Good evening, and welcome to the Texas Roadhouse second quarter earnings conference call. Today's call is being recorded. All participants are now in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. At that time, if you would like to ask a question, please press star then the number one on your telephone keypad. Should anyone need assistance at any time during the conference, please press star zero and an operator will assist you. I would now like to introduce Tonya Robinson, Chief Financial Officer of Texas Roadhouse. You may begin your conference. Thank you, Emma, and good evening, everyone. By now, you should have access to our earnings release for the second quarter ended June 28, 2022. It may also be found on our website at texasroadhouse.com in the Investors section. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and therefore undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC. These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements, including factors related to the COVID-19 pandemic. In addition, we may refer to non-GAAP measures. If applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release. On the call with me today is Jerry Morgan, Chief Executive Officer of Texas Roadhouse. Following our remarks, we will open the call for questions. Now I'd like to turn the call over to Jerry. Thanks, Tonya, and good evening. We are pleased with our second quarter results driven by impressive sales at our concepts. For the quarter, our restaurants averaged over $135,000 in sales per week. It was great to see that dine-in guest counts at comparable restaurants remained above both 2021 and 2019 levels throughout the quarter. It was also encouraging that our restaurants still averaged nearly $18,000 per week in to-go sales. Seeing our operators generating these sales volumes both in the dining room and in to-go is why our enthusiasm for the future remains as high as ever. In the second quarter, we saw a return to our historical seasonal sales trends, which we did not have in 2020 or 2021. As a result, we experienced a slight decline in our year-over-year total traffic as the increase in our dine-in guest counts was offset by a decrease in the to-go guests. We do not believe this reflects a change in overall demand for our restaurants. Rather, it appears that more people are getting back to their normal routines when it comes to dining habits, work schedules, and vacations. Additionally, we believe that sales and traffic performance that we saw in the first four weeks of the third quarter supports a continuation of this trend. Despite the decline in second quarter to-go traffic, we remain confident in our ability to execute a successful to-go business. As our to-go sales are settling in well above our pre-pandemic levels, we are investing in several digital and development initiatives to improve our overall long-term execution and ensure our to-go guests receive the same legendary food and legendary service that our dining guests receive. At this time, we are evaluating our October menu pricing. As always, we will stick to our tried and true process of gathering feedback from our operators and listening to what they believe is right for their restaurants. We are pleased that we have not seen any signs of guest pushback or negative mix from the price increases that we have taken over the last twelve months. This menu price acceptance by the guest is important because our value proposition has been and always will be one of our key differentiators. We expect to be cautious when it comes to menu pricing, especially at a time when the consumer is feeling inflationary pressures. On the development front, we opened 4 company-owned Texas Roadhouses and 1 Bubba's 33 during the second quarter, and we have already opened an additional 2 Texas Roadhouses in July. We remain on track to open approximately 25 company-owned Texas Roadhouse and Bubba's 33 restaurants this year, with all remaining unopened restaurants currently under construction. It is worth noting that any construction or supply chain delays could push a few of them into early next year. We also expect to open 2 company-owned Jaggers and our first Jaggers franchise restaurant later this year. Lastly, our international franchise partners are on track to open 6 restaurants in 2022. Our new Texas Roadhouse restaurants continue to open with high sales and guest counts and are holding on to these volumes. The restaurants that we have opened this year and the majority of the restaurants that we expect to open going forward are larger buildings. These new prototypes are being built with a similar number of seats, but more storage and cooler space in the kitchen as well as a more dedicated to-go area. This will better support the volumes and the mix of business that we expect going forward. While the added square footage is pushing development costs higher, our returns remain comfortably above our target due to the strong sales of these restaurants. As I said at the beginning, we are excited for the future of all three of our restaurant concepts. They are each at different stages of development, but combined, they provide us with a long runway for future sales and profit growth. Now, Tonya will provide a financial update. Thanks, Jerry. For the second quarter of 2022, our revenues increased 14% compared to last year, primarily driven by store week growth of 6.4% and an increase in average volume of 7.4%. Restaurant margin dollars grew 6.6% to $168.7 million, and net income decreased 4.1% to $72.4 million or $1.07 per diluted share. The repurchase of 2.7 million shares of stock during the first half of the year benefited EPS, offsetting most of the percentage decline in net income. For the quarter, comparable restaurant sales increased 7.6%, driven by 8.4% average check growth. While guest traffic declined 0.8% overall, dining room traffic was up 3.8%. Check growth includes positive mix of 1% driven by year-over-year improvement in the percentage of guests choosing to dine in, as well as all guests continuing to order higher-priced entrees. As Jerry mentioned, our restaurants averaged $135,000 in weekly sales in the second quarter, and to-go represented approximately $17,800, or 13.1% of these total weekly sales. While our to-go percentage declined throughout the quarter, we are comfortable knowing that part of this decline was driven by a year-over-year increase in the number of guests dining in our restaurant. By month, comparable sales grew 8.7%, 9.6%, and 5.2% for our April, May, and June periods, respectively. Comparable sales for the first four weeks of the third quarter were up 3.9% as compared to the same period in 2021. While the comp percentages softened in June and July, we believe this is more a function of the guest count trends that we are lapping from last year rather than a significant change in the level of sequential guest demand this year. This belief is supported by our three-year comparable sales trends, which increased at a consistent rate of approximately 30% throughout the second quarter in July. For the second quarter, restaurant margin as a percentage of total sales was 16.6%, down 116 basis points as compared to the second quarter of 2021. We also focus on restaurant margin dollars per store week, which were approximately $22,400, up 0.3% as compared to Q2 2021. Food and beverage costs as a percentage of total sales were 34.1% for the second quarter, up 98 basis points compared to 2021. Commodity inflation of 11.8% was the primary driver of the increase and was better than we expected as we benefited from lower beef prices later in the quarter. We have updated our full year commodity inflation guidance to approximately 12%, with roughly 75% and 30% of our commodity basket secured with fixed prices for the third and fourth quarters, respectively. While spot prices for beef have been declining, our current expectation includes some elevation in beef cost in the fourth quarter. Labor as a percentage of total sales increased 43 basis points to 32.7% as compared to Q2 2021, while labor dollars per store week increased 8.7%. This increase in labor dollars per store week was driven by wage and other labor inflation of 7.7% and growth in hours of 2.3%. These increases were partially offset by lapping $1.9 million of additional bonus and COVID-related payments to our restaurant employees, as well as the $1.6 million net benefit of adjustments to the reserves related to our workers' comp and group insurance programs. The reserve adjustments include a $0.8 million favorable adjustment this year and a $0.8 million unfavorable adjustment last year. Based on current trends, we have increased our full year wage and other inflation expectations to approximately 8%. Other operating costs were 15% of sales, which was 21 basis points lower compared to Q2 2021. The year-over-year benefit comes from sales leverage due to higher averaging of volumes, partially offset by higher costs in areas such as utilities, credit card charges, and repairs and maintenance expense. Moving