Bravo Brio Restaurant Group Management Discusses Q4 2012 Results - Earnings Call Transcript

Feb.25.13 | About: Bravo Brio (BBRG)

Bravo Brio Restaurant Group (NASDAQ:BBRG)

Q4 2012 Earnings Call

February 25, 2013 5:00 pm ET

Executives

James J. O'Connor - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer

Brian T. O’Malley - Chief Operating Officer and Senior Vice President of Operations - BRIO

Saed Mohseni - Chief Executive Officer, President and Director

Analysts

Joshua C. Long - Piper Jaffray Companies, Research Division

Will Slabaugh - Stephens Inc., Research Division

Conrad Lyon - B. Riley & Co., LLC, Research Division

Christopher T. O'Cull - KeyBanc Capital Markets Inc., Research Division

Brian Ward

Imran Ali - Wells Fargo Securities, LLC, Research Division

Michael Halen - Sidoti & Company, LLC

Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Bravo Brio Restaurant Group Inc.'s Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, February 25, 2013.

On the call, we have Saed Mohseni, President and Chief Executive Officer; Jim O'Connor, Chief Financial Officer; and Brian O'Malley, Chief Operating Officer. Now I would turn the conference call over to Jim O'Connor, Chief Financial Officer.

James J. O'Connor

Good afternoon, everyone, and thanks for joining us today. At the market close, we issued our fourth quarter 2012 earnings release, which, you have not already had a chance to review, can be found at our corporate website at www.bbrg.com under the Investor Relations section.

Before we begin our formal presentation, I must remind everyone that part of our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and, therefore, one should not place undue reliance upon them.

Forward-looking statements are also subject to numerous risks and uncertainties that can cause actual results to differ materially from what we expect. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. And like all of our press releases, webcasts and presentations, these filings are available under the Investor Relations section of our website.

Also during today's call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and the reconciliation to comparable GAAP measures is available in the earnings release.

And now, let's review our performance for the fourth quarter of 2012, which was a 14-week period that ended on December 30, 2012.

Total revenues increased 17% to $112 million from $95.7 million in the same period of the previous year. The $16.3 million increase was the result of an additional 219 operating weeks generated from 13 new restaurants opened during the trailing 15-month period and 102 operating weeks related to the additional week. The 14th week, a holiday week, is traditionally one of our highest-volume and most profitable weeks of the year. Net sales generated in this week were $8.5 million, and the related adjusted diluted earnings per share were approximately $0.07 per share. Overall, our comparable sales, which includes the impact of a shift in Christmas, increased by 0.5% and was driven by a $0.25 increase in average check, partially offset by a 0.6% decrease in guest counts. Note that we calculated comparable sales using the first 13 weeks of the quarter. Therefore, sales generated in the 14th week of this quarter were excluded from all comparable sales and guest count calculations in 2012.

During the quarter, we added 1 BRAVO! to our -- to the overall comparable sales base, and we ended the year with 85 restaurants in our comparable sales base, which consisted of 46 BRAVO!s and 49 BRIOs. Together, comparable restaurants represent 83% of our company-owned restaurants.

For BRAVO!, our restaurant revenues increased $4.6 million, or 11.4%, to $44.8 million compared to $40.2 million in the prior year period. Comparable sales increased 1.7% due to a $0.50 increase in average check being only partially offset by a 0.7% decrease in guest counts. Average weekly sales for comparable BRAVO! restaurants were $66,900.

For BRIO, restaurant revenues increased $11.7 million, or 21.3%, to $66.5 million compared to $54.8 million. Comparable sales decreased 0.5% due to lower guest counts as well as a slightly lower average check compared to the fourth quarter of 2011. Average weekly sales for comparable BRIO restaurants were $97,200. Note that 15 of our 54 BRIO Restaurants, a full 28% of the total, are not included in the comparable base.

Now let's look at our expenses in detail. Cost of sales increased 17.4% to $29.6 million compared to $25.2 million in the same period of last year. As a percentage of revenue, cost of sales increased 10 basis points to 26.4% from 26.3% due to a higher protein-related commodity cost.

