis points headwind to our comparable sales in the third quarter, driven by the relatively profit-neutral impact of reduced delivery fees. While sales were solid with customers buying two or more pizzas, we saw lower transactions in our lower ticket items. In this current economic cycle, consumers have become more deliberate in managing their overall spending and are showing a preference for brands that are offering compelling value. While we know we offer attractive value for our customers, our marketing and innovation efforts have primarily focused on premium product offerings at premium price points. As a result, our price value perception is not as strong as it should be in this unique environment. In the second quarter, we began shifting our efforts and investments to focus on initiatives that improve our value perception while still protecting our brand positioning. We are being thoughtful and intentional in our approach by focusing on opportunities for modest transactions without placing unnecessary pressure on store-level profitability. We believe this is critical and are aligned with our franchisees on this core approach. There are three opportunities we are focused on in the balance of the year geared towards driving sustainable, profitable growth over the long term. First, improving our value perception; we believe showcasing our Better Pizza and better ingredients at appropriately valued price points will improve our overall value perception and drive better transaction trends. For example, in June, we launched our cheeseburger pizza, a fan favorite limited-time offer at an attractive $9.99 price point. We also began to focus on our $6 mix-and-match value platform, which is our pairings, and recently launched our extra-large New York Style pizza for $10.99—a more competitive price point than last year. We have been pricing our offerings with competitor offers within the QSR pizza segment, and over the past eight weeks, we have seen improvements in our value perception. This gives us confidence that if we maintain an appropriate balance of value offerings and premium products, it will lead to improved sales trends over time. We know that driving trials of our product is critical to winning consumers' wallets in the future. At our company-owned restaurants, we are also testing various value offers in certain markets to analyze the repeat rates, identify potential basket starters, and larger basket motivators. These test-and-learn opportunities provide us with data points to help our entire system improve. Second, reigniting and expanding our innovation pipeline. We are expanding our pipeline with unique and differentiated offers focused on grades. Over the past 40 years, Papa John's has built its brand on better ingredients and better pizza, and we have a strong pantry of consumer-tested innovations. Our teams are actively collaborating to unveil new opportunities to improve overall customer satisfaction, enhance craveability, and increase visual appeal to further improve the strong value proposition Papa John's provides. We attended tastings this past week as our teams presented various products at different stages of development. The validation has been fantastic. This is one of the best parts of the job, and I must say we can't wait to share some of these innovations over the next year—they are nothing short of absolutely delicious and must-have products. Third, improving our digital and loyalty experience. We are focused on improving conversion and reducing friction within the customer experience. Most of our sales occur through digital channels, with nearly one-third of our sales occurring through apps where customers tend to purchase more frequently. We are actively identifying ways to streamline the ordering journey and improve the overall user experience. For example, in July, we rolled out an app update that improves call to actions, navigation, elevates imagery, and more prominently features loyalty rewards. We are also actively evolving our holistic digital platform to improve conversion, drive repeat transactions, and streamline customer insights. In addition, we are maintaining a strong focus on the customer experience in our restaurants, which we know is another key pillar in customer retention. In the second quarter, our restaurant teams continued to improve out-the-door times, leading to higher overall customer satisfaction scores year-over-year. I'd also like to touch upon our recent initiatives to enhance our national marketing efforts and effectiveness. In the second quarter, we launched our all-new brand platform, 'Better Get You Some,' which is a modern refresh of our brand visuals and messaging. Since the launch, we have seen quarter-over-quarter improvement in our aided brand awareness along with a higher intent to purchase. We are now coupling this new brand platform with value messaging to ensure that we are best positioned to convert intention into sales in the third quarter. We are making incremental investments to test the marketing messages and assess the impact when combined with our new national brand platform to drive repeat purchases and stronger conversions. We anticipate these investments will place additional near-term pressure on company-owned restaurant level margins, but the insights we gain will benefit our entire system over time. Now moving to an international perspective, our cross-functional teams are executing at a high level. In the second quarter, we experienced an improving comparable sales trend, which was approximately flat compared to our competitors from our Middle East region. Excluding this region, our international comparable sales were up approximately 3% from a year ago. The number one focus of our international transformation initiatives has been to set the right foundation to support and drive long-term success. In particular, our team has made significant progress in advancing our efforts to optimize the UK business model. In the second quarter, we closed 43 underperforming company restaurants in the UK and today we have refranchised 60 restaurants. As a result, only 13 company-owned restaurants remain in the UK market. Based on these actions and the continued operating success of our franchisees, we expect the UK market to be profit-accretive in the second half of this year. Our attention is now turning toward growth, specifically how we drive higher average unit volumes (AUVs) and partner with developing franchisees in this important market for Papa John's. Additionally, our new international hub leaders are doing a fantastic job focusing on our most significant markets, serving in partnership with local franchisees on local marketing strategies, and building a foundation of strong, locally relevant brands that are profitable restaurants. For example, in the second quarter, we introduced our biggest international marketing campaign in Papa John's history with the launch of Federal Pizza. This insight-led innovation integrated with our 'Better Get You Some' campaign and local programming led to improving global results across each regional hub. The work these teams are doing provides valuable insight that will inform our approach to operations, product innovation, and market development across the globe. All of the initiatives I have discussed today are designed to drive unit-level productivity, which is the primary driver of unit development. Over the past five months, I've had the opportunity to spend additional time with some of our larger developing franchisees. While comparable sales remain challenged, the profit-neutral shift in channel mix, combined with the loss of lower-margin transactions has had less of an impact on their overall profitability. We have multiple initiatives in place to deliver real-time cost savings throughout the development process in addition to greater contractor supplier and equipment optionality based on market and anticipated restaurant volumes. Our teams have made substantial progress this past quarter, and now we are hearing from some of our developing franchisees that their build costs are much more in line with industry norms. Solid unit economics are attractive development incentives, and lower build costs are resulting in continued growth in our gross North America openings, which