Operator: Good morning, ladies and gentlemen, and welcome to today's Ruth's Hospitality Group First Quarter 2022 Earnings Conference Call. [Operator Instructions]. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Kristy Chipman, Chief Financial Officer and Chief Operating Officer. Please go ahead.

Kristy Chipman: Thank you, Jason. And good morning, everyone. Joining me on the call today is Cheryl Henry, our President, Chief Executive Officer and Chairperson of the Board; and Michael Hynes, Vice President of Finance and Accounting. Before we begin, I'd first like to remind you that part of our discussion today will include forward-looking statements. These statements are not guarantees of our future performance, and therefore, undue reliance should not be placed upon them.

We'd also encourage you to refer to the Investor Relations section of our website at rhgi.com as well as the SEC's website at sec.gov for copies of today's earnings press release and our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating and financial results. During this call, we will refer to adjusted earnings per share. This non-GAAP measurement was calculated by excluding certain items. We believe that this measure represents a useful internal measure of performance. You can find a reconciliation of adjusted earnings per share in our press release for today’s call.

I'd now like to turn the call over to Company’s Chief Executive Officer, Cheryl Henry.

Cheryl Henry: Thank you, Kristy. And good morning, everyone. Before we share the details of the quarter, I want to take a moment to acknowledge the efforts of our team members and our franchise partners over the past few years. Their hard work and commitment brought us through extremely challenging times and positioned Ruth’s Chris as a leader in the fine dining category.

As always, our success stems from serving the highest quality foods with genuine hospitality. And with that as the company's Foundation, we can better focus on and deliver the total return strategy that has benefited our shareholders over the years. That strategy starts with organic growth. And we're pleased to be investing more than $50 million this year into new restaurants, relocations, remodeled, and digital technologies that drive that growth, improve our guests experience and our restaurant operations. It also includes returning excess cash to our shareholders through debt pay down, dividends and share repurchases.

Taken together, we believe these actions will sustain the underlying growth and profitability of the business while creating significant value along the way. As far as the first quarter, we're pleased to have delivered solid results with year-over-year earnings per share growth of 17%. This was driven by sales recovery throughout the quarter, and a continued focus on margins. And it's safe to say that despite ongoing challenges, like inflation and supply chain disruptions, our team has delivered an impressive start to 2022. Our top line sales in Q1 beat 2019 levels and our momentum improved each month to end the quarter with comp sales exceeding 8%.

This momentum continued leading to double digit comp sales growth and positive traffic through April. This is especially encouraging given certain regions of the country and our private dining business remain below pre-pandemic levels. We attribute the recent demand compared to 2019 to a few factors. First, an increase in our just because and special occasion business. Second, the continued contribution of our Ruth’s anywhere programs.

And finally, we benefited from our digital transformation plan, which is now gaining traction. Moving on to profitability. We posted a solid restaurant margin as labor and cost of sales stabilized during the quarter. Kristy will discuss our financial results, including labor and commodity expenses in greater detail. But it's worth noting that changes in our labor models delivered savings of approximately 156 basis points during the quarter compared to 2019.

All-in- all, our underlying business is strong. And we're confident that our current investments, which includes building new restaurants will generate a solid return. Our focus for that development is to establish a dependable cadence of new units with a goal of five to seven new restaurants annually. In March, we successfully opened our first restaurant of 2022 in Aventura, Florida. And while early we're pleased that it has outperformed the system and our sales expectations, including Aventura we remain on track to open a total of five new restaurants over the course of this year, with two expected to open in the third quarter and two in the fourth.

In addition to those new restaurant openings, we have two relocations currently under construction, one in Winter Park, Florida, as well as one in Woodland Hills, California. These relocations reflect our new contemporary design that leverages outdoor dining spaces in larger bar areas, as we expect these restaurants to open by end of year. In terms of future pipeline, we are finalizing the lease for a restaurant in Albany, New York, and are in the final negotiations for two additional leases. When combined with leases previously find, we expect to have a total of five restaurants in the pipeline for 2023 soon and continue our work to find the best sites for the future. Despite increased material and construction costs, we remain committed to returns consistent within our historical levels.

