Good day, everyone, and welcome to the Chuy's Holdings third quarter of 2023 earnings conference call. Today's call is being recorded. At this time, all participants have been placed in listen-only mode, and the lines will be open for questions following the prepared remarks. 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, Inc. At this time, I'll turn the call over to Mr. Howie. Please go ahead, sir. Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2023 earnings release. If not, it can be found on our website at Chuy's.com in the Investors section. Before we begin our 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 risks 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 condition. Looking ahead, we plan to release our fourth quarter 2023 earnings on Thursday, February 22nd, 2024, after market close. With that out of the way, I'd like to turn the call over to Chuy's President and CEO, Steve Hislop. Thank you, Jon. Good afternoon, everyone, and thank you for joining us on our call today. We're pleased with a solid performance during the third quarter, highlighted by revenue growth of over 6% and a comparable sales increase of 2%, including positive comp growth across all periods. Equally important, our ability to maintain a strong value gap relative to our peers has allowed our traffic performance to exceed our broader casual dining peers as we continue to gain share. We also drove improved profitability with a 17.6% increase in restaurant-level profit dollars and an industry-leading restaurant-level margin of 19.4%, representing a 190 basis point improvement over last year. This result further demonstrates our team's ability to effectively and efficiently execute our four-wall operations. We are proud of what our team was able to accomplish during the quarter. As we look towards the end of the year, we will continue to make progress on the various initiatives we have put in place to drive sustainable top-line growth and profitability. With that, let me update you on our growth drivers. Our team's focus on menu innovation has allowed us to generate one of our most successful Chuy's Knockouts or CKO campaigns during the quarter, with items like Hatch Green Chile Burger, Steak Burrito Bowl, and Chicken Tinga Enchiladas, clearly resonating with our guests and driving incremental traffic to our restaurants. To build upon this momentum and keep our offerings top of mind, we are adding a slight twist to our next CKO offering. In late October, we introduced our first barbell approach to the CKO platform, with Braised Short Ribs as a higher-priced CKO menu item, along with Stuffed Avocado and the Elvis Presley Memorial Combo offering. We are encouraged by the early feedback thus far. We are also pleased with the continued strength of our off-premise channel during the quarter, mixing at approximately 28% of total sales as compared to 26% last year. Similar to last quarter, we enjoyed another solid performance from the delivery channel, which was mixing at approximately 11.4% of our third quarter sales, a three hundred basis point increase versus last year. Catering also performed well, with mixing increases eighty basis points year- over- year to 3.3% of total sales. To further capitalize on the catering opportunities ahead, we recently partnered with ezCater and are currently in the process of rolling out the platform to all of our restaurants. We continue to believe our off-premise channel will remain at least in the mid-20s of our sales, with catering contributing approximately 4%-6% of total sales long term. Turning to marketing initiatives, we continue to optimize our digital media campaign using Google, TikTok, Instagram, and Facebook, including organic influencer content, YouTube video advertising, and the promotional advertising with DoorDash and Uber. Ultimately, we believe this approach to marketing yields the best results in our effort to effectively communicate our defining differences from our incredible value, from made-from-scratch food and drink to our exciting CKO offerings and overall differentiated experience at every Chuy's restaurant. Finally, I would like to provide an update to our development plan. During the third quarter, we successfully opened our third restaurant of the year in Harker Heights, Texas, bringing our total restaurant count to 100. We are also on track to open one additional new restaurant in December for a total of four openings for fiscal 2023. Due to continued construction and inspection delays, our new Brownsville, Texas, restaurant, originally expected to open toward the end of December, will now open in late January. As we look forward to fiscal 2024, we are initially expecting to open six to eight new restaurants with a focus on markets where our concept is proven with high AUVs and brand awareness. The delay of our new Brownsville opening will likely move our development target to the higher end of this range. Overall, we are very pleased with the performance of our recent openings and remain excited about our organic growth opportunities ahead for the brand. With that, I will now turn the call over to our CFO, Jon Howie, to discuss our third quarter results in greater detail. Thanks, Steve. Revenues for the third quarter increased 6.4% to $113.5 million, compared to $106.7 million in the same quarter last year. The increase was primarily related to the growth of our comparable restaurant