BJ's Restaurants' CEO Presents at J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum (Transcript)

| About: BJ's Restaurants, (BJRI)

BJ's Restaurants, Inc. (NASDAQ:BJRI)

March 07, 2013 7:30 pm ET

Executives

Gregory A. Trojan - Chief Executive Officer, President and Director

Gregory S. Levin - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Secretary

Analysts

John W. Ivankoe - JP Morgan Chase & Co, Research Division

David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Welcome back, everyone, and hello to everyone, on the webcast. John Ivankoe from JPMorgan, restaurant analyst. It's really a pleasure to welcome BJ's Restaurants which is one of only a couple of companies that's not formally under JPMorgan coverage but constantly under JPMorgan observation in the industry and a leader in a casual-plus space and a very differentiated brand and experience.

We're having an interesting conversation, Greg Trojan and I, who's now the company's CEO, I believe, as of February 1st, met when he was CEO of House of Blues back in 1997. And I won't share all these funny stories from my -- that happened to me during that time. But Greg is a great leader in the industry and I know BJ's is very happy to have him. Many of you know Greg Levin who is the company's Chief Financial Officer and does a very good job at the company, so we do look forward to having a nice conversation today.

Question-and-Answer Session

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And especially from your perspective -- you're both named Greg, Greg Trojan, understand kind of what you saw in the business. You probably had a lot of opportunities, but what brought you to BJ's and what mark that you'd perhaps like to make on the business?

Gregory A. Trojan

The -- John, I -- the opportunity to grow a concept that has the future ahead of it like BJ's does was kind of in a nutshell sounds very simple, but I found myself talking to the team members at BJ's a lot in terms of don't take for granted what we have here and the opportunity that this company has to grow and be something special. And so it was a concept I was from pretty familiar with. There's a lot of PepsiCo heritage at BJ's. And a number of the folks and one of the several founding fathers of the concept was a gentleman by the name of Bill Tilley, who is a formidable shareholder and force -- at BJ's as -- or at PepsiCo as a longtime investor. Was one of the guys that really got BJ's off and running in its modern form and someone I knew for a long, long time. Unfortunately, Bill just passed away late last year but he was someone that kept telling me, "You've got to take a look at BJ's. This is really quite an opportunity." And when I did come it was clear to me that it was a pretty unique opportunity in the space. And I'm happy although I enjoyed my time in -- at Guitar Center very much. I love music as evidenced from my House of Blues days and we did a lot of fun, innovative things in the world of retail at Guitar Center. It's nice to be back in the world of restaurants and I love food and I like people a lot and it's a great place where you get to control the guest experience from beginning to end for better or worse and hopefully, it's more often for the better and I like having that control over the guest experience from the start to end. And so it's really been fun to be back.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And it is interesting especially learning about the story and constantly refreshing myself on the story, the number of restaurants you have in such a few number of states. I think there 130 restaurants in 15 states, but nearly half of those restaurants, I believe, are in California.

Gregory A. Trojan

That's correct.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

So it means that -- what I mean -- it's either a good thing or a bad thing. I mean it's either like somebody could say from the outside world, "You have -- you'll be successfully in markets where you're very penetrated and the rest of the country where you're not, like the Northeast isn't an opportunity," or one can say that you really have much more white space based on the fact that you're only in 15 states than the majority of public companies that are out there today. So I mean as you've took your impression, whatever it was, and the studied the data, what is the potential of expanding this brand into many of the states that you're not?

