Greetings, and welcome to Dutch Bros Inc. first quarter 2022 conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paddy Warren, Dutch Bros Director of Investor Relations and Corporate Development. Thank you. You may begin. Thank you. Good afternoon, and welcome. I'm joined today by Joth Ricci, President and CEO, and Charley Jemley, CFO. We issued our earnings press release for the quarter ended March 31, 2022 after the market closed today, and we'll file our 10-Q in the upcoming days. The earnings press release, along with the supplemental investor information deck, have now been posted to our investor relations website at investors.dutchbros.com, and we will post our 10-Q there as well when it is available. Please be aware that all statements in our prepared remarks and in responses to your questions, other than those of historical facts, including statements regarding our future results of operations or financial condition, strategies, plans, and objectives of management are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are inherently subject to risks, uncertainties, and assumptions. They are not guarantees of performance and are expressly qualified in their entirety by cautionary statements. The forward-looking statements made as of today's date, and we undertake no obligation to update them to reflect events or circumstances after today or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events except for as required by law. We may not actually achieve these plans, intentions, or expectations disclosed in our forward-looking statements, and therefore you should not place undue reliance upon them. For more details, please refer to our earnings press release and to the risk factors in our other SEC filings, particularly the risk factors described in our annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022, and our upcoming quarterly report on Form 10-Q for the period ended March 31, 2022, to be filed with the SEC. Finally, while we have prepared our consolidated financial statements in accordance with the generally accepted accounting principles of the United States, we will also reference non-GAAP financial measures today, which can be useful in evaluating our core operating performance. However, these non-GAAP financial measures, which may be different than similarly titled measures used by other companies and are not substitutes for measures that are prepared under generally accepted accounting principles. Rather, they are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for or superior to the financial information prepared and presented in accordance with GAAP. Investors should therefore review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings press release and not rely on any single financial measure to evaluate our business. With that, I'd like to turn the call over to Joth. Thank you, Paddy. Good afternoon, and welcome, everyone. We certainly appreciate your continued interest in Dutch Bros. Let me begin with some opening remarks on our business and Q1 performance. Charley will then review our financial results in greater detail as well as update our full year outlook before I leave you with some concluding thoughts. Finally, we'll turn the call over for Q&A. As we get started, I wanna remind you who we are as a people and a company. Our North Star is long term, sustainable growth predicated on our people. When we started this public company journey, we shared these focus points and promises. One is that we would continue to find and develop our people who are our growth capital. two, to open new shops wherever people want great beverages with an eye on 4,000+ shops in the next 10-15 years. three is to increase brand awareness and encourage a deeper customer engagement. four, to invest in and use digital technology to improve the customer experience. five, expand margins through operating leverage. We believe our investment thesis holds, and we are living up to these promises. That's in large part due to our team, our Broistas, our leaders, and our franchisees. I wanna thank everyone for their hard work in the last quarter. At Dutch Bros, we view our culture and our commitment to creating a better future for our employees, customers, and communities as the keys to our success. The work our team did in the first quarter helped us live up to our mission and make a massive difference one cup at a time. In the first quarter, we opened 34 new shops, 26% more total shops than a year ago, and we entered 11 new markets. We grew total revenue 54% year-over-year through new shop development and same shop sales of 6%. We generated adjusted EBITDA of $9.7 million. We celebrated our 30th anniversary in a very Dutch Bros way by getting over 400 of our people together in person for the first time in more than 2 years to enjoy each other and reinforce the strength of our culture. With our franchise partners, we raised a record amount to fight food insecurity through our Dutch Luv Day of Giving, in which customers and local shops support food banks and agencies in their communities. The first quarter represented another building block in our long-term growth and value creation story. We remained focused on our disciplined growth strategy, utilizing strategic site selection to create great customer and barista experiences. Our reception in new markets continues to be outstanding and the strength of the brand across geographies endures. While we are pleased with the strength of our revenue and shop development in the first quarter, margin pressure in our company shops led to a lower adjusted EBITDA result than we expected. That margin pressure was primarily a result of these factors. Our decision to be disciplined on the price we took, which we believe is less than half as much as many of our peers. Faster inflation and cost of goods, especially in dairy. The pull forward of deferred expenses related to the maintenance of shops, and normal new store inefficiency amplified by the volume of new and ramping units in quarter one. It is important to always recognize that Dutch Bros' story is all about long-term sustainable growth. Everything we do inside the company is focused on making the business better and stronger three, five, and 10 years from today. Unfortunately, in this past quarter, a confluence of cost pressures overwhelmed our decisions around price and resulted in near term margin compression. We anticipated higher expenditures. However, we did not foresee the speed and magnitude of cost escalation within the quarter. Dairy, for example, which makes up 28% of our commodity basket, rose almost 25% in Q1. While costs rose throughout the quarter, we experienced a change in sales trajectory from mid-March onward as macroeconomic headwinds accelerated and comps turned negative. We are monitoring these factors and have chosen to take a more conservative stance on our 2022 outlook given macroeconomic uncertainty. Importantly, as time passes, we have a greater and greater confidence in the growth potential based on the performance of our new units in both established and