below restaurant margin, G&A grew year-over-year by 33.5% and came in at 4.8% of revenue. The $12.4 million growth in year-over-year G&A expense was primarily driven by costs associated with our managing partner conference that was held in April of this year. For comparative purposes, we incurred costs of approximately $8 million in total this quarter versus approximately $3 million for the abbreviated conference in the third quarter of last year. Our effective tax rate was 13.4% for the second quarter as we continue to benefit from higher FICA tip credits. As such, we have lowered our full year 2022 tax rate expectation from approximately 15% to approximately 14%. With regards to cash flow, we ended the second quarter with $180 million of cash, which is down $145 million from the end of the first quarter. Cash flow from operations of $111 million was more than offset by $60 million of capital expenditures, $31 million of dividend payments, $25 million of debt repayment, and $128 million of share repurchases. We also acquired one franchise restaurant for $6.6 million. We continue to expect full year 2022 capital expenditures will be approximately $230 million. With the addition of the 1.7 million shares that we repurchased in the second quarter, we have now repurchased over 2.7 million shares of stock for $212.9 million this year. At the end of the second quarter, we have approximately 167 million remaining under our share repurchase program. Now I'll turn the call back over to Jerry for final comments. Thanks, Tonya. We are fully aware that discretionary spending is being impacted by higher prices. History shows that during times like these, Texas Roadhouse's incredible value positions us to come through this period with increased guest satisfaction and a larger and more loyal following. As we move into the back half of the year and plan for next year, we will first and foremost remain focused on our legendary food and our legendary service. We will remain fanatical about maintaining both our heaping sides and our made from scratch food. We will also continue to ensure that our restaurants are properly staffed with friendly and attentive Roadies in order to meet all our guests' needs. In closing, I want to thank our managing partners and their teams, and also our loyal guests who drove our quarterly sales to over $1 billion for the first time in our history. We are highly confident in our operators and their ability to continue delivering strong operational results. That performance, along with a smart and disciplined capital allocation approach, will create continued growth opportunities for our Roadies and position us to create additional value for shareholders over time. Operator, please open the lines for questions. At this time, I would like to remind everyone in order to ask a question, press star, then 1 on your telephone keypad. In the interest of time, we ask that you limit yourself to one question and one follow-up today. Thank you. Your first question comes from the line of Brian Bittner with Oppenheimer. Your line is now open. Great. Thanks. Good afternoon. I wanted to ask about the cost side of the equation. It seems as though your food cost outlook is getting a little bit better than you originally were thinking, when you talked to us last quarter, and that seems to be the other way around relative to your peers and how they're communicating. I guess the exposure to beef in the near term is helping, but you said you expect it to spike again in the fourth quarter. Can you talk to us about how that frames how you're thinking about beef for 2023 on the cost side? The follow-up to that, I'll just ask now, is we saw your COGS margin sequentially improve from the first quarter, which was nice to see. How do you want us to think about the trend in your COGS margin moving forward? Sure. Thanks, Brian. Yeah, you know, we were able to moderate that guidance on commodities for the full year down to 12%, which felt really good. A lot of it was driven by the fact that we were seeing beef costs soften across the second quarter. That felt really great to see, especially after those prices spiking the way they did in Q3 and Q4. Some of that was offset, too, just by higher commodity prices across the basket. I think that's what you're hearing a lot of other folks talking about right now that maybe haven't experienced beef inflation or just those other line items. We're seeing it in other proteins like pork, chicken. We're seeing it on potatoes, some dairy items, bread mix, oils, things like that. It truly is spread across the basket pretty evenly, as we look at the remainder of 2022. We did think about what beef prices might be, and as we said, 70% locked on, you know, prices in Q3, only 30% locked in Q4. There is some risk there, some uncertainty. Could go either way, but just, you know, as we're hearing about beef supply, potential issues on beef cattle supply, how, you know, farmers are taking a lot of cattle to feedlots right now and things like that, we're kind of expecting there could be some, you know, that could just create some pressure maybe later on in Q4. Still remains to be seen, but that's kind of how we're thinking of it. Can't really give you a lot of outlook into 2023 on beef other than to say a lot will depend on what that beef supply looks like, how that plays out in 2023, what the timing is. Obviously, as you all know, you know, if supplies get restricted, that can have an impact. We'll see kind of what happens going forward. On the, I think the last question, part of your question, Brian, was just about margin percent, especially on the COGS line, heading into the back half of the year. I'll tell you know, you would expect them to continue to be a little higher, much like they were last year. You know, costs kind of went up last year. We're coming off of those numbers and would expect to see, you know, still some pressure on that COGS line, in the back half of the year, compared to maybe what we felt so far this year is kind of the way we're looking at it. We do have a little bit of beef deflation in Q3, but we expect that to kind of flip back around in Q4. Thank you, Tonya. You're welcome. Your next question comes from the line of Jared Garber with Goldman Sachs. Your line is now open. Great. Thanks for the question and actually kind of follows Brian's line of questioning, but more on the pricing side. Jerry, you mentioned that you're assessing your typical third quarter price increase and those conversations that you always have with your operators. It sounded like you're taking a little bit more of a measured approach just as we think about the consumer being pressured a bit more broadly with inflation. Can you just give us a little bit more color on what the conversations with the operators are like right now and how your customer you know may be positioned towards the back half of the year to absorb another round of price increases? Is there a reason you're thinking that maybe it might be time to pump the brakes on the incremental pricing? Thanks. Yeah. I think we will go into it from our side with a conservative approach as we have in the past. We will hear from our operators and see where the folks in our category are at, and then really try to make the best decision that we can for our business and for our consumer. Like you said, we're in the early stages. You know, we've obviously shown in the past too that we'll do what we have to do if we feel like it. It's the right thing that balances the business. We'll go into it with a conservative approach and see how these next 60 days kind of shake out once we hear from everybody, and we have the data, and we see where our costs are at and then try to make the best decision possible for both parties. Great. Thanks. Thanks, Jared. Your next question comes from the line of David Tarantino with Baird. Your line is now open. Hi, good afternoon. A couple questions on the sales trends. You know, if I look at your performance, it's holding up very well relative to what we're seeing elsewhere. I guess my question is, are you seeing anything under the surface in your business that would make you concerned about your consumer, you know, or at least the health of your consumer at this point? I know there's a lot of cross currents, so wondering if you're seeing any signs, you know, either trade down or otherwise that might give you a little pause at this point. I mean, I would tell you from an operations standpoint, we really haven't. Like we said, it really has felt like we've got back to a more seasonal process. We're here at the end of July knowing that in the next 2-3 weeks, people will be going back to school and changing a little bit of their routine. You know, I think the work habits and the vacations, it seems to have been kind of getting back to normal almost in some aspects. From that, we obviously are the demand is still very high, which is great for us. The dining rooms are full, and the consumer continues to be very hungry for our made from scratch and our