Labor cost increased 17.5% to $37 million compared to $31.5 million in the same period last year. As a percentage of revenue, labor costs rose 10 basis points to 33% from 32.9% and were driven principally by labor inefficiencies at newer locations.

Operating cost increased 14.6% to $16.3 million compared to $14.2 million in the same period last year. As a percentage of revenue, operating cost fell 30 basis points to 14.5% from 14.8% due to sales leverage associated with the additional week in the quarter. Operating costs increased 17% to $6.6 million compared to $5.7 million in the same period last year as the result of 4 restaurant openings in the last quarter of 2011 and 9 new restaurants in 2012.

As a percentage of revenue, occupancy cost held steady at 5.9% in both periods.

Taking these 4 expense categories together, total restaurant operating cost increased $12.9 million, or 16.9%, to $89.4 million from $76.5 million in the same period last year. Our overall restaurant-level operating profit increased 17.6% to $22.5 million from $19.2 million, and restaurant-level margins improved 10 basis points to 20.1% compared to 20% in 2011.

General and administrative expenses increased $1.4 million, or 27.7%, to $6.6 million compared to $5.2 million in the same period last year. This increase was driven by the additional week in the quarter; higher wages and benefit expenses, including stock compensation costs; as well as costs associated with our third-party gift card provider. As a percentage of revenue, G&A increased 50 basis points to 5.9%.

Preopening costs, which are driven by the timing and number of restaurants opened in a given period, were $0.9 million compared to $1.9 million in the same quarter last year. In the fourth quarter of 2012, we opened 2 restaurants and had 2 additional locations under construction, whereas in the fourth quarter of 2011, we opened 4 restaurants and had 5 additional locations under construction.

Noncash impairment costs were $4.1 million related to 2 restaurants in the fourth quarter of 2012 compared to $2.2 million related to 1 restaurant in the fourth quarter of 2011.

Depreciation and amortization expenses increased to $5.2 million from $4.4 million but held steady at 4.6% as a percentage of revenue. The higher expense in absolute dollars was the result of restaurant base growth over the past year.

Net interest expense was $0.3 million compared to $0.4 million due to a lower average outstanding debt. Outstanding debt at the end of the fourth quarter was $23.1 million compared to $32.6 million in the year-ago period, a decrease of $9.5 million.

Income tax expense was $1 million compared to $0.1 million last year. The lower-than-normal GAAP tax rate for the fourth quarter of 2012 was primarily due to the impact of the asset impairment charge in relation to our pretax income and the dollar amount of credits and deductions used in the determining our tax rate.

Our income tax expense in 2011 was minimal to the -- due to the accounting treatment surrounding the reversal of the remaining valuation allowance against deferred tax assets.

GAAP net income was $4.4 million, or $0.22 per diluted share, compared to GAAP net income of $4.9 million or $0.24 per diluted share in the same period last year. Both periods had adjustments to arrive at our as-adjusted net income, which consisted of adding back the noncash asset impairment charges of $4.1 million and $2.2 million, respectively, as well as certain adjustments to normalize our effective tax rate. On an as-adjusted basis, net income amounted to $7.3 million, or $0.35 per diluted share, compared to adjusted net income of $5.1 million or $0.25 per diluted share in the fourth quarter of 2011. As I previously mentioned, the benefit from the additional week of operations in 2012 was approximately $0.07 per diluted share. Please refer to the reconciliation in the press release for further clarification, as we believe our as-adjusted results provide a more useful view of our business on a quarter-over-quarter comparison.

Now let's discuss our updated 2013 outlook for the 52-week period ending on December 29, 2013. We are expecting revenues up between $420 million and $430 million, which includes comparable sales up minus 1% to positive 1%.

I would like to highlight 2 important factors implicit in our revenue guidance for 2013. First, given the calendar shift associated with the transition from a 53-week to a 52-week fiscal year, our first operating week of fiscal 2013 will be compared against a much stronger holiday week from the prior year. As a result of this calendar shift, our comparable sales in the first quarter of 2013 will be negatively impacted by approximately 2 basis -- 200 basis points. In dollars terms, this equates to almost $2 million or approximately $0.03 per share in the first quarter.