sales, as well as an additional 65 operating weeks from new restaurants opened subsequent to the third quarter of 2022. In total, we had approximately 1,300 operating weeks during the third quarter of 2023, and off-premise sales were approximately 28% of total revenue, as compared to 26% a year ago. Comparable restaurant sales in the third quarter increased 2% versus last year, primarily driven by a 3.8% increase in average check, partially offset by 1.8% decrease in average weekly customers. Effective pricing during the quarter was approximately 3.5%. We expect to carry about the same amount of pricing for the remainder of the year. Turning to expenses, cost of sales as a percentage of revenue decreased 220 basis points to 25.1%, driven by overall commodity deflation of approximately 5% as compared to last year, as well as leverage on menu price taken subsequent to the third quarter of last year. Based on the current market conditions, we now expect low single-digit commodity deflation for the fourth quarter, as well as the fiscal year. Labor costs as a percentage of revenue held steady during the quarter at 30.4%, primarily due to hourly labor inflation of approximately 5% at comparable restaurants, which was offset by a menu price increase taken subsequent to the third quarter of last year. We continue to expect hourly labor inflation of mid-single digits for the fiscal year and the fourth quarter. Operating costs as a percentage of revenue increased 50 basis points to 16.8%, driven by higher delivery service charges from an increase in delivery sales, an increase in restaurant repair and maintenance costs, and higher insurance premium, partially offset by lower utility costs as compared to last year. General and administrative expenses increased to $7.9 million in the third quarter, from $6.7 million in the same period last year, driven mainly by higher performance-based bonuses. As a percentage of revenue, G&A increased to 6.9% from 6.3% during the same period last year. In summary, net income for the third quarter of 2023 increased $2.1 million, or 41.8% to $7.1 million, or $0.39 per diluted share, compared to $5 million or $0.27 per diluted share in the same period last year. During the third quarter of 2023, we incurred $1 million or $0.04 per diluted share in impairment, closed restaurant and other costs, compared to $1.2 million or $0.05 per diluted share in the same period last year. The decrease was primarily related to a reduction in rent paid on previously closed restaurants. Taking that into account, adjusted net income for the third quarter of 2023 increased $2 million or 33% to $7.9 million or $0.44 per diluted share, compared to $5.9 million or $0.31 per diluted share in the same period last year. Moving to our liquidity and balance sheet. As of the end of the quarter, we had $69.9 million in cash and cash equivalents, no debt outstanding, and $35 million available under our revolving credit facility. We also purchased 538,907 shares of our common stock during the quarter, for a total of $20 million. In year to date, we purchased 622,428 shares of our common stock, for a total of approximately $23 million. As of the end of the quarter, we had $27 million remaining under our $50 million repurchase program, which will expire on December 31, 2024. Finally, let me provide an update on our outlook. For 2023, we are now expecting adjusted EPS of $1.85-$1.90 per share. Again, $1.85-$1.90 per share, which includes an estimated $0.08-$0.10 per share positive impact due to the fourth quarter of 2023 containing 14 weeks versus 13 weeks in fiscal 2022. This is based in part on the following annual assumptions: G&A expense of $30-$31 million, 4 new restaurants, net capital expenditures of approximately $35-$37 million, restaurant pre-opening expenses of approximately $2-$2.3 million, effective annual tax rate of approximately 13%-14%, and annual weighted diluted shares outstanding of 17.9-18 million. With that, I'll turn the call back over to Steve. Thanks, Jon. Overall, we believe our business fundamentals remain strong. Our team remains eager and energized to provide our guests with a unique Chuy's experience they have come to expect when they visit one of our restaurants. With our continued focus on four wall operational excellence, disciplined capital allocation, and solid pipeline of unique growth, we have put Chuy's on a path to maximize long-term value for our shareholders. With that, we are happy to answer any questions. Operator, please open the lines for questions. Thank you, sir. Ladies and gentlemen, we will now be conducting the question and answer session. If you would like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. . You may press star two to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question comes from Chris O'Cull of Stifel. Please go ahead. Hello? Chris, your line is open. You can ask your question. Oh, sorry. I had the mute button on. I guess my question relates to traffic performance. Traffic's been negative the past couple of quarters, and the rate of check growth has started to slow. So I'm just curious, what do you think needs to happen to reverse that traffic decline? And, I mean, are there specific company initiatives that can deliver the gains, or is it gonna require just a better consumer spending environment? Well, great question, Chris. As we're looking right now, we feel pretty good about where