Good afternoon. I'm Brian Vaccaro, the restaurant analyst here at Raymond James, and we're excited to kick off the afternoon with the team from Chuy's. Anyone in the room, if you do have a question, I'd love to work your questions in as organically as we can into the conversation. So don't be shy to raise your hand if you do have one. And with that out of the way, we'll thank you to Steve, the CEO- Right ... of, of Chuy's, and we also have thought we had Jon, but we've got the VP of Finance as well, Natalie Harden. You have the A team. We've got the A team. Yeah. So Jon, if you're out there, we say hello. But so Steve, I think you've got some opening remarks about the company, and maybe we'll give us a quick catch up- Yeah, just- - on Q3. Yeah, just a quick overview. You know, we're a little concept based out of Austin, Texas, started in 1982. We currently have now 100 restaurants. We're basically in 16 states in the Southeast, Midwest. Texas is our biggest area, obviously. And what we're known for is all made from scratch food. You know, we don't even have a freezer in our building. We squeeze all the limes for all our margaritas. We have 10 different sauces that we make from scratch every single day. And it's exciting. And you know, as far as our growth over the next few years, we're gonna end this year with 4. We did have another one in the 12th period that we were gonna open, but that pushed back into 2024. We're looking at, about 6-8 next year, probably on the high end, since we're moving one back into it. Then we'll get back to our 10% growth in 2025. So it's a pretty exciting time for us. With that, I thought we'd just have Natalie go over a quick third quarter review, and just catch us up, and then we'll open it up for your questions. Be great. Yeah. W e had a great year. We had a great third quarter, ended obviously September twenty-fourth, a few months back. T he few highlights we wanted to bring out is that top line, our revenue grew 6.4% to $113.5 million, mostly driven by our comp sales. We saw 2% comp sales growth, which was amazing. Each period of the quarter had positive comp trends, which is great to see, a nd with all that, we were able to accomplish 19.4% store-level operating margin, which is one of the best in the casual dining sector. It's, it's amazing, and honestly, that's really due to continued operational excellence and focus on affordable operations. Just to conclude there, from the P&L standpoint, adjusted net income, we had $0.44 per share in a quarter, 30% increase in the actual adjusted net income, which is great, great to see. Balance sheet and cash flow, I think, was only always defining Chuy's extremely strong balance sheet position. Our cash balance was $69.9 million as of September 24. And with that, throughout the quarter, you know, we focused on being opportunistic in our buyback program. We bought back actually 539,000 shares for about $20 million, which was amazing. We have about $27 million dollars remaining under the authorization program, which would expire December of next year. W e still have opportunity to tap into that and, buy, buy back some of those shares we issued back, at the ATM during the pandemic, b ut, we still believe that our business have really strong fundamentals. We have a great team and, you know, ready to, host that customer and show them really, you know, defined Chuy's experience s o really, really thrilled, with our fourth quarter and going forward. All right. Well, thank you for that business update. W e could start at the top on sales, and you obviously disclosed that comps through your quarter sort of flattened out. The industry was a little choppier in September, and I think you disclosed that October you were flat to maybe slightly negative. Curious if you could just share just how November played out, if you have any context on November, but just also more broadly, what you're seeing from a demand perspective, health of your consumer, et cetera. Yeah, yeah, yeah. What's continued into the November time frame, October, November is very, very similar. Again, we're seeing still a good pent-up demand, you know, so we're pretty pleased with that. We've seen a increase in our appetizer sales that we mentioned were down a little bit before, s o it's starting to move a little bit there because we introduced our happy hour food basically last April in 2023, after not having anything for a happy hour for the prior two years. Mm-hmm. W e're optimistic. We feel great about our operations, we're kind of like turtles in our approach of our business right now, especially when anything gets tough. The great thing about us is we're of such a value, so we feel great about our position in a wishy-washy economy right now. Mm-hmm. Having said that, we feel great about it, and right now, what a turtle mentality means is get in and execute, four-wall execution. We believe long term, that's who's gonna take share, so that's our main focus. Yeah, another thing to add, like Steve said, you know, overall consumer trend appears to be strong, but one thing that is different for us, maybe than the rest of the industry, we introduced Uber Eats in the fourth quarter of last year, actually in the middle of October, and kind of slowly ramped that up through the first quarter of 2023. Mm-hmm. A s we're going into November, December, and actually into Q1 of 2024, we see harder comparisons to a year ago on a trending basis. Just some headwinds that we're facing just on a comparison standpoint. Yeah, that was all the 95% of Uber Eats was incremental. Right, right. Okay, okay. That's a good, good point