Our investment in digital transformation is also a critical part of the strategy. As we outlined in early 2020, we have focused our transformation initiatives on three key pillars, enhancing the guest experience, reducing friction and increasing our team's productivity. I'm pleased to report that during the quarter, we rolled out our proprietary platform that uses restaurant specific data to improve demand forecasts in our table management. While it's only been a few weeks, it has already resulted in high single digit traffic increases on the weekend, which is encouraging. Of course, investments in new restaurants and new technologies won't be successful without the people behind it.

And that is why we continue to invest in hiring, training and deploying world class team members. To that end, we made further progress during the quarter, adding manager to our restaurants, as nearly each of our locations are returning to pre-pandemic sales and traffic volume. Before I turn it over to Kristy, let me quickly summarize where we stand on our total return strategy. As I mentioned earlier, we're investing over $50 million in capital, with the majority of that investment supporting growth initiatives that we will believe -- we believe will generate a solid return for investors. To complement that investment, we are returning cash to shareholders through a 17% increase in our dividend payments, while also paying down $45 million in debt.

We've done this while maintaining net cash position of over $25 million and have roughly $25 million left on our most recent share reauthorization. So to keep our momentum, we will continue to focus on the details of execution, which includes providing an incredible dining experience for every guest every time they visit. We're not only confident that we can navigate external factors that might come our way, but also in delivering value for shareholders in the process. I will now turn the call over to Kristy Chipman to cover the specifics of the quarter.

Kristy Chipman: Thank you, Cheryl.

For the first quarter ended March 27, 2022, we reported GAAP net income of $10.4 million or $0.31 per diluted share. This represented a 14.1% and 16.5% increase respectively, compared to the first quarter of 2021. Excluding adjustments non-GAAP diluted earnings per common share was also $0.31. Total revenues for the quarter increased 44.5% to $126.1 million compared to $87.3 million in 2021. While company owned restaurant sales increased 45.4% to $118.7 million compared to $81.6 million in the prior year.

Comparable restaurant sales for the quarter increased 41.5% versus 2021 and increased 8.1% compared to 2019. As compared to 2019 five months, top sales were negative 0.2% in January, positive 11.5% in February and positive 14.4% in March. As Cheryl alluded to earlier, January demand was slowed by the Omicron variance but as you can see, guests rapidly returned to our restaurants in February and March. As a reminder, we took a price increase in late March of approximately 3.4% on certain products, including beverages. We also recalibrated certain restaurants within pricing tiers.

To date, we have not seen a noticeable change in mix and traffic due to this price increase. Franchise income for the quarter was $4.7 million, up 24.7% versus the same period last year, driven by comparable domestic franchisee sales of 23.8% and international franchise comp of 29.5%. Other operating income was $2.7 million, up 45% versus last year. Moving on to restaurant expenses, food and beverage costs for the quarter increased 445 basis points versus 2021. The main driver of the increase is beef which increased approximately 37% for the period, even though prices declined each month sequentially.

As a reminder, we have a lot at approximately 70% of our food purchases during the first quarter last year. Our total market basket increased approximately 28% compared to the first quarter of 2021, reflecting continued pressure in nearly all food categories including beverages. During the quarter, we entered into a new forward pricing agreement and we are now locked for approximately 20% of total beef volumes through mid-August of this year. Labor expense for the quarter versus 2021 increased approximately 150 basis points due to the operating restrictions that existed last year. However, when compared to 2019, labor costs for the quarter improved 156 basis points driven by labor efficiencies, partly offset by increased wages.

