CHUY (2020 - Q4)

Good day, everyone, and welcome to the Chuy's Holdings Fourth Quarter 2020 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode, and the lines will be open for questions following the presentation. On today’s call, we have Steve Hislop, President and Chief Executive Officer; and Jon Howie, Vice President and Chief Financial Officer of Chuy's Holdings, Incorporated. At this time, I will turn the conference over to Mr. Howie. Please go ahead sir. Jon Howi

Thank you, operator and good afternoon. By now everyone should have access to our fourth quarter 2020 earnings release. If not, it can be found on our website@www.chuy's.com in the investors section. Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward looking statements. These forward looking statements are not a guarantee of future performance, and therefore you should not put undue reliance on them. These statements are also subject to numerous risk and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. With that out of the way, I would like to turn the call over to Steve.

Thank you, Jon. Good afternoon, everyone. And thank you for joining us on the fourth quarter earnings call today. I hope everyone is staying safe and healthy. I'm pleased with the results of our fourth quarter, which like most of 2020 required us to adjust our business on the fly as a result of a changing external environment. The resiliency and flexibility of our team resulted in sequentially improved comparable sales in the fourth quarter compared to the third quarter and adjusted earnings per share of $0.19. This despite the closure of a number of our dining rooms in November and December due to the heightened COVID-19 restrictions during what is typically a very productive time to be here for our restaurants. Despite some weather interruptions, we continue to be pleased with the overall direction of our first quarter sales trends, as in dining restrictions have been relaxed in many areas. While we are cautiously optimistic for a steady return to a more normal operating environment, our teams will continue to stay focused and nimble in an external environment that remains unpredictable. Turning to the fourth quarter profitability. Our continued focus on cost management and operating efficiencies resulted in an approximate 10% improvement in restaurant level profitability compared to the same quarter last year. As our margins improved 600 basis points despite an approximately 23% reduction in sales due to the pandemic. We are confident that even as we ramp up dining room operations, and return to a new to a more normalized level of operations, our efforts throughout the year we'll have a lasting positive impact on our profitability. Again, none of this would have been possible without the dedication and hard work our team members in serving our guests all at the same time keeping them safe and healthy. Since the onset of the pandemic, there have been three key pillars that have resonated with our guest’s safety, convenience and value, which continued uncertainty even as we enter 2021, we believe these pillars [ph] remain crucial to not only guide us through the current environment, but also help our company to emerge stronger when this pandemic subsides. Let me quickly update you on these pillars. Safety continues to be at the forefront of all of our activity. And as we've spoken about in the past, we're investing in technology to help us not only improve the in-restaurant peace of mind for our employees and guests, but also create efficiencies that can help our business long term. Along with a pay-at-the table device that we noted last quarter, we continue to look at other payment methods, including QR code payment and pay-by-text solutions that we are testing in several of our stores. While early feedback has been positive, we will continue to look for ways to minimize contact points with our servers, while we still provide the best in-class hospitality that Chuy's is known for. Convenience is also an important factor during this uncertain time, and our off-premise business has given our guests additional opportunities to enjoy our food. Our off-premise business remains strong during the fourth quarter, maintaining a mix of approximately 33% of revenues and at a rate of more than double our pre-COVID-19 levels. While this mix will likely receive as our dining room capacities return to historical levels. We believe we can continue to hold off-premise mix in the mid-20s rate due to the enhanced level and convenience and how well our food travels. All-in-all, we believe our guests appreciate the unique appeal of a high quality made from scratch food and drink and we continue to enjoy strong demand of our offerings through all current avenues of our business. Lastly, we continue to grow our value by not only streamlining our menu, but also offering convenient family meal and beverage kits. While we have no plan on making major changes to our menu at this time, we expect to add back several popular items and restarting our digital marketing events to further drive awareness on our current unique offerings. Turning to development for fiscal 2021, we are targeting between four and six new restaurants, one of which opened in February in Pembroke Pines, Florida. The operational changes we have made it as a result of COVID have served as a learning tool for our development team. As we look at our long term development plans, we would expect to increase use of our smaller prototype to provide the same unique dining experience for our on-premise guests, but also better allows us to execute increased optimism for the safety and convenience of our guests. With that, I'll now turn the call over to our CFO, Jon Howie to discuss our fourth quarter results in greater detail.

