Chanticleer Holdings (NASDAQ:HOTR)
Q4 2015 Earnings Conference Call
April 01, 2016, 11:00 AM ET
Jennifer Belodeau - IR
Michael Pruitt - Chairman & CEO
Mark Roberson - COO
Joseph Gomes - William Smith & Company
Howard Halpern - Taglich Brothers
Greetings and welcome to the Chanticleer Holdings Fourth Quarter 2015 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jen Belodeau, Investor Relations for Chanticleer Holdings. Thank you, Ms. Belodeau, you may begin.
Thanks, Michelle. Good morning and welcome to Chanticleer's fourth quarter 2015 earnings call. On the call today we have Mike Pruitt, Chanticleer's Chairman and Chief Executive Officer; and Mark Roberson, Chanticleer's Chief Operating Officer.
There is a slide presentation that accompanies the remarks today. In order to access the slides, please go to chanticleerholdings.com. Then go to the Investor Relations section and click on the fourth quarter 2015 financial results conference call under the events section, log on to the webcast and you will be able to access the slide. Again, in order to access the slides, please go to chanticleerholdings.com, the Investor Relations section, click on fourth quarter 2015 financial results conference call, under the events section, log on to the webcast and you will be able to access the slides.
Let me take a minute to read the Safe Harbor statement. During the course of this conference call, we will make certain forward-looking statements. Any statements that are not historical facts contained in this call are forward-looking statements as that term is defined under the Private Securities Litigation Reform Act of 1995 PSLRA. Which statements may be identified by words such as expects, plans, projects, will, may, anticipates, belief, should, intends, estimate, and other words of similar meanings. Such forward-looking statements are based on current expectations, involve known and unknown risks, reliance on third-parties for information, transactions or orders that maybe cancelled, and other factors that may cause our actual results, performance, or achievements or developments in our industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements.
Factors that do cause actual results to differ materially from anticipated results include risk and uncertainties related to the fluctuation of global economic conditions, the performance of management and our employees, our ability to obtain financing and required licenses, competitions, general economic conditions, and other factors that are detailed in our periodic reports and on documents that we file from time to time with the Securities and Exchange Commission. The forward-looking statements contained in this conference call speak only as of the date the statements were made, and the company does not undertake any obligation to update the forward-looking statements. We intend that all forward-looking statements be subject to Safe Harbor provision of the PSLRA.
With that let me turn the call over to Mike. Go ahead, Mike.
Thank you, Jen, I appreciate it. Good morning everyone, I appreciate that all of you have taken the time to join our fourth quarter conference call. Our company made great strides and achieved significant milestones this year.
Some of those highlights are, the mission in 2015 was focused on expanding and diversifying our business by growing our Better Burger. We successfully completed three acquisitions during the year. With those transactions now under our belt, we're well positioned to build long-term value for our shareholders. Annual revenues increased to $42.4 million and system-wide store count increased from 26 to 62 over the past twelve months. On a quarterly basis, revenue grew 47% and our EBITDA improved 71%. The revenue growth and EBITDA improvement in 2005 [ph] were direct results of the acquisition strategy.
We successfully completed three acquisitions in the past year; BGR: The Burger Joint; BT's Burger Joint, and Little Big Burger, added to our scale, diversified the revenue base and resulted in a solid platform to drive future growth. In addition to diversifying our business in the burger space, we also opened two new Hooters locations internationally; first, in Townsville, Australia, and the second in Port Elizabeth, South Africa where we own the real estate. Hooters is an important and valuable part of our business. In the near-term, our focus will be to drive better profitability from the current base of Hooter stores and our growth strategy will be more focused on organic growth in the Better Burger business. We closed the Little Big Burger transaction on the last day of the third quarter, and the concept has exceeded our expectations in terms of revenue contribution and EBITDA margin. We also opened our 23rd BGR location during the quarter at the high traffic Springfield Town Center in Springfield, Virginia.
With the acquisition of BGR, we moved into the franchising business. As a franchisee of Hooters, we bring a unique perspective to the roll of our franchisor and look forward to expanding our franchise business. Franchising has the potential to be a high margin platform for growth with very attractive returns on capital. We plan to expand our BGR franchising platform and hold our other brands into our franchising business during 2016. I'm very excited about the future of the business, and there is a lot to talk about with regards to our strategy going forward. But prior to doing that, let me turn the call over to Mark to walk through the financials.