Gregory A. Trojan

Well, I've been in retail in one form of another for longer than I like to remember now, right, and I spent many days of my career in vans and in cars doing site visits and so I've seen -- if I haven't seen every mall in America come close, and I -- frankly, I start to salivate when I start to think of the trade areas we're not in and when I envision how we're going to perform in a lot of the open space that we haven't yet developed. And so it's the key driver of the future of the concept is that. The thing that I'd add on top of just the geographic potential is the flexibility in the concept to grow in small town U.S.A., suburban and urban is unlike anything I've experienced in my career or seen as a consumer. And it's evidenced for those of you listening or here today that haven't been to a BJ's, look around when you go and I would challenge you to look -- see a restaurant or any kind of retail concept that has the diversity of guests in it that our restaurants do under -- on almost any dimension and whether it's economic or social, racial or whatever. And also diversity in terms of the kind of occasions that our assets are used for. So that ranges from lunch for senior citizens to seeing a game with young 20-somethings and drinking beer in our bar area to family occasions with kids. I mean, it is all over the place in the very good way. And as a result, our concept is very well from trade areas that range from Downey's and the Montebello's of the world in L.A., if you're familiar with those, to the Irvine's and Huntington Beach's to Addison, Texas, and we do very well in the El Paso's and Lubbock, Texas'. So again, I haven't seen too many concepts that have that kind of range to them. So when you look at -- think about the development future and the potential of a concept, you can't help but get pretty excited about it.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

I mean, just a personal comment. I had the chance to go to the Falls a few weeks ago and I mean, what a beautiful restaurant that is.

Gregory A. Trojan

Yes, well, thank you.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And the volume it's -- I mean, we're full at 11:30 and in the morning, I mean, you obviously have something special there. And that's a restaurant -- I mean, just the entire area is probably 70% Spanish-speaking or 80%?

Gregory A. Trojan

Yes.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

But very high and your awareness in South Florida is functionally nonexistent. I mean, it's going to grow, especially with properties like that. One, which is very special and you couldn't have better visibility, which is very good. So I mean, so the -- so let's just think like that, a little microcosm of South Florida, if we can, where I think you've opened a few restaurants even in the past year and apply it to other areas of expansion that you're talking about, I think the Mid-Atlantic, Northeast, in terms of how companies can go and make a lot of money or lose a lot of money. So let's talk about what you're going to do to ensure your success.

Gregory A. Trojan

Well, it goes back to the earlier observation in some ways, is we've got to be careful because a lot of concepts have tripped and worse on the development front, right? And you made the observation around the clustering of the concept, which I view as a positive, right, is not just from the white space that's left but we have scale and core operating capabilities in the markets that we're in. We're going to continue to develop with that mindset. So I think pursuing a "We're going to go everywhere" strategy is a strategy to -- particularly when you have a concept that as executionally complex as ours, we need that scale primarily because of the people development and recruiting and all that goes into making sure we have the teams to operate our restaurants. So that's #1 in my mind is both development pace and where we go is dictated by -- the limiting factor, at end of the day, is people. And the next kind of hub development and flag planting that we're going to be doing is in the middle Atlantic and in Northern Virginia. We're opening in Tysons Corner, which is a market I know well from my CPK days and others. And I think it's a great choice for the next place to develop from. Number one, it's a great restaurant market, great demographics and it allows us to go into the Northeast from that base and then obviously go South and down into the Southeast from that neck of the woods. So we're very excited but we've got to be balanced about it as our developments is going to be weighted in both fill-in areas of where we do have scale and then take on the challenge of opening in new markets which take some extra investment and some time to get our operations in line with others. But those -- that's going to be great areas of the world for us.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

I'm sure, Jerry Deitchle and Wayne Jones have talked to you about the Cheescake Factory experience. Which in a lot of ways, it's kind of the opposite of this in terms of clustering. And they did -- their average unit volumes were higher, but square footage-wise, it's fairly similar. So let me just -- I mean, just kind of use on this, a company that was -- still is, very successful, why that's not the right strategy for you? Because they planted flags all over and then filled in much later.

Gregory A. Trojan

Yes, yes. I just think that we have, in some ways, a more difficult operating model than Cheesecake, given that we're operating at a $14-guest check, right? So we're doing these tremendous volumes but at that, I guess, you start doing the math and the volumes and the complexity of what we're doing with our range of menu is something we embrace and is a real, we think, a barrier to entry. But as a result, that operating complexity, I think demands that scale that I'm alluding to. And I think Cheesecake was very successful in pursuing what I would refer to as kind of the capital market strategy of go to the big markets, high-trafficked big -- largely mall development, but they had an infrastructure where they could afford to do that and sustain islands at a time at the volumes they were doing. I think given our model, we need that scale more, but it's a balance.