Thanks Steve. Revenues for the fourth quarter ended December 27, 2020 decreased to $78.7 million compared to $102 million in the same quarter last year, primarily driven by traffic declined due to COVID-19, including the loss of 145 operating weeks due to the various closures of restaurants during the fourth quarter of 2019 and the first quarter of 2020. In total, we had approximately 11,196 operating weeks during the fourth quarter. Comparable restaurant sales decreased 18.3% during the fourth quarter and included a 24.3% decrease in average weekly customers partially offset by 6% increase in average check .Our off-premise sales remained solid during the fourth quarter at approximately 33% of total revenue compared to 14% in the same period last year. Please refer to today's earnings release for our fourth quarter sales cadence by period. Turning to expenses. Cost of sales as a percentage of revenue decreased 170 basis points to 24.4% primarily as a result of switching to a limited menu and eliminating our complimentary buffet style -- buffet style chips and salsa Nacho car partially offset by 70 basis points increase in the cost of beef and 20 basis points increase in the cost of chicken. Overall cost commodity inflation for the fourth quarter was approximately 2.5%. Based on current trends, we are currently expecting a modest commodity inflation rate of 1% to 2.5% for fiscal 2021. Labor costs as a percentage of revenue decreased approximately 600 basis points to 29.7%, primarily due to reduction in hourly employees and store management personnel as the company has transitioned to an off-premise heavy operating model with reduced dine in capacities coupled with the hourly labor rate deflation of approximately 3.6% during the quarter. Operating costs as a percentage of revenue increased 50 basis points to 15.7% compared to last year's quarter, primarily due to increases in delivery service charges and to-go supplies as a result of the growth in off-premise business, partially offset by lower credit card fees, insurance costs and liquor taxes. Marketing expense as a percentage of revenue remained relatively flat at 1.1%. As we resume our digital marketing efforts, we expect our marketing spin will increase to a crushing 1.2% of revenues for the first quarter. Occupancy cost as a percentage of revenue increased 100 basis points to 8.7% primarily as a result of the sales key leverage of fixed occupancy expenses. General administrative expenses increased to $6 million in the fourth quarter from $5.7 million in the same period last year, primarily driven by discretionary bonuses as a result of the improvement of the restaurant level operating margin above industry standards during the COVID-19 pandemic partially offset by reduced travel, professional and legal fees and other expenses as a result of cost saving measures in response to COVID-19. In summary, net income for the fourth quarter of 2020 was $1.8 million or $0.09 per diluted share compared to a net loss of $1.4 million or $0.09 per diluted share in the same period last year. In comparison during the fourth quarter of 2020, we incurred a $2.8 million in impairment in close restaurant costs as well as a $0.1 million in deferred tax adjustment in conjunction with the Cares Act. During the fourth quarter of 2019, we recorded an impairment and closure costs of $6.3 million. Taking all that into account, adjusted net income for the fourth quarter of 2020 was $3.9 million or $0.19 per diluted share compared to $3.3 million or $0.20 per diluted share in the same period last year. Moving to our liquidity and balance sheet, as of the end of the quarter, we have $86.8 million in cash and cash equivalents, no debt and 25 million of availability from a revolving credit facility. With ample liquidity and strong financial footing, as well as positive sales trajectory and resilient team members, we believe we have the means to navigate being incurred at the current environment. Before I turn it back over to Steve, I'd like to quickly discuss our limited outlook for 2021. While I'm not in a position to provide you with our usual financial guidance, I would like to give you some directional metrics that would be helpful. As Steve mentioned earlier, we will be opening four to six new restaurants in 2021. We expect net capital expenditures net of tenant improvement allowances of 15 million to 25 million. And lastly, we expect restaurant pre-opening expenses of 2 million to 3 million in 2021. With that, I'll now turn the call back over to Steve.