Thanks, Mike. Good morning. You will turn to Slide 5, We'll walk you through the Q4 P&L results first. Total revenue increased 47% year-over-year and 23% sequentially from Q3 to $12.7 million for the fourth quarter. The growth was driven in large part by the strong performance of our Better Burger brands, which we'll look at in more detail momentarily.
Our cost to food and paper improved 400 basis points from 34.3% of restaurant revenue to 33.9% as of Q4 2015. Our food and paper costs vary considerably from region to region and business to business, but overall we are starting to realize some of the benefits from the increased scale and purchasing capabilities.
Restaurant operating expenses improved from 66.6% to 60.8% of restaurant revenue. We realized significant improvements in operating expenses in our American Burger business and also saw incremental improvements in most of our other lines of business as well. Operating expenses were also favorably impacted by the addition of Little Big Burger, which operates at a much lower cost model than our other brands. Operating expenses were negatively impacted, however, by results in Australia where we continue to operate at lower than normal levels of revenue and a largely fixed operating expense structure. We expect operating expenses to continue to improve in 2016 as we focus on driving additional leverage from the U.S. businesses and as Australia sales continue to recover through the year.
G&A declined from 19.6% of revenue to 13.9% in Q4. The improvement in G&A was a direct result of the increased leverage from operating a larger business. As we continue to centralize back-office functions and evaluate other costs throughout the system, we expect G&A to continue to improve as a percent of revenue. As a result, restaurant-level EBITDA improved significantly from $86,000 in Q4 2014 to $849,000 this past quarter. Adjusted EBITDA improved from a loss of $1.3 million to a loss of $380,000. While we were just shy of our goal to reach EBITDA breakeven entering 2016, we closed the gap significantly and are on the right track.
EPS was negative $0.12, improving 63% from negative $0.32 in the prior quarter. As you know, we undertook a reorganization of our Australia operations in Q3 at which time we increased our ownership and control of the 5 stores there from 60% to 80%, and we also brought in a new management team and a new local operating partner. We are early in the turnaround phase with the Australia stores but we are seeing steady incremental progress each month in the revenue trends. We have confidence in the local team, and see it taking 6 months to 12 months to fully turn the business around and return to more normalized revenue and contribution levels.
On Slide 6, as you can see Australia was the significant component of the EBITDA loss we reported for Q4, and we certainly expect improvement in that line of business over the next several quarters.
Referring now to Slide 7 through Slide 9, system wide store count increased from 26 in December 2014 to 62 at December 2015. The majority of that growth was from our Better Burger business where we grew from 6 locations to 40. Revenue mix also changed dramatically with Better Burger's revenue now moving from 11.9% of revenue to 43% of the total revenue mix. Hooter's revenue shifted from 74% of the revenue to 43.9% of revenue as of the end of 2015.
In addition to growth and revenue from acquisitions, our U.S. Better Burger and Just Fresh concepts demonstrated solid same store sales increases at 9.1% and 4.2%. Revenues were lower in our international Hooter's location due to the impact of the stronger dollar or currency translation as well as from a softer top line in our South Africa stores where the local economy has softened and in Australia where the business is early in the turnaround process.
Slide 10 provides a snapshot of our balance sheet. Our cash balance increased to $1.5 million compared to $200,000 last year. And shareholder's equity increased to $21.8 million from $15 million in 2014. With our acquisition phase concluded we are now focused on proven hand restored balance sheet and we are actively pursuing initiatives to refinance the existing debt and provide additional non-diluted capital, provide working capital at and store growth.
On Slide 11, we have three separate initiatives underway to strengthen the balance sheet and brought out additional non-equity financing for our growth. First, we retained an investment bank to place up to 10 million pounds in 7.5% interest only bonds in the U.K. The anticipated proceeds will be used to refinance some of our higher interest debt currently on the balance sheet. And provide working capital for new store openings and general working capital. Second, we signed a letter of intent with a U.S. investment bank for up to $10 million in capital under U.S. government EB-5 program which we'll used to expand our domestic footprint. Third, we signed a letter of intent with the U.S. financial partner who will provide the capital to open upto 10 new Little Big Bigger stores in the Seattle area. This arrangement will enable us to grow the Little Big Burger in the Seattle market without raising additional equity capital.
It's important to note that all three of these initiatives will strengthen the balance sheet and allow for growth without relying on diluted equity capital. Of course, while we feel confident about the current status of all these transactions, we are not able to provide any guarantees or assurances as to how much capital we have received or if the transactions will be completed.
I will hand it back over to Mike now who will discuss operational developments and wrap-up.