are on track to be 15% to 20% higher than the prior year's gross openings. It is also important to point out that many of our new restaurants that have opened over the past two years are producing AUVs that are at or higher than the system average of $1.2 million. These AUVs for our gross openings are significantly higher than those of the closures. Now to dive a little deeper into our second quarter results and outlook for the second quarter of 2024, global system-wide restaurant sales were $1.2 billion, down 1% in constant currency. The lower sales were largely attributable to lower North America comparable sales, partially offset by a 2% net unit growth, both on a trailing 12-month basis. Total revenues for the second quarter were $508 million, down 1% from a year ago, primarily reflecting a $9 million decrease in North America commissary revenues due to lower commodity prices in the quarter and to a lesser extent, lower transaction volumes. A $3 million decrease in domestic transaction volumes was somewhat offset by a higher average ticket. Partially offsetting these revenue declines was higher international revenues, primarily driven by the net impact of the UK company-owned restaurants versus the prior period. Turning to profits, adjusted operating income for the second quarter of 2024 was $38 million, up 4% from a year ago. The higher year-over-year adjusted operating income was a result of higher North America restaurant margins as we continue to drive cost discipline across our operations as well as domestic commissary margin improvement. In addition, the second quarter benefited by approximately $2 million from local advertising sales mix. These positive impacts were partially offset by a roughly $3 million impact related to the operations of our UK franchisee acquisitions. When taking into consideration a second quarter 2024 operating loss and approximately a $2 million increase in G&A expenses as we continue to invest in our restaurants and technology platforms, we also accounted for the consolidation of the acquired UK restaurants and lower North America comparable sales. Adjusted operating margin for the second quarter was 7.6%, up from 7.2% a year ago, primarily reflecting improved margins at our domestic company-owned restaurants and supply chain. Overall, our domestic company-owned margins improved approximately 130 basis points compared with the prior year's second quarter. Driving the improved margin was an approximate 140 basis point benefit from a higher ticket and an approximately 30 basis points benefit from lower food basket costs as we continued to see relief in cheese and milk prices. Partially offsetting these benefits was an increase in labor costs of approximately 30 basis points as we optimized the model and delivered an excellent customer experience while also adjusting for shifts in channel mix and consumer demand trends. Over the trailing four quarters, our company-owned restaurant profits have increased significantly as we place a stronger focus on unit economic improvement. Moving on to cash flow and our balance sheet. For the first six months of the year, net cash provided by operating activities was $42 million. Free cash flow was $13 million, reflecting unfavorable changes in working capital and timing of cash payments for income taxes, partially offset by a $6 million decrease in capital expenditures. We continue to operate with ample liquidity, which totaled approximately $260 million in cash and borrowings available under our revolving credit facility and a gross leverage ratio of 3.1 times. Overall, our teams around the globe continue to take a disciplined approach to running the business. We've improved restaurant level margins and operating profits through cost normalization, revenue management, and labor optimization in the quarter despite the lower sales. While our efforts to date have had a positive impact on our bottom line, we recognize there is more work to do. Looking at our outlook for the balance of the year, for the first four weeks of the third quarter, North America comparable sales were down approximately 6%. We anticipate comparable sales to remain under pressure and be down mid-single digits throughout our third quarter. We then expect comparable sales to begin sequentially improving into the fourth quarter as seasonal demand increases. Our value perception continues to improve from the initiatives I just discussed, and we execute on our strategy for the automated comps to be down 3% to 5% as we balance transaction trends and unit economics. Internationally, we anticipate full year 2024 international comps will be down slightly as we remain in a dynamic environment. We are pleased with the progress of our transformational initiatives and expect this segment of our business to be a profit contributor. Going forward, we anticipate 2024 adjusted operating income to be between $135 to $155 million, a broader range than we have previously guided to as our team's focus on executing against our strategy, maintaining flexibility on pricing, and increasing testing to improve North America transaction trends. While our first half operating profit suggests we can maintain our previously-stated adjusted operating income guidance, we believe the additional investment flexibility is oriented to accelerate actions to drive long-term growth. We continue to expect better profits from three areas: the increase to our fixed commissary margin; our international transformation initiatives, notably the closure and refranchising of the UK restaurants we mentioned earlier; and continued growth in North America development. However, these benefits will be somewhat offset by lower North American comparable sales and higher G&A expenses. While higher company-owned restaurant margins had been a tailwind to adjusted operating income during the first half of the year, we are anticipating lower year-over-year margins in the second half as we reinvest some of our first half earnings into improving transactions. We also expect to hold pricing within our company-owned restaurants despite increasing commodity costs relative to last year in the second half of 2024, particularly in cheese and protein. In terms of other non-operating expense items, we expect net capital expenditures to be between $75 and $85 million and our tax rates to be between 23% and 26%, all consistent with our prior guidance. From a development perspective, the North American market is our most accretive development for Papa John's, and we remain committed to accelerating the expansion of our domestic footprint moving forward. Through the first six months of the year, we've opened 31 new restaurants and closed 17, resulting in a total of 14 net new North America units. This brings our total North America restaurant count to 3,447. For fiscal year 2024, we expect to open more than 100 new restaurants, but the closures of underperforming units could be slightly higher than originally anticipated, although well within historical norms. As such, we anticipate net new openings in 2024 to be between 45 and 65 restaurants. As a reminder, the AUVs of new openings are significantly higher than our anticipated closures. From an international perspective, through the first six months of the year, we have opened 79 restaurants on a gross basis. These new restaurant openings were offset by 116 closures, primarily in the UK, certain Middle East markets, and China. This brings our total international restaurant count to 2,436. Our regional teams are doing an excellent job engaging with franchisees in the local markets, and we now expect gross openings to be at the higher end, if not exceeding our current guidance of 100 to 140 new international restaurants for fiscal 2024. We continue to review the performance of our international franchisees, and while the vast majority of strategic closures within the UK market have been completed, we may initiate additional strategic closures in other regions to improve marketplace health. As such, our net openings could be impacted by the closure of underperforming locations to strengthen our franchisee base and enhance long-term profitability. Finally, as we look to the longer term, we see significant opportunities to drive franchisee health and overall profitability.