Thanks, Jon. While there are still a lot of uncertainty surrounding the pandemic, we believe the work we've done to date has positioned us to be a stronger and more efficient company. We are cautiously optimistic about the strength of our business, and remain nimble to the ever changing market conditions as we begin 2021. We will also remain prudent with our capital expenditures and ensure that everything we do going forward will be done with the health and safety of our team members and guests at the front of our minds. With that, we're happy to answer any questions. Thank you.

We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from David Tarantino with Baird. Please go ahead.

Hi, good afternoon. Just a question on sort of the quarter-to-date trend just so that we understand the dynamics. Thank you for giving us the number for the first period. But recognizing the second period might have had a lot of disruption from weather. I'm just wondering if you could give us an update on what you've seen through the through the whole period so far.

Yes, we -- like we said, we started off rather well in period one and the first two weeks of period two before this historic, cold front and snow that came through Texas and a little bit in the southeast. We were affected approximately, bought a million and eight probably from that in sales. And then in those two weeks. And then we bounced back that following week with a very strong weaker sales, because a lot of people still didn't have power to pull people down here. So we did bounce back that other ones and the trend lines are doing fine right now.

And so I guess, Steve or Jon, I mean, could you maybe just clarify and what that means, in terms of what your comps have been quarter-to-date, or if you want to talk about maybe what's the exit rate after the weather has looked like, just to give us a sense for how the business is running?

So quarter to say, if we're looking at that would be right around 19% down. And like we said a lot of that a lot of that is from those two weeks. We had some as you can see a better, better trend line in January, and then it was backwards in February because of that, but it's come back strong since then.

Right. Perfect. Thanks. Thank you for clarifying that. And then Steve my question really is kind of on the longer term outlook related to unit growth. And I wanted to see if you could maybe elaborate on the smaller prototype you mentioned, and that being playing a more prominent role. And then also, perhaps, kind of talk about the strategy on site selection and, and how you're planning to approach kind of getting back to the pace of unit growth that you've talked about in the past double digits, is that going to be more about kind of growing within your current footprint or, and kind of in-selling? Are you thinking about new markets and related to that, if you could just kind of update us on the site selection tool that you're using as your approach this?

Well those were good five questions. Good job. The first thing is, is a small promo, it's basically, we started in and that's really will start actually in 22 August. I mean 21 other -- we don't know because all the stores were opening this year, the four to six are ones that we had in the pipeline for last year. And they're different sizes. And again, the prototype is just, we still love hermit crab. And so we'll still be doing a lot of that, but the smaller prototype will be in that round, 55, 5600 square foot range, a little bit more enhanced to go area, and this packaging area are probably a little bit larger patio. But you'll love it. And, we're expecting some good sales out of that, but it's obviously less employees to work at specifically in the front of the house. And, as we've mentioned in the past, and correct me, if I stop me if I missed any of these questions that you had, we're looking at like four to six this year. And I think we've said six to eight the following year, then you'll see us at the single the low double digits from there on out, probably starting back in 23. And we're on that as far as where we're going to be going right now, we'll probably going to be looking at putting the stores online and all our existing markets specifically probably over the next three years, you'll see everything will be done in the backfill side of our business. And so you'll see us probably stay in our backyards for like I said, the next three years on our growth with proven i.e. the short, basically the existing markets that have strong brand awareness, and why don't you tell them a little bit about the site tool.