Gregory S. Levin

There's also -- real quick, a couple other things that play into it differently as well. One is the fact that the BJ's concept competes against the bar and grill segment a little bit. And the bar and grill segment spends a lot of money on television advertising. So our cluster strategy allows us to build brand awareness in those markets where we don't have the capital or the financial resources to spend that type of money on the marketing. And the second thing, which we never think about per se, is the logistics around the beer side of our business. So doing a capital market strategy around the beer starts to become a little bit of a diseconomies of scale per se. And by clustering it really allows us to get that economies of scale of getting the beer into the market. So that plays into us also little bit differently than the Cheesecake Factory model.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

So you -- yes, I mean, you mentioned advertising a bar and grill and you've be -- recently begun testing of advertising at BJ's. So when we talk -- I mean, so as you -- I mean, you've obviously -- in Guitar Center I think you did some advertising, certainly California Pizza Kitchen, I mean that's done some over the year and in a variety of different ways. But to what extent is advertising really an opportunity for you and when you think about the percentage of stores that could be touched by television, I mean, what could that be efficiently as opposed to investment?

Gregory A. Trojan

Well, when you -- I would broaden the question a little bit, John, in that advertising doesn't necessarily mean TV. And we are starting -- we've done some limited testing. We're about to do kind of the second round of it in a few weeks here, and it's something that we need to learn and understand in some of our developed markets but we're not going to have the kind of scale nationally as we continue to develop from where we are to rely on television in our markets for a long time, if that indeed ever -- is the answer. So that forces us to rely on real estate, a la' Cheesecake early on and make sure we're in those AAA traffic locations, particularly to begin with, in new markets. But I do think there's an opportunity if you -- it's pretty compelling when you look at our level of awareness. You made the observation in Florida, right, and you're right on. Our awareness levels lag most -- every mass-market, casual dining competitor out there. But our research would tell us that our -- the adoption rate and return rates and the fans that we make once they try the concept is very, very compelling. So there is an opportunity to figure out other ways, economic ways to drive awareness because we are very confident that'll lead to conversion. And so we -- one of the undeveloped muscles, if you will, the concept given how young it is, is the whole brand positioning. One of the challenges of who we are is we're many different things to many people, as I explained, which is a marketer's nightmare in a lot of ways, right? And figuring out how to distill the BJ's story and tell it whether it's through digital means, we have a great advantage of who we are on a local marketing basis and that is a lot of the heritage at BJ's, but something that hasn't been much of an emphasis as we've developed and so there is an opportunity there. We don't pretend to have the answer. But to me, it starts with distilling more succinctly than we have been able to or have put the resources to what the messaging is because there's a lot of stories to be told about BJ's. For example, first and foremost, is the quality of our food. People love us when they try the concept but I don't still think we get the full credit for the quality of execution in our restaurants because we're not telling any stories or very few stories around our food other than having people just taste it and I think the restaurant experience is partially taste buds but it's also brain and heart, and telling some stories and giving some people some information and background and romancing the experience will help us.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And one of the things that I saw by accident in Phoenix, I'd been visiting for the weekend, was a freestanding insert in the newspaper that I think had some, one side, I think it was featuring some meals that were under $10, featuring some lunches and I think it had a coupon element to it, if I'm recalling correctly.

Gregory A. Trojan

Yes.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

I mean, so was that -- is something like that a tactical response to what's kind of a slow environment for the last 4 weeks or was that a type of Phoenix is like, it's still a market that hasn't fully recovered economically. Is that something that's specific to that market as a necessity?