new markets. Our labor margin remained elevated in Q1 relative to Q4, but down slightly from the first quarter of last year. Importantly, as we mentioned in Q4, our operations are not being impacted by staffing shortages. Hiring has been brisk and turnover remains low. This is a key part of our story as we will always strive to provide great work quality, compensation, and advancement opportunities for our baristas. We believe this allows us to attract and retain the very best people that are committed to great customer experience. Within our company shop, we chose to pull forward certain deferred maintenance investments that we were unable to complete last year due to COVID. Our full year expectations on these costs remain unchanged. We opened 54 company shops in a condensed time frame from December through March. Therefore, we experienced margin pressure from an accelerating pace of new unit openings, both in terms of elevated pre-opening spend and normal new shop inefficiency. Given the pace of openings and the speed by which the business is transforming, a degree of variability within our results may often be the case over time. Our focus is long term growth, and these new market labor expenses support both our culture and investment thesis. If we need to make a significant investment in a market or in the development of our people prior to opening, we'll do that without hesitation. It is a short term cost for a long term growth and gain. Based upon a revised cost forecast, we are taking a more conservative stance in our 2022 annual outlook and for adjusted EBITDA. The bottom line is, despite the macroeconomic uncertainty, we remain highly confident in our ability to navigate through these short term challenges and in our overall value creation model. During the first quarter, new shop development was the second highest on record for Dutch Bros. These 34 company-operated shop openings compared favorably to our guidance of at least 30 total shop openings. We are encouraged by the performance of our real estate, training, and operations teams as we expand our shop footprint. Our pipeline remains strong well into 2023, and we are highly confident in our new shop guidance for 2022, which we are in fact raising modestly today. Our development strategy is centered on rapidly achieving density in our new markets. When we enter a new market, we start with one shop, but quickly build several more to capture market share and satisfy consumer demand. If this strategy works as expected, density and scale will thereby create a positive flywheel effect, increasing brand awareness and providing more capacity. Our class of 2020 and 2021 shops produced average unit volumes of $2.1 million, which is approximately 10% higher than our system average. Additionally, our new shops have demonstrated a predictable and consistent volume and margin progression, typically reaching margin maturity within 3-4 quarters of opening. Of the 34 shops opened in Q1, 11 were in new markets and were turned over to newly promoted regional operators. On January 14, we opened our first shop east of the Mississippi River in Nashville, Tennessee, which we quickly followed with two additional shop openings in the surrounding area. Thus far, the performance of these shops have exceeded our expectations and serves to validate our optimism for further development as we move from west to east. Beyond Tennessee, we look forward to increasing our shop density in other newly entered states. Seventeen of our 34 Q1 openings were in Texas and Oklahoma. In Q1, we also began to ramp up development in Southern California with five total openings. Initial results are positive, with these new shops outperforming our system average. The entry into these markets is significant for us, and we're excited about meaningful growth opportunities for this region in 2022 and beyond. The remaining nine shops were infill locations in markets such as Salt Lake City, Colorado Springs, Denver, Tucson, Sacramento, and Las Vegas. Although like everyone, we've experienced a slight labor scheduling disruption during the first 3 weeks of January due to the Omicron variant. We remain fully staffed and effectively experienced zero disruption to our shops in February and March. For the quarter, COVID related staffing constraints only affected 0.75% of company operated shop days. Trailing 12-month shop level turnover for Q1 was 66%, which is up from the 12-month period ending Q4, 2021. Still, our shop level turnover remains far below the industry average and new hiring has been brisk. Shop level manager turnover was in the low double digits while regional operator turnover was virtually nonexistent. We attribute our comparatively low turnover metrics to our unique people first culture, significant career development opportunities, and the benefits and incentives we provide to our employees. As we increase shop development, we open up even more leadership and growth opportunities for our people. In Q1, for example, 12 regional operator candidates were promoted as operators. As of March 31, we have 109 regional operators running our 310 company operated shops. Currently 2.8 shops per operator. As our system matures, we expect this span to continue to grow to between four and seven. One of our primary tools in growing market share, understanding our customers, and driving ticket increases is our Dutch Rewards program. As of March 31, we had 3.7 million registered users with nearly 2/3 of those active over the last 90 days. In the first quarter alone, we added more than a quarter million new 90-day active members. This is about 4,000 active members per shop and is driving the 61% Dutch Rewards transaction penetration. We are excited about the adoption of this program and the opportunity it provides us to recognize, reward, and engage many of our amazing customers. In established markets, our digital penetration was about 15 points higher than in our expanding newer markets, providing potential upside for our program as our newer markets mature. The consistent growth of our rewards program and our 90-day active members provides evidence of both customer acceptance and adoption. Over the last quarter, the average ticket for Dutch Rewards members was approximately 6.5% higher than for non rewards members. We are pleased with our customers' adoption and use of Dutch Rewards, especially as users begin to utilize the platform's stored value features. As more customers load funds to their accounts, it should reduce transaction times, speed up lines, and free up time to create meaningful, lasting connections. We also benefit from the additional average ticket increase of nearly 10% when our members use the stored value or as we call it Dutch Pass feature. While we are in the early innings, we have begun to operationalizing this data at a small scale. We've had initial success with specifically targeting customer behavior, upselling, and product trial. We look forward to expanding on these and other programs to generate consumer insights, develop customized offers, and personalize