All right, thanks again, Mark. Turning to Slide 13 we believe it's important to remind shareholders how far we have come as a company over the last few years. As you know the last few years we have been focused on executing our acquisition strategy and building our business. We have successfully diversified our revenue base with very attractive regional brands in the Better Burger space. The goal now is to focus on driving organic growth while also driving enhanced margins and improved profitability.
We made significant progress in Q4 on that strategy. Unfortunately, did not achieve EBITDA breakeven that we were aiming for but we were not that far off, particularly including Australia and the fact that it does not include our Hooters dividend that we receive. So we are very encourage about how the company is progressing and even more focused on achieving consistent EBITDA profitability. I will like to next provide a bit more color on one of our better performing acquisition and also an update on our turnaround of our initiatives in Australia.
Turning to Slide 14 on the last day of September we completed the acquisition of Little Big Burger, a fast casual burger chain in Oregon with a loyal following and an exceptionally strong financial model. In the fourth quarter LBB surpassed our performance expectations and significantly contributed to the top line growth as well as achieved solid 20% plus EBITDA margin. Little Big Burger highly scalable business model will enable us to open our ninth and tenth locations this spring in summer further strengthening our presence in the pacific northwest. We are also actively pursuing real estate in the Seattle market and expect to see our first openings there with our new partner joined 2016.
On Slide 15 as we announced last quarter we organized the Australia operation under Australia's administrative process. As a result we increased our ownership stake from 60% to 80% in Australia Hooters location. We also took greater control over the day to day operations of the business and brought in a new local management team and a new local operating partner. With the change in management and ownership we believe this will allow the business to return to a more normalized revenues overtime. Our recently strengthened regional management team has already made key improvements including investments in social media, facility upgrade, strengthening the store level management and staffing level.
Customer response has been quite positive. It will take close to 2016 to get Australia back to where it needs to be financially but we are encouraged by the month-to-month progress and are excited by the long term prospects of the markets. On Slide 16 we have several exciting new store openings planned for 2016. We are seeing strong demand across all our fast casual counters and we are expanding into existing new markets -- I am so sorry, existing and new markets.
The recent BGR franchise deal will continue to strengthen our core market by adding engaged entrepreneurs dedicated to bringing the iconic BGR brand in the Baltimore Washington market. We hope to open the first franchises by the end of this year. We also announced plans for our eleventh corporate-owned BGR location and have other locations under consideration for future openings. In February we opened our eight Just Fresh location as we continue to expand that concept in the Charlotte market. We also entered into leases with the ninth and tenth Little Big Burger locations that we expect to open in 2016 as well.
Moving to the next slide, in February we signed the letter of intent and entered into a financial partnership that will enable us to roll out 10 Little Big Burger stores in Seattle. Given the concept's strong performance and loyal customer base in Oregon we believe that Seattle market provides a natural and attractive opportunity for expansion. Under terms of the agreement Chanticleer will receive management fee for operating the stores and split profits with our financial partner based on 80:20 split up until the partner has recouped his investment. At that point Chanticleer share will increase to 50% of the stores earnings plus the management fee. Little Big Burger presents an opportunity for expansion with high returns on investment and importantly this opportunity enables us to do this without diluting our shareholders.
On Slide 18 to conclude our strategy entering 2016 center zone, growing our Better Burger business we will expand Little Big Burger and BGR to company-owned stores and through franchising. We've got several properties under lease and strong pipeline of potential sites under consideration for 2016 and beyond. We will broaden our franchisor model. The franchise model has potential to generate high returns and on investment allowing for expansion of our brands while minimizing our capital requirement. We have several franchising opportunities for BGR in the pipeline and we will afford to offer Little Big Burger business franchises later in the year.
In our Hooters business, we will focus on improving margins through our current locations. We do not expect to open any new Hooter stores in 2016 in South Africa or Australia but we will continue to look for opportunities to expand our very successful U.K. location but intend to be very selective about growth. Our focus in 2016 will be leveraging the existing 15 store base and improving margins and profit contribution. Drives margin and profitability, we have made tremendous progress in 2016 and are very close to being EBITDA profitable. We have significant opportunities to further leverage our business model to drive top line results while improving cost of sales, operating expenses and G&A to drive profitability.
That is our team's primary focus for 2016. We have some initial success in unifying and streamlining the operations of our fast casual contest while successfully maintaining a local personalized field. In particular we have been able to reduce food and beverage cost, financialise HR and insurance operations, we have much more to do and look forward to sharing these results with you as the year progresses. In addition, as we have discussed we intend to refinance our existing debts and further strengthen our balance sheet and provide a solid foundation for growth. As we emphasize throughout the call 2016 will be focused on driving enhanced profitability.
