Boston Pizza Royalties Income Fund (OTC:BPZZF) Q2 2018 Earnings Conference Call August 9, 2018 11:30 AM ET
Wes Bews - CFO
Jordan Holm - President
Nick Corcoran - Acumen Capital
Elizabeth Johnston - Laurentian Bank Securities
Hello. This is the chorus call conference operator. Thank you for standing by. Welcome to Boston Pizza's Second Quarter Conference Call. As a reminder, all participants are in listen-only mode. And the conference is being recorded on August 9, 2018. [Operator Instructions].
At this time, I would like to turn the conference over to Wes Bews, Chief Financial Officer. Please go ahead.
Thank you and welcome to the call. We will be discussing the 2018 second quarter results for Boston Pizza Royalties Income Fund, or the fund, and for Boston Pizza International, or BPI. For complete details on our financial results, please see our 2018 second quarter materials filed earlier today on SEDAR or visit the fund's website at bpincomefund.com. Should you require additional information after the call, you can reach us via the Investor Relations phone number listed in our press release. The fund is a limited purpose open-ended trust established under the laws of British Columbia to acquire indirectly certain trademarks and trade names used by BPI in its Boston Pizza restaurants in Canada, whereby BPI pays an amount to the fund based on franchise revenues of Royalty Pool restaurants. For a complete description of the fund, please see the annual information form dated February 7, 2018, which was filed on SEDAR.
Before I turn the call over to Jordan Holm, President of BPI and the fund, I have to remind everyone about the risks inherent in forward-looking information. Certain information in the following discussion may constitute forward-looking information that involves known and unknown risks, uncertainties, future expectations, and other factors, which may cause the actual results, performance or achievements of the fund, Boston Pizza Holdings Trust, Boston Pizza Royalties Limited Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, Boston Pizza Canada Limited Partnership, Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings Partnership, Boston Pizza restaurants or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.
For a more complete definition of forward-looking information and associated risks, please refer to the fund's Management Discussion and Analysis issued earlier today. Forward-looking information is provided as of the date of this call and except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.
With that, I'll turn the call over to Jordan.
Thank you, Wes, and welcome everyone to Boston Pizza's second quarter investor conference call. Today I will discuss our results for the three month and six month periods ended June 30, 2018, and Wes will review the key financial items. Later, I'll touch on Boston Pizza's plans for the remainder of the year and we'll leave time for your questions at the end.
As you can see from the press release and financial statements filed this morning, Boston Pizza posted system-wide gross sales of $280.8 million for the period and $546.4 million year-to-date, representing increases of 1.9% and 1.8% respectively versus the same periods in 2017. In addition, the fund posted franchise sales from restaurants in the Royalty Pool of $215.4 million for the period and $419.4 million year-to-date, representing increases of 1.3% and 1.0% respectively versus the same periods in 2017.
The key driver of our sales results for the period and year-to-date was the additional sales from the eight net new Boston Pizza restaurants opened in 2017, and added to the Royalty Pool on January 1 of 2018. Same-store sales growth or SSSG for the period was 0.3% and also 0.3% year-to-date. The same-store sales growth for the period and year-to-date was principally due to many repricing and increased take-out delivery sales offset by a weak general economic conditions in regions directly connected to the Canadian oil and gas industry. Take-out and delivery sales have been positively impacted by our recently launched Skip the Dishes online delivery partnership. SSSG was also impacted year-to-date by the adverse impact of the Saskatchewan 6% provincial sales tax on restaurant purchased food.
BPI completed eight restaurant renovations during the period, compared to four in the second period one year ago. This brings our total to 18 restaurant renovations so far year-to-date in 2018 compared to eight completed in the same period one year ago. Restaurants, typically close for 2 weeks to 3 weeks to complete the renovation and experience an incremental sales increase in the year following their reopening. Included in our renovations for the second quarter, we celebrated the very first ground up build project using the new Boston Pizza prototype and design standards in our Medicine Hat, Alberta location. We started the second quarter of 2018 with our JC Thin Crust Creations promotion, including five new pizza recipes on Thin Crust with gourmet toppings. It's a delicious addition to our menu and is becoming a key attraction for our guests driving increased pizza sales. This pizza campaign was supported with television advertising and digital and social media campaigns. With hockey and basketball playoffs in full swing during the second quarter, we promoted Boston Pizza as Canada's sports bar headquarters with campaigns focused on NHL Hockey and NBA Basketball. For the NHL hockey promotion, guests had the opportunity to play our NHL fantasy draft when they ordered a Molson product to win daily prizes. These sports promotions were supported with television and digital and social media campaigns. On June 11, Boston Pizza launched a brand new, completely redesigned national menu with a more modern design to fit our new brand positioning and improved navigation for our guests.