What we continue to enhance the site tool, that's one that we're looking at in 2022. Looking, we've looked at a number of states that we believe we have high A, high brand awareness, and we've looked at the site tool, and it's given us, with this new kind of sales volume and kind of the 3.5, we believe that gives us a lot of opportunity to backfill some of our bigger metropolitan areas, still some of our bigger metropolitan areas, whether it's Dallas, Austin, Houston, Nashville, and some of those and put more sites in there without cannibalizing because looking at a 3.5, that also allows us to go into maybe smaller markets, where before we're looking for a 4.2. Now in going into like an Abilene or a long view, or somewhere like that here in Texas, so I think it opens up a lot more markets, when we're looking at that kind of volume. Now, I think at some of those markets, we're still going to see, some higher volumes. But when we're looking to pick a site, we're looking at kind of that and where we can backfill in some of these very these areas that we have high brand awareness.

I think that was most of the questions that you had.

Yes, you did an excellent job. And sorry for throwing them all. One other ones on? What are the desired or projected unit economics on that 3.5 million and 55? I assume that's the volume you would want on the 5500 square foot prototype? But what are you looking for, from a unit economic perspective?

I think with what we've learned during the pandemic, that's what's exciting about it with, with what we've learned from the pandemic, I think we can get, those high teen restaurant level margins, in that 17% to 18%, if not a little higher, depending upon in the areas that we're talking about, with lower cost to run those restaurants. So we're still looking at that 30% return on investment, and, and looking at an investment of, in the mid-twos to three going forward. So we're looking with our national contractor to not only revamp our design, but also re-engineer or value engineer, the building itself. So we're looking at reducing some of the costs there as well.

And that's not only just on a prototype, but that's not only remodeled, but we also have it.

Great, thank you very much.

Welcome, Dave.

Our next question will come from James Rutherford with Stephens. Please go ahead.

Hey, thanks for taking the question. Congrats on the quarter here. Las Vegas, I just want to start with Texas, and just how you all will approach your Texas restaurants now that you have some latitude to make your own decision about capacity. Maybe you can talk about kind of where capacity was before the new rule. And where do you think that might go during the first quarter if you expect any changes at all?

Yes, right now, the capacity that we've been at is probably in our restaurants with a six foot distancing, or probably been on 50% capacity. Because most of our restaurants or tables, although our dining sales is right in that 65% because of our patios also. And then initially I don't see that changing a whole bunch of everybody is coming out, down here and everybody's keeping all the restrictions and obviously now this big price with all the mayors and the governor, what they wanted to see done in the markets compared to us. But as far as us, we're going to maintain the six foot distancing in our stewards for currently. And we're also just going to be pushing the flow through of that. And we're all going to be wearing masks in my restaurants for the safety of our employees, and the customers that are coming in. And as time goes by, as people get more customers we’ll start growing that as long as we don't go backwards as a community. We’ll be growing that and then we'll be hiring more people to get into the come in and work as servers and so forth. And we'll expand it as people get more comfortable with these new new information from our governor.

Okay, yes, that will be great to see. I also wanted to ask about the the hourly wage inflation that you all saw. That seems unique compared to some of the restaurants that were that we also cover. Is that due to the mix of restaurants that you're operating today? I think you've closed a few since the fourth quarter of last year maybe what's driving that? Or is it state specific?

Are you talking about the deflation? Right? We had deflation…

I misspoke. Yes, the deflation?

Yes, a lot of it. I tell you, James is driven by the front of the house. We yeah, it's all in the front of the house. And it's offset by some increases in the back of the house. And when we when, you know, when we wanted to go only, we kind of made a, a company-wide edict, if you will, to pay the minimum tipped wage, because we felt that the tips because we reduce the staff down to very low to do to go only and so there were several, just several people that were running to go out, and they would get a lot of tips. And they did I mean, we had kids that were walking home with 300 bucks a day, if not more. And so they were making more money. And we brought that tip waste, because in the past with our to go not being very strong. We had people making 10, 12 bucks an hour there. So, a lot of that was that kind of [Indiscernible] that we made, and bringing that price down, that that's overall as we've hired people back, we still have that we still have that strong to go. And so we were able to hire him back yet it more in line with the nation or not the nationwide but the specific statewide tipped wage.