We expect to continue to see positive same stores comps as we focus on improving performance at our existing stores. Our franchise platform we added in 2015 will continue to grow in 2016. We will take a disciplined approach to new store openings when opportunities look attractive. Store economics or utilizing internal financing or favorable financial partnerships for new store openings. We have tremendous potential to drive organic growth and profit improvement and we are focused on delivering that and again we plan to strengthen our balance sheet by refinancing our higher interest obligation and adding working capital and we will finance new store growth using internal and non-diluted financing.
Thanks again for everyone who has joined the call and we will now open up for questions from operator.
Thank you. [Operator Instructions] Our first question comes from the line of Joe Gomes with William Smith & Company. Please proceed with your question.
Good morning guys, just a couple of quick questions here. The first one in the third quarter call you gave a range, somewhat conservative range for fourth quarter revenue in $13 million to $14 million range, and it came in around $12.6 million. Just wondering what was behind coming in at little bit below the lower end of your range that you gave in the third quarter?
Yes, you know Joe, we built the range based on Q3 plus normalized revenues for Australia, which we have not obtained as yet and will take some time to get there as well as adding in Little Big Burger, so obviously Little Big Burger came in and is performing as expected. We also had Margaritaville in that expectation, and we ended up not closing on the Margaritaville location in Australia, and obviously there is always a little bit of seasonality. Q4 contains a lot of holidays, so Q3 compared to Q4, some of our Charlotte based businesses because of the combination of Thanksgiving, Christmas holidays where the businesses are shutdown, a lot of our uptown locations had several days where there was lower volume or closed because of holidays. So some of that is a little bit of seasonality noise, some of it is the timing of Australia, and some of it was the Margaritaville.
Okay. On Australia, I am just wondering if you can give us little more color or insight as to what really gives you guys confidence that we are going in the right direction, that we are going to hopefully by the end of 2016 get back to a normalized revenue run-rate here? It just seems that these operations have been struggling, so I am just trying to get the more color or details to why you have confidence in that?
Well Joe, the fact is in 2014 prior to our partner there having his financial difficulties, the stores did a lot better, and we are solidly profitable in growth. The second thing is there was a deterioration, but we are looking at what they used to do and feel comfortable that we can get back to where they used to be given the fact that we have really put some money behind it. The other thing we take comfort in Joe is the Hooters corporate sent the Chief Operating Officer for Hooters of all their stores, the head of franchising who was retired from McDonald's and the head of purchasing and the head of real estate to Australia about 4 weeks or 5 weeks ago for a week, and they worked at every store and they evaluated every store.
And the feedback, they were here 3 weeks ago at Corporate in Charlotte, and their feedback was they came away incredibly, much more optimistic about the opportunity there than their fear while they were going in because they really had never been to the stores when they were working well. They were only there now, and so Hooters is willing, we have a board meeting Monday, they have expressed that they are willing to reduce royalties, help us with some marketing there to get it back on track, and we have seen it, each month it has gotten a little better.
The good days where there is a big sporting event, they have gotten bigger and better and the bad days where there is no sporting event, they have gotten a little bit better so we do take comfort, we have a great partner there now, the 20% partner who is our operating partner, he is a long time 50 years in business in the Sydney, Australia market, and he constantly tells me, Mike this will not -- we will be successful here. So we have that confidence, Hooters has the confidence and we are committed to it.
Good, sounds good. Just back for a second here on Hooters Corporate, I mean you did say in your presentation that you had no expectations of opening anything new in South Africa or Australia this year. Per the terms of your agreements with them, are there any, how many I guess, stores do you have to open and in what timeframe as per the terms of your franchising agreement with Hooters?
We have no – currently we have no obligations to open any additional Hooters restaurant, so obviously we think the markets stand if they could take more stores, but if we were to do any more stores, we would go to Hooters and have to enter into a new agreement for additional store openings. We have met our obligations on the current stores. When we redid the Australia deal, they took the existing five stores and packaged it as, that deal was a one-time deal and it's off. If we want to open new stores, we would enter into a new agreement and so we have a standing offer to open stores in the Pacific Northwest. We have a standing offer including an agreement that we could execute tomorrow for the UK, and as we said in our presentation that Nottingham, England store is a Top 3 international store in the world, Top 20 overall store out of 460 in the world, and so if the right opportunity presented in the UK -- we certainly would have to look at that really hard given the success that we are having and continue to have there, but it's proven to be pretty tough to find the right kind of real estate deal that we would need in order to make a profit similar to the real estate deal we have in Nottingham.