Our full year guidance of 200 basis points of improvement for the year versus 2019 remains intact, as quarterly variations were considered in that guidance. Moving beyond restaurant expenses, combined marketing and G&A as a percentage of total revenues was 11.2% compared to 10.5% in the first quarter of 2021, reflecting our investment in the digital transformation we have underway and adding resources back to the business. That said, we expect marketing and G&A to be in the range of 10.3% to 10.8% of total revenue. As of March 27, we have $66.8 million in cash and our outstanding debt was $50 million. Since then, we've repaid an additional $25 million in debt for a total repayments of $45 million since the beginning of 2022.

As of May 2, our net cash position was approximately $25 million. Finally, our Board approved a second quarter dividend of $0.14 cents per share. And as Cheryl noted, we have approximately $25 million remaining at our share buyback authorization. I'll now turn the call back to Cheryl Henry for a few closing comments.

Cheryl Henry: Thank you, Kristy.

In closing, let me reiterate how pleased we are with a solid start to 2022 and a strong demand from our guests as they returned to our dining room. This brand was established by single working moms 57 years ago this month. We have veteran operators and franchise partners with decades of experience, who have honed their skills and agility and have continued to elevate this business and our hospitality through every hardship and downturn. We believe the company is positioned for long term success. And we'd like to thank each of our team members, franchise partners and shareholders for their continued support.

Thank you for joining us on the call this morning, and I look forward to taking your questions.

Operator: [Operator Instructions] Our first question comes from Brian Vaccaro from Raymond James.

Brian Vaccaro: Hi, thank you and good morning. I was hoping you could give us a little more color on the sales acceleration that you saw in February and March and sounds like it's sustained in April as well. And obviously exiting the Omicron impact.

But are you seeing, I guess, to what degree are you seeing previously lagging regions catching up to other regions that had already recovered? And also to what degree are you seeing business lunches and dinners recover in recent months?

Cheryl Henry: Yes, thanks, Brian. So regionally, we still we had mentioned Hawaii and Boston and Manhattan specifically, and they still have not fully recovered. We're seeing slow recovering in a couple of those markets. That's more in the April timeframe. And as far as private signings during the quarter, that really didn't see recovery.

We are seeing a bit more of that. I think as we've talked about it, and people are back to work, beginning of March, we saw a lot of back to work. And I think you starting to see that reflected in the April numbers. But we still see that as an opportunity in front of us to continue to grow through the back half of the year.

Brian Vaccaro: Okay, and sorry, if I missed it, but I think in past quarters, you sort of stripped out Hawaii, Boston, and Manhattan.

Can you provide the extra, the comps extras markets this quarter?

Cheryl Henry: Sorry, those markets had about a 600 basis point impact for the quarter still.

Brian Vaccaro: Okay. Great.

Cheryl Henry: And Brian I think we mentioned 600 to 700 in the past, so you can kind of see where that was before that. Yes.

And I would say that everybody is improving including them. But as the rest of the system has positive comp, it's, we're still seeing that relative difference between those markets, even though they are improving from their lows. They're just not improving as quickly as the rest of bases.

Brian Vaccaro: Understood. Okay.

And the quarter today, I just wanted to confirm you're up double digits. That's versus 2019. Just wanted to confirm that. And then Kristy, could you level set what that means in terms of average weekly sales?

Kristy Chipman: Yes, Brian, so that it's against both but yes, 2019 is I'm speaking to specifically when I mentioned it in the script. Yes, so 2019, average weekly sales 108.5 in period, 141.7 in period two, 128 in period three and a quarter was 124.7.

Brian Vaccaro: I'm sorry. Yes. Thank you for that. I was asking about April.

Kristy Chipman: Oh, I'm sorry.

Brian Vaccaro: So we're up doubled, yes.

Kristy Chipman: Thanks.

Michael Hynes: Hi, Brian. The April average weekly sales look a lot like March in the 127 to 128 range.

Brian Vaccaro: Okay, great.