In addition to the redesign, the new menu highlights the Thin Crust Creations, Santa Fe salmon and the new calamari recipe, as well as a fresh line up of cocktails and popular non-alcoholic beverages. On June 25, we launched a new campaign to celebrate Boston Pizza as Canada's summertime destination featuring the popular Thin Crust Pizzas, $5 Coronas and cocktails including the Moscow Mule and Bourbon Fizz. The campaign is currently running and is supported by mass media, including a television campaign celebrating patio season in Canada.
Turning to restaurant development, we opened one new Boston Pizza location during the second quarter of 2018. Subsequent to June 30, we opened one more Boston Pizza location bringing our total to two new Boston Pizza restaurants opened so far this year. This continued expansion further solidifies our position as Canada's number one casual dining brand by serving more than 50 million guests annually in more locations than any other full service restaurants in Canada. We have some exciting initiatives planned to drive sales for the rest of 2018, which I'll speak more about in a moment, but first, I'd like to turn the call over to Wes for review of the fund's financial performance. Wes?
Thanks, Jordan. The fund posted royalty income of $8.6 million for the period and $16.8 million year-to-date compared to $8.5 million and $16.6 million respectively for the same periods one year ago. This represents an increase of 1.3% for the period and 1% year-to-date. The fund posted distribution income of $2.9 million for the period and $5.6 million year-to-date compared to $2.7 million and $5.2 million for the same periods one year ago. Royalty and distribution income in respect of the period and year-to-date were based on the Royalty Pool of 391 Boston Pizza restaurants reporting franchise sales of $215.4 million for the period and $419.4 million year-to-date. In the second quarter and year-to-date of 2017, royalty and distribution income were based on the Royalty Pool of 383 Boston Pizza restaurants reporting franchise sales of $212.7 million and $415.1 million respectively.
The fund posted net and comprehensive income of $6.3 million for the period and $8.7 million year-to-date compared to $7.9 million and $14.5 million for the same periods one year ago. The $1.6 million decrease in the fund's net and comprehensive income for the period compared to the second quarter of 2017 was primarily due to a $2.6 million change in fair value adjustments and lower interest income of $0.4 million, partially offset by higher royalty income of $0.1 million, higher distribution income of $0.2 million, lower income taxes of $0.3 million and lower interest and financing expenses of $0.8 million. The $5.8 million decrease in the fund's net and comprehensive income year-to-date compared to the same period in 2017 was primarily due to an $8.1 million change in fair value adjustments and lower interest income of $0.9 million partially offset by higher royalty income of $0.2 million, higher distribution income of $0.3 million, lower income taxes of $1.4 million and lower interest and financing expenses of $1.3 million.
While net and comprehensive income is the measurement of the fund's earnings under International Financial Reporting Standards or IFRS, the fund is of the view that net income does not provide the most meaningful measurement of the fund's ability to pay distributions as the calculation of net income contains non-cash items that do not affect the fund's cash flow.
Non-cash items include the fair value adjustments on the investment in Boston Pizza Canada Limited Partnership, the Class B unit liability, interest rate swaps and changes in deferred income taxes. Consequently, the fund reports the non-IFRS metrics of distributable cash and payout ratio to provide in the fund's opinion investors with more meaningful information regarding the fund's ability to pay distributions to unitholders. The fund generated distributable cash of $7.3 million for the period, compared to $7.1 million for the second quarter of 2017. The increase in distributable cash of $0.3 million or 3.8% was primarily attributable to a decrease in BPI's Class B unit entitlement of $0.4 million and higher royalty and distribution income of $0.3 million, partially offset by higher SIFT tax of $0.3 million.