Right, okay. And then on the Just Fresh, we have talked a little bit here and you have talked a little bit about it today about franchising and just was wondering where you are in the process of beginning to franchise the Just Fresh?
So we have hired a consultant for 90 days, as I remind you Joe as 44% partners in Just Fresh our gentleman that were the big eyes, the original backers of Bowjangles that sold, they have a very strong thought on franchising which I have a lot of respect for, so they recommended consultant which we brought in for 90 days. He put together very elaborate presentation on something that we needed to do. He thought we would need to do is to be successful in franchising. We've implemented some of those with the opening of the late -- the Ballantine Store, we're opening -- we're implementing a few more of those things with the stores that we just opened at the YMCA. And we have Kelly who runs our franchising arm of BGR, Ed was the former president of Ziffi [ph] but he has a very deep experience with franchising.
But where we are really focused on now because it's jumped ahead of the table is Little Big Burger, and so Ed has been out to Little Big Burger, we are starting the process of getting the audit that we need to do, the document that we would need to do in order to implement a franchising program for Little Big Burger. And so we literally unsolicited I am getting one email a week with someone of interest to open a Little Big Burger franchise and our pipeline is very robust on the BGR as I said on the call we are pretty close to announcing a few new territories for sales of BGR franchise. Ed has done a great job there in building that pipeline and giving the success that we continue to have in the DC market by winning the best burger in DC and we even though the economics for the concept, we have a strong pipeline there for that too.
So we're still tweaking the consultant gave us some advice on Just Fresh, advice that we actually agree with. The problem we have with some of our stories Joe and they best performing stores as the one downtown, all the three stores downtown have very limited space. For example a Juice Bar which was one of his recommendation. We don't really have space to change and add things like that to those locations. If they are so successful, we can't really mess with it either. So we are still going down that path.
Okay, thanks guys. I will get back in the queue.
Our next question comes from the line of Howard Halpern from Taglich Brothers. Please proceed with your question.
Good morning guys, you have a date for that BGR location in Virginia, first half of the year, second half of the year to be open in BGR?
Well, I think Howard we said it's going to be at least the late second quarter, third quarter. It's a new construction so it's a very high profile successful strip center opening here at the mall that is adding another late to the mall as a brand new space and we are going into that space. And so we expect by the end of second quarter to be handed the keys for construction and once we handed the keys it's usually 90 days to around 100 days that you get the location open.
Okay and couple of franchise questions I guess. You anticipate as talked about earlier to have some seasonality with franchise revenue in Q4, going forward?
What you are seeing coming through the Q4 numbers is purely ongoing royalties, I think we have that 80,000 in a royalties for the quarter. We have other details that we are working on that will result in increase in royalties going forward on a recurring revenue basis as well as upfront fees and other fees related to staying up for franchisees and the franchise regions. So you could see a little bit of working us as we start to close more deals for additional regions.
And one of things that we really didn't talk about in the call but it's actually in our investor presentations that our Kuwait franchisee who opened three location last year, had the fourth location that is fairly close to being open and we have an Oman location as well that is in the pipeline, that they are going through training as we speak that's under construction that will also open which was also in our existing pipeline that we have only acquired the brand. Last year we opened four franchise locations so we think that number this year is more like six to eight.
Okay, can you talk a little bit about, I read in car about the BGR, BG burgers, how is that going, is it nearly complete?
We have rebranded the three locations in the Charlotte market. They were all strategically placed and so it was a process. They are all complete today so what we initially did is we took the best of both so for example their Turkey Burger was loaded better than our Turkey Burger so we incorporated their Turkey Burger into the existing American Burger company stores and so their milkshakes were better and so we added their milkshakes to our stores and have changed what we were doing.
So we went through the menu process first, the menu boards first. Then we sort of initially ceded it by putting on locations owned by American Burger Company before we changed the actual signage and then in 90 days then we changed the signage to American Burger Company. And what we did that around Howard is we have had a very successful promotion Soul Panthers, this year part of our investments. Because they were successful and we actually have two locations within 15 minutes of the Panther's stadium, one of those locations which is our top performing store. The Panthers are regulars in the store because it's in walking distance from the practice facility, and so we really promoted on the radio and everything around having all of the stores around Charlotte around the American Burger Company promotion so in order to include the locations we changed the branding.