we're going with our food initiatives, and we definitely have seen incremental bumps during our CKOs of roughly 100 to 100, well, 1 to 1.5%. So we think we need to stay the course on that. Then the rest of it is really just operating in excellence and staying inside our four walls and just continue to execute out there. And that's what our main, main focus on is, really kind of keeping our heads down. But again, I think we have the proper amount of CKOs and the proper amount of really getting our messages out about our defining differences. And I think we'll continue to stay that course. Okay, that's, that's helpful. And then, Jon, I, I had a question about labor costs. I know labor costs as a percentage of sales were flat year-over-year, but if you look at the cost per operating week, it was only up, it was up, I guess, at a lower rate than the wage inflation. So has the company made any improvements or changes to, to its labor management system, or are there any things you guys are doing to try to keep labor costs tight? No, I mean, we're doing more of the same. We do have great transparency into kind of the hours that are spent and the hours per entree that are spent per store. We continue to look at that and manage it. You know, we've... And the other thing too is that we're doing a better job in decreasing overtime, which has helped dramatically in kind of the overall inflation of labor as well. Do you think there's a lot left in terms of reducing overtime? A little bit, but not much. I think we've taken a lot out of that as we've gotten fully staffed. So I think, we're probably—I mean, we're pretty happy where we are. Mm-hmm. There's some efficiencies that I think we'll gain as sales grow, but I think we're pretty happy where we are. Great. Thanks, guys. Thanks, Chris. The next question comes from Todd Brooks of Benchmark Company. Please go ahead. Hey, good evening. Thanks for taking my questions. First, I want to lead off on, if you look at the last couple of classes, and I know we're kind of legging back into a more normalized unit growth cadence, but can you look back on maybe the last couple of years of openings and talk through how those stores have produced relative to corporate average, just as we can kind of have an idea of the productivity with this strategy of infilling in kind of Chuy's intense awareness markets? Yeah, Todd, great question. They are basically performing better than our expectations, or at least at or better than our expectations. Those expectations were a little better, considering that we're in five of our states where the AUVs are better than the company average. So we've been very pleased with this strategy, and it's coming to fruition. Yep, and we'll continue this, the strategy for the near future, definitely next 3-4 years. Okay, great. That's helpful. Thanks. Second question I had: Jon, is there any view on kind of contracting items? I know deflation's been a benefit here, and it's still looking like a contributor in Q4 for you. But as you start to look to 2024, what's the- what's kind of the contracting window and how is that looking out there for items that you can fix the pricing on? Yeah, we continue to strive to contract about 40%-45% of our total commodity basket. Right now, you know, the biggest driver, I think, on most inflationary commodity baskets out there is beef. We're contracted through the first quarter and a little past that, at pricing that's a little more than what we are paying now, but not extravagant, so we're very pleased with that. So overall, from a commodity standpoint, it's really too early to tell, but I think it's gonna be more normalized inflation next year, with obviously the inflation in the beef cost and offset by some other things. Great. And then the last one for me, and I'll jump back in queue. Thanks for the updated guidance. Just trying to get a sense, the $1.85-$1.90 guidance, what's that kind of imply for either same-store sales assumption or traffic assumptions, in the fourth quarter for Chuy's? Thanks. Well, I mean, given the uncertainty environment out there of what's going on, and we have some bigger matchups, if you will, in the fourth quarter, because we are rolling over the implementation of Uber in the fourth quarter, which that was, you know, approximately 200-300 basis points as we spelled out in our release there. So that's gonna be a higher matchup going forward in the fourth quarter. So I think the sales will remain solid from here, but from on a comp basis, it'll be a little flattish to up. Okay, perfect. Thanks, Jon. Our next question comes from Brian Vaccaro of Raymond James. Please go ahead. Hi, good evening, guys. Could you just go back to the sales? Could you provide a little more perspective on, on the cadence you saw through the quarter and any update you can provide on, on what you're seeing quarter to date? Sure. So the quarter was. It started out at about two. Let me see. It's in front of me. It was 2%. I'm sorry, Steve. Yeah, it's all right. July was 2.3, August was around 3.1, and September was about 0.8. Yeah. as far as our sales cadence throughout the quarter. What we're seeing here in October is, you know, flattish to slightly down in October in overall comp. A key part of that, as Jon just mentioned, was rolling over the 300 basis point improvement on DSPs that we mentioned in our delivery partners. Yeah. Great. Okay, thank you for that. And