The fund generated distributable cash of $14 million year-to-date compared to $13.4 million year-to-date in 2017. The increase in distributable cash of $0.6 million or 4.6% was primarily attributable to a decrease in BPI's Class B unit entitlement of $0.8 million and higher royalty and distribution income of $0.5 million, partially offset by higher SIFT tax of $0.5 million and interest paid on debt of $0.1 million.
The fund generated distributable cash per unit of $0.335 for the period, compared to $0.348 for the second quarter of 2017. The decrease in distributable cash per unit of $0.013 or 3.7% was primarily attributable to the British Columbia provincial government increasing the general corporate tax rate by 1% effective January 1, 2018, which increased the fund's SIFT tax rate by 1% to 27% for the period and negative same store sales growth on a franchise sales basis for the period.
The fund generated distributable cash per unit of $0.64 year-to-date compared to $0.66 for the same period in 2017. The decrease in distributable cash per unit of $0.02 or 3% was primarily attributed to the higher SIFT tax talked about earlier and negative same store sales growth on a franchise sales basis year-to-date. The fund's payout ratio for the period was 103% and 107.8% year-to-date compared to 99.1% and 104.6% for the same periods in 2017. The increase in the fund's payout ratio for the period compared to the same period in 2017 was due to the combined effects of distributions paid increasing by $0.6 million or 7.9% and distributable cash increasing by $0.3 million or 3.8%. The increase in the fund's payout ratio year-to-date compared to the same period in 2017 was due to the combined effects of distributions paid increasing by $1.1 million or 7.9% and distributable cash increasing by $0.6 million or 4.6%.
The increase in distributions paid in the period and year-to-date compared to the same periods in 2017 was due to BPI having exchanged approximately 1.9 million Class B general partner units of Boston Pizza Royalties Limited Partnership and 40.8 million Class II general partner units of Boston Pizza Canada Limited Partnership for 1.6 million units in September, 2017.The fund strives to provide unitholders with consistent monthly distributions and as a result, the fund will generally experience seasonal fluctuations in its payout ratio. The fund's payout ratio is likely to be higher in the first and fourth quarters each year compared with the second and third quarters each year as Boston Pizza restaurants generally experienced higher franchise sales during the summer months when restaurants open their patios and benefit from increased tourist traffic. Higher franchise sales generally results in increases in distributable cash. Given the top line structure of the fund, no current mandate to retain capital for other purposes, it is important to note that a payout ratio close to 100% is to be expected over time. On a trailing 12-month basis, the fund's payout ratio was 101.6% as at June 30, 2018. For additional context, the fund's annual payout ratio for the prior 3 years ended December 31 were 100% in 2017, 98.9% in 2016% and 94% in 2015. The fund also ended the quarter with $2.2 million in cash.
On August 8, 2018, the trustees declared a monthly cash distribution to unitholders of $0.115 per unit for July 2018. This distribution will be payable on August 31 to unitholders of record on August 21. This represents the 193rd consecutive monthly distribution since the fund's initial public offering and with this distribution, the fund will have paid out total cash distributions of $294 million or $20.07 per unit since the IPO in July 2002.
With that, I'll turn the call back to Jordan for the outlook. Jordan?
Thank you, Wes. We're excited about several initiatives underway to drive Boston Pizza's results for the remainder of the year and beyond. As I mentioned earlier, in early June, we launched a completely redesigned national menu that features many new innovative menu items and also allows for regional pricing adjustments where appropriate to pass along input cost inflation and also contribute to same-store sales growth.
Next Monday, August 13, we will hold our High Five Day, which is our annual thank you to our guests for being fans of Boston Pizza. Individual size gourmet pizzas are being sold for just $5 for the day, which last year resulted in a record of over 94,000 individual pizzas sold across Canada. We'll be looking to surpass that total during this year's event.
Toward the end of the third quarter, we'll launch our Annual Kids Cards promotion, which features - which offers guests 5-3 kids meals in exchange for a $5 donation to the Boston Pizza Foundation Future Prospects. The seven week-long promotion runs through the fall, the back-to-school period and has a goal of surpassing last year's record total of over $1.1 million raised in donations to the foundation. We have 392 locations opened today and six more locations, currently under construction. So optimistic about the continued expansion opportunities for Boston Pizza.