Second, we will be closing 2 underperforming restaurants near the end of the first quarter of 2013. Accordingly, our annual sales guidance reflects the impact of these closures. Note the net property and equipment assets of both of these restaurants have already been impaired, and additional expenses associated with the closure of these restaurants will not be material.

In terms of development, we intend to open 7 to 8 new restaurants and are modeling them at average unit volumes of 85,000 per week for BRIO and 65,000 per week for the BRAVO!s, respectively, reflecting our historical median volumes at both brands. Preopening costs will be between $4 million and $4.5 million, while net capital expenditures are projected between $23 million and $25 million and will be funded through operating cash flows.

Looking at the other costs, we estimate commodity inflation of 2.5% to 3.5%, driven mostly by increases of beef and chicken costs as well as higher dairy costs. Additionally, we continue to expect modest pressure on the labor line as a result of inefficiencies at newer restaurants, minimum wage increases and higher health care costs.

We expect our annual effective tax rate to be approximately 30% and our diluted share count to be approximately 20.6 million shares.

Finally, we expect diluted earnings per share to be between $0.88 and $0.94, which should be viewed in the context of a $0.07 benefit in fiscal 2012 due to the 53rd week.

Concerning the first quarter, while we do not normally provide quarterly guidance, to provide better clarity to our investors given the calendar shift as well as other factors, we are estimating that first quarter revenue will be between $101 million and $102 million, assuming comparable sales of minus 3% to minus 3.5%. Note that the comparable sales data is inclusive of the 200-basis-point negative impact from the calendar shift.

As part of our continuing efforts to efficiently deploy our capital to best enhance long-term shareholder value, in the fourth quarter of 2012, our Board of Directors authorized the repurchase of up to 20 million of our common shares. During the fourth quarter, we repurchased approximately 224,000 shares at an average price of $13.06 per share, as we believe our shares remain undervalued relative to our peer group given our current fundamentals and our long-term growth potential. Our current repurchase authorization extends through the end of fiscal '13. And although we expect to continue to repurchase shares, we will remain disciplined in our execution of our repurchase program. Note that our diluted share count guidance does not reflect any impact from potential share repurchase activity.

Now I would like to turn the call over to Brian O'Malley, our Chief Operating Officer, who will provide an operations update. Afterwards, Saed will wrap it up with formal remarks. Brian?

Brian T. O’Malley

Thanks, Jim. Let's start by discussing our key initiatives from a culinary perspective. Early this quarter, both BRAVO! and BRIO successively introduced our light menus. We are targeting those guests who are specifically looking for healthier options while dining in an upscale, affordable concept. The Lighter Side menus feature items that are all under 550 calories. Like all of our menu selections, they are flavorful and deeply rooted in Italian cooking methods. The new light menus, the Lighter Side of Tuscany and the Lighter Side of Rome for BRIO and BRAVO!, respectively, feature assorted appetizers, side salads, entrée salads and entrées ranging in price from $4.25 to $19.95. The Lighter Side menu options are a clear differentiator for our concepts and already comprise about 14% of our entrée mix.

A few of my favorites are the Salmon Griglia over heirloom tomatoes, the Shrimp Mediterranean on orzo and rice pilaf and the Chicken Caprese layered with mozzarella and marinated tomatoes.

On March 19, BRAVO! and BRIO will be celebrating our third National Ravioli Day. Each year, we promote, via social media, this big day and bring in thousands of hungry guests anxious to partake in the celebration. Both brands will be offering all ravioli dishes at 50% discount in the dining room to make this day special.

As you know, we launched our myBRAVO! and MyBRIO loyalty programs in September of last year with the intention of gathering data from our guests that would provide insight into their dining preferences and also allow us to design targeted reward incentives. The program is centered on surprising delights that can be redeemed over generally shorter time periods such as a welcome gift, birthday gift and other surprise rewards. As a benefit, we're seeing an increased open rate on our emails, which translates to better communication and interaction with our most loyal guests. As we build our guest loyalty base, we will gain even more insight, which will allow us to further enhance the program.