Thank you, Ravi. In summary, we are pleased with our improved restaurant level margins and profitability in the second quarter, which completely offset the sales shortfall for the quarter. Our brand and core product remain in demand in the highly competitive pizza category, but we know there's more work to be done to realize the full potential of the Papa John's brand. We are sharpening our focus, investing in digital, and accelerating development through improved economics. We are also evolving our marketing to ensure we meet consumer expectations for value by prioritizing customer experience. Franchisee success and operational excellence are critical for Papa John's continued growth and value creation. I am excited to be part of a culture where people feel empowered, valued, and appreciated to be their very best. I also look forward to building a strong and collaborative partnership with our franchisees to help attract new franchisees to Papa John's and to build an even stronger brand. Our team here at Papa John's has set up an aggressive plan to immerse me in the business over the next several months. My plan is to come back to all of you, and we are ready to discuss our amplified, differentiated position and unlock future value for Papa John's and all of our stakeholders. At this point, we'd like to open the call for any questions you may have. Thank you.

Our first question comes from Jim Salera with Stephens, Inc.

As mentioned in your question on timing in Ravi, I wanted to dig into the trends in the third quarter. Rob, you mentioned in the first four weeks down 6%. Is there a reason that we should expect maybe a little incremental lift in 3Q just given some of the innovations you have more medium behind the Papa pairings and the marketing automation for some of your value offerings?