our members Dutch Bros experience. Great customer experience helped drive our Q1 results. With first quarter revenue up 54% compared to same period last year to $152.2 million. System same shop sales grew 6% in the first quarter and 11.1% compared to 2019. While company operated same shop sales grew 5.1% in the first quarter and 9.9% compared to 2019. Same shop sales growth was a function of higher traffic and check that was partially offset by sales transfer. Notably, trends were stronger in the first half of the quarter before tempering in mid-March, which we believe were primarily driven by macroeconomic headwinds related to decreasing consumer discretionary income, such as rapidly rising gas prices and the discontinuation of federal COVID stimulus checks, and also greater sales transfer as more new shops in existing markets opened. As I mentioned before, quarterly adjusted EBITDA was $9.7 million, impacted largely by our decisions on pricing, dairy costs, labor costs, our decision to invest in preventative maintenance and the impact of accelerated new shop development. To conclude, we believe we have something here that is unique, a growing profitable business, a strong balance sheet, and a phenomenal culture and loyal customer base. These factors give us a strong foundation necessary to support enduring growth. Our culture remains as strong today as it did the last five years and 25 years before that. Now I'd like to turn the call over to Charley to review our financials. Thanks, Joth. Before I begin, I want to highlight that with each earnings release, we post a presentation that contains supplemental information and details on our investor relations website. I encourage you to reference it as I make my comments. I will begin with the profitability of our overall company operated shop portfolio. For Q1, company operated shop contribution decreased from 26.8% of company operated shop revenue to 18.3%. I'll walk you through the key drivers of that decline. It starts with our decision to be conservative on price, considers recent cost pressures, and ends with the margin impact of executing our fast-paced company shop led growth strategy. As I discuss these drivers, please see slide 11 of the investor deck. Beginning in November of 2021, we took our first price increase since the beginning of COVID, a modest 2.9%. This translated to approximately 220 basis points of margin relief. At that time, we believed this was appropriate given the cost increases we were experiencing. As a company, we try to avoid taking large price increases, and when we do take price, we try to do it infrequently. We think this is the right way to build lasting relationships with our customers and serves to encourage them to make Dutch Bros a key part of their daily beverage routine. However, as Q1 unfolded, we experienced three significant rapid cost escalations that on an individual basis would not have caused distress, but when taken collectively, did overwhelm our PNL. Faster input cost inflation, especially in dairy, and also labor cost increases. The pull forward of expenses related to the ongoing care and condition of shops and new and normal store inefficiency amplified by the sheer volume of new and ramping units in quarter one. In the first quarter, we encountered 480 basis points of cost pressure from those higher ingredient costs relative to the prior year. As Joth noted, dairy increased by almost 25% towards the end of the first quarter to near historic highs in what is now 28% of our ingredients cost basket. We did not anticipate this sharp rise. While we do not believe dairy will stay this high indefinitely, we have to assume it will remain high for most of 2022. Additionally, we encountered 240 basis points of cost pressure in our labor line. This includes higher training costs, higher overtime to keep stores open, and higher legislative minimum wage advances in California, Arizona, and Washington State. We continue to see stability in our workforce despite a slight uptick in turnover in the first quarter. The good news is that our stores are staffed and operating at full hours. The combination of margin pressure from ingredient costs and higher labor costs resulted in margin compression of 720 basis points prior to offsets we achieved through menu price increases. Our modest price increases that began in November and a positive discount rollover offset 370 basis points of this pressure, netting to 350 basis points margin compression. Please note that in April, we placed a further 3% menu price increase into motion that we expect to finish rolling out to the system by the end of May. Should these elevated costs remain, we will assess further pricing actions and productivity measures through the balance of this year to protect shop profitability long term. Finally, we encountered 150 basis points of cost pressure from elevated shop operating expenses, primarily from pulled forward maintenance spending. This maintenance spend was restricted during COVID, and much of this spend reflects clearing out a backlog. Our full year expectations remain unchanged. This expense category will come back to our original budgeted spend by year end. Therefore, there is a timing impact in our Q1 financials that we don't expect will impact the full year. The second key driver of the year-over-year decline in company operated shop contribution is 340 basis points related to executing our fast-paced company shop led growth strategy. This effect is primarily timing and is an inherent part of our long term growth strategy. In the first quarter of 2022, we opened 34 new company shops, compared to just nine new company shops in the first quarter of 2021. We also had the first month of operations for the 20 company operated shops we opened in December of 2021. Pre-opening costs were $6 million in the first quarter this year, compared to just $1.7 million in the first quarter last year. On a percentage basis, pre-opening costs were 4.6% compared to 2.2% last year, an increase of 240 basis points. On a per shop basis, this is higher than our norm, as we had 11 shops that were first shops in their respective markets, and speed to market also had some costs. First shops have higher pre-opening costs as we spend more time with our opening crew, training our staff, and creating a solid, competent base for expansion. Additionally, we incurred approximately 100 basis points of impact from normal new shop inefficiencies that drop off as shops become more productive in ensuing quarters. Our growth objectives will remain in place despite the challenges we face in the middle of PNL. Regarding new shop profitability, new shops take a few quarters to reach the margin productivity levels of our mature shops. In this regard, we remain on track. You can reference this margin maturity curve and our actual results in the investor presentation on our website. Another key objective of our growth strategy is that once shops mature, we aim to have each new shop deliver a shop-level contribution margin of approximately 30% in year two. As a reminder, this