And then also, I want to ask about some of the digital transformation. You touched on, Cheryl, at the beginning of the call, and can you elaborate, you talked about a high single digit traffic improvement, I think with some of the new seating initiatives and the demand forecast, so just elaborate a little bit on what that means and how that's impacting the business.

Cheryl Henry: Yes, so Brian, I mentioned specifically, that's on the weekend. I think if you go back, even probably 2019, we talked about changing out some of the way the restaurants were laid out and better utilizing all of the real estate in the building. It's benefited us greatly during COVID.

We could not have anticipated that. But this is really where we're starting to see the data behind the initiatives kind of combined with the work that we have done around the seating and floor plans. And so we're able to on those high volume days, take advantage of that and make sure we're utilizing optimum capacity in the restaurant, considering labor and guest experience as well and so we fully rolled towards the end of January I would say it was really an effect by the end of February beginning of March and so we're starting to see that positive impact. And again, it's early, but it's really behaving the way we, during tests, believed it would behave across the system.

Brian Vaccaro: Okay, great.

And then last one for me, just on the commodity front. Kristy, you mentioned the new contracts in place through August. It seems like the spot market has moderated especially on the prime side, could you just touch on what you're hearing in terms of the fundamentals, and perhaps give us a little bit of sense of how you expect your inflation to be in the second quarter? Just to make sure we're all on the same page?

Kristy Chipman: Yes. So beef fundamentals first, I think we continue talk to our suppliers, certainly herd size and drought conditions and things are working against us. But and we've seen these kind of increase from the first quarter lows, but not significantly yet at this point as it comes through our system.

So heading into the summer, we think that beef prices are increasing from where they're at today, seasonal demand, tight production, droughts, higher transportation costs are a situation we're keeping a good eye on, while prime grading is slightly lower as well from a year ago. So I think overall, it continues to be very difficult, which is why we are not providing COGS guidance at this point in time. I think when you look at the rest of the basket, we would expect another quarter of inflation similar to what we've seen this year, because really, our inflationary pressures didn't start until the back half of 2021. Non-beef.

Brian Vaccaro: Non-beef, okay.

All right. Thank you. I'll pass it along.

Operator: The next question comes from Nicole Miller from Piper Sandler & Co.

Nicole Miller: Thank you.

Good morning. I'm just following up on that inflation topic. What was inflation in the basket in the first quarter? And I think it was versus really no material inflation a year ago in the first quarter.

Cheryl Henry: That's right. 28% in a total basket including beef.

Nicole Miller: And the second quarter, I understand, what you're saying about no cogs? But I guess I would say what, maybe for the course of the year, and knowing the lock, I think you said through August, is it this similar level of inflation, then that runs through kind of that framework or something higher or lower?

Cheryl Henry: Are you speaking to beef specifically, Nicole?

Nicole Miller: It really up to you because I'm sure you can slice or dice it, I can take it either, it doesn't matter.

Cheryl Henry: Yes, no, I would say that we started to see higher beef prices in the back half of the year last year. And so we will be coming up and comping against those higher beef prices. And as I mentioned, we saw beef coming down sequentially through this quarter and into April, we do, it is starting to come back and trend along the historical seasonal levels. And so I think that in the back half of the year, beef prices will moderate.

I think from, and similarly from an overall inflation, we start to lap a higher cost space in the back half of the year for the rest of the food items. And therefore I think it will moderate. I can't give you a percentage per se of what we think inflation will be. It's just too uncertain right now. But I do believe moderation is coming in the back half of the year.

Nicole Miller: And then switching to development. Are the two reloads considered within the five new stores? So it's three net? Are those in addition to the five new store openings?

Cheryl Henry: Yes, Nicole, those are in addition to five new opening, so seven store.

Nicole Miller: Okay. And what can you tell us about the pipeline? So one got opened, right, in Florida? I don't know how many more specific you want to call out, but just, how is development tracking in 2Q and for the rest of the year? Is it a good pace? Do they pull forward? Did it get pushed back? How's that looking for the other four?