Gregory A. Trojan

No, that's not a recent -- that's not a recent reaction. That's something that in the last couple of years has been part of the playbook. And there's not an overwhelming kind of strategy in one direction or the other in terms of media, but on a limited basis though, they seem to have worked -- to work quite -- quite well and is one of the things in the playbook of today but not really a reaction to recent times...

Gregory S. Levin

We've, over the last 2 years, have used kind of a Sunday emphasize. And from time to time, we will use a offer in there to kind of drive people as well as to promote maybe value options and other type of things. So it wasn't really any change. And I think the stuff that Greg's continue to talk about in regards to the branding of the concept is how is that media mix or that advertising mix can be changed over time, especially with our loyalty program and other things that are out there that are different ways to reach the consumer.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

So a couple of things until we move on to loyalty because I do think that's important. I'm sure you do as well. I mean, the concept was famously insensitive to the economy, especially given your California exposure kind of I think 2009, 2010. I mean, do you think -- is it less sensitive at this point? I mean, I'm sure you've heard some casual dining numbers, the companies talking about being down 8 and then other variety of things. And so like where are you right now in terms of, if customers are going to go out at all, they're going to come to you, or are you seeing some customers manage around the edges at this point 2013? We're supposed be in a recovery not in the downturn and the last couple of weeks certainly have felt like a downturn.

Gregory S. Levin

I don't know in the prior if we were recession-proof from that standpoint. I mean, we did see comp sales through 2008 and 2009, they flattened out. I think we were down 0 down to maybe 1%.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

That's excellent.

Gregory S. Levin

Well, compared to the rest of the industry and I think as a result of that, we outperformed the industry whether it's a Knapp-Track or Black Box, whatever different people are looking at today. And I think we continue to do that. At the same time, though, as we've continued to build into more areas and the great thing about the BJ's concept is that, not only can we go into upscale or middle America area or small town, et cetera. Some of those might be more influenced by macro events than maybe where we were 4 or 5 years ago. But I still think as we look at the BJ's concept, we think about this first quarter and some of the challenges in this first quarter. But I think all consumer discretionary concepts have really seen kind of, to your point, they were -- some people are seeing sales down, 8%, 9%. I think the BJ's concept still stands head and shoulders above traditional industry metrics from that standpoint. It doesn't mean that we don't go with the industry from that standpoint but I think we're going to continue to have that opportunity to outperform.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

So discuss -- Starbucks has obviously kind of -- has really led the industry with loyalty and their card got put into the place in 2001 and casual dining has been -- I mean, really lagged. And you actually have one of the leading programs in casual dining around loyalty. So I mean, talk about what percentage of your transactions actually do get registered on the card and how big and how important you think it could be over time? I mean, if you're releasing those kind of specifics or if it's too new to talk about.

Gregory S. Levin

Well, we haven't released those specific transactions and those specific numbers. I would tell you that today I think both Greg and I agree that, frankly, it's a little too low in regards to the amount of the transactions that are on the loyalty program, and we're seeing it increase though. We're building that database, which is what we expected to do over the first 6 months, and we've recently been changing things up on the loyalty program where we've been offering maybe special offers for our loyalty guests to come back, maybe use these points with a limited time offering basis and we've seen some great returns in that regards. I think ultimately as we've talked about on the loyalty program and I'll turn it over to Greg here in a second is the fact that it's going to allow us to have that one-on-one connection with the guest. And that's going to allow us to differentiate and have a better communication tool than going out maybe and spending all that money on television or something else that we can do as effective if not better than other casual dining concepts.