The fourth quarter was a successful end to the year with regards to our gift card promotion. Our gift card sales grew 25% over prior year, thanks mostly to our relationship with our third-party provider, Blackhawk, who distributes the cards for us in 16 states that covers approximately 70% of our restaurants.

BRIO will be rolling out our new menu tomorrow nationwide. We're excited to introduce our seasonal dishes, of which 2 of my favorites are the Chicken Florentine Bruschetta and the 3-Tomato Insalata.

With that, I would now like to turn the call over to Saed, who will wrap up our formal comments. Saed?

Saed Mohseni

Thank you, Brian. Thank you, Jim. There's really no doubt that the consumer environment is still challenging. And from our viewpoint, we think 2013 will be very similar to 2012. We believe that our competitors will stay aggressive with their promotional activity in terms of number of offers, the price of offers, as well as the marketing dollars supporting such offers. Against this backdrop, we're going to work hard at strengthening our top line, expanding our guest base and ensuring the loyalty of our guests. And to get there, we're going to continue to do what we do best, which is offer great quality food and service at attractive price points.

Still, as a strategy, we do not intend to follow others in the industry by offering substantial discounts, as we believe this will compromise our brand equity, lower our margin of profitability and train our guests to expect discounts before dining with us.

Brian already mentioned 2 of our 2013 initiatives: a loyalty program and reduced-calorie menu. As part of our business plan, we will also continue to provide a lower price point within our overall menu management strategy while maintaining some very popular existing value-driven offerings. These include, for example, our $7.95 Lunch program, $5 MARTINI NIGHT and our $3.95 Tuscan Tasters and Bar Bite happy hour appetizers. Still, given the relative affluence of our guest base, we feel comfortable taking a price increase in 1% to 2% range on an annual basis and intend to do so in 2013 as well.

On the development front, we continued to capitalize on opportunities in 2012 and opened 10 restaurants, including 1 operated under management agreement. In the fourth quarter, we opened 2 BRIOs: 1 in Wayne, New Jersey; and 1 in Austin, Texas. This year, we plan to open 7 to 8 new restaurants, including 2 restaurants in the first quarter, 1 in the second quarter and 4 to 5 in back half of the year. We also will be entering new markets, such as Boston, Long Island, New York, while also adding to our presence in Florida, Texas and Utah.

Looking ahead, we expect to build 40 to 50 new restaurants over the next 5 years in attractive real estate that meets our specific site criteria. With just over 100 restaurants in our portfolio, a nearly 40% to 50% expansion of our footprint over this time frame would make BBRG one of the most aggressive growth stories within our industry.

Still, with a portfolio of our size, it is necessary to discontinue operations of underperforming restaurants from time to time whose trade areas have either moved or never fully developed. With that in mind, as Jim stated, we have decided to close 2 restaurants by end of the first quarter of 2013.

While it is emotionally difficult to make this type of decision, we feel it is the best interest of our company and our shareholders to devote our effort and resources on projects that have better long-term prospects.

In addition to executing all the things that make for a successful enterprise, namely growing sales, growing units and profitability, we also intend to enhance long-term shareholder value through our share buyback program. Our objective here is to ensure a proper deployment of capital. And as always, we will be disciplined and opportunistic in our approach.

Before we turn the call over to -- for Q&A, I would like to express my deepest appreciation to all of our team members for bringing to life the brand attribute that we all have taken so much pride in at BBRG. We know that with so many dining options available to our guests, the exceptional service and attention to details provided by our team is the reason why BRIO and BRAVO! are viewed as a premier dining destination. Thank you, team members, for all your hard work and efforts.

And to our analysts and investors, thank you for your interest in BBRG, and we'll be now happy to answer any questions you might have. Operator, would you please open the line for questions?

Question-and-Answer Session

Operator

[Operator Instructions] And our first question will come from Nicole Miller Regan of Piper Jaffray.