BPI also recently purchased two Boston Pizza locations in downtown Vancouver, bringing the total number of corporately-owned restaurants to six. We are planning extensive renovations for the newly purchased restaurants to bring them up to the new design prototype standards, similar to what we've seen in our Medicine Hat and downtown Toronto locations. We have also completed 21 restaurant renovations to-date and have many more scheduled for completion during the rest of the year. These renovations help keep Boston Pizza restaurants looking fresh and modern and bring technology and equipment up to the latest standards.
In addition, our experience shows that the franchisees investment in a store renovation, is rewarded with incremental sales increases when the location reopens and guests are attracted to the great new look. Although we continue to see economic challenges in regions directly connected to the Canadian oil and gas industry, we have many exciting initiatives underway that we believe will drive our results going forward. With this continued momentum, we remain Canada's number one casual dining brand.
With that, I'd like to begin the question-and-answer session. Operator?
[Operator Instructions]. Our first question comes from Nick Corcoran of Acumen Capital.
Quick question on same-store sales growth. Can you break down how the drivers between average check size and customer traffic drove that number?
Hey, good morning, Nick. So in the second quarter, we saw some average check inflation, part of it due to menu repricing. We did in certain regions, particularly those impacted by higher - minimum wage rates. They did take off cycle menu increases or small increases either in January or October, those regions would include places like Ontario, Alberta and British Columbia most recently. So we did see average guest check rise as a result of passing on menu price increases. When we relaunched our new national menu on June 11, most of the restaurant groups across the country did take some pricing and that's our annual cycle for menu repricing.
So from that point forward, we'll also see a slightly higher average guest check based on that that does contribute to same-store sales growth. The other drivers that contributed to same-store sales growth, as I mentioned would be take-out delivery continues to be a growth area for us and has been, I think for our industry for a number of years and certainly Boston Pizza has been a long time player in take-out delivery and continues to benefit from the growth in that area. Around May, we launched a national partnership with Skip the Dishes, and we have a number of stores that have signed up for that during May and June, we're seeing more and more locations offer that as part of their overall take-out delivery platform. And so we saw a big rise in take-out deliveries through the new partnership platform.
And, yes, in terms of overall traffic, we continue to see the trend where take-out delivery is strong in terms of growth in both in average check size, certainly as we move more from phone orders to online orders. We see an increase in average check size through online. I think when we talked about in the past, it's been about a 20% higher average guest check in online orders versus the traditional phone orders and that's just a factor of when someone is sitting in front of their, either phone mobile device or their computer, a tablet, the online ordering process is the perfect server, it remembers your last order, it prompts you for upsells, and there is a bunch of things that that factor into it being a higher average guest check. And we are seeing more and more people migrate over to our online platform, whether it's the MyBP app or our bostonpizza.com online ordering portal, as well as third-party delivery services like Skip. So more sales coming through there. So I think - does that answer your question?
[Operator Instructions]. Our next question comes from Elizabeth Johnston of Laurentian Bank Securities.
So just again on same-store sales growth, I wanted to ask you about, one of the factors that you called out in the press release about the impact of the restaurant taxes of Saskatchewan, just trying to figure out how that still impacting and to what extent, given the fact that I believe we would have lapsed that introduction now, since it, I think, it took place in April last year. So any commentary with respect to the magnitude? That would be helpful.
Yes, I think we highlighted it in the commentary on same-store sales growth, as being a year-to-date factor. So you're right. We would have rolled on the implementation of the tax, I think in March or April of 2017. So for those not living in Saskatchewan, they simply added a 6% provincial sales tax on to restaurant purchase meals that had not been there before. So with restaurant meal cost rising automatically by 6%, we did see an impact on traffic, just as we have in other regions that have put GST onto restaurant meals in the past. So that was a headwind for us for the year as we cycle through that. And to your point, we have lapped on that. We do continue to see weakness in the central part of the country just economically in Saskatchewan and a little bit of Manitoba, Alberta does feel and we talked about this on previous calls, as feel like it's rebounding now with oil being up above $60, $65, employment numbers improving. We are seeing a very slow but steady recovery there, and it translates into consumer confidence, which then leads to suspending in places like retailers and restaurants, like Boston Pizza. So Alberta seems to be recovering, Saskatchewan is lagging that in our opinion in terms of economic recovery, and spending.