Gregory A. Trojan

So John, as you know, loyalty is still early days for us as well. I think my perspective is that the value in it is to use it as an opportunity of more on the surprise and the light side of rewarding loyal customers or any of our customers. The point space aspect of it's kind of a price of admission and as people expect but there's -- beyond casual dining, there's too many of those programs as it is and people don't even carry the cards around and all of that. But I think the real opportunity is to use it as a vehicle for those incremental visits, right? And I think the way to do that and for people to take notice is to just send them a compelling offer of value, and also it's not just monetary. I think what we're doing in the craft beer side of things to be able to talk to people about the new exciting things going on in product development and the cool new beers and educational. There's a lot of interesting things that we can leverage that connectivity with. But I think that's where the cool -- and you can start managing our capacity that way by looking at where we have unused capacity and really give some people some compelling reasons to drive traffic in parts of -- day parts in our restaurant that we're not as busy. Because doing that on a Friday and Saturday night doesn't help us too much.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And can that be tied into either table ordering or table payment. I mean, I know you kind of mentioned at least that, is that actually in any restaurants now and as importantly, and I can't really recall myself, have you actually seen it work anywhere?

Gregory A. Trojan

Yes. We're actually not connected to loyalty, doing some very limited testing on pay-at-table kind of things and we're very interested in the online ordering side of the business and with an eye towards connecting those. I come most recently from an e-commerce experience and where we were able to react very, very quickly, promotionally as well in using the amount of change in big-box retail and online retail is enormous. It hasn't -- it's not at that same level in casual dining, but I think there's a lot of things that can -- a lot of thinking in terms of how it could change the guest experience that are very transportable that I think are pretty interesting to start thinking about. So loyalty helps because you need that one-to-one connection to try -- to start doing some of those things but I think -- I'm pretty excited about some of the innovations that are around the corner there.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Well, but you'd change gears a little bit. I mean, we you talked about new markets and -- talk about the experience of new unit volumes in those new markets and just preparing for the conversation today, I mean, do you think ramping profitability of new stores in general is kind of part of a focus so if there's something that you can do to kind of have to say, the units are fully efficient after x number of months and what you think that should be? And then we'll talk about some other margin implications after. The volumes in new markets. If -- I mean, if you kind of talk about it broadly and then the ramp of profitability for new units in general.

Gregory S. Levin

Yes. I think the new unit volumes in regards just that top line sales volumes really comes down to kind of the densities in those areas. So we're expecting an area if you think about the Falls, where you've been, frankly, the average unit volumes in a restaurant like that, in that dense of an area, are going to be almost California-like, where we've talked about the fact that California has got some of the highest sales volumes of BJ's in that regards. As we go into some of these other markets, it, frankly, just depends like Lubbock, Texas is doing unbelievable for us. As we go into some of the smaller town markets, we don't expect them to do quite the sales volumes as maybe a California restaurant, but the price to entry is going to be a little bit less and therefore, your returns on that investment are going to be as good, if not better, from that standpoint because the cost structures are different. Now separate of that, I would almost say universally, the ramp-up is very similar and that's because you're still taking a new restaurant with green individuals whether it's a green management team that hasn't worked together. You know they're seasoned in BJ's, green hourly team members. That's just going to take a while for them to work through some of those issues. What tends to happen in our restaurants is you see maybe at about 120 days. You start to move that number or that restaurant level operating margin which we target to be around 20%. It's going to move into that 16%, 17%, 18% range and it's going to kind of stay there. It's going to incrementally improve over the next year. But usually as a restaurant starts to hit its 13th, 14th month, you start to see that margin expansion happen because they've now been able to cycle through the full year. They understand how the holidays are going to impact them, and their team has become much more seasoned and they've develop that kind of eye-hand ordination and that eye-hand speed to get the food out of the kitchen that much better. So I use this football term a lot. We move the ball down to the 20-yard line, it takes a little bit more time to go from the 20-yard line into the end zone and that's going to usually come in at the second 12 months of operations.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And is that something that you want to particularly pull up? I mean, you -- should it be 6-month, should it be -- I mean, right now we're not talking about big numbers here. Should it be 6, 9, 12 months as opposed to 15?