Cheryl Henry: Yes, so earlier this year, Nicole, we talked about getting to a more normalized cadence of five to seven. I mentioned earlier, we will have five this year.

And then again, the two re-lows. And we've announced two sites for ‘23. And I mentioned today three other that are in the final stages of lease negotiation we expect to have soon and we continue looking I think, some of the changes we talked about in the floor plan and the designs have opened up some opportunities for us. And that's why we said five to seven versus kind of a pre-COVID, three to five. And so we're looking we will be, as always careful and meticulous about how we choose our sites.

But we are finding opportunities out there. So we continue with that thought around five to seven going forward.

Nicole Miller: And just the last one, I realized the question on a recession is a little tricky. And even just lower GDP is painful without an outright recession. What's interesting is, if that were to be the case, you don't have any, or don't have as much business to lose, right, that went away with COVID, and did a fine job more than replacing it with a local business guest or social user.

So if we head in that direction, what happens to the guest, who has been just nothing but absolutely robust up until this point? We're still through this current today period?

Cheryl Henry: Right, and no, it's true. We haven't seen any, we're seeing the same headlines and volatility in the market, especially this week. We've not seen that yet, in our weekly sales and traffic numbers. We've, I mentioned earlier, we've been -- we're 57 year old company this month, we've been through many downturns, the consumer will feel an impact at some point, we believe there's some resilience to our higher end consumer. And that may be what you're seeing play out right now.

But we have, again, a very experienced team, very experienced franchisees. So we are prepared. We have some, always we're putting a plan together. If we have guests that are more value oriented, we're able to meet them where they are in the moment. And so I won't speak specifically, I’ll let the economist opine on how deep and when.

But I know that this team is prepared and we understand when things get tight how our guests respond and you were right, we were just talking about the idea that sometimes you start to see it, the windshields is a little bit of the corporate dining. But given where that's been we know we've had other revenue channels that can offset that. And we're putting our plans in place, and we'll be ready.

Operator: The next question comes from Andrew Barish from Jefferies.

Andy Barish: Good morning.

How are you guys? I’m good. Thanks. Could you just as we start to see the new unit growth ramped back up, can you give us a quick refresher kind of on new unit productivity? Just what you underwrite to in terms of top line volumes, just given some of the changes you've talked about, and some of the smaller markets that you're starting to bring into the unit growth as well.

Cheryl Henry: Yes, and we speak broadly about the expectations for these boxes. So as you mentioned, smaller markets, smaller boxes, love their patios.

And then the way we're thinking about it, the costs, as I mentioned are going up, but we're expecting more productivity out of them from top line standpoint, as well as when you overlay some of the digital initiatives. And price as well, that these volumes are, will be considered higher. And we're seeing that, it's early, we've got a couple of boxes up now and running. And so that's how we think about it broadly.

Kristy Chipman: Yes, I mean, I think when you talk about it from an overall return standpoint, that's exactly right.

So even though material costs are up, similar to about 20% or so, we are also seeing the top line grow relative to the things that Cheryl mentioned. And therefore, from a total return perspective, we're doing well with the openings we have. And as we start to build out going forward, we're looking at, similar types of top line volume.

Andy Barish: Okay, great, thank you. And just on the on marketing and G&A, obviously, ran heavier in the first quarter, versus your guide for the year.

Can you just give us a little color in terms of what was going on there? Is it the tech spend kind of upfront or just timing?

Cheryl Henry: Yes, so certainly our tech, our digital transformation technology spend both from a capital perspective as well as an expense perspective is loaded in the front half of the year. The other thing that I would mention is, we're adding, we have started to see the lapping we added some team members last year, so from an overall G&A perspective that's coming in. And then on the marketing side, we saw gift card sales really be strong in the first quarter and the discounts associated with those flows through our marketing line. And so those are sitting in there as well.

Andy Barish: Interesting and then just one other thing, Cheryl, you mentioned Ruth’s Anywhere.