hospitality in the restaurant. We feel good from that aspect. Just like you said, the demand is high for us, which is exciting. I think too, David, I'll tell you know, sometimes the percentages can be a bit misleading because of with the noise and the cross currents, as you mentioned. When you look at average weekly sales dollars, it again, like Jerry mentioned, it just gives you some confidence because you see those continuing to grow year-over-year. From that perspective, you know, feels good. We see mix. We saw mix moderate a bit. That was a little bit more from the shift back into the dining room a bit more and to-go being down a little bit more as you would have expected. We still got a little bit of benefit on mix from that, but the expectation would be, and we kind of saw it in P 6 and 7, that, you know, mix is moderating even a little bit more. Staying positive, but it's behaving as we would have expected, and we're not really seeing anything that would lead us to believe pricing isn't flowing through or that the consumer is changing their behavior. Good to hear. Jerry, my follow-up is related to this. You know, you weren't CEO the last time we had a major kind of prolonged downturn in consumer spending. I was curious just to hear your philosophy on how you would approach a downturn if we get one. You know, certainly there's a lot of concerns about that in the environment. Just wanted to hear your thoughts on what you would do differently or not do differently if you were to get that scenario. Yeah. When it did happen, I was actually a market partner running 12 restaurants in the state of Texas. I saw that we stayed true to our made from scratch, our heaping sides, our friendly service, you know. As long as I know that we're gonna deliver on our promise, and we're gonna do the things that we were born to do kind of thing, and that is provide every guest that walks through our door with the best value, the best plate of food, the friendliest place, and an experience that they will feel good about. That's when you really have to earn it, their business, when things are tough. Because when the money's tight, they're really thinking about where to spend their money. We really have to overdeliver on the experience so that it's worth it to them. I think our strategy will always be to exceed our guest expectations. We'll have to continue to look at our cost controls. Our menu has many items, and I would refer to them almost as Country Dinners that are very value oriented to our consumers. We built that into the menu from the very beginning and to focus on those items that are extremely good portion sizes and great value. I think we'll just continue to do the things that we do and try to overdeliver on the promise. You know, I don't wanna get into any kind of shrinkage or reduction of our plate and you know. I think we can focus on our value-driven menu items if we really need to go push that harder. We will overcome it, we will fight the fight, and we will earn the business from our consumer. Makes sense. Thank you very much. Thank you. Your next question comes from the line of Christopher O'Cull with Stifel. Your line is now open. Thanks. Jerry, you mentioned that a return to normal seasonality this summer has affected traffic, and there's been a debate as to whether seasonality or consumers choosing to spend less are the reasons for the weaker industry sales the past several weeks. What gives you confidence the slowdown you're seeing relates to a return to normal summer seasonality versus not having that last year? And then should we see an improvement in comp performance as school begins, as we start to have like-for-like seasonal patterns, I guess? Well, I think if we go back and compare to what would be a normal year, which has been a while, you know, typically when school goes back in, our weekdays soften up and our weekends get busier. I guess that's what we've been kind of studying over the summer, is that we've actually seen both the weekdays and the weekends maintaining and holding. Although a slight reduction, typically your flip, your weekends get a little softer during the summer because people are out enjoying lake time and different things like that. You know, it's kind of hard to really. Are we completely back to normal? I wouldn't say that. It will be interesting to see as we go back to the school year this year with, I would think, most everybody 100% back in classroom, and will the consumers' routines get back to more of a normal trend. It is to be determined, I guess, at this time. I do know that typically you see a softening of sales in August, September, October a little bit because of the school transition. We've always continued to be positive sales growth over the past. We're lapping some pretty big numbers from that standpoint. I think the big number for the average weekly sales tells us a lot. More importantly, there's a huge demand, and we just got to live up to the expectation. I think too, Chris, you know, if you look, we mentioned that 3-year stack number, you know, so kind of comparing back to 2019, which maybe was more normal, and you see a lot of consistency in that number. You know, through P7, if you assume that continues in the back half of the year, that can give you some confidence on what comps continue to be, you know, in the back half of the year. Some of it, you know, you are losing a bit of check. You know, we had that 4.1% menu price increase that we took in late October of 2021. Some will depend on what rolls back in from the pricing conversations that we have. We do expect mix to kind of moderate a little more in that flattish area, in the back half of the year. It really just all comes down to traffic. Okay, that's helpful. Just had another question, Tonya. The 10-Q last quarter stated the company expects the average investment to build and open a Texas Roadhouse location this year is going to be about $1 million higher than what was spent last year. Is the company planning for this higher level of investment to continue into 2023, or are you considering changes to the prototype or something else to help reduce the investment? Well, there's kind of a couple things going on in that increase. You've got, you know, the larger prototype is a piece of it, but then there's also just the inflation that we're feeling right now on equipment, building costs, labor, all of those things. There would be some expectation that those numbers would come down as we get through that inflationary cycle, and, you know, see that perhaps come back down a little bit, would be the hope. We're always looking for ways, though, to control those costs and, you know, manage those deals, things like that. We're looking for the best deal on rent. We're looking, you know, for all of those things. Really right now, it's really driven by inflation more than anything else. Yeah, on the Roadhouse side. The Bubba's 33, I think we're probably digging a little deeper on things that we could do to maybe bring some of those construction costs down. We've got a few initiatives that we're really trying to see. I think we've got a few restaurants right now that have opened with a couple of the initiatives, but we anticipate by the end of the year, the full package of initiatives to reduce some of that without really changing the building, will be in effect. We'll know. Right now, Bubba's hasn't increased any, which we've been able to kind of chew up the inflation on that cost, and we'll continue to look at it and then hope for maybe some reduction in pricing as we go down that road on it. A couple of more things on the Bubba's side, probably more than Roadhouse, when it comes to the building change or being able to pull some costs out. Great. Thanks, guys. Thank you. Your next question comes from the line of Jeffrey Bernstein with Barclays. Your line is now open. Great. Thank you very much. First question was just on the restaurant margin for the back half of the year. Seems like you have a pretty good line of sight into commodities with your tempered expectation, and on the flip side, maybe a little bit more labor. You know, other than the pricing, which is unknown, but how do you think about restaurant margins for the second half of the year? You know, do you have intention to return to a certain target? Or better yet, just what's your expectation for the back half on that blend of all those puts and takes? Sure. I think, you know, as we see sales return to some normal seasonality, I think margins kinda go that way too, and Q3 and 4 are typically some of our, you know, lowest margin quarters. So I think there's kind of that starting point for the rest, the back half of 2022. Then, you know, a lot just depends on where some of these inputs land. You're continuing, besides commodity and labor, you're continuing to see, you know, costs going up a bit in the other operating line, utility costs. Those types of things continue to rise, and I could see, you know, that continues to be an impact in the back half of the year. You know, where