Gregory S. Levin

Well, I think what you -- when you look at that number, obviously, from a financial impact, the sooner the better in that regards but you never want to do that at the expense of a long-term value of the guest. And it's going to take that time to season your team members from that standpoint. What we do at BJ's around that is we make sure we've got the right systems in place. So we've got a labor metric in place, we've got a theoretical food cost system in place. We can measure the waste. We've got actual versus theoretical cook times so we can go look at those cook times and try and pinpoint where the bottlenecks are and where the issues that are happening in that restaurant to move it forward and really, by having those systems, you can accelerate that pace to get the ball over the goal line using that football analogy maybe before the 12 months time frame. But you want to make sure you're not doing it at the expense of the guest. And what tends to happen in a lot of restaurant concepts is they push on margin and ultimately really hurt the restaurant. But when you think about margins in this business, you are always going to have those -- that freshman class, that's going to be a little bit lower than your mature class. And I think even you, you've been in this business for a while. As you think about 2008 and 2009, we started seeing some really great margins coming out of these restaurant concepts that at the same time, weren't putting up big comps and it's because they weren't building anymore and they didn't have those immature restaurants dragging it down. So we work hard to bring up those new restaurants, but ultimately there's -- they're always going to be a little bit behind the mature restaurants.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

So one question before I forget to ask it, I mean, do you use pricing equal across all of your stores across all of the markets, or are you looking into individual market pricing?

Gregory S. Levin

Right now, we have a couple of different tiers out there but generally, it's pretty close across the markets, and we are looking at that.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

It is -- I have heard companies, I don't want to name them over webcast, that do you use the same pricing in every store in the United States and it's very surprising to me. I mean, it's -- cost structure incomes, expectations, competition, there's 15 reasons to why you would have it different except for the fact that it's the same.

Gregory A. Trojan

They must not operate in California which is...

Gregory S. Levin

Well, I think that's an opportunity as we continue to build the BJ's concept is, does different pricing or maybe even different menu, our changes a little bit of menu make sense.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

I mean, so I don't know what type of product mix your kitchen was built for. I mean, what we often times see in restaurants is the kitchens are left the same where the evolutionary process can be very, very slow that sometimes aren't in necessary agreement with what the product mix is. In other words, is the restaurant that you're building tomorrow, just have the similar kitchen to what you -- already exist or is the restaurant tomorrow optimal for what the product mix actually is, if I'm being clear. So do you think as you have a big enough base of restaurants now and your product mix presumably is fairly predictable, have opportunity for significant system changes, not just from a technology and IT perspective, but from a restaurant operating systems perspective. I mean, of course, the easy example for someone like me is to point to Chili's that really has changed a lot of their kitchen. I mean, is that -- do you have structural opportunities in the kitchen that could be meaningfully margined out without hurting the customer?

Gregory S. Levin

I don't know the exact answer to that but you always continue to evolve your kitchen. And if I think about the BJ's concept specifically and how we've evolved over the years, we used to have what you would call a 4-burner for the pasta individual. We saw pasta take off and we added another burner. So all of our restaurants today are built with a 6-burner. We've expanded the grill capacity as we enter -- as we added more sandwiches or other items. So I think over the years, we continue to evolve. Our menu from that -- or our kitchen from that perspective, and we currently have an initiative, what we call, I think it's proto-kitchen 2015, I believe, on our list. But we continue to evaluate our kitchen in term of what's that right kitchen line supposed to look like. So we want to continually evolve that. Now frankly, the BJ's kitchen is a very large kitchen to begin with. And it gives us a little bit more flexibility, I think, than maybe some of the other mass-market casual concepts, as they've evolved their business, they didn't have that capacity there.

Gregory A. Trojan

So we have learned a lot. I mean, there are some retro projects that are fairly recent that have -- they've been more capacity expanding, John, where we're constrained in our kitchens and have learned some basic layout and equipment and we continue to test those. But there's still some innovating to go there and there's also just some constant look at how can we -- we run a very complex concept as we've talked about and how can we continue to have the diverse kind of menu that we have but make it simpler for our folks in our kitchens to execute and end up with a higher-quality and more consistent quality to our guests while doing that. And that will lead to more efficient -- efficiency at the same time.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And I don't know if you're alluding to this or I'm matching the interpretation but I mean, there's -- off-premise food production is in a very different place today than it was 10 years ago, for example. And you made the point earlier, do you get credit for being almost a fully scratched kitchen? And in the taste, yes, but not necessarily in the mind. So it could be interesting to see, like, what opportunities you may have to come in and say, "Listen, let's just kind of consider everything and..."