Where is the off premise mix? And is that -- did you call that out just seasonally in the winter months, you see a little bit more of that as patios in some places are not as available, or just give us a little more color on that please.

Cheryl Henry: Yes, so broadly, when we Ruth’s Anywhere was100% of our business back in early 2020, I think we are finding that right balance when the demand is so high for the experiential for wall, genuine hospitality, and then just seeing it as a valuable revenue channel at certain parts of the day and parts of the week. And so we're balancing that late last year. And yes, your point is seasonal. So I think, as we were in the fourth quarter, it was a bit higher as a percent of sales, we saw Q1 as Omicron started to slow down, and we were seeing the restaurants become busy again, we're looking at between 3% and 5% of sales still very valuable.

And the work we're doing now is to understand, where we can turn that up. If there's opportunities to take advantage of capacity that's not there, can we do it and to do to sales, and then when we really want to make sure we're focused on the in restaurant experience.

Operator: Our next question comes from Todd Brooks from Benchmark Company.

Todd Brooks: Hey, good morning, everybody. I was wondering if you give us maybe some qualitative comments, we're coming into Mother's Day, this weekend, Father's Day Graduation.

What's that occasion business? What are you seeing relative to maybe fiscal ‘19, as far as maybe pent-up demand for gathering now that we're through two years of this, and people are, to an extent done with it, and they want to get back out there and celebrate events with friends and family?

Cheryl Henry: Yes, you just said it, I think we are seeing a lot of that. I think we saw a little during the holidays, [Indiscernible] is fourth quarter, but again, that was kind of overshadowed by the beginnings of Omicron and so I think now we are seeing a combination of the work, especially on the holidays, and those really high peak, high capacity days, the combination of the demand from the guests and being able to meet that demand through the capacity utilization platform that's in place. So we are seeing, fairly significant dip over what we saw in 2019. I don’t know, Mike, if you have anything you want to add.

Michael Hynes: Sure, just the number on Easter, which was in April, and farmers recent holiday.

Historically, Easter is not as strong for us as Mother's Day or Father's Day, but it's still a great holiday for us. And we saw performance this year plus 30% versus 2019 for Easter.

Todd Brooks: Great, helpful. Thank you. Secondly, following up.

And I know we've spent time talking about digital transformation, and kind of the table efficiency. But are there any other early wins coming out of the program that you want to highlight for us?

Cheryl Henry: Yes, I'll just mention one. I mean, I think we bucketed into three places, right. And that was enhancing the guest experience, reducing friction and the productivity of the team. The productivity of the team work is in front of us.

And we've got some tests in place. I'm not going to speak to specifically yet on that, but I do look forward to sharing more. The other one I will mention is, a tool we've been working on the hospitality side. And I think that I've said this a lot is our caretaking of this brand is that the idea of this is a high human touch business. And we don't want to ever use a piece of data or technology and put that in front of that hospitality.

So we've actually taken an approach of how do we use data and technology to enhance the hospitality and so we've put a test in place in many of our restaurants and seem to be fully rolled out. That gives our restaurant teams the access to information that allows them to make the experience even better for our guests. And early very early but early signs are it's paying off and the ratings we're getting from those experiences as well as some of the repeat visitation. And so that goes to our focus on making sure whatever we put in the restaurant and whatever data we use, has a benefit to the guests and ultimately to the business. But that's another one we're excited about and look forward to sharing more about in the future.

Todd Brooks: Okay, great. Thanks. Then final question for me. Kristy, you talked about locking 20% of the beef needs through late summer. This 20%, you didn't interpret it one of two ways.

One prices were coming down at that point. Maybe you were hoping for more moderation. So you didn't want lock more, or your supplier partners felt like it was okay. We're kind of we see the outlook for the back half of the year, we don't want to enter into big agreements to lock more beef. Would you lock more if you could or do you feel there's more opportunistic levels to maybe lock more of the beef needs in the future?