we land on pricing has an impact, you know, on what margins might look like and how traffic fits into that. I think there's still a lot of moving pieces to it. I think margins are gonna be pressured in the back half of the year and we're gonna see that continue. We'll just see kinda how that plays out. I still feel good, Jeff, to your point on, you know, being able to get back to 17%-18% margins, that's always our goal, at some point in time. A lot of that expectation of when that happens is just gonna be driven by the commodity outlook and labor outlook and, you know, what sales continue to look like. Feels like that, you know, don't know if that'll be a 2023 possibility. You know, it'll be great if it is, but that is still definitely a goal, and we think it's achievable. Understood. Just to follow up, Jerry, you talked about the restaurant pipeline and feeling pretty good that all things are under construction, but a couple could slip, I guess, into 2023, which is totally reasonable. As you think more broadly about 2023, have you seen additional available real estate that intrigues you? Maybe there would be an uptick from the 25 openings between Texas and Bubba's, or are you kind of keen to kind of stay more in that mid-20s rather than pushing 30 or higher? I'm just wondering what your early thoughts are. I know you don't have all things signed and delivered, but just your thoughts on unit openings in 2023. Yeah. I would tell you the pipeline looks pretty solid. I would tell you we'd be higher than. Right now it looks very optimistic. We have quite a bit prepped up and ready and not including, if anything, from 2022 pushes. We're focused on trying to get to that higher end in 2023. There have been some really good deals out there where our guys have been working really hard to bring us some opportunities. I feel very optimistic that, you know, it's and like you said, it's a little bit more expensive to do business, but as far as the real estate availability and where we want to go, it's available out there and we're being aggressive on it, I can tell you that. Great. Thank you. Thank you. Your next question comes from the line of Peter Saleh with BTIG. Your line is now open. Great. Thanks. I want to come back to the conversation around, you know, consumers and the behavior there. I think in the past maybe several quarters or so, you were seeing consumers still trading up from some of the smaller steaks to larger steaks. Just wondering if you're still seeing that or if you're seeing any signs of check management at all, you know, a reduction in appetizers, drinks, desserts. Anything of that sort would be helpful. Yeah, you are still seeing that a little bit, Peter, on the entrees. You're seeing a little bit of that trade up. Probably, you know, if you're seeing any softness on mix, maybe alcohol, the number, you know, of alcoholic beverages, you know, a little softer. But we're still seeing a bit of that, even though we're lapping some pretty strong numbers of that happening, you know, last year. We're still seeing a bit of that. Not really anything, you know, within the food categories that would signal, you know, anything happening. That feels pretty good. Great. Can you just remind us, Tonya, what the one-year comps were last year in July, August, September, just so that we have a good comparison for this year? You want the comp sales last year or- July, August, September. broken down by month for the quarter? Yeah. Yes, please. Yeah. Let me see. Let me make sure I'm giving you the right numbers here. Those numbers last year were 44.1% in July, 29.8% in August, and 20.7% in September. Great. Thank you very much. Your next question comes from the line of Eric Gonzalez with KeyBanc. Your line is now open. Hey, thanks. Good afternoon. I'm wondering about the off-premise business. You know, you don't play in the third party arena, which I believe does skew higher income, but I was wondering, you know, how the customer profile of your takeout guests might compare to that of your dining guests, and which you would say was a little bit more vulnerable to some of the macro headwinds that seem to be playing out across the industry? If we were to enter a significant economic downturn, would you expect to see the takeout business slow before the dine-in business or vice versa? I'm just wondering how you think about that. Thanks. That's a great question. You know, I don't know that we know yet. I think it's been interesting to see as the dining room traffic has slowed down a bit, you see more folks maybe moving from to-go back to dine-in. I think some of that is just a function of being able to get into the restaurant in, during the week. Because, you know, waits sometimes are so long. I think that was maybe helping the consumer decide on the to-go transaction rather than waiting, to get a seat inside the restaurant. I don't think there is a big difference between those guests as far as what they spend, the mix of what they're, you know, or anything like that. It seems very similar as far. Obviously, you don't have the alcohol transaction on to-go, but otherwise seems very similar. From that perspective, I think all good. I think it just remains to be seen. I think the guest likes the convenience of to-go is really what we're seeing. The technology that we've added to that transaction makes it very convenient. The way they can come to the restaurant and pick up that order is very convenient. I think, you know, just with the way people live these days, that continues to be something they're going to look for and seek out. It's kind of the way we would look. We're very focused on continuing to drive those to-go sales. Yeah, Eric, just to give a little confidence on that, currently, all summer long in our restaurants, we've been working on what we call Mission Statement University, and it's rolling out the online ordering switchboard system, which helps integrate our dining room orders or basically our to-go orders, whether it be a walk-in, a phone or an online, a little easier and smoother transition into the kitchen so that it's giving our operators a little bit more confidence that they can handle more to-go business without it affecting the dining room. We're very excited. We believe that this software and the education of our operators will allow us, with confidence, to be able to take more orders in every 15-minute segment. That's going on out in our restaurants right now. Obviously we feel great about our windows and our pickup process and even our order process. This is more about our operators feeling more confident that they can handle to-go business successfully without it affecting their dining business. This has been an initiative that we've been doing for the last seven or eight weeks, and we're very excited about our product coach team and our service experts that are out there teaching and coaching. I just personally have witnessed two, one in Connecticut and one in Florida in Panama City myself. It is just a great experience for us to watch our operators learning how to execute at a higher level when it comes to dining room business and to-go. We are very excited from an operations standpoint that we're gonna be able to execute to-go and continue to get better at that experience for our guests. That makes sense. Thank you. Thank you. Your next question comes from the line of Christopher Carril with RBC Capital Markets. Your line is now open. Hi. Thanks for taking the question. I wanted to ask about in-restaurant capacity in your existing restaurant base. You noted the larger formats of restaurants in development, as well as guest counts above 19 and 21 levels. We're seeing, I guess, off-premise mix moderating a little bit, right, shifting to on-premise. How are you thinking about meeting demand in the restaurants today? Well, it's interesting when you look at the comps anyway, you know, typically, and we continue to see this, the most successful restaurants are the ones that continue to drive traffic. They're finding ways to continue to bring guests in the door. They may be getting a bump out, adding seats. That might be one way. Other ways, though, they're doing it, you know, just their seat utilization and bringing folks in on the shoulder periods and things like that. They continue to find ways to drive that traffic. It's always interesting to see. I don't know that we would ever say we have a store that is maxed out capacity or anything like that. I think they continue to find great ways to do it. Got it. And then just for my follow-up, I wanted to ask about labor costs and maybe if you could provide any additional detail on the outlook there. The wage and other labor inflation outlook is maybe a little bit higher than what you provided last quarter. Curious as to how you expect that or those inflationary trends to kind of play out over the remainder of the year. Thanks. Sure. Yeah. You know, most of the wage inflation, that's built into that 8% guidance, a lot of it occurred in Q1 and Q2. You know, it was over 10% in Q1, 