Joshua C. Long - Piper Jaffray Companies, Research Division

This is Josh on for Nicole. Jim, could you provide the actual sales dollars for BRAVO! and BRIO during the quarter? And then provide any commentary on the amount contracted you've had or what you're baking into that inflation expectation for this year?

James J. O'Connor

Sure. The total BRAVO! sales are $44,796,000, and total BRIO net sales were $66.502 million. In terms of the inflationary for commodities were 2.5% to 3.5% for the year. That's really going to be driven like everybody else's, principally from the protein side, chicken and beef being the big drivers. And we see a little bit of pressure also in the dairy side, too. Really, outside of those 3 key drivers, it's really a fairly benign inflation environment outside of those areas.

Joshua C. Long - Piper Jaffray Companies, Research Division

Okay, that's helpful. And then are you contracted on anything meaningful for those proteins now? Are we still kind of planning day-to-day or more in line [ph] with the stock market?

James J. O'Connor

We are contracted with about 65% of our goods through the end of Q3 for meat. We did find a couple of favorable entry points in terms of contracting for meat. So that was a good thing. And then just kind of broadly in terms of the commodities, we're about 80% contracted for the first half of the year and basically 100% for the quarter right now. So I think we'll probably, compared to this time last year, a little further down the pike from a contracting viewpoint than we have been. And a big part of that is taking advantage of a temporary softness in the beef market.

Joshua C. Long - Piper Jaffray Companies, Research Division

Great, that's helpful. And then on the pressure on the labor line that you discussed during the prepared comments, is there any color you can provide there on what portion of it is coming from just the general sales deleverage? Or maybe a more refined outlook on how you're thinking about health care cost during the year?

James J. O'Connor

Well, I think it's a little bit of all of those. I think over the last 12 to 15 months, most of the labor deleverage has been because of the impact of new restaurants. There are some of those cost increases that we're seeing, including the minimum wage, as well as a little bit of health care. But for us, I think, as a percent of sales, I still think the relative impact of the new restaurants is the biggest driver.

Operator

And our next question will come from Will Slabaugh of Stephens.

Will Slabaugh - Stephens Inc., Research Division

I just had a couple of questions. First, some of your thoughts on the consumer, kind of what you saw last quarter as you obviously accelerated off of October trends. And then as we entered into 2013, just considering all the choppiness that most of your peers have been talking about recently.

Saed Mohseni

Well, as you can tell, we had a very good December. Both of our concepts are truly a magnet for holiday parties as well as just any time that's a cause for celebration. So we were very pleased how the quarter ended. And even the first quarter, even though we are forecasting to 3% to 3.5% down for the quarter, it's important to note that really, 2% of that just comes from calendar shift. So in reality, we're looking at maybe 1.5% -- 1% to 1.5% down. It continues to be choppy. There's really days that things look really, really good, and there's days that things doesn't look that good and, frankly, there's no explanation for either one of them. But obviously, we're having a little more normal winter this year compared to last year. So that adds to the choppiness of the sales. But overall, we're still very pleased with where we've seen frankly from a restaurant standpoint and how they're performing.

Will Slabaugh - Stephens Inc., Research Division

Got you. And then I want to ask you about guidance, too. If you could just walk through that a little bit -- maybe some of your assumptions there a little bit further with regard to the restaurant-level margins year-over-year and kind of what you expect there?

Saed Mohseni

Well, I think that obviously, the -- we had a very good margin on profitability in our fourth quarter, which basically gave us an opportunity to exceed expectation. But majority of that came because of that 53rd week. And anytime we get an $8.5 million week, your balance will drop substantially with that to the bottom line. As we look to 2013, we don't expect that level of margin on profitability because we're not going to have that excess week at the end. With that said, though, we've always done a good job of managing the company despite the flatness of the comp sales. So we've never talked about kind of margins for the year, but I would think that if everything holds true, we should be on that mid-17 to a little maybe higher than that for the year.