Okay, great. And in terms of Alberta, since you mentioned it there, I'm just wondering how much that continues to recover? I'm looking at your results, effectively flat same-store sales growth for a little while now, and Alberta is one of your, if not your largest geographic, your largest province by store count. So I'm just trying to reconcile the commentary with respect to an improving market there with the fact that same-store sales is effectively flat.
So you trailed off at the end there Elizabeth. Can you repeat it?
Yes just want to reconcile that the commentary about an improving market in Alberta with the fact that same-store sales is effectively flat and the fact that Alberta is one of your largest, if not your largest market.
Yes, I guess, the improvement would be for three years, we saw declines in same store sales growth in the province of Alberta and that was obviously due to employment trends and challenges and people holding onto their dollars being facing an uncertain economic future, but as that's recovered in the last few quarters, we've seen improvements, i.e. no longer seeing declines in that province on a same-store sales basis but seeing close to the national numbers so flat maybe slightly negative, but improving certainly on a trend basis as we move forward and even store-by-store and kind of, anecdotally, when you go and meet with franchisees and talk with people in that market, they are feeling much more optimistic about the future. And like I said, slow recovery and certainly, we went through quite a dip after the oil dropping below $30 at one point and a lot of uncertainty in that market, but we certainly are starting to see the results flatten out and hope to see them pick a positive momentum going forward.
Right thank you. And when it comes to the regions where there was some off cycle with pricing, I believe you called out Ontario, Alberta and most recently, British Columbia specifically. In those regions, can you give any commentary with respect to how the prices increases have been received by customers and if there's been any obvious pullback in traffic as a result.
Yes, I mean, we were careful in the strategy that we had in all of those markets. We learned first in Alberta, because they were the first ones to start the minimum wage increase with a target of going to that $15 ultimately. Ontario was a very different approach because the government increased the rate so rapidly. I think it was 21% overnight on January 1 of this year. And so but we had done a bunch of analysis to see what pricing we would need to take in order to offset increased labor costs. We have the advantage on the other - many of our other input costs including ingredients, foods that we are able to use the economies of scale to keep those prices generally inline and give our stores a food cost advantage.
But with labor, we do feel that impact and needed to do what we could to put the pricing in small increments as I mentioned, June, October, January. In terms of the impact that it's had, we did see in Ontario, many restaurants and retailers and other businesses affected by the labor rate change pass on some form of pricing increase. And we did everything that we could do and continue to take it elsewhere to provide efficiencies at the store level, to look at other input costs and maintaining those, so that we are giving our guests sticker shock when they come in and see big pricing differences and doing it in small increments I think helps with that.
Nevertheless, consumers don't have 6% or 8% or 10% more disposable income in their pockets to accommodate for the price changes that restaurants and retailers are having to pass on in a market like Ontario where it's been such a sudden change to that the labor rates and so I think people are adjusting their practices and whether that's coming in less frequently or ordering a little bit less when they do come in, they have to work within their disposable income budgets. Now that may lead to some trading down in our industry, we've seen that before, where during tougher economic times people who generally eat at, let's say, upper scale casual or even fine dining might trade down and eat in kind of mid-scale where it's - little bit more affordable, little bit more value-driven. And on top of that we might see people who would traditionally eat in full service restaurants, like Boston Pizza trade down and instead eating in QSR or home meal replacement grocery locations that offer lower price per person average check.
So we are seeing a little bit of traffic slowdown in Ontario, I think as a result of the overall price increases there and the fact that, as I said, people's wages haven't jumped up by 5% or 6% or 7%, but the pricing in all areas has had been adjusted as a result of those labor increases. So yes, we are seeing a headwind on traffic there and that's just the economic reality of pricing increases versus available disposable income. But nonetheless, we can benefit from being a value player, we're midscale in average guest check just right around $20. So compared to a lot of other full-service dining options, we would be considered a value player.
That's great, thanks. And you would lead me to my next question about competitive landscape and who your customer is do you find that your customer remains that value customer where there was an importance on promotional activity, which you've always been focused on. But is that increasingly important as a