to keep in mind for sure. Steve, you made some, and the company has made some significant changes through the pandemic that have benefited margins pretty significantly, with your margin several hundred basis points being above where they were pre-COVID. Or, you know, now we're about to turn the clock into 2024. Is this the new normal to where, you know, you've been talking about giving back some margin for the last 12-18 months, at some point. Is this the new normal, or are there still some things about the guest experience or the labor model that you'd like to reinvest at some point, or you see opportunities to bring back, so to speak? I'd say r ight now, where we're at in the last half of the year, it's the new normal. You know, we wanna play in that 19%-20% margin mix. Anything higher than that, I'd probably reinvest back into the consumer, specifically on less price, I'd say. Mm-hmm. You know, we've always been very conservative on our price points, anyway, really to make sure our value play stays consistent and is the best in the market, in all markets that we operate in. W e're comfortable where we're at. We think long term, 3-5 years, we wanna still play in that 19%-20% margin. And like, yeah, as you mentioned, which is 300-350 basis points better than what our 2019 margin was. Yeah. Most of that pickup was in the labor line. A s it relates to changes to the guest experience or the number of hours you're open, or the number of seats you have in the box today versus pre-COVID, is there anything... Or maybe even, I still gotta ask you, any chance we'll bring back the Elvis trunks? J ust thinking about bringing back, getting closer to normal, is there anything that's constraining your traffic recovery in your opinion? No, not at all. I mean, right now, what we did is we did take an hour, as you mentioned, off. We also maximize our tables at 42-44 in general. We believe that maximizes the movement in the store, the energy level in the store, the number of staff that you have in the store. It actually enhances the server experience with the guest. So we're very, very pleased with inside four walls and how we're executing that. We think this model, and we've told everybody all along, 2019 model to our 2021 and 2022 models are two different things. Mm-hmm. What we started in 2021 is the new model. That's why we really don't talk about 2019 anymore. Yep. Yep, makes sense. I guess, as you think about comps and your traffic, specifically, but comps overall into 2024, I know you've said pricing likely in that 2.5%-3% range. What are some of the more significant levers on your radar you think you can pull to drive traffic next year? H onestly, I'm gonna tell you, the number one thing is continuing focusing on four walls and do what we do best, concentrating on customer experience and, you know, execute to the best of abilities. I think, honestly, that's number one. Mm-hmm. Number 2 is, we've been working on expanding our catering business. Right now, it's about 3%, kind of a year-to-date number, and we hope to settle in at 4%-6% but a little bit longer term, right, because it does take some time to develop those relationships with our communities to build out that business. O ne thing that we do, we'll do in 2024, and actually end of this year, is expand our ezCater business. Currently, it's in about 70 of our locations, and we hope by the end of first quarter of 2024, we'll expand it to the rest of the company. Okay. What that's really gonna do, it's really gonna boost our lunch catering sales, office parties, and stuff like that. Y ou know, hopefully, there is some opportunity to increase some traffic in our catering in 2024. Okay. Especially when, now that the offices are opening again, believe it or not, and getting back to at least 3-4 and sometimes 5. W e see that as a, as a pickup that will hopefully get us to that 4%-6% range long term on the catering side. Yep, yep. I guess thinking about new channels that have come in, obviously, off-premise exploded during the pandemic, third-party delivery, included within that, and the margin profile of third-party delivery obviously being lower, than a dine-in transaction. Can you help dimensionalize where does ezCater, the fee structure kind of land? You know, yeah, Brian, one thing I just wanna tell you, just to kind of take a step back, is no matter what sales channel, you know, we operate, whether it's delivery or is it ezCater, it's a dine-in, we're always trying to be and price ourselves margin neutral. Y ou know, from that standpoint, it doesn't really matter where we sell. Okay. W e're generating very consistent margin, a nd yeah, to your question about the ezCater, it's similar to third-party providers, and like I said, margin profile is neutral, and we price it accordingly. Okay. Yeah. Okay, that's great. That's great. I guess, a hot topic these days in the current environment is just price value, how much pricing the industry has taken, and thinking about the relative value proposition of different brands. Maybe touch on that. You’ve historically, you know, held to a conservative pricing approach for the brand's heritage. Sure. How have you managed that through the pandemic? How have you seen your relative value maybe widen versus peers, and what kind of an advantage is that? Yeah, great question. I think some people have called me stubborn, in fact, I don't know if you are one of them, but,, we've always, and prior to the pandemic, we were always in that 2, about 2, 2.5% range, and we felt great. We felt it's so important to have that value equation in our concept and specifically