7.7% in Q2. A lot of that is what really drove that guidance a bit higher, you know, for the full year. We expected, you know, as we started lapping higher wage rates in the back half of the year, we thought that growth might moderate a bit in the back half. We still think it will moderate, but maybe not as much as we were originally thinking. I think, you know, we have a big focus here on making sure our people are taken care of, doing the right thing, staffing at the levels we need to staff at. For us, it's really that investment in our people is something that, you know, we wanna continue to do. That's, you know, a big focus of ours. I think the trends in the back half, they might be just a touch higher than what maybe we expected them to be. More of it was really what the expectation that we saw in Q2 was a bit higher. It's really what drove that. Great. Thanks very much. Mm-hmm. Your next question comes from the line of David Palmer with Evercore. Your line is now open. Great, thanks. Good evening. Question on the food cost, just to follow up on some of your other comments. You mentioned, Tonya, that I think that you thought that beef prices might be down in the third quarter, and I think your guidance implies for overall food costs for the second half, the overall basket would be up, what, 9%+, I think, or so, something like that. I'm trying to piece that all together. It's not often that you have a comment about your beef that's going a different direction than your overall basket, but you did mention that things are gonna come back up for beef in the fourth quarter. My thinking is you're really talking about, you know, very different quarters over the next two quarters, and then that there's something else going on beyond what we would see, say, in Urner Barry with regard to the steak cuts in your basket, maybe distribution, the other things. Love any color about that. Sure. You know, some of it, David, just has to do with what we're lapping from last year. Q3 was really where we saw that large spike in increases. Rib eye was one of the cuts that, you know, we saw a huge increase in cost last year in Q3. Some of it is just, you know, kind of what we're lapping. Actually, you know, you referenced about 9% in the back half of the year. That is about what we are expecting pretty equally across quarters. You know, even with some minimal. It feels great to say beef deflation, by the way, but it's pretty minimal. Even with some minimal beef deflation, you do have other parts of the basket that are continuing to see higher cost. You know, your other proteins are seeing it. All those things I mentioned earlier, bread mixes, oils, potatoes, some dairy items. You really are seeing more across the basket outside of even beef than we've seen before, that's kind of doing that. The movement to a higher beef cost, again, it's pretty minimal in Q4, and it's just really based on only being locked 30% on fixed prices. We're just kind of anticipating that costs could get a little bit higher in Q4, just if there are any supply restrictions, things like that start coming into the system, kind of what we're thinking. Thanks for that. Then just a follow-up on the pricing stuff. The comments that you made and the trends that you have would seem to suggest that you have pricing power. Your three-year trends are quite firm, and you don't seem to be seeing any major cracks in terms of trade down. I'm just wondering about any other inputs that would give you pause about raising price. Is there anything going on with the competitors where they're discounting? Or are you know, just listening to the news reports about maybe what's around the corner? You know, anything about your mindset that would make you question your ability to raise price? Thanks. I wouldn't question. At this point, I still wanna really get educated as to what our costs are gonna be, and hear from the operators. You know, we go into it with a conservative mindset. We obviously look at the numbers deeply, and then we make a decision that we believe is best for the business, in a balanced procedure. You know, obviously, it's a difficult time because you hear inflation in all of these different areas. You know, we will pay attention to what we believe is important to take care of our consumer. We do pay attention to what's going on in the industry and even in the grocery store. You know, if we have to, we will, and we have. We don't want to, but, you know, I think we know that we have to do something. I just don't know where it's gonna land right now. David, I'll tell you know, we still believe in, you know, the philosophy that commodity inflation is cyclical and commodity costs are cyclical. While we are feeling some significant inflation right now, that cycle at some point will turn. That philosophy hasn't changed. You know, that just means we may take it on the chin a little bit more during that short-term cycle, and count on the guests being loyal and coming back to us, and that's what we've done in the past, and it's really benefited us. Thanks. Yep. Your next question comes from the line of John Glass with Morgan Stanley. Your line is now open. Thanks. If I could just first ask a follow-up on the question about margins, restaurant margins in the back half. You know, typically in many years prior to COVID, back half margins were about 200 basis points below first half margins for the seasonality reasons, you know, we discussed. Is there any reason to think this? You know, I understand you didn't make a pricing decision yet in the fourth quarter, but you kind of know what pricing is in the third quarter. So is that a reasonable starting point to think about back half restaurant margins being down a couple hundred basis points for first half, or is there a reason not to think that way? No, I think that's a good starting point, you know, John. I mean, that's kind of as we head back into some normal seasonality, we're looking at historical trends too, you know, what does that look like from a margin perspective. I don't think that's unreasonable to start there. Then it's just really looking at, you know, how much pricing are we gonna be taking? What do we think traffic trends can continue to be? Where do we land on some of these cost inputs? All of that obviously is a lot of moving pieces for sure. Yeah. No, I appreciate it. It's just that I don't think consensus maybe has considered that yet. Jerry, can you talk about technology more broadly? At one point, and forgive me if I'm misremembering, but KDS was something that was being tested. Where are you on that, if I have that right? What are the important things? I know you talked about to-go, but other technology pieces that you think about for the next 24 months and how they might impact the business? All right. Well, thanks. I'll give you an update on our Roadhouse Pay, which we currently have over 300 stores. The stores that have it, there's an 82% usage in the concept. That is very exciting that the pay at the table, the consumer is using it. It's helping them turn tables a little quicker because, you know, you're right there, you take care of your pay out. We're very excited about our Roadhouse Pay and the rollouts are going very well. The Digital Kitchen, as you know, we opened a new store in Shakopee, Minnesota, I believe in the early part of the year. We just completed our conversion of an Austin, Texas restaurant, and right now, the feedback is very positive. Food quality, kitchen times, no lost tickets, easy to train employees. You know, it seems like we've got a lot of real positive feedback there. I was just talking with my chief tech guy earlier about that success and what we are gonna look at for not only the fourth quarter potentially, or even into 2023. There is definitely some demand for the Digital Kitchen. We also, again, as we talked about the online ordering switchboard that we are out there training in the restaurants right now. We have all of our market partners coming to town next week, and we'll be doing a training session on that. We want we wanna be able to execute to go not only for our guests, but we wanna have tools that are available to our operators that not only give them confidence to take more orders, but to execute at a high level. Anytime we can use technology to enhance the guest experience, those are the top three right now that we are currently having success with and excited about to continue going forward. Got it. Thank you. You're welcome. Your next question comes from the line of Lauren Silberman with Credit Suisse. Your line is now open. Thank you very much. I have one on the consumer. Are you seeing any differences in behavior with the lower income consumers specifically? Given your strong value proposition, any sense you're getting benefit from trade down from higher cost restaurants? Any color that you can give on the demographics of your average consumer would be helpful. Yes, Sara, I don't know if I can answer that on the low-end consumer. We really don't track it, our guests that way, so it