We have not till date changed the actual location. It is an outlier, it's a very successful store, we treated a little bit on the menu and -- but we have not changed the branding in the actual North Carolina market.
Okay. And one final one on -- I guess the earning revenues, is that -- I mean where the source is going to come for that in the future? Are they going to be pretty stable to what they have been in the fourth quarter?
Yes, I mean right now the only gain in revenue is from the Hooters in Portland, Oregon and that revenue has proven to be extremely stable actually, so that we don't see any changes to that. It works well because in Washington State it will have gaming and Washington State as a state income tax or no-straight income tax and gaming and the Hooters that we have there literally rate on the river that crosses between Washington State and Oregon. So two monster shopping complex when we set right at the base of it. So we benefit from people coming across the line to book shop and gamble, and enjoy the Hooters experience as well. So we don't see much. And a point to it, if we were able to ever decide and do other location in Oregon, we would have the ability also to put gaming in that location since we hold a gaming license with the State of Oregon.
Okay, keep you the good work guys.
[Operator Instructions] Our next question comes from the line of Shiraj Singh [ph] with RedChip Companies. Please proceed with your question.
Hi, good morning guys.
I just had a quick question on the refinancing of your debt, you guys are in the process of finalizing the agreements?
So we finalized the agreements, we're in the process now of marketing and collecting money for closing that we're anticipating to be in mid-April.
Okay. And I wanted to know more about the EB-5 program? It's actually foreign investors investing in the U.S. right?
And how does Chanticleer qualify for that program?
So the way the investment works is, the investor has -- they put up $500,000 into a U.S. business that will employ 10 people to work more than 35 hours a week at full-time. So the restaurant industry -- there is a lot of industry, the hotel industry that have been able to attract over the last few years which program has been in place that foreign investment based on the criteria with the restaurant has been one that's definitely been -- is one that they've focused on, it has that potential possibility, and so they -- we've presented to them all of our brands, we've done the job studies, everything to make -- to get to the point where we've qualified, we have a term sheet.
Right now we've gotten some location, both at Little Big Burger and I believe, BGR, and we've applied for a couple under the American Burger as well that to the TEA Program to get approved if they meet the areas of which are qualified because it also has to be an area that where job growth is needed, we can't put it in an area where there is low unemployment, a real high income zip code. So there is variables that go into it but we're fortunate that at least today we have some locations that have been approved and we're working through the process now. I was actually in New York the last few days and that with our banker there and some of the investors, and so we're pretty confident that we're going to be able to close some transactions very shortly.
Going forward, what do you expect the same-store sales growth to be? And how do you find to improve the sales at your restaurants?
In all objects, I wouldn't want to say we can predict that, right. The only thing in same-store sales growth, you hope that your past is sort of a predictor to the future and Rich Adams has done a great job, as has Shelly on the fresh businesses where over the two years that we've owned those two businesses, they've been consistent in hitting the mark on what we consider very attractive same-store sales to mid-single digits to low double digits. And so they're working hard every day, every day we're in the market, it seems to be -- we look at the daily sales sheets come out every day, we still see improvement there; their marketing, their brand recognition, opening new stores from a geographical expansion. We continue to see that but that doesn't necessarily give 100% certainty to the future or ability to predict where they will be in the future.
Okay. Were there any updates on the back office integration and synergies in your Better Burger business?
Well, I think Mark highlighted some, I mean we definitely picked up points on all areas of the business, a lot of that was generated from the Better Burger business but we've consistently saw improvements on HR, credit card processing fees, bank processing fees, costs of goods, we have a national contract with Cisco for distribution which is very attractive as we've added -- like Little Big Burger, for example, we picked up a significant margin there based on their contract with Cisco versus ours. We're going to right now negotiating, we currently have some of our brands, contracts with Coke; we are actually negotiating both, with Coke and Pepsi now as we integrate some of our Little Big Burger that didn't have any agreement. So we're trying to improve margins there by putting them all under one umbrella. With things like that we've found -- Rich has been good and Nate in DC, we're working very hard on improving beef cost by finding a beef that works for both. And so it's an everyday process of picking up pennies of savings here and there that we think will continue to improve quarter-over-quarter for the foreseeable future.
All right, thanks a lot.
There are no further questions at this time. I would like to turn the floor back over to management for closing comments.
Again, I'd like to thank everybody for joining the call today and taking the time to hear Chanticleer story on Q4 and going forward. Again, we look forward to as we go forward whether through press releases as they occur or as we finish Q1 and have our first quarter call updating our shareholders on the progress that we plan on making.
This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.
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