Gregory A. Trojan

Listen -- exactly. And I think if you -- and our approach is certainly going to be this. If you approach that with what's the best quality answer at the end of the day, and you shouldn't have a lot of rules around what's in-house -- and I think culturally, we don't have the barrier that maybe some other concepts have had in that regard. And I think there are some opportunities.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

It's -- one of your neighbors, and if we can talk about it specifically, is Yard House, obviously. I mean, they're you but with, obviously, a much higher average ticket. I mean, like what is its success and kind of the breadth of that concept taught you from what you could become? I mean, do they give you more permission, for example, to take the menu up in any direction?

Gregory A. Trojan

Look, I'll let Greg add to it as well because he has a lot of historical perspective. Mine's more as a consumer, right, and...

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Yes, you're both great. But you are, I mean, you are different. You serve slightly different purposes but I do cross over -- I mean, I go to both.

Gregory A. Trojan

Right. And we have a lot of very high regard for Yard House as a concept and what they've accomplished and who they are, but we are pretty -- more different than people the casual observer probably recognizes. There's something like a $10-guest check difference between our concept and Yard House, and that is obviously extremely significant. But -- so I think there are -- with those differences in mind, that's not where we're going to go. It doesn't give me a desire to, in fact, one of the fundamentals of our concept is the value proposition and we think we deliver a $20-guest check experience for $14 and that is fundamental to who we are and why we're successful in all the trade areas, I think. So I -- we always learn from competitors in a lot of different respects, but we could coexist in a lot and we do, as you probably know, in a lot of different trade areas. And interestingly, when we open on top of them or vice versa, there's a little bit of an impact but it's not as significant as you'd think. And I think the reason is there's more differences there than you would think.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

A question for you, as you came into the company, you've obviously -- you worked at several corporations, on the board of corporations. In terms of how the corporation is structured, regional field, I mean, they're obviously it's delicate if you haven't actually decided anything, are you...

Gregory A. Trojan

Yes, I'm about to announce a major issue.

David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division

Are you optimized -- and optimize can mean you want to spend more money, of course. It doesn't -- I mean, I'm not alluding to anything. But you could -- or there could be reallocation or what have you, so not that where we are in the webcast...

Gregory A. Trojan

No, no. I...

Gregory S. Levin

Yes, Greg. Tell him.

Gregory A. Trojan

Actually, I'm here to confirm that...

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Don't say that.

Gregory A. Trojan

There's a -- it's an incredible infrastructure, as I started out with my comments. I think the -- not just the quality of the team but the infrastructure I alluded to earlier just runs very, very well. It's more of a matter of what we need to evolve and develop going forward and as we scale but it is as capable an executing team as I've seen in multiunit retail, and that's not easy to do given what this concept's like. So that's not -- I don't see that as an opportunity here. I see it as an asset and I'm certainly not contemplating any fundamental changes in the structure or the infrastructure of the business. And that's part of the fun for me, frankly, is that -- I've been, as you know, in some earlier-stage startups and semi-turnarounds, et cetera. Well, that's not the case and it's great to be able to focus on the growth part of this business and not on the things that we need to fix or make major changes in the operating infrastructure. So it's a good question.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Okay. Are there any questions from the room? Continue to have fun. Congratulations.

Gregory A. Trojan

Thank you.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

And thank you for coming.

Gregory A. Trojan

It's great to see you.

Gregory S. Levin

Thank you.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Thank you.

Gregory S. Levin

Thanks for inviting us.

John W. Ivankoe - JP Morgan Chase & Co, Research Division

It's a pleasure.

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