would be tough for me to comment on that. I think overall, you're absolutely right. The value on the menu, I can see being very attractive to a guest who's looking to manage their, you know, what they're spending. So, there's a lot of great things on the menu that fall into that wheelhouse, which is really awesome. We have the Early Dine, which is, you know, coming in in those earlier hours of the day part, and great options there that provide some value on the menu too. So that's really great, and I think speaks to that consumer probably. I'll tell you when we... You know, the last recession we had, we do believe we saw some of that trading into our guest, into our restaurants from the higher end guest maybe who was used to paying more of a higher PPA. I think when they tried us, they realized how good the food was, and they didn't leave. That really is what helped us with that ten-year traffic growth trend that we had. We still believe that's, you know, that is possible and that happens. That's something definitely that we're thinking about, you know, of how we continue to speak to that guest and bring them in. Great. Thank you. Just on dine-in, really strong growth in dine-in traffic this quarter. Where are you running on dine-in traffic versus 2019 at this point? Dine-in traffic versus 2019 on a three-year trend. I don't know that I have those numbers in front of me, actually. I think, you know, we're still seeing some really good trends. If I go back and look at kinda what traffic was for Q2 in 2019, you know, you're looking at 4.7% up in 2019 on comps. Traffic was running about 1.7%. You know, we were seeing probably in that 1%-2% range of traffic growth in 2019 each quarter, kinda what we were running back then. Great. Thank you very much. Mm-hmm. Your next question comes from the line of Jon Tower with Citigroup. Your line is now open. Great. Yeah. Most of my questions have already been answered, but I guess I'll hit on, in terms of, you know, knowing right now that you've got at least potentially higher beef supply, or excuse me, lower beef supply coming in late 2022, 2023. I think the USDA is forecasting a 7% or so reduction in production. Is there anything you could do or proactively do right now with the knowledge in hand to address this? Maybe it's, you know, lock in some supply earlier than you normally do for 2023. Maybe there's some technology like you're mentioning about the KDS, pushing that out across the system faster, or, or heck, even pricing. I'm just curious what you might be able to do now knowing that prices next year might be taking off again. Yeah. From a supply perspective, I mean, you know, you could certainly lock up additional supply. That's not necessarily gonna help you from a cost perspective, but it would, you know, help you kinda lock that up. We do a great job of locking up supply even when we can't lock price. Right now, you know, you're not getting a lot of takers on locking up prices too much. I think there's just still so much uncertainty out there as far as what may happen in the future. Not really seeing an opportunity on price, but you could see it on supply. You know, we have never approached. Higher beef prices by changing something on the menu or moving a focus away from steak on the menu. It's just really not who we are. Our menu is so tight. It's. We don't add a lot of items. We keep things front and center. Our guests, they have their favorite things. I don't know that there was much there we would do either, John, to be honest, as far as making significant changes. We have added things in the past, though, like a salmon salad or, you know, things that we feel like give our menu some variety, you know, and things for, you know, to kind of avoid that veto vote. I think some of it, you just kind of have to ride it out and, you know, and see kind of where things land and what the trend, you know, how long that cycle might last. Got it. I'm curious if you could clarify. I think you said something about the store margins in the back half being like 200 basis points lower than first half. I'm just curious if that was accurate or if I misheard something. I wanna make sure that I heard that correctly. Yeah. You know, I think the reference was to 200. You know, if you go back to 2019, that's probably the closest date you could really see more of that normal trend. You know, and just to give you margins by quarter from 2019, it was 17.9%, 17.6%, 16.7%, and then 17.1% as you looked across from Q1 to Q4. Again, you do see some of that softness, you know, in Q3. A lot is just gonna depend on commodities, really, and where that inflation, you know, you could pick up leverage if some of that supply doesn't pan out. Maybe you know, you see some continued softening on costs. You could see traffic coming higher. You know, pricing, all those things just come into play. I would say it's kinda hard to read a lot into it. There is no doubt that margins typically are softer in the back half of the year for us. That's just the typical trend. Okay. Great. No, that makes sense. I just wanna make sure I didn't hear, mishear anything. Thank you. Appreciate it. No, I appreciate it. Thanks. Your next question comes from the line of Andrew Strelzik from BMO. Your line is now open. Great. Thank you and good afternoon. I had two development related questions, I guess. The first one, you talked about last quarter maybe some opportunities to accelerate or better navigate, I guess, the development process, the new store development process. I know there's still some delays going on, but have you been successful in realizing some of those opportunities? That's the first question. Number two, when you talked about the larger prototype having more storage and coolers to help meet demand, what are you doing in the legacy stores to kind of manage that same thing? Is there any need to, I don't know if it's, you know, investments or what have you to kind of retrofit that, but how are you going about that in the legacy stores? Thanks. Yeah. I will tell you know, we continue to look at the development. We have learned a lot. We've obviously extended out our timelines. I feel really good about where we're at. There is you know, there's one item right now that we are concerned about because we can't open a restaurant without power, and there are some transformer concerns out there. We are having a backup plan to be able to do that. You're on temporary power. We can pretty much overcome a lot of obstacles. That one concerns me a little bit. I do believe that pipeline is we are coming up with a backup plan if needed. I think everything else we've kind of learned how to navigate through some of the permitting and the different extended time periods. As far as the new or the existing stores and whether it be a cooler expansion, you know, we're looking at some of these really high volume restaurants and evaluating what they need to be able to handle that, and whether it's more seats, more cooler space, more storage. We've done some very cool things with some of the existing prototypes. We've relocated some restaurants that have had a lot of success at the end of their lease, so we move them just in a close proximity, but they get more parking, they get a brand new building. Relocations have been very successful. We have numerous on the books again for next year as well as this year. We're looking at our very top high performers and what we can do to help and support them. It's 'cause it's just smart money to spend, no doubt, 'cause the volume is there. Makes sense. Thank you very much. Your next question comes from the line of Jeff Farmer with Gordon Haskett. Your line is now open. Thanks. I'll be quick given the hour. Just two real quick ones. Anything you can share, Tonya, on how hourly employee tenure or turnover levels have shifted versus pre-COVID levels? Where do you guys stand now on those two metrics, tenure and turnover versus pre-COVID? On the hourly employees, you're actually seeing a bit of return to normal, more normal turnover levels. You know, more of those pre-COVID levels. We had seen, you know, turnover, you know, creep up on the hourly side to 140 or so%, and that's been coming down more in line with that, you know, 130, high 120% range. Everybody calculates it differently, but we're pretty consistent in the way we do that and it feels good to see those. I think we still have some work to do, our operators would tell you, but we do feel good to see those get a little more in line with things. On the management side of things, you know, you continue to see improvement there too. I think we've actually have gotten back to pre-COVID levels from a manager turnover perspective. Most of that isn't at the MP level. Usually that, we're seeing that more at the service manager, kitchen manager level. All right. That's helpful. Taking a stab here, but anything you can provide or any color, any sort of framework for how we should be thinking about G&A and G&A dollars in 2022 sort of finishing out the year? Big picture