Good morning, gentlemen, and thanks for the question. As I showed up, we're really focused on three things to continue to drive the long-term run rate of the business improvement versus like, as you talked about, improving the value perception. And that is by bringing our pop-up earnings and our New York Style, which are both fantastic price points addressed in the business. I hope you have the app downloaded and have seen how we are enhancing the digital experience. We are really excited about those two elements of the business. But what we'd say is that what we're seeing in the consumer data is that consumers are more value-focused right now. So we're trying to take a balanced perspective in terms of the second half for the year, ensuring we find our full balance of sales, comps, focus, transaction trends, and unit economics.

Okay. Now if I can follow up on the digital piece, some of your competitors have seen frequency growth after making tweaks to the royalty structures of their digital offerings, particularly lowering the threshold to redeem for items rather than saving up for rewards. Is that maybe something that we could see in the near term in the back half of the year that could add some incremental value and provide a lift alongside the other market activations you guys are going on?

Jim, as I've been here for only a week, we've had a number of great sessions with them. We came out of the gate right away talking about innovation, second, making our digital experience a priority, and third, making sure our loyalty strategy was front and center. We believe that getting consumers into our app will drive higher frequency. We think it's stickier.

And to David's point, we believe that in this value-conscious world we are living in, driving stronger or immediate gratification could present real benefits for our franchisees and help drive folks into 1P, which is a very important project.

Our next question comes from the line of Sara Senatore with Bank of America. Your line is now open.

Great. Thank you very much. I have a two-part question. First, regarding the improvement in underlying consumer metrics, value proposition, brand awareness, and service speed—how long should it take for that to translate into transaction growth? I would have expected to see some improvement in June versus what we saw in July, and we're not really seeing that. So just trying to understand how long it takes for these kinds of initiatives and improvements to translate. And then also related to that, I know you've been testing some value actions in your restaurants already, but you didn't see any difference in the comp trajectory for company-operated versus the broader system. So I'm wondering how you get these initiatives right.

I'll start on this. We've had a strong value message. The good news is the team has made adjustments regarding our New York Style extra-large pizza at $10.99, which is great value. We need to continue to be out there with appropriate pressure both nationally and locally to make sure that the consumer understands our great value repeatedly. This will build over time. I'll turn it over to Ravi to talk about the tests; we've got some good tests underway in the company restaurants, but it's just a little too early to have all of the certain learnings.

Just regarding your question around progression throughout the quarter, the underlying or the baseline comp trend from the prior year did show sequential improvement. We see that improvement fairly directly correlated with enhancing our value perception. We're comping in Q3 plus three from the prior year. We are actively focused on taking actions that improve repeat rates, which means long-term gains for frequency.

The focus of our programs immediately is to get people to show up more often at Papa John's, and we are trying to ensure we drive transactions to get more people into the restaurant. We know if we have them show up, we can train them on the entire menu. We're trying to do this in collaboration with the franchise community in concert with the restaurant economic model teams who are working hard on this. I feel like we've got solid plans in place to start to build momentum moving into next year.

Thank you. Our next question comes from the line of Peter Saleh with BTIG. Your line is now open.

Thanks for taking the question. I wanted to ask about the development costs. It sounds like you made some progress on reducing some of the costs, which were above where you wanted them to be. Can you elaborate a bit on what you're seeing regarding development costs, especially in the most recent build, and whether you saw a reduction in those costs? Where specifically are you seeing savings?

Thanks for that question. We are taking a disciplined approach to how we are engineering development costs. As I shared in the Q1 call, we had thrilling architectural designs to ensure we are building a box that is both effective for service and cost-effective. We've been negotiating new deals with our general contractors, which has absolutely delivered some benefits. We are focusing on having the right optionality regarding our furniture and fixtures. All three of these elements are critical, and we are seeing progress. We've shared with our franchisees in the last month that another wave of cost savings will deliver results. It's a bit too early for me to provide specific numbers, but I can affirm that our costs are coming down year-over-year. I'm hearing from our larger developing franchisees that their build costs are coming much more in line with industry norms, which is a solid sign.

I've been pleased to see the work that’s underway regarding value engineering. We are making significant progress and committed to continuing that progress quickly. In the interim, we will look to have the right incentive plans in place to bridge the gap until we align those costs to ensure we keep opening new restaurants and build a strong pipeline for the future.

Understood. And then, Todd, just to clarify regarding any potential changes to the rewards program; is this something more of a 2025 event, or could we see it in the latter half of 2024?

I'm relatively new to the role, Peter, and I believe it takes time. We have work to do to optimize what that program looks like, and then to undergo the internal tech work to ensure the platform is set up to deliver seamlessly for the consumer. Some of that work has already begun, but Ravi may have more to add.