Steve, just thinking about the pipeline in 2024, I'm curious what you expect the average build-out cost to be and how that might compare to 2023. And, Jon, maybe you could talk to also this the real estate strategy that you're employing. Can you just remind us how that's impacting your plans into 2024? Why don't you go over the real estate strategy? Yeah. So I mean, right now, obviously, as you know, the build-out cost is probably about 40% higher than it was prior to the pandemic. Now we're also doing development work of the site, land work, versus getting the site delivered to curbs in, like we were prior to the pandemic. So that's added some cost as well. So you're looking at overall cost in probably that, you know, $3.5 million-$4 million range. What we are doing to combat this is, given that our cash situation gives us a little flexibility in our real estate, is buying a lot of our properties. Since we've got to do the land development anyway, buying our properties, doing the land development, and then, you know, in the future, you know, when the cap rates come back down, doing the sales leaseback to recapture some of that cost and increase the overall ROI, ROI, and, and get it to those cash-on-cash returns that we're looking, you know, at 30%. Okay, that's great. And can you remind us, how many pieces of land do you currently own? I think it's right around 5-10 currently. Yep. Yeah. Okay. About half, I think about half of what we're opening in 2024 are purchases. Yes. Okay, perfect. Thank you. And then just last one for me, if I may... Oh, sorry, did you have a comment? No, go ahead. Okay, great. Just on labor costs, you know, kind of big picture in a little bit. I think for most of the post-pandemic period, you've been thinking that that would get into the low 30s, say, the low, you know, say, 32% or so range. And I guess the question is, are we now at the point in late 2023, where this level in the 30%-31% range might be the new normal, or there's still a level of hours or investment you think you need to make in that line? Thank you. You know, yeah, I appreciate it. You know, going in, our lowest indexing quarter is the fourth. So you know, we probably are in that 31%+ range is what our objective probably would be. Okay, about 31- Yep, 31%, 31.5%, right in there. Thank you. Our next question comes from Nick Setyan of Wedbush Securities. Please go ahead. Thank you. As we think about comp drivers going forward, you know, can you just maybe enumerate, you know, the comp drivers for the rest of Q4 and, you know, into 2024 as you wrap that Uber Eats rollout? Yeah, I would say the two main drivers are obviously catering. Catering has been and exceeded our expectations kind of each quarter-over-quarter. So you know, we did close to 4% last year in catering. I think we will surpass that this year in the fourth quarter. And then also our CKO has continued to drive incremental growth. Those are the two main factors, as well as we're upping our advertising spend in the fourth quarter as well. Along also with a great time of really getting into the gift card season, obviously through the holidays. What do you expect the marketing expense to be in Q4? On the year, it will, it'll break down into about a 1.4%, but for the whole year, but I added about $300,000 into that 1.4%, for the fourth quarter. Do we see an uptick in marketing next year as well, as a percentage of sales? ... I'm sorry, Nick. You're kind of breaking up a little bit. Can you say that again? Can we see an uptick in marketing as a percentage of sales next year as well? No. No, I mean, we're still gonna budget that right around that 1.5%. Okay. Thanks very much. Thanks, Nick. Our next question comes from Tyler Prause of Stephens Inc. Please go ahead. Hey, thanks for taking my question today. So some of your peers during this earnings season have called out a return to normalized seasonality and spending patterns, reflecting maybe a similar cadence to that of pre-COVID. I would love to get your thoughts on industry trends and how that might relate to what you're seeing at a restaurant level by income cohort as far as trade down or mix management. You know, right now, I'd say for us, our first normalized quarter we felt was the same time last year. That's when we felt we were starting to get back to some normalized. And as throughout this year, it is, it was very similar to the cadences that we saw in pre-COVID days. Yep. It didn't get somewhat normal until the fourth quarter of 2022. Very helpful. Appreciate that. And, as far as the G&A guidance, how should we think about that going into fiscal year 2024? Sure. Probably more, right now it's got a little more performance-based bonus on that. What we normally try to do from a G&A perspective is we basically budget target bonus, and we look at G&A as kind of flat to the next year, just adding on about 80% of our store growth. So you can look at maybe adding about 5% onto the G&A for next year. However, with the target bonus or with the extra bonus on there, it's probably gonna be flat with what it is this year, next year. So you can kind of use the cadence that you're seeing on a quarterly basis for G&A next year. Great. And, just one last one here, if I could sneak it in. So appreciate the G&A guidance—sorry, as far as D&A, how should we think about that for the fourth quarter in the fiscal year 2024? As far as from a percentage standpoint, or? Yes, as