Will Slabaugh - Stephens Inc., Research Division

Got you. That's helpful. And just lastly, I wanted to ask you a little bit about the loyalty program and what that's allowing you to do now that you weren't able to do in the past, and then where you're seeing that benefit already and maybe where you might expect that benefit to grow a little bit in 2013.

Saed Mohseni

Well, the loyalty program, as you know, we rolled out in September of last year. And with regards to the benefits, first and foremost, I think what it has allowed us to do is actually really get inside with our real, real loyal guests. And from a communications standpoint, our emails, we're opening about an 80% and 88%, for BRAVO! and BRIO, respectively, open rate higher than we were with any email program we've run in the past. So we know that the guests who are actually on the program are loyal guests and are interested in what it is that we have to offer out there. Right now, we don't have a whole lot of data in terms of success or failure in terms of growing sales. What we do have, though, is we've got about 240,000 people signed up for the program so far, so we're pretty excited with that number. And we do think that what it's done so far for us internally is give us an opportunity to really understand how the guests are using us, which, again, long term is going to give us a better opportunity to figure out how to communicate with them and how to market to each one of those potential guests.

Operator

And our next question will come from Conrad Lyon of the B. Riley & Co.

Conrad Lyon - B. Riley & Co., LLC, Research Division

If you haven't stated this on the call, do you mind stating what the sales volumes were of the stores that you anticipate to close this quarter?

James J. O'Connor

We really haven't disclosed that in terms of the overall volume. They will be closing at the end of the quarter.

Conrad Lyon - B. Riley & Co., LLC, Research Division

Okay. BRAVO!, BRIOs?

Saed Mohseni

It's 1 BRIO and 1 BRAVO!.

Conrad Lyon - B. Riley & Co., LLC, Research Division

Okay. The point I'm getting at, I just want to ask you this. So with the same-store sales outlook for the year coming down a little bit, call it about half of that, less than half of that $10 million call it revenue reduction maybe attributed to the comps, I would assume, then, the sales volumes of these stores, if you pulled that out, makes up for the balance and then some. So dare I use the word "conservative," "conservatism" within sales guidance for the year? Is that a fair assumption?

Saed Mohseni

I don't know about conservatism. I think that there's a lot of things going on. I think that we're very realistic. Conrad, as you know, usually, with -- the numbers that we put out are usually the numbers that we achieve. So I don't think it's conservatism. And in fact, I don't want anybody to read into it that it is conservative, but I do believe it's realistic. As I mentioned, when you start your quarter down in comp sales of 3 to 3.5, then get -- to get to that positive side of the equation by the year, you -- we have to have some good quarters to get.

Conrad Lyon - B. Riley & Co., LLC, Research Division

Certainly.

James J. O'Connor

Conrad, I'd also say just when you look -- and I think Saed went through the cadence of new development. I think we're probably a little bit more back-ended this year than front-ended. So that probably is part of the driver in terms of the overall revenue number.

Conrad Lyon - B. Riley & Co., LLC, Research Division

Okay. Let me ask this, too, from a margin perspective, kind of following up from the last question. The stores that are closing, is there going to be any addition by subtraction? Or is it just too inconsequential to the overall unit base?

James J. O'Connor

In terms of the...

Conrad Lyon - B. Riley & Co., LLC, Research Division

Yes, the follow-on margin, are there some fixed costs getting taken out there that's going to...

James J. O'Connor

Yes, I -- in terms of 2 stores that we're closing, those 2 stores were negative cash flow. In terms of the overall impact, it will be positive, but not materially so.

Conrad Lyon - B. Riley & Co., LLC, Research Division

Okay.

Saed Mohseni

These were really one of those opportunities just that either the market just didn't develop as we expected it or, frankly, in certainly one case, the market just moved away. So -- and we didn't really see an upside in either one of these locations moving forward.

Conrad Lyon - B. Riley & Co., LLC, Research Division

Got you. Okay. Last question here, just in terms of repurchases. So how do you feel in terms of allocating capital towards repurchases versus new unit development in this market? Is it -- are you still gung ho on new unit development returns are there, or might you choose to say, okay, let's...