Okay, thank you. I'll turn it back to the queue. Thank you, Steve. Thanks, Jon.

Thank you.

Our next question will come from Nick Setyan with Wedbush Securities. Please go ahead.

Thanks. And congrats on the great margin. In simply the off-premise sale, can you just remind us what the breakdown now is between third party delivery between the Chuy’s app and the website? And then walk in or phone in?

Sure. We get that in front of me here, Nick. If you're looking at total, let me make sure I'm looking at the right thing here. If you're looking at total breakdown, in the fourth quarter, our online takeout was approximately 12.3%. Our call in takeout was about 11.5. Delivery was about 8.5 and catering was 1.1. So if you look at total digital, we are total digital of about 20. And that includes basically our online and our third party delivery partner. We are about 20.7% total digital and in Q3 and we remain there, right? Pretty close to 21% in Q4. So that's been pretty steady. As we said earlier to we are at 33% on off-premise and Q3 and we're at 33% in off-premise in Q4 as well.

Understood. Are you able to now gather, I mean the kind of data where you can actually, mine that data in terms of the customer database, and do things like one-on-one marketing in a way that you weren't able to do today? You know, pre-COVID what have been the sort of customer signups in terms of the growth rates and where is it now? What are some of the opportunities because of the entire digital mix going forward?

There's a lot of opportunities there, Nick. And what I would tell you is we're still accumulating that data and mind in it for information that we can do that. We do have, once we get up in dining room, and we're attaching a lot of things to our CD management tool, which is wisely that that can mind some of that data. And that also has the one on one marketing associated with it where it will identify lakhs users, they will identify, specific users of a particular product. Maybe specific users of our restaurants during lunch, not dinner or dinner, not lunch, that we can target market, those individuals. And we currently have that today. We're just trying to tack on more customer data that we're getting from other different areas that we can put in that database. So we're still, we're still trying to gather that information and use it, but we're not right at we're not using that information today. But we're gathering it. So I think we'll be there, we should be able to be there by the end of the year.

That’s very helpful. And just last question and early, any early thoughts on G&A for the full year?

I'd use a target right now. I would use a target of 2090 just as a kind of a precursor.

Okay, fair enough. Thanks so much.

Thanks, Nick.

Our next question will come from Andrew Strelzik with BMO Capital Markets. Please go ahead.

Hey, guys. It's actually Dan on for Andrew today. Thanks for taking the question You guys like others have benefited from some of the higher check averages that we've seen over the past year, which has helped offset obviously, the steeper labor steeper traffic declines. And I guess I'm just wondering how you're thinking about the evolution of second traffic, as we sort of trend back towards a more normalized operating environment? I mean, obviously, I think we all anticipate traffic recovering, but is there an opportunity to hold on to some of the higher checks you've seen? Or? Or how do you kind of think about the evolution of both of those?

Oh, yeah, part of it is, is it will also [Indiscernible] and in order to go, especially with our own logo or a lot of constants, and we're doing some extra selling in there also. But we see that because of the mix change, and where he is, is actually moved up a little bit, that higher check average is most of it is the mix; it's mostly the mix, and our kits. And they're not going to go away, the evolution of the menu is I'm not making any changes to the menu in the short term, as we get back to all our markets have a no six foot distancing, you will see me add a handful of menu items back on that that that won't erode, probably we're that mix is currently. As far as pricing, that might go along in that. We're going to have and we just did about a one in three quarter percent price increase for this year as we move forward. So that's going to move it a little bit. But I don't see anything that's going to erode our check average, from materially from where it's at currently, maybe going up a little bit, because we just took the price increase.

You know, and a lot of that, Nick is, is the family kids. And if you're looking at the percentage of those family kids, they've been very consistent. Really, it's period six at about 5% to 6%. So and even in period 12, is still 6%. So it stays even as we've opened dining rooms and it was just totally on to go. I mean, they've really stayed consistent.