strokes. Sure. Well, you know, yeah, we had that. You know, you have that mismatch of cost on the conferences we talked about. Outside of those things, it should be pretty consistent from a dollars perspective across each quarter in the back half of the year. Would be our expectation. Typically, you see a little bit, you know, in 2021, you see a little bit of increase in cost in Q4. A lot of times that's being driven by bonus payouts as we get to the end of the year and paying out based on full year performance. With 2021 being so much significantly higher than 2020 coming off that year, a little bit more of a pop there in Q4 of 2021 than maybe what we're expecting, you know, as we head into the back half of the year. I think that you probably, Jeff Farmer, would just expect to see a little more normalized trend from a dollars perspective when you bake out that mismatch on comps. Okay, thank you. Mm-hmm. Your next question comes from the line of Brian Mullan with Deutsche Bank. Your line is now open. Hey, thank you. Just a question on capital allocation. You know, step up in share repurchase this quarter, you know, really this year has been notable. My question is, Tonya, how do you want us thinking about this? You know, we know Texas Roadhouse is always going to keep a conservative balance sheet overall, but are you also in some way expressing a view that the stock is undervalued right now? If that's the case, would you be willing to keep up this pace for a while longer? Well, I think, Brian, what we saw was just some opportunity, you know, earlier in the quarter to really take advantage of kind of what was going on in the markets. We had some excess cash that, you know, we knew what development was going to be and what we were going to need from that standpoint. We felt very comfortable bringing our cash balance down and net cash even, you know, $75 million in debt on the books. I would say that doesn't indicate a change in our, you know, principle or the way we're thinking about share buybacks. I think you'll continue to see us be, you know, look at dilution and shares that are being issued. We'll continue to see, you know, what we can do from an opportunistic perspective. Right now, we feel really good where we are from a balance sheet perspective, where cash is sitting and the amount of debt that's outstanding. From that perspective, I think we feel like we're in good shape. Thank you. Mm-hmm. Your next question comes from the line of Dennis Geiger with UBS. Your line is now open. Thank you. Just wondering if there's anything unique that you're seeing by geography or any notable difference in performance across certain markets. Thank you. Not too much really significant fluctuation. Pretty much behaving as you would normally expect it to, you know, at this time. You know, I know, you know, there's been, you know, talks of, you know, the COVID spikes and COVID occurrences and things like that, but those are really hard to read across the country and what that impact might be. We haven't really put a lot of energy into trying to see what that might be. Pretty much the same as what it normally looks like, Dennis, as far as, you know, just how comps are growing. You've got strong stores all across the country. Makes a lot of sense. Thanks, Tonya. Mm-hmm. Your next question comes from the line of Andy Barish with Jefferies. Your line is now open. Hey, guys. Thanks for taking the question. Wanted to go back, Jerry, to your comment, you were talking about implementing some software on to-go. Does the business put governors, you know, kind of on to-go, just given a lot of that demand comes, you know, in busy sort of Friday, Saturday nights as well and is that what you were referring to as an opportunity to kind of, you know, free up some throughput there? Yeah. Every 15 minutes, we can put a little buffer if we need to. You know, that is a part of it. The software helps blend or mix that in so that we can handle, depending on how many tickets we have hanging from the dining room, depends on how much we can do successfully on to-go. Yeah, the software helps. It makes a little smoother and easier and just the education of we can take more orders based on the smooth transition of this, allowing the guest to, you know, even if they have to get pushed to another segment, it's not too far. Knowing that instead of saying, no, we may have to push you to the next bucket, and we have a little bit smoother transition in doing that. It has really been working well for us, giving our operators more confidence that they can do more orders. Got it. And then Tonya, on the beef purchasing and contracting side, I know it's gotten a little bit more opaque over the years. Is there a way, just thinking about sort of 2023 and the potential for higher cost there to start blending in some of that with the back half of 2022? And is that informing kind of some of your decisions or some of your discussion today on beef costs and maybe 2023 doesn't feel as much of an impact as potentially could be out there? Well, I mean, you know, we do have some ability just based on how we age our beef, to buy, you know, if there's some opportunity to buy some things, you know, a little further out or a little sooner. We have that ability to do that. You know, all of our steaks are cut fresh in the store, and there's not. We don't have any frozen meat. You know, from that perspective, it's hard to kind of buy ahead of time and use it later in the restaurants. I don't know if that, Andy, was what you were referencing or if I missed the question. Yeah. It was just more of a contracting strategy rather than, you know, taking. Ah. you know, taking physical, you know, product. Yeah. I do. Okay, I do understand that. Yeah. We have never really utilized those hedging, you know, ourselves internally. We kind of rely on our suppliers and things like that to do that. That is something we've looked at recently to see if there is some opportunity there to, you know, to utilize those strategies and maybe get ahead of things a little bit. We'll see if that pans out. Okay. Thanks very much. Thank you. Your next question comes from the line of John Ivankoe with JP Morgan. Your line is now open. Hi. Thank you. Also a question on to-go. At least, you know, from what I've heard on the call, a lot of it really, you know, the changes that you're going to make are very much focused on the operator and giving them, you know, more confidence to hit, you know, certain ticket windows. But I was hoping, you know, I guess if you could elaborate, you know, if there are any changes beyond that, if there are changes that the customer themselves may see or notice, and, you know, really see how, you know, Texas Roadhouse is significantly, you know, differentiated, you know, than some of the peers. You know, certainly, I'm not expecting you to get back to what you did during COVID where, you know, you were a completely unique experience, you know, relative to everyone else. I was wondering, you know, how, you know, you could stretch or move the brand to do a takeout experience that the customer will notice that maybe others, you know, in the segment simply are not. I don't know that there's anything magic out there right now. I think our convenience of the to-go pickup windows probably even the ability to come in the restaurant without having to go through the host area is one of the significant changes that we made. More of what we're doing is the flow of our to-go food to get to the packers, where they pack that food up so that we can become more accurate and make sure that you know it's critical that when that guest gets home they have everything that they expect or wanted. That's more about what we wanna be. The convenience I think we've done over that through the pandemic. The whole pickup experience, the ordering experience, I believe is very solid. We really have done a great job. I just wanna continue to give my operators the simplification of how to get it packed right and how to make it work when you got a full dining room, and to have that confidence that they can do both at a very high level. I think too, John, sometimes the guest, you know, feels maybe a little frustrated because they have to wait for that to-go order. What Jerry is talking about too gets that food in the hands of the guests even faster by getting them kind of blended into the dining room queue, so with the dining room guests. From that perspective, they should see that as far as just, you know, when they order, they're not given, you know, an hour wait time. Maybe they're getting it a little bit faster. Got it. Understood. Thank you. Mm-hmm. Your next question comes from the line of Jim Sanderson with Northcoast Research. Your line is now open. Thanks for the question. Just wanted to follow up on pricing strategy. Again, do you have any feedback or sense of how your competitors have reacted to the pricing you've taken in the market today, and whether that has narrowed the value gap or value position you have in the market? I think in some ways, you