Saed Mohseni

No, no, the -- fortunately for us, the returns continues to be there for new restaurant. Our first priority still is to build new restaurants. So the fact of the matter is, we are generating more cash than we're using to build new restaurants. So what we're basically using is excess cash, it goes toward purchasing shares.

Operator

And our next question will come from Chris O'Cull of KeyBanc.

Christopher T. O'Cull - KeyBanc Capital Markets Inc., Research Division

Saed, my question relates to the 40 to 50 new stores in the next 5 years. What level of granularity have you gone through in site planning to come up with that estimate?

Saed Mohseni

Well, again, you look at -- in the last 5 years, we've built 42, 43 restaurants on a much, much smaller base of restaurant to begin with, right? So right off the bat, it should give you some comfort that in the next 5 years, especially now that we're entering markets such as Northeast, we're starting to focus in California, a much, much more densely-populated part of the country than we have in the past. And frankly, we continue to see some good opportunities for BRAVO! coming along. I feel comfortable right now. Obviously, no one has a crystal ball looking ahead, but based on the number of projects that we look at on a yearly basis, the number of projects that we say yes to versus the number we say no to, I feel comfortable that, that 40 to 50 should be a realistic number for us in the next 5 years.

Christopher T. O'Cull - KeyBanc Capital Markets Inc., Research Division

Have you all worked on any site modeling analysis or just performed any site modeling analysis to kind of understand what the targeted DMAs would be for those 40 to 50 stores and how many you could have in each DMA?

Saed Mohseni

Oh, absolutely. We've done -- well, we work with Buxton as part of the analytical work of our site selection. So site selection is part science, part art. So we use Buxton for the science part of it, and we do a total penetration of the market. We do look at the U.S. penetration, number of restaurants we can have. So to answer your question, yes. But it's not -- the question is not whether or not, for example, Ohio can hold 25 restaurants or 27 restaurants, the question is what are the next 7 restaurants for Ohio? So -- and I just used the market that we obviously have a large penetration. Five years ago, we did a study with Florida, and we concluded that we can build 25 restaurants. And at that time, we only had 4 or 5. Today, I'm happy to announce that we're going to open our 13th restaurant in Florida, and we feel very, very comfortable that we can have 25 or so in that state. So we do use outside consultants for the science part of it, but, at the end of the day, it also -- it tells you there's probably 30 restaurants in Manhattan, but we don't -- we're not even interested in looking at Manhattan because, frankly, it's not cost effective. So real estate is about a balance between art and science.

Christopher T. O'Cull - KeyBanc Capital Markets Inc., Research Division

Given you have gone through that exercise, what percent or, well, I guess what portion of the 40 to 50 would be BRAVO! versus BRIO?

Saed Mohseni

We look at -- for both of these concepts, we can build 50-50, equal amount in the next 5 years. And -- but it is going to be driven by the site. We make those decisions not based on whether or not it is a BRAVO! market or a BRIO market, but we certainly make that decision based on household income, density of population, co-tenancy within the center and, frankly, ultimate market penetration in there. And those decisions are really made one location at a time.

James J. O'Connor

I will say that we feel pretty confident that both brands have a long runway in front of us.

Christopher T. O'Cull - KeyBanc Capital Markets Inc., Research Division

I'm not thinking it's '13 as much as the next few years, but BRAVO! really hasn't had much development since 2008, I guess. Should we start thinking about accelerating the rate of development of BRAVO!?

Saed Mohseni

It -- a part of the reason, it's been really our choice because majority of the projects that have been getting built over the last 3 or 4 years has been the developers putting money into what they consider their A centers. And just in A centers, you're dealing with a higher rent, higher common area. And in a lot of cases, you're dealing with a center that, by putting a BRIO in there, we're basically the best capitalized in the market. While we feel very confident that BRAVO! would do very well next to Saks Fifth Avenue, the fact of the matter is, with having BRIO there with $5 more in average check per person, it gives us a better return immediately. But with that said, though, we've also -- you look at Omaha, Nebraska, you look at Ann Arbor in Michigan, these are the markets that a BRIO would not work and a BRAVO! has worked and will work in the future, and that's the beauty of having both of these brands that gives us this tremendous amount of opportunity to look at the entire country and not just look at a segment of the country.