margin excludes depreciation and would not include pre-opening expenses, which are typically borne in the first year. As an example, I direct you to slide 10 of the supplemental investor deck. Our class of 2020 achieved a gross margin of 26% in the trailing twelve months, inclusive of depreciation expense. Depreciation for all company shops was about 4% this same period. We do not expect our long-term objectives for new shop profitability will be at risk from the current economic climate. Rather, we will map menu prices and costs to protect the strong economic model we have built. Further, we will continue to focus on operational innovation to enhance productivity while improving the employee and customer experience. Shifting now to G&A. We are beginning to realize G&A leverage. In the first quarter, our total G&A grew 26% relative to revenue growth of 54%. As a percentage of total revenue, G&A was 29.7% versus 36.4% in the first quarter last year. We expect that our G&A will continue to leverage as we gain scale. Please note that our G&A was burdened by 120 basis points of public company costs, 160 basis points of one-time special events, and 80 basis points of COVID related write-offs. Now a few comments on liquidity. Our balance sheet is strong and well capitalized. As of March 31, we had $27 million in cash and equivalents and $372 million in committed undrawn debt capacity, with an option to further increase our liquidity if needed. As of March 31, we had $28 million drawn on our revolving credit facility and $100 million in term debt, reflecting $101 million in net debt. On February 28, we refinanced our existing credit facility to provide greater liquidity and maintain a strong balance sheet geared for new shop growth. Our new five-year facility provides us with $500 million in committed capital. Shifting now to guidance. Joth mentioned that late quarter sales trends were pressured. Since mid-March, the normal seasonal traffic build that typically takes place as we move out of winter and into spring with a peak in May slowed measurably. We expect this sales pressure to continue in the short to mid-term, with leading industry indicators suggesting declining QSR traffic, increased incidence of trade down and outsized regional pressure in the Western United States, which we believe is due in part to higher relative energy costs. We are monitoring closely the potential impact of increases in energy prices on our customers' behaviors, which we believe may be negatively impacting consumer discretionary spending and affecting our traffic. Absent a change in the underlying macro environment, we are not projecting a meaningful tempering of these trends, hence our lowered full year adjusted EBITDA guidance. Inflation in both ingredient and operating costs has risen rapidly, catching us off guard from the speed and the sharpness of this rise. In the short term, it is unlikely that our new menu price actions will fully offset the extent of these input cost increases. We believe outsized menu price moves in the face of consumer discretionary spending headwinds would not be wise at this stage. For our high growth brands, the lifetime value of each customer is heightened. It is our desire to keep our menu prices approachable for customers across the income spectrum. Given the unexpected speed and magnitude of these cost and consumer demand events, we are taking a more conservative view of 2022 adjusted EBITDA and same shop sales. However, given the strength of our openings and their attractive returns, we are modestly accelerating new shop development. To that end, for full year 2022, total system shop openings are now expected to increase to at least 130, of which at least 110 shops will be company operated. Total revenues are projected to remain in the range of $700 million-$715 million, reflecting our continued expansion in shop openings. Same shop sales growth is now estimated to be approximately flat. Adjusted EBITDA is now estimated to be at least $90 million, reflecting near term margin pressure in our company operated shops and our decision to take modest price increases during the year. Capital expenditures are still estimated to be in the range of $175 million-$200 million, which includes approximately $15 million-$20 million for our new roasting facility that we project will open in 2023. For Q2, total shop openings are expected to be at least 30, of which nearly all shops will be company operated. Same shop sales are estimated to be flat to slightly negative as we face macroeconomic headwinds impacting consumer discretionary income. April same shop sales were -3.7% in 2022, compared to +22.6% in 2021, our largest rollover of the year. Before turning it back over to Joth, I'd like to take a moment to reflect on how far this business has come. From the year before COVID, 2019, to the end of 2021. We finished 2021 operating 271 company shops. We had just 118 company shops at the end of 2019. At the end of 2021, there were 538 total shops in the Dutch Bros system, compared to just 370 at the end of 2019. AUVs were $1.9 million for 2021, compared to just $1.6 million in 2019. In 2021, we generated $498 million in revenue. We generated $238 million in 2019. At this pace, and with this level of transformation, at times there will be variability in our results and our growth will not always be linear. With that, I'll turn it back over to Joth for closing remarks. Thank you, Charley. I appreciate that perspective. We have all the building blocks for Dutch Bros to remain a successful and enduring company. Powerful, authentic brand that shares the love. Strong people systems that drive company culture and fuel our shop growth. A highly engaged customer following. Customizable and uniquely curated beverages. Highly consistent and highly attractive unit-level economics. A portable model that is successful across geographies. A strong and well-capitalized balance sheet and an engaged co-founder and experienced leadership team. Nearly nine months after our initial public offering, we are staying true to our core thesis. We've hired more people and facilitated tremendous growth opportunities for our employees. We treated our customers well, and we're doing our part to be good partners in our communities. We believe that we are on a 10-15 year path to 4,000 shops. For thirty years, Dutch Bros has been in the business of relationships. We've been there for our people and our customers every day. The current environment is without precedent, but know that we will navigate this uncertainty with the same long-term outlook, resourcefulness, and collective wisdom of our Broistas, leaders, and franchisees that has made this company what it is today. We wanna thank you again for your interest in Dutch Bros, and now we'd be happy to take your questions. Operator, please open up the lines. Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. If you'd like to ask your question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. If you could limit yourself to one question and one follow-up so we may get to everyone's questions before time runs out. Our first question comes from the line of Nicole Miller with Piper Sandler. Please proceed with your question. Thank you. Good afternoon and appreciate the update. I thought I'd ask about the team first. If I heard properly, there was a comment in there about turnover being a little higher, and I was curious what that rate of turnover is and just thinking about, you know, peak periods of stress, and having moved past those, why would you be experiencing higher turnover now? Well, I think that, you know, we've kinda looked at, you know, what was going on last year, what was going on this year in the market. I think that there was an accelerated, you know, return of, I would say, applicants, you know, that we reviewed. I think we reviewed 39,000 applicants year to date, if I'm not mistaken. You know, it's probably just people getting back to work. I mean, Nicole, I don't know exactly the answer to that question. I can give you a lot of theory to that. I think there's probably just an element of back to work, like people coming back off of COVID, you know, more opportunities presenting themselves in the job market with such low inflation. People might be, you know, jumping for more money. I'm sure there's a lot of just job-related, market-related factors that's going on out there. You know, we- Yeah. Yeah. The flip side, our numbers are still really low, so we're still. Okay. You know, pleased with where we're at. It would be fair to conclude up, but you're not talking about a material number at this point. I mean, yours has been so low. I didn't know how much to read into that comment, frankly. It kinda sounds like, I mean, that's what I would have guessed and didn't wanna guess. How have you been able to, you know, you don't present the same sticker, right, wage, but once someone gets in the system with the tips, they understand the process and the benefits. Are you still able to tell that story? Absolutely. Yeah, I don't think that story's changed at all. I think our trailing 12-month number, like, at the end of March was, like, at 66%. So- Okay. It's still from a relative standpoint, I'd say it's still relatively low. It's not as low as it was. I think it's still very manageable, and I think our story and how we're treating our employees is as strong as ever. Then just a numbers question, and realizing we're all doing the same thing real time in terms of modeling. But with the $90 million adjusted EBITDA kind of bogey, it would imply, I guess, you know, store level margin. I have to admit, I'm taking pre-opening out of mine. If this number doesn't make sense to you, I get it, but just know this is without pre-opening. Like, store level margin in 1Q is around 23%. You know, it has to average for the rest of the year something around 30%. It, you know, it seems like the cadence could be lower in 2Q, but then store level margin has to pop back up in the back half. If that is the right assessment of these early read on numbers, like, how is that gonna happen? Because margin, you know, was under pressure with a 6% comp isn't gonna be even more under pressure with a flat comp. How can we think about that? Well, I'd refer you to the investor presentation to understand the seasonality, right? Yeah. Quarter one and quarter four are our lowest average daily unit volumes. Quarter two and quarter three are the higher ones. Part of what's taking place, just from a sequence standpoint, as we move through the year, we get more leverage, so margins start to rise. That's very normal, right? Margins have reset because of the higher cost pressure and gone lower, but they still will rise in the summer as we get the higher volumes. Okay. Thanks a lot. Appreciate it. Mm-hmm. Thank you. Our next question comes from the line of Sara Senatore with Bank of America. Please proceed with your question. Thanks. A question on the demand side and the top line first, and then a quick follow-up on the margins. You know, if I look at, like, kind of the three-year trend, you know, versus 2019, I think you mentioned volumes were up about 10% versus 2019 in the first quarter. I get something slightly different, but I know people calculate stacks differently. If I assume kind of flattish comps in the second quarter, it looks like a pretty similar stack versus 2019. I wanted to sort of understand how much of the slowdown may just be the really difficult stack comparisons versus, you know, the macro situation, particularly as you point out, given how hard the April lap was. Have you seen any variation? You mentioned, you know, Western in particular, but have you seen any other variation in terms of demand? 'Cause it does feel like we're hearing, you know, a very wide disparity in terms of what different restaurant companies are seeing. Let me take the stack question, and I'll again, I think our document on the web will help you see the data on slide eight. The rollover we had in Q1 of 2021 was a 9.5 comp. Q2 was a 9.9 comp. To your point, there's not a lot of difference in the rollover from a year-over-year basis. Then the lap gets a little bit easier back part of the year. What we're really seeing is, as I mentioned in my part of the script, sales usually start to build in the spring and hit a peak towards the end of May on an average daily volume basis. We just are not seeing that growth. We're not declining, we're not seeing that growth, that expansion that happens seasonally. Then I'll start on your regional questions. We, you know, the biggest differential we've seen is where the gas prices, fuel prices, energy prices are elevated. We've seen more of this lack of sales growth coming in those areas, which amongst many other factors, points to the discretionary income piece at the low end of the consumer. Then secondly, we are seeing that afternoon, more discretionary day part get restricted, which is where you would expect when people are starting to choose between what they've got left over in their wallet at the end of the month and choices around spending. Sorry, but just to clarify, you said the one-year compares, and I understand are the same, but if I look at your two-year stack, it gets about 400 basis points-500 basis points tougher. I guess that's what I'm asking about, which is, given that, you know, a lot of us are benchmarking versus 2019 to kind of control for the variability, it does look like that alone would explain a sequential deceleration. I guess that's what I'm trying to understand. Yeah. I mathematically, yes. Back to what I said earlier, which is, I think the stacking thing can be difficult and challenging. You're looking at multiple years. We know our business seasonality and the growth in our business seasonally really stopped in the middle of March. We left February when we had the last earnings call with a really solid comp number through February, and then it just decelerated very quickly from that point. I know you can look at this two-year stack, but the way we analytically look at it is sequentially whether we're getting seasonal sales growth or not. I