Kristy Chipman: Yes, I mean, we lock for certainty, right? We're not going to try to time it to get to the exact low, we're going to do our best to lock for certainty.

Right now I don't have any new lock to share, but we're always looking at it and making sure that we have a forecast out for what we think beef is going to be on the market. And if a lock seems to be good for us, and favorable, and in the money, we're going to lock as much of that beef as we can, based on the projections we have.

Todd Brooks: And historically, how much would you run with locked typically?

Kristy Chipman: Yes, I think it is variable. I mean last year this time, we were locked not this time but in Q1 we were locked for 70%. Now we're locked for 20%.

So, again, it's just going to be based upon the volatility of the market, our competence and the projections that we have from the suppliers, et cetera. So I can't set on one exact percentage for now.

Operator: The next question is a follow up from Brian Vaccaro from Raymond James.

Brian Vaccaro: Hi, thanks. Sorry, if I missed it, but two quick follow up on menu pricing.

If you take no additional increases, could you just level set where effective pricing would be over the next couple of quarters?

Cheryl Henry: Sure. So no additional pricing, Q2 would be 7.42, Q3, 5.9 and Q4, 4.0, if we take no pricing for the rest of the year.

Brian Vaccaro: Okay. What's your current posture or thinking towards potentially taking additional pricing with beef moderating et cetera?

Cheryl Henry: So we're going to be looking at our private dining menu more closely in the next couple of months. So I could see us taking something small there, no analysis yet, but we always look at that about this time of the year.

And then as I've mentioned in the past, we're sensitive to price even though we've taken significantly more price over the last 12-months than we historically would have. So but we're going to continue to look at it, I think, the inflationary trends beyond beef will continue to happen with labor, all of that going to go into our equation, as we look in the latter half of the summer for, whether or not we should take more price.

Brian Vaccaro: Okay And just in terms of the macro reads, if there are any, within your business in recent weeks or months, I'm not sure how real time you can see this, but is there any change in recently on the number of celebrations, birthdays, et cetera? Which I had assume not sure but I'd assume captures maybe some more economically sensitive guests that could be feeling some of the pressure of high gas prices, broader inflation, et cetera? Are you able to see anything like that in your recent trends?

Cheryl Henry: I would say not particularly, it's nothing that we would call out specifically, that's what's driving our results, and they should slow down, if that's what you're kind of alluding to might happen. Obviously, our guests are at a cross segment of the population. And so I think we're all that wondering, how strong are the balance sheets? How long will they be coming into the restaurant for those celebratory occasions, but I think we also know that, looking at and listening, people are favoring services including restaurants and experiences much more than they are hard goods.

And so we are going to be ready to capture as much of that as we can for the rest of the year.

Brian Vaccaro: That makes sense. And then last one, just wanted to take another shot at commodities. And I know it's uncertain, but I guess just everything we know today, just in sort of the spirit of making sure we're not surprised everything we know today, make sure we're on the same page. And I don't know where you set the contract on the 20% obviously, but it seems as you said back it seems like your basket inflation could moderate towards 10% as a ballpark year-on-year in the second quarter.

Is there anything material I might be missing if you'd be willing to comment on that?

Cheryl Henry: So I think what I said was I think Q2 is still especially if you exclude beef, Q2 will be similar to Q1, which is about 19%. So I think we have one more quarter of higher inflation when you compare it to 2021. And then it will moderate, the degree with which it will moderate is really uncertain right now.

Brian Vaccaro: Okay, but year-on-year inflation on beef should moderate pretty meaningfully in the second quarter as well, right?

Cheryl Henry: Absolutely. That was correct.

There are no more questions in the queue. This concludes our question and answer session. I'd like to turn the conference back over to Cheryl Henry for any closing remarks.

Cheryl Henry: Thank you, Jason. And thank you all for joining the call today.

We look forward to updating you again soon. Have a great day.

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