We aren't taking a waterfall approach to how we evolve our digital platforms; we are operating in agile ways. A recent example is that we put loyalty rewards front and center for consumers on the homepage. It immediately informs users if they have rewards they can redeem. This is just one example of how we are continuously adapting and improving the experience for our users.

Our next question comes from the line of Eric Gonzalez with KeyBanc. Your line is now open.

Good morning. Your question seems to imply that the international business has really turned the corner, particularly outside the Middle East and China. Could you discuss where some of the upside is coming from and maybe address those problem areas such as the Middle East and China and how you see those markets evolving over the next few quarters? Also, it might be helpful if you could discuss the content in the UK specifically given the size of that market and its contribution to profitability. Thanks.

I'll address your question, Eric. This quarter in international is a great example of how we are taking a thoughtful and structured approach to our international transformation. We now have general managers based globally in key markets like the UK and Dubai. What this has done is brought the Papa John's management team much closer to consumer centricity and a deeper partnership with franchisees. We are improving our insights into menu innovation and enhancing store formats that work particularly well. Our strong performance in Latin America is a good sign as well. We are also collaboratively discussing best practices across the globe. In the UK, we are four quarters into this overhaul. This quarter really represented the culmination of closing 43 underperforming company restaurants and refranchising 60 locations, shrinking the market significantly but in a strategic manner to set up our franchisees for better unit economics. As we focus on the results from stores changing hands, we are seeing healthy increases in comparable sales performance. I am now focusing on setting up our innovation engine to provide compelling value perception while maintaining a premium positioning. We are also increasing attention on markets like China because there is plenty of opportunity to unlock there. I will be meeting with our international team shortly to plan for strategic development for 2025 both on the menu and from a restaurant format viewpoint.

Thank you. Our next question comes from the line of Alexander Slagle with Jefferies. Your line is now open.

Thanks. Good morning. I wanted to clarify the margin figure for international in the second half, given all the other changes. How should we think about the international margins for Q3 and Q4?

The easiest way to frame this up is to consider the UK. We're moving back toward our franchise model, which should allow us to return to more historical levels or slightly higher on the margin structure. The challenges previously facing international margins were tied directly to the company ownership structure in the UK.

Our next question comes from the line of Jim Sanderson with Northcoast Research. Your line is now open.

Thanks for the question. I wanted to follow up on the promotion you had in the market, the $9.99 Cheeseburger promo, which didn't meet expectations on yield. I'm trying to reconcile the value perception gains you've reported with the deceleration in same-store sales through July. Any feedback on how to think about it?

We did consider the ticket size when the Cheeseburger was promoted. It was healthy and accretive to our average ticket volume. While the offer was at a strong $9.99 price point competing with other items, it allowed better access for consumers with limited budgets, encouraging more transactions. What we observed was sequential improvement in our metrics on a two-year basis. While the Cheeseburger promotion increased excitement and habit building, ensuring consumers keep us top of mind, we are also focusing on premium developments like the introduction of other value options.

So just to follow up: you said you saw sequential improvement on a two-year stack, so you have no concerns with cannibalization or consumers trading down to the promotion?

Correct. We are actually observing very healthy tickets across promotional activities. All three promotions have netted positive results to our average ticket, showing strong demand. The goal is to ensure we provide great value while allowing consumers the freedom to configure their meals, mitigating potential cannibalization and driving a robust ticket size.

I think it would be helpful for Jim if we discuss a few leaky buckets. We've noted plans to address those; let's reiterate where those buckets were in the quarter.

We have spent time diagnosing the business. Strong performance has been observed when customers are buying for larger social occasions. We're seeing healthy performance in those order sizes. The areas we need to address include occasions where consumers only purchase one pizza or smaller add-ons. This has provided us insights into how to adjust our offerings, helping us better navigate in a price-sensitive market.

Thank you. Our next question comes from the line of Fred Wightman with Wolfe Research. Your line is now open.

Just wanted to follow up on the occasions you were discussing. When you talk about lower income consumers, do you think that need for improved value perception stems from relative positioning versus the pizza category or against QSR? Where are you seeing the biggest gap?

We see pizza as a broad category catering to everyone. Pizza customers have diverse occasions for their purchases. When positioned in a value-focused occasion, smaller purchases tend to yield a lesser impulse buy. This has led us to evolve our marketing strategy, emphasizing compelling promotions such as our $10.99 large pizza offer to restore value perception. This aids in bridging the gaps to retain customers worried about value perceptions.

The pizza category is expansive, and we face challenges in value perception relative to our competitors within that segment. We need to thrive within the pizza category, ensuring our relative value against peers is robust. We keep an eye on all competitive dynamics as we enhance positioning across branding about the need for higher value.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.