see. Okay. Just on the margins, you know, the actual. The restaurant level margins were actually pretty consistent, I think, with sort of where we thought they might be. In particular, you know, the COGS headwind we saw a big one in the fourth quarter. You know, labor was up in the fourth quarter. A lot of that actually to me wasn't quite as surprising. I guess I'm just trying to understand maybe where the difference was. Maybe this is easier said. Can you just tell me how to think about G&A for this year? Because, you know, I'm wondering if maybe that's where we went wrong or if it's just our expectations versus your own as we think about guidance. Because like I said, the restaurant level margin isn't all that the compression isn't all that different from what we saw last quarter. Yeah. I mean, I don't know what you had down for G&A. G&A for us is pretty uniform by quarter. It grows very steadily because it's headcount driven and it's regional operator driven. There's not a lot of moving parts in that number. The biggest change for us is this ingredient logistics supply chain cost increase that we're feeling. That's why we're pulling our guidance down, because relative to our models, we've got that 300 basis points-400 basis points margin contraction going forward. I think we can do a walk down with you to understand the G&A piece better that you're looking at. Okay. Brilliant. Thank you. I'll pass it along. Our next question comes from the line of John Ivankoe with JP Morgan. Please proceed with your question. Hi, thank you. You do have obviously interesting, you know, demographics, 55%, I think, under 25 years of age. Also usage 17% of, you know, customers visit before 9:00 A.M., which really does leave you know, quite different than some other, you know, beverage focused or coffee focused peers. I mean, can you elaborate in terms of like, I think you said that you were seeing, you know, weakness in the afternoon day part, 31% of business at, you know, this, all part of the IPO stuff, you know, after, you know, 4:00 P.M. But talk about, I guess, the challenges and the opportunities, you know, that you may have of having, you know, a really young afternoon skewed customer. I mean, is there anything that, you know, that you can or should or would do, you know, on the promotion side to kind of bring people, you know, bring these folks back in? Or, you know, is there something that you can do, you know, in the morning to, you know, to better utilize, you know, that day part, you know, relative to the afternoon? Yeah. Hey, John Ivankoe, this is Joth Ricci. Hey, you know, we have seen morning daypart growth. Actually, to your point, we've actually seen an uptick in that kind of pre-10 A.M. business, and, you know, which I think is an indication of back to work and kind of some behavior-based. I think where we've seen our decline is that 10 A.M. to really, you know, actually probably 6 P.M. business has been the largest decline. That, you know, we're really kind of chalking that up to a younger demographic with some discretionary income challenges related to what's going on in the marketplace. Really how you attack that is, I think, a couple things. One is that I think energy drink and how we utilize the rewards program will be key. I think we'll do more promotion with energy as we continue to kind of drive that in that day part. I continue to think that it's our biggest opportunity as a segment. I think in a market like this, you work on market share, and I think there's a way for us to make that happen, in improving the business in that midday day part. So I think that's the key to that day part. That will be different by region. The beauty of our app is we'll be able to execute, you know, at a market level program if we need to, depending on kind of what's happening with traffic patterns. You guys, presumably you haven't, none of this is self-inflicted at all. Like, you haven't seen your throughput actually slow in terms of how many customers you can get through the line in a given hour. Was there any change? I know it's probably tough to actually see in terms of what. Okay, so it really was demand driven. You weren't constrained. Yeah. If anything, you know, with the sales transfer, we actually helped improve flow and improve the things that we're doing. Again, we believe the app has a significant improvement to how we take people through. We're not seeing anything related to consumer sentiment here, where actually our consumer sentiment remains very strong. This is purely a consumer behavior issue that we're all dealing with, you know, related to traffic. Understood. It's a separate question than my second one. This one was one B, if you will. You know, you took up CapEx last quarter, pulled down EBITDA this quarter. You know, you are in a slight net debt position. It's not classic that one, you know, would finance, you know, a long-term asset like store growth with a revolver, for example. Or, you know, I guess maybe, you know, or, you know, $100 million I know you have on the term loan, which has been drawn. Could you know, just philosophically, you know, kind of talk about your balance sheet, your debt, your capital needs, you know, in the context of store growth? In other words, you know, to what extent, you know, does the balance sheet in and of itself give you maybe, you know, reason for some moderation as we work on our 2023 and 2024 forecasts? Hey, John, it's Charley. Yes, I agree. If you were taking a long-term asset, you might wanna match your financing to the long-term value of that asset. In our case, as we model out the business and worked on our credit facility, we see our needs peaking modestly in 2024, 2025. After that, we start to generate free cash flow. We felt like let's just shorten this instrument, take a short instrument, keep it flexible, keep the cost of it low, and then get to that 2023, 2024, 2025 timeframe and reassess where we're at in terms of whether we need to take on any kind of longer term structured debt, I'll call it. Okay. All right. That's helpful. Thank you. Our next question comes from the line of Andy Barish with Jefferies. Please proceed with your question. Hey, guys. Good afternoon. Just a couple of things. First, Charley, on the numbers, I may have missed it, but the sales transfer impact in the quarter, and kind of what you're looking for going forward, it sounds like it's a little bit more elevated than it has been. Little bit. It was about 230 basis points of transfer. We typically in prior quarters, we'd been seeing about 150 or so. That's mostly the timing of accelerating the growth and hitting some pretty high volume stores with sales transfer. I think between 150 and 200 basis points of sales transfer is a good way to look at it going forward and the way we've modeled it out. Slightly elevated but not out of the range of what we'd expect. Okay, understood. Just, I guess philosophically and size-wise, you know, two things. I mean, as you get bigger, is there an opportunity, you know, kind of at closer at hand on, you know, on purchasing