in all the competition. I n Texas, we have all the competition, which is, Mexican food on every corner for breakfast, lunch, and dinner. As we move out, we get into all the casual diners, and that's where we're taking share. So it's something that we always monitor market to market. Mm-hmm. During the pandemic, you saw last year, I did take 2 in a historical crazy year of commodities and inflation and, on the labor. We did take 2, and it was roughly about 7%. I think you'll look at the competition at that particular time, is in that 8%-11% range on what they took. In prior years before that, when we were taking 2.5, they were probably in the 3.5-4. Mm-hmm. O ver the years, we've definitely expanded our value prop, and that's important for us. I f you go all the way back to 2008, if you followed us back then, you notice we were probably very last into the downturn and very first out, and I believe that was our value prop at that particular time. Mm-hmm. W e're gonna keep that thing thought process as we move forward. Won't just leave money on the table, but again, we're gonna be the best value in the market. As we move forward, as you've already mentioned, we're looking at that 2.5%-3% range in this upcoming year. You're probably on the competitive set been hearing about a 4%+ number there. A gain, we'll continue to expand that value prop, but that's definitely our three things. T he three things that we really live by right now is still safety and then convenience, especially with our to-go now, and what we've been able to do to keep it at more than double what we were in 2019. Mm-hmm. Then obviously, the value is our third pillar. Yeah. Yeah. And another dynamic we're seeing is, you know, certain brands increase their advertising spend, come back into the market with a little bit louder voice on TV, certain brands, et cetera. W here does marketing and advertising rank for you, and how are you thinking about deploying and maybe changing your advertising, increasing your spend, what have you relative to what the competition is doing into 2024? Yeah, great question. Mm. As you know, obviously, during the pandemic, we stopped all of it, right? You know, I think we started getting really into the social media play really in 2018, and probably a test in 2019, all throughout the year. Social and the, and the part is that that's really share of voice. That's kind of like our... what we consider local store marketing from a store-level com- process. We're right now in the YouTube, we're in programmatic video. We're also and we have a few different assets that we have out running, whether they're 30-second spots, 15-second spots, and the next 36-second bumpers. We're on a lot of sports channels, especially in this time of year, and then as you get into the basketball, especially college basketball, we'll be in that on the programmatic, and we'll stay there. Our spend is roughly around 1.4%. That's what it was pre-pandemic also. Mm-hmm. We evaluate that, but we're pretty pleased with our makeup. Right now, we're in the final processes of our 2024 plan, specifically the second half of the year, and we feel that's plenty good for us moving forward. A gain, the key thing on social media, you can flip it on a dime, right? Mm-hmm. Mm-hmm. I f I have anything that I would like to add, whether it be talking more about a CKO or really talking about the defining differences of Chuy's, which is everything's made from scratch, and it's all homemade, we'll continue that. W e'll be loose, but it could range a tenth or two, but no more than that. I can tell you that now, especially going into the new year, you know, the key message outside of our, obviously, our defining differences, highlighting our CKOs and something new to talk about, we're only also focusing on our value, right? Value that we have in our menu. I think it's a, another great message that is really important to our consumer right now. That's great. Yeah, and maybe elaborate on what some of the specific things you're doing on the value side, too. Whether it be introducing items on the value side or also communicating that to your guests. Well, the key thing is we don't do any price offs, what you have it in price offs right now, whether it be any of our competitors, where they do 2 for $20s and all those other stuff, you can do that all day just looking at our menu. Mm. See, the menu itself screams value, a nd obviously, when we do CKOs, they're all value-oriented, except for one that will be what we call a higher-priced one. We'll probably never make it on the menu because the menu has to scream value, but it's gonna be in the vein that we do everything in all our talk. Like I said, it's really all about communication, how we communicate, how we picture that advertising or asset, you know whether it's the size of the meal that we're offering and the pricing that it has, but o ur creative department and marketing department have been working to craft that message to the consumer. Mm-hmm. I meant to ask this at the beginning when we were talking about the sales and the health of your consumer, but what are you seeing in terms of any behavior changes beneath the surface, maybe in menu mix or how they're navigating, you know, maybe your alcohol mix or your appetizers, et cetera? Maybe you could elaborate a little bit on that. You know, I can tell you obviously, we've talked about liquor attachment rates kind of been going down, especially if you look at 2020 and 2019 and pre-pandemic. They've been down, and year-over-year, they're slightly down, but on a trend basis, we actually see a slight