Christopher T. O'Cull - KeyBanc Capital Markets Inc., Research Division

Okay. And just one last one. And I apologize if I missed this, but why did the check average decline during the quarter at BRIO?

Saed Mohseni

It's just the consumer. The consumer shift of what they order. And we're totally comfortable with it. As I mentioned, we've always had some very good values in our menu as part of our overall standard pricing. So in some cases, the consumer takes advantage of that. And it's not unusual to see some quarters' average check per person to be up while other quarters to see it slightly down.

Operator

And our next question will come from Jeff Omohundro of Davenport & Company.

Brian Ward

This is Brian Ward on for Jeff. Can you talk a little bit about your views around how the new lighter fare menus fit in with your demographic base? And are you doing anything specifically to help drive that category menu trial?

Saed Mohseni

First of all, our demographic lend itself to the Lighter Side of menu. 65% of our guests are female to begin with and it's been -- as Brian pointed out, it's been perceived very well right off the bat. So we feel really, really good about it. We, as a matter of fact, are feeling very confident that this will be something that eventually just gets rolled into our regular menu as part of our everyday dining. And frankly, so far, the reception by our guests has been very, very positive.

Operator

And our next question will come from Imran Ali of Wells Fargo.

Imran Ali - Wells Fargo Securities, LLC, Research Division

This is Imran on for Jeff Farmer. I'm not sure if you can comment on current quarter trends, but it sounds like just recently, it sounds like other restaurants and retailers have indicated that top line headwinds appear to have eased moving into mid-February. And I was just wondering, have your same-store sales trends directionally followed a similar pattern?

James J. O'Connor

Well, I think there's 2 dynamics within our comps, both of which we've talked about. One was just the calendar shift on the first week, which is costing us 200 basis points. And then when you look at the kind of the rest of the dynamics within the model is -- I think it's a combination of several things. One is the -- what everybody else has talked about in terms of the macro, in terms of payroll tax increases, tax refund checks getting deferred, et cetera. But then you also have the impact for us of weather, being a normal weather winter for us, particularly in the Midwest, compared to this time last year. So it's really the combination of all those things that are really impacting our trends right now.

Imran Ali - Wells Fargo Securities, LLC, Research Division

Okay. No, that's helpful. And just kind of following up on your new Lighter Side menu at those concepts, I was just wondering, has there been a margin impact just from the new offerings? I know it's still early, but I was just curious.

Saed Mohseni

No, no. There has been no margin impact. As a matter fact, the price point on the items is very similar to those that are on the current menu right now, and they're costed out at basically the same margin that our current menus are right now.

Operator

[Operator Instructions] And our next question comes from Michael Halen of Sidoti.

Michael Halen - Sidoti & Company, LLC

So in terms of 2013 development, are we still looking at more BRIO units being opened versus BRAVO!?

Saed Mohseni

That's correct.

Michael Halen - Sidoti & Company, LLC

Okay. And are you willing to give us any more color in terms of what you think the split might be?

Saed Mohseni

Right now, you're looking at probably 1 to 2 BRAVO!s, and the remaining would be BRIO.

Michael Halen - Sidoti & Company, LLC

All right, great. And last questions. Do you have any additional data you can give us in terms of Banquet sales in the fourth quarter, maybe what percentage of sales or the growth rate you're seeing there?

James J. O'Connor

Sure. We're pleased with the progress we have made on the Banquet side. So when you look at us from a year-over-year perspective, we're up in terms of the total comp dollar as well as an increase in the Banquet sales as a percent of sales.

Operator

And gentlemen, that is all the questions we have for today. I'll turn the conference back over to you for any additional or closing comments.

Saed Mohseni

Well, thank you so much for joining us on the call. As always, Brian O'Malley, Jim O'Connor and myself will be available should you have any questions. Thank you, and have a wonderful day.

Operator

And that does conclude today's teleconference. Thank you all for your participation.

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