far as percentage. But D&A, I mean, I would take it, I mean, just trend it as it's trending on a percentage basis. Great, and, that's all for me today. Thank you. All right. Thanks. Thank you. Thank you. Ladies and gentlemen, just a reminder, if you'd like to ask a question, you're welcome to press star and then one to place yourself in the question queue. Our next question comes from Drew North of Baird. Please go ahead. Thanks for taking the question. My first one is just on Q4 margins. Is there any way to contextualize the level of restaurant margin improvement you expect in Q4? It sounds as though commodity costs or the cost of sales line should remain very favorable, again, providing a nice tailwind. So I guess, is it right to think we could see a similar level of margin expansion year-over-year as we saw in Q3, or any other puts and takes we should consider as it relates to the fourth quarter? Great question, and, thanks for the question. Yeah, I, I think you're not gonna see... It's gonna be more like probably the first quarter, because we're gonna see a little higher, labor in the fourth quarter that's gonna offset that favorability in the cost of sales, as well as, as higher, operating costs. And so the way we're looking at it, it may be kind of flat to last year's margin. However, adding on to that, about 60-100 basis points relative to the extra weeks, weighting that we get on that extra week as far as the, the, 53rd week. The 53rd week, on the weighted sales on, on the fixed expenses, we get an extra 70-100 basis points. So you're looking at, you know, probably 70-100 basis points better than last year. That's very helpful. And then, one, looking ahead to 2024, I guess with signs of still relatively modest total inflation here in the fourth quarter, I guess, how should we start to think about the inflation backdrop for 2024 for commodities and labor based on what you're seeing out there today? Maybe if you could provide some context, or guardrails on commodity inflation and labor inflation for 2024, and how that is informing your view on taking price next year as you cycle the, the increase in February. Sure. It's still way too early to tell. So, I mean, you know, but what I said earlier was that we think next year is gonna be a more normalized inflation year from a commodities perspective. I don't see labor changing much from this year, so probably in that mid-single digits next year inflation. So that's kind of what we're seeing today. But again, it's really too early, and we'll give you more input on that when we release our fourth quarter numbers. But you will see us probably get back to our historical, before COVID type of price increases with that information Jon just gave you, in that, you know, 2.5%-3% range, and we usually do, one price increase a year, and it'll be at the beginning of February, is when we do that. So like I said, in that, in that, at 2.5%-3% range. Very helpful. Thank you. Our next question comes from Andrew Wolf of C.L. King. Please go ahead. Hi, good afternoon. I want to ask on the development side, very generalized kind of question on, you know, kind of your confidence that you can, you know, effectively double new restaurants, you know, given in such a frustrating environment. I know, I know you have a different plan longer term, but, you know, just sort of in terms of checking the boxes on permitting and making sure equipment's around and contractors show up and, you know, just the nitty-gritty of actually getting the, you know, the building open. Yeah, yeah, frustrating. It's been frustrating this year, though, our pipeline is really, really strong for the next few years. We've worked really hard on it this year, and we're further down the road that we feel real comfortable on that. You know, 6%-8% that I mentioned then with new Brownsville moving back a little bit, like I said, I think the high end of that range looks pretty comfortable to talk about. So that's what we did. So again, I think we're down the road in a lot of these, so we feel pretty... You know, we feel good about the 6%-8%. Getting back into 2025, we still feel good about, you know, getting back to that- 10% 10% solid growth in 2025. Okay. And my other thing is, as a follow-up on the Uber Eats, I guess that fully lapped in October and partially in September? It's basically week 41, so just slightly after quarter end in Q3. Okay. So if that's gone flat and the business is—if the business is flat versus an exit rate of about two, does that mean I'm doing my math right, like the 88% of the business that's not delivered is actually improving sequentially a little bit? Like, in-store dining or something is actually at a slightly- A little bit. We're seeing a little bit improvement on that. We also for the fourth quarter- In the industry. Yeah. Yeah. Okay. I'm just trying to make sure I, I can understand that. Okay. Yeah. Were you saying something else? No, that's fine. Okay. That's it for me. Thank you. Thanks, Andrew. Thank you. Ladies and gentlemen, we have reached the end of today's question and answer session. I would now like to turn the call back over to Mr. Steve Hislop for closing remarks. Thank you so much. Jon and I appreciate your continued interest in Chuy's and are available to answer any and all questions. Again, thank you and have a good evening. Thank you. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your line.