improvement. Mm-hmm. I think overall, it might be because of the consumer maybe a little bit tight on spending right now, with inflation being still where it's at. But also, it's possible because of the new generation of people, maybe a little bit more healthier and maybe not, you know, doesn't quite take a lot of, you know, pleasure in necessarily drinking, b ecause we do see actually attachment rate on non-alcoholic drinks are going up. Mm. It's kind of interesting dynamic, but, you know, like I said, we do see improvements in the liquor attach rates. Our apps attachment, I think, as Steve mentioned earlier, it's actually up. Mm-hmm. We introduced a $5 chips and dips program, kind of a happy hour deal, about early April, end of March of this year. Mm-hmm. W e're really seeing some traction on that from the transaction standpoint so t's really exciting to see, but yeah, overall, it tells you that consumers are still willing to spend with the casual dining but they might be a little cautious, and again, just value-oriented, like you said. T his is not in the planned questions, but just along the lines of sort of the trend towards non-alcoholic beverages, is that, when you're talking about that, are you seeing that mix on sort of just traditional NA bev, sodas, et cetera? Mm-hmm. Yes. Yep. Yes. I guess on your culinary teams and your menu teams, are they starting to investigate further, maybe some non-alcoholic bevs some mocktails zero-proof, what have you? Yep. Where are you on that front? I'd say we're in the early testing phases of that, but again, remember, on all our alcohol sales, 85% of them really are beer and margaritas and a variation of margaritas. Mm. We are looking at a few different margaritas without it. Mm-hmm. That seems like it's something that's gaining momentum, yeah. It's important to note that, you know, as far as we still, if you just talk about our dine-in average mix is right around that 18%, which is a solid number in any category. Mm-hmm. Yeah, oh, yeah. Yeah. Still significant. The thing is, when you more than double your to-go sales, which means you don't have alcohol going out in to-go sales. Mm-hmm. That's a key. In dining, is it still around that 18%, which is strong? Right. Casual dining is more in that 11-13 range. Right. Right. Well, on the margin front, I wanted to just ask you a couple questions on inflation, if we could. The commodity side, I think you said you expect to be down low single digits here in the fourth quarter. Are there any changes worth highlighting? I mean, produce can always flip around this time of year. We've noticed some changes in the beef market. Live cattle futures have sort of pushed out, et cetera. So any changes worth noting? And then just what are your current expectations on inflation as you think about 2024? You know, I can tell you just, I mean, our expectation of the fourth quarter and a full fiscal year didn't really change. We do think, like you said, low single-digit deflation and probably the same for the fiscal year, so that's, that's really good. You know, one thing you mentioned about the beef specifically, we do not use the center cut, you know, like most of the steakhouses out there that's really under pressure right now. We use more of a flat meat, and as a matter of fact, we actually locked in a contract for our beef through third quarter of next year at the prices that are slightly elevated to this year, but still pretty good when you look at our total basket, because chicken is still coming down, produce is coming down and again, that is wild card. Mm-hmm. You know, we feel we're positioned really well. Overall, for next year, what we're thinking that, we think that inflation probably gonna be more in a normal kind of inflationary numbers like that 2%-4%, probably year-over-year, kind of what we've seen, you know, prior to the last few years of this hyperinflation. So hopefully, we'll normalize there, and obviously, whatever price we're gonna take, that Steve mentioned earlier, should be able to cover that. And so we try to stay that, you know, kind of a margin flat, neutral 2024 to this year. Okay, great, great. And then shifting gears a little bit to labor, I think most would say that the environment has improved, but it seems like there are still some markets that are tight and challenged. Not sure if you have markets like that or units in certain markets, but if you do, what percentage of your stores would you say, "Well, it's still tough there? It's never easy. It's never easy. Having said that, we're staffed. We're fully staffed. Okay. You know, and the difference that we're really focused on is our training, though, 'cause it's, it's a different level of employees, s o what, 20 years ago, the first job a young kid would have would probably be fast food. Now it's casual dining, so the way you have to train is different. You're not gonna give them a, a manual per se. It's, it's gonna be on their phone. It's gonna be all social in how you do it, s o we've really made the move over to all that over the last year, year and a half, and our retention rates are, are, are great, you know, much better than casual dining Black Box. You know, we have a turnover rate and a retention rate of about 100% on all our leases is a good number. Mm-hmm. W e feel great about it, but again, we are doing some investment in our training more in the, you know, LMS-type stuff and the social side of our business. 