Guys, that that's helpful. And then I just had a question on sort of the broader labor environment. Appreciate the color on some of the labor deflation you guys have been experiencing what's driving that? And I guess I'm just curious how you're thinking about the labor environment more broadly. I want to and there's still higher unemployment, but then, we have all the conversation around the changes in tech wage, increasing minimum wage. So just what are you seeing from a labor perspective in the marketplace as you're you're looking to hire and kind of like what are your expectations for that maybe moving forward?

The key for us is right now as we've been at basically 50% of our dining into dining as far as our capacity, but we are like I said earlier, we're in that 65% range because of our patios. It's tough hiring right now. It's really tough. Obviously, when and we can't when we can move eventually get rid of the six foot dining well obviously going to be in a market to be doing a lot of hiring specifically front of the house on the server side. But it's very difficult out there for the hiring situation currently.

Got it. Appreciate the color. I'll turn it back over to the queue. Thanks, guys.

[Operator Instructions] Our next question will come from Todd books from C.L. King. Please go ahead.

Hey, guys, a couple questions for you one, just with another quarter of really stellar restaurant level operating margin performance. I know you have some initial thoughts of how much of this improvement you're likely to hold on to on the backside of the pandemic with another strong quarter north of 20%. Any change in what you think you're going to be able to, to hold on to Jon on the backside?

No, Todd, I think at this point, I mean, we still believe that our labor is going to go up, as Steve said, when we when we start hiring back to full capacity. We're still at similar capacities today that we were in in the fourth quarter. And going to even in Texas, even though they're open enough, we're going to operate in a similar manner that we did in the fourth quarter. And in the fourth quarter, we did have 11 stores in November, December, that were closed, to only to go only in certain states. And so they've opened back up in January, to get more consistent with their third quarter, but they've been consistent, and we haven't really, changed the mix from a dining standpoint. And as you can see, the online is still consistent at 33%. And so until we can start staffing, the dining rooms and get them up to 100% capacity, we still anticipate that that increase in labor. And still, however, with that increase, we still plan to have that 300, 350 basis points, improvement to maintain prior to prior years, to say,

Okay, great. Great. That's helpful. Thanks. And then, Steve, nowhere in the window that you had initially talked about evaluating the nine stores that had been temporarily close through the pandemic, what's the, what's the status of you in the team gotten out and kind of looked at those markets and made any decisions on those stores?

I'll take that one. Todd. You know, at this point, we've been assessing kind of what they're, what we think we can do in those markets, we haven't been able to get out. But we think at this point it’s probably more likely that Todd that those doors are going to maintain closed. And, we are currently looking at a real estate firm to help us get out of some of those leases, as well as some of the other close stores. And so we're looking to get out of those leases, that's probably going to cost us between 12. And 12 million to up to 20 million on a conservative basis to get out of those leases. But we don't expect like, like I say, there may be one or two, but right now we're thinking it's more likely than not, they're not going to open.

Okay, great. We can factor that in the model time. And then additional question, gift card business this year, could you talk about how much the gift card business was down at holiday. And then typically what your window of redemption is, I know some other peers have talked about 80% or 90%, redeemed in the first couple of months after the holiday. I'm wondering if that's kind of music, same store sales to the downside a bit to start the year here.

Todd, I don't have those numbers in front of me. But, they generally aren't a significant piece. And they've been pretty, actually pretty flat. They were down a little bit consistent with kind of what our overall sales have been. But they've been pretty flat and really shouldn't affect, our sales going forward.

Okay, great. Thanks. I'll jump back into the queue.

Our next question will come from Chris O'Cull with Stifel. Please go ahead.

Hey, thanks. Good afternoon, guys. This is actually Alex on for Chris. Just curious, what's kind of driving the change in thinking on those nine locations? Was it that the markets weren't strong as a whole? Or was it bad real estate within the market? And then can you kind of help sort of frame up the level of sales underperformance of these stores relative to the rest of your system or your core markets pre-COVID?