know, that's something we definitely pay attention to. Whenever we have our pricing decisions, typically, you know, we're talking about it in February, March, and again in September, October. We're definitely looking at what the guests, you know, or what the competitors are doing, and we wanna make sure that that gap that we're keeping, you know, that value and that gap with the consumer. So it is definitely something we're watching, Jim. I couldn't tell you off the top of my head who's kind of got what pricing or anything like that. We actually dive into it a little bit more than that. And our operators kind of bring to the table the pricing in their areas and their markets. Yep Because it is so different across the country. We actually go a little deeper on it and don't look at it as much from a high level perspective. Not noticing anything kind of significant or meaningful that would make you want to pull back on your thoughts on pricing based on what competitors are reacting to? Nothing. Yeah. Nothing from a competitor perspective at this time. Again, we'll dive into it more. Yep On the upcoming call. Yeah, for sure. Just a quick follow-up. I think on the 3.9% comp for July, what's the underlying traffic trend for that comp number? Well, there's about 7.2% pricing, 7.3% pricing in the menu throughout Q3. Mm-hmm. You can kind of use that to back into what the traffic trend. We typically don't give out specific traffic trends on a monthly basis. All right. Thank you very much. Uh-huh. Your next question comes from the line of Brian Vaccaro with Raymond James. Your line is now open. Hi. Thank you. Just a real quick one on labor. I wanted to ask one on labor deployment, specifically, you know, the average hours per store. Are you happy with current levels and able to achieve your targets for ops and the guest experience, or do you expect to continue to add hours year on year moving through the second half? Thank you. I think, you know, Brian, a lot will just depend on what that traffic growth looks like. That's always a big driver of what growth in hours is gonna be. You know, and I think, you know, the operator right now, I would tell you, they wanna be staffed, and they wanna be staffed for any call-outs, and they wanna for any unexpected changes and, you know, in the schedule and things like that. They're probably gonna, you know, move a little bit more towards being very well-staffed. That could lead to a little more growth in hours versus what traffic looks like. I'll tell you, me as the CFO, I'm okay with that. I like that investment in that line and we know that that legendary service really adds to the experience, so we wanna make sure that's happening. You know, I think for the operator, it's tough right now, from a staffing perspective and just knowing what you need and what those sales levels are gonna be and things like that with just all the kind of lumpiness that you see, lapping last year. They'll probably be a little more leaning towards growing hours a little bit more. All right. Thank you. Mm-hmm. Your next question comes from the line of Sara Senatore with Bank of America. Your line is now open. Thank you. Just a couple of quick clarifications. The first is on the comp trend. I know you mentioned July running around 30% versus 2019. I guess if I just track that 3.9 out through the quarter, it would imply something less than 30%. Just on a three-year basis, July sounds like it was the toughest comparison. We, you know, as we look at that 3.9, maybe it could get better through the quarter if that three-year stack holds. That's just my first question. Make sure I'm interpreting it correctly. Yeah. I mean, like we've been talking about seasonality from a seasonality perspective, you start to see that softness in July, and Q3 tends to be where you see more of it than anywhere else. I don't think it's unreasonable, Sara, to think that that 3.9, you know, it could be the low point. A lot, again, will just depend on pricing's pretty consistent throughout the quarter, again, at 7.3%. It somewhat depends on where mix lands and, you know, if we continue to see it be flattish or we get some benefit there. You know, on the traffic side, dining room and to-go. But I don't think you're being unreasonable in your, you know, kind of how you're looking at it. Okay, thank you. Sorry, just the second question is, I'm sorry to belabor the point about the seasonality of margins, but this year seems kind of unusual to me in the sense that you have so much less inflation in the second half than the first half. The guidance implies, you know, inflation comes down by 300 or 400 basis points sequentially. That's pretty atypical, I guess, is what I'm asking. You wouldn't normally see that, so maybe the seasonality on margins isn't quite as relevant this year. Well, it's really tough to say because of the volatility, and you kinda have to look at it on a two-year stack. I think that might help when you're kinda trying to forecast what the back half of the year margins might be. You know, looking at the cost of sales percentages, you know, they're gonna continue to be a bit elevated, you know, in the back half of the year. I, you know, I think the expectation would be that some of that seasonality does come into play in the back half, you know, that we typically would see, with the margins being a bit lower. Right. Understood. Thank you. Thanks, Sara. Your next question comes from the line of Jake Bartlett with Truist Securities. Your line is now open. Great. Thanks for taking the question. You know, I'm sorry if you've answered this before. I didn't either maybe register it. You know, I wanted to ask whether staffing is at all, you know, has been a hindrance to sales growth. You know, another one of your competitors last night talked about the COVID resurgence, you know, impacting the availability of staffing, people calling in sick. I'm just wondering whether, you know, whether the staffing is, has been dampening, you know, sales to, you know, maybe to a greater degree than it had, you know, in the first quarter. Then the second question is separate, and it's on Bubba's. It looks like you're planning to open a handful of Bubba's stores this year. I'm just wondering, you know, your confidence. I know you've been working on Bubba's for a while and, you know, at some point you had expected to be kind of in the high single digits for Bubba's development. You know, is that something that you think we could expect for 2023? You know, are you there in terms of kind of really starting to ramp up Bubba's growth? Well, I'll take the first part of that question, Jake, on, you know, kinda how we're thinking about staffing. I would say staffing's probably easier today than it was back at the beginning of the year and, you know, but you still would probably have operators out there telling you even today it remains, you know, a challenge for them. So it's definitely a little bit, you know, it's not one size fits all across the country. A lot just depends on where they are. I think definitely it has gotten a bit easier than it was at the beginning of the year. I would just say that I think with our turnover lowering, that means that our people are getting more experience, so they're able to do more, which is great, I think from that standpoint. I do believe that we're, and still in this quarter we're better than last quarter on the staffing side. I think it's helping all across. There are still a couple of pockets that probably need a little more attention and help, but overall, again, continue to head in the right direction through the second quarter. As far as Bubba's, you know, I am very confident that we've got some leadership. We've added, you know, made a little change in the leadership, added some multi-unit focus, have gotten a real clear vision of what we want and expect. I'm very proud of the food. I really do think that the Bubba's food is really living up to our expectations. We have a service expert that's now leading a team to help us really ramp up our level of legendary service. As far as building a leadership team that can help carry us into the future so that I have more confidence in building more restaurants, that is really what we've been working on for the last nine months. I feel really confident with the team going forward. They've gotten a real clear vision and focus, and they're coming together as a team. Not only the managing partners, the market partners, our VP of operations, the team is looking really good for growth. I'm very excited about it. I do believe that I am gonna be able to rely on them to produce more and to grow more in the coming years. Thank you very much. Thank you. There are no further questions at this time. Tonya Robinson, I turn the call back over to you. Thanks, Emma, and thanks everybody for being on the call tonight. As always, if you have any additional questions, don't hesitate to reach out to us. Have a great night. That concludes today's conference call. Thank you for attending. You may now disconnect.