'Cause kids learn on their phone. They don't learn by reading, so it needs to be interactive, and it definitely works, but that's where a couple of extra percentages of spend will be. Okay, okay. And rounding that out a bit, I think your wage inflation has been running sort of mid-single digits. Mm-hmm. Is there any light at the end of the tunnel, or maybe now that we're full, we might dip a little bit below that at all? I know you don't have stores in California which is a good guy in 2024, but how are you thinking about wage inflation? You know, the mid-single-digit number is where we're gonna end up for the fourth quarter and a year. Mm-hmm. Honestly, right now, with what we know, the inflation that currently exists and obviously all the, you know, reset and minimum wages coming up in the states that we operate, which is a very business-friendly, we still think that mid-single digits for next year, it's probably the number that we're gonna be at. Okay. Mm-hmm. Okay, great. I guess we'll round out the conversation with the few minutes we have left, just on unit growth. Obviously, the industry is still dealing with permitting delays and the like, but if, if the universe allows you, you know, to kind of... You expect to open six to eight units next year, but assuming things continue to normalize, I guess, what's your comfort level on hitting that six to eight? Maybe elaborate on the pipeline a little bit. Absolutely. Yeah, I'm very, very comfortable. And we've already said that, it'll be on the higher end of that because we had one roll from this year into next year. You're 100% right, but one of the things that we did is we added on a 90-120-day extras for our construction timeline. Okay. T hat's already baked into our plans for future, next year and the year after that. Mm-hmm. W e're very, very comfortable. We're looking at, you know, what, basically our five states that we've already are already in, and then we expanded that to actually seven. Mm-hmm. It'll be mostly backfill, mostly the smaller prototype. They're in our backyards. Our AUVs for our company is 4.5, in the original five states that we did, it's higher than that, so we feel comfortable really moving into these market points. Mm-hmm. W e feel great, and we feel great about getting into 2025 at 10% growth rate year in and year out after that. So we feel great. Like I said, and when you're talking about the five states, I'm talking, we're gonna be opening a lot of stores in Texas, Oklahoma, Tennessee, Kentucky, Indiana would be the five, and then we added on- Arkansas ... Arkansas Arkansas and Ohio. Okay. T hose are the states that we'll be looking at over the next 3-5 years. Obviously, we're in 16 states, and we're not gonna ignore any of those. Mm-hmm. 'Cause as you know, we feel as we get more stores in a marketplace, we actually do better. Another thing to mention that obviously our development pipeline has never been better. Oh, yeah. We are utilizing, obviously, technology, right? We're utilizing Esri as a site selection tool. We actually just introduced Placer.ai to kind of try to help us put everything together. Mm-hmm. O bviously, we have a great, you know, master broker as well. They're helping us with their relationship and knowledge, and boots on the ground, whether it's our operators our executive team, to make sure we select the right site. 'Cause sometimes technology is the best, but you actually have to have boots on the ground to really feel that, the numbers are real. Yeah, living and breathing there. So, Yep. Yeah. W e feel excellent about the development coming up. Great. And obviously, you know, development costs have shot up during the pandemic, but maybe you can just walk us through your current unit economic targets on the next class of stores or, or the next couple of years, what you're underwriting. And I, and I think you're buying some more sites outright and maybe doing some sale-leasebacks as well. So maybe just talk a bit more about that as well. Yeah, so just real quick, starting with, kind of a buying more sites. Obviously, we have a significant cash position that we mentioned, and we take the opportunity to buy the new sites. We're actually buying some of the existing sites as well, to possibly package them, bundle them together, and do a sale-leaseback transaction after some of those new stores have a chance to mature. And at a good cap rate, we can bring some money back and really boost that cash on cash return that you're talking about. Mm-hmm. Yeah, unit economics, the targets going forward. Obviously, it's a little bit tough environment right now, the construction costs, but we're still targeting at about 30% cash on cash return going forward, and obviously in hopes that some of this construction costs will come down some. Mm-hmm. Mm-hmm. Steve mentioned earlier our margins about 19%-20%, and you know, on a top line of you know, $3.5 million-$4 million. Mm-hmm. We're super excited. That's a key contributor to those a nd then opening, and then that's our model, the 3-5. That's not our expectation. Right. Obviously, we're putting these stores in a market that have north of 3-4.5 AUVs. Mm-hmm. H aving a smaller prototype, because we did change the prototype from about 7,400-7,500 sq ft to 5,500 sq ft, it gives us an opportunity to penetrate some of the smaller markets and expand, you know, our white space as well. D on't be concerned about 75-55. You know, our biggest store per seat is Barton Springs. That's 50 under 5,500, that does $8 million. That's a good sales per sq ft. There you go. Just do that everywhere. Yeah, that's it. Well, any questions from the room? If not, we will go ahead and wrap it there. Thank you again, Steve and Natalie. Thank you so much. Thank you. Appreciate everybody's time.