Yes, Alex, these stores we decided when we went into the pandemic that we were going to close them, they were not top end performance to start with. And again, it's not in any one markets, it spreads throughout the company. And it could have been a real estate issue if it had been a parking issue. But it's also one where there's not a lot of daytime pop, and the ability to really grow are to-go areas. And that's how we're kind of evaluating them as we move forward. But they were not big time performance to start with.

Okay, and any sort of level of underperformance relative to the rest of your system, 10% lower or 20%, lower anything like that?

I would say they were in the high twos to mid threes as far as sales wise. And so that's definitely when you know prior to the pandemic or overall average was around 4.3 million.

Got it? Thanks. That's, that's helpful. And then, your off-premise sales remaining in that 30% to 35% range quarter-to-date seems to indicate, a continued stickiness, even as dining rooms reopened in January. Are you surprised with that level of off-premise retention? Do you have any metrics around repeat usage or any change in the mix between delivery and carry out in recent months?

Again, we've really not had any change in dining room metrics, as far as how much we can maximize our data is. As I mentioned to you earlier, we're still like, we have been put several months at about a 50% capacity inside of our restaurants, because of all the tables and the six foot distancing, and that still remains today at the same level. That's why you've seen that consistent number of about 33%. We do expect, as dining rooms open and as they eliminate and get more comfortable with getting rid of the six foot distancing. We do anticipate that to go and that dining number, I mean that to go number two to come down a little bit in the mid 25 range, as dining rooms, get a little bit busier.

Thanks, guys.

Thank you.

[Operator Instructions] Our next question will come from Bob Derrington with Telsey. Please go ahead.

Yeah, thank you, Steve. I'm just, I guess, looking into the crystal ball as we look out towards, more of the population getting vaccinated, the pandemic coming under better control, the alcohol sales, bar sales have historically been really strong. And I'm just trying to envision a point in time. And I'm sure you've given some thought to this, when you make have a more lively bar scene. How do you envision the reopening of those? And, certainly I think, historically I think margins on alcohol, adult beverages have historically been pretty good. Do you have some thoughts around that?

Yes, I'm pretty pleased with where we're at, with alcohol sales without bars, or gathering places, which is our bars that are currently very, slim to none because of the six foot distancing. And as that goes away, and people get more comfortable about going in, I'm not talking three deep at the bar, I'm not talking too deep at the bar, I'm saying where you'll have all the chairs at the bar. So again, when we see that, and we will see that. When? My crystal ball is Apple foggy, it's not as clear as I'd like it to be, but I don't see a huge mad rush into restaurants as this thing goes away anytime, in the next month to two months, or even the next quarter to two. As crystal ball is Crowley [Ph] is I'm looking probably as some of the distancing will be eliminated, hopefully, by the fourth quarter of this year. And our expectation would be to get the bars opened a little bit more as far as customers in their window as a waiting area, and see us get back to historical and that 17% to 18% and be able to grow from there.

Is it reasonable that we likely will not see the Nacho bar come back and it'll, maybe chips and salsa, at a minimum or approximate?

Yes, I think it's very reasonable, because again, it's a buffet style and a lot of our health departments aren't going to allow that style any longer as we move forward, but you'll see as we get back to normal and get rid of the six foot distancing, you'll see us as we do currently, now you haven't drink specials from four to seven. You'll see us add something from an appetizer section or some type of specials. That will be an added draw for a happy hour in the future, but probably not the nacho.

Got you. Okay. Thanks, Steve. I appreciate it.

Thank you. Thanks, Bob.

This concludes our question-and-answer session. I would like to turn the floor back over to Steve Hislop, for any closing remarks.

Thank you so much. Jon and I appreciate your continued interest in Chuy’s and we will always be available to answer any and all questions. Again, thank you. Stay healthy and have a good evening.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.