and supply chain to sort of, you know, eliminate. I know the commodity markets are experiencing, you know, unprecedented volatility. Is there anything near term, you know, that could help on that front? Secondly, you know, anything on sort of new unit glide path? I mean, they do ramp pretty quickly, but anything that you're looking at there you talked about or mentioned, you know, some productivity initiatives once or twice without, you know, without specifics. Sorry that's a lot there. That's okay, Andy. You're testing my retention here. I think on the commodity costs, you know, in the place that we're at right now to see short-term effective improvement is limited in how we buy and kind of where we're at. We're out long on coffee. Dairy, obviously you don't have a lot of control over. You know, really, you know, we're kind of beholden to some freight impact and some other, you know, small basket of goods because we just don't have that much in our basket. It just so happens that dairy makes up such a large percentage of that basket. Previously, we had been talking coffee a lot and had said it makes up such a small percentage, you know, we're okay on coffee, which continues to be the case. Dairy, you know, certainly caught us off guard. I do think we have some opportunity to improve internally on our purchasing and our purchasing capabilities and how we look at that long term. As we grow, that is an area of emphasis for Charley and myself as we kind of, I'd say, build that muscle here at Dutch Bros. Two is related to how we manage shops. I will tell you that our retail ops team is looking hard right now at labor. I think we all need to be looking at labor, and we all need to be thinking about how we manage labor, especially related to overtime and things of that nature and maybe related to some day part flexibility. Just because of the nature of the business is changing a little bit and the nature of the market is changing a little bit. We need to be flexible on how we do that. That would also include, you know, new shops. I'll tell you that the importance of the new shops and why we mentioned it in the script the way we did is that, you know, it is so important for us to get a new shop off the ground, out of the ground in a positive way. We will leave people in a marketplace until we feel like it can be transitioned over to the operating team, that can be there on a day-to-day basis. If we have the opportunity to take a team out sooner, we will. We won't skimp on that because the importance of that investment for the long term. I think you got them all. Thank you very much. All right. Thanks, Andy. Our next question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question. Great. Thank you very much. A couple of questions. First one, just on the broader restaurant margin, which seems to be a focus here. How much do you believe are structural headwinds? Obviously, you have a, you know, that slide that walks through kind of all the different factors there. Is there any concern that some of this might limit your long-term restaurant margin recovery opportunity, maybe the accelerating new unit growth pressuring restaurant margins long term or some of these incremental cost pressures that might not abate? How do you think about what's kind of short term versus long term in terms of that restaurant margin based on the current headwinds? Yeah. It's Charley, thank you for that. You know, I don't think there's anything about the way we go about doing business structurally that would cause us to pause. These are just unprecedented increases in our highest cost item, dairy, among other things. At some point, you have to feel like that can normalize and get to some reasonable place. It's typically very cyclical. If it does structurally stay elevated, as we mentioned, we'll look at our pricing, menu pricing structure to try to deal with that. In terms of long-term returns, as we mentioned, our year two cash margin, we look at achieving a 30%. You know, right now we're looking at 300 basis points-400 basis points of margin contraction from these cost pressures. Let's say that 30% is, you know, reduced by 10%. That doesn't really change our 10% meaning 30 goes to 27. That does not really change our investment thesis because we're doing higher volume in our new units than our original investment thesis. If we do a little less margin near term, that's not really gonna change the answer. You know, we're very comfortable raising our guidance on new units because we know it's a great investment, and we have plenty of room between what we achieve and our cost of funds. Understood. Then you mentioned earlier that your pricing is clearly below some of your competitive set. I think you said you took, what, the three points in November and you're taking another three points. You took it last month. How do you test that? I know you have a younger customer and a clearly more discretionary nature. Like, how do you measure the elasticity that maybe it might, not that you shouldn't be taking it, but the risk that it might accelerate the issue, going into a macro slowdown. What kind of testing do you do for that? We do test markets, but the good news about our business is we have such a fast purchase cycle that we get a quick read in any test market when we do something. Yes, we are concerned. That's why we're very prudent about not raising our prices fast. We're gonna make this next step and watch it and read it. Again, we'll get a pretty quick read because we have a fast purchase cycle. Then we'll judge how that's landing, and we'll assess what to do next. Understood. Then just lastly, because you commented on G&A, I think you said you leveraged it in the first quarter, which is you tested for high growth mode here. I'm just wondering, I think you said steady through the year, but is there thoughts on a 2022 range, maybe growth relative to revenue on the G&A front somewhere? You know, any kind of color you could provide on that? Not off the top of my head, but since our revenue growth rate's gonna be pretty consistent quarter to quarter, you know, we're expecting to get very similar G&A leverage as we're achieving as we achieved in the first quarter, right? You know, we had over 50% revenue growth. Even if that tempers slightly, G&A is not gonna accelerate from a growth perspective. It's pretty steady. You know, I think as we speak more, we can kinda help with how to model that out. Our next question comes from the line of David Tarantino with Robert W. Baird & Co. Please proceed with your question. Sales trajectory here. I guess the first question I have is related to that sort of lack of seasonal build you talked about, Charley. I was wondering if you're seeing that across most of the base, including some of the new locations. I guess, is this a macro situation that's affecting all stores, maybe not to the same degree, but you're seeing it across the system? Generally speaking, yes. It is across the system. Got it. Thank you for that. Then on the clarification of the guidance, I guess what is the assumption for the rest of the year? I guess, you know, ignoring the you know, comparisons, you know, if you think about modeling out the seasonally adjusted sales trends or the average daily sales trends as you called it, you know, are you assuming any improvement or any deceleration or I guess, how are you approaching that specifically? We're not assuming any deceleration. Pretty much the trend line that we're on today, we're extrapolating that forward. We guided to about flat, realizing the first quarter we had positive comps. That in itself infers slightly negative comps in the back three quarters of the year. Got it. Okay. That's helpful. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question. Hi, good afternoon. I know it's always hard to figure out causality when you have a big shift in your sales like you had, but I guess I'm wondering, are you seeing signs of the consumer trying to manage their check, which would kind of back up the idea that it's maybe related to higher gas prices? I ask because obviously you have a suburban footprint, and I'm wondering if, you know, the elevated return to work might also be an impact on your business more broadly. Yeah. Hey, Sharon. Without claiming to be a macroeconomist, I will tell you that in mid-March, when gas prices jumped the way they did, we saw an immediate flip on our daily sales. It was almost to the day of the way that worked. I think you could infer we believe that, you know, we've done some analysis on the gas prices and influence related to our daily sales, and we believe it has influenced it, and we believe that if gas prices stay inflated, it will continue to influence it. I do believe there's some trends we're seeing. We're seeing morning daypart actually grow, and I think that actually is going to people going back to work and getting back into their daily routines of either taking kids back to school, especially on the West Coast, where we really just came out of a COVID lockdown, you know, we'll call it in February. We saw trending move in those markets that were previously affected by school closures and things of that nature. There is something there to that. I think as long as gas prices stay high, I think we can continue to see consumer trends or consumer spending will suffer. Can I ask a follow-up? Have you, I mean, Charley, you just said you're kind of assuming, you know, similar comps for the rest of the year and then to flat to slightly down or slightly down. Have you seen the trend stabilize? Only mildly. It's not. We're not, we don't have a falling knife. We have a slightly negative sales trend that has just continued since what Joth mentioned, which is mid-March. It has just been treading low negatives. Okay. Thank you. Our next question comes from the line of Andrew Charles with Cowen and Company. Please proceed with your question. Great. Thank you. Charley, can you talk a little about, more about the margin impact of new store inefficiencies? I mean, this is something obviously is a fast-growing system you guys have seen before. Curious if it's a more pronounced impact on margins versus what you've seen in prior quarters. You know, as a follow-up to that, just how are you better managing that going forward as you guys will be accelerating unit growth as well? Yeah. A couple things. From a quarter-to-quarter sequence, it's not dramatically different. Our comments are related to prior year. Of course, we had a lot more openings this year than last year. I would separate it into two areas. One is just absolute pre-opening expenses, and you can see that in our P&L, and you can add that back. Then a little bit of drag, a little bit more drag than normal on the labor side and the cost side because we compress so many openings into a 3 or 4-month cycle, which normally might've gotten spread out over 6 months. We don't see a structural problem or challenge in our new store margins. You can see in the presentation we put up there that we're, you know, those stores are still seasoning out very quickly. It's just a compression of all of those costs in a short timeframe. That's helpful. I'm not trying to sound the alarm with my next question, but, you know, because I appreciate that the pressure on comps is very recent, and you guys are still seeing strong productivity at new stores prompting you to raise the 2022 development guidance. You know, and I appreciate the guidance for same-store sales embeds this level of performance the rest of the year. I guess if we just kind of think a little bit more sinisterly, what would you have to see that would lead you to take your foot off the gas at 2023 development to help improve the trends that are in place? I think we would have to see that new store volumes really have gone backwards, and they haven't. We're just not seeing that. You know, strong openings. As long as we see that, it gives us confidence to keep going. Very helpful. Thanks, Charley. Our next question comes from the line of Jeff Farmer with Gordon Haskett. Please proceed with your question. Thank you. Have a follow-up and a quick question. On the follow-up, I'm just looking for a little bit more color on the magnitude of the gas price driven same shop sales headwind for the West Coast shops versus those in the rest of the country. Again, just trying to get an order of magnitude given how much greater the gas price inflation has been on the West Coast versus the rest of the country. Through the work that our analytics team has done, we think it's about a 2% hit on same shop sales with gas pricing. There's variability to that depending on what region of our markets you're in. Especially on the West Coast, and we believe that number across the system is somewhere around 2%. Okay. That's helpful. Switching gears here a little bit to an entirely new topic. As your Dutch Rewards customer sort of database, for lack of a better word, continues to grow, I'm just curious if there's been any sort of what do you consider larger or bigger surprises in terms of how your customers are interacting with the concept? Anything that's caught you off guard relative to a few years ago when you didn't have all that data versus today when you do have the data? This is Charley. Hi. Candidly, not a lot of surprises. Their behaviors seem to be very, you know, in ways we would expect and predict. It's not surprising us what we're seeing in frequency or, you know, stored value loads, et cetera. It seems it's a very reliable outcome. Okay. Appreciate that. Thank you. Thanks. There are no further questions in the queue. I'd like to hand the call back over to Joth Ricci for closing remarks. Again, we wanna thank everyone for your continued interest in Dutch Bros. We are optimistic about our future. We look forward to running this business for the long term and really can't wait to work with our people, our teams, our leaders, our franchisees in creating the Dutch Bros for the future. Thank you for the time. We're all in this together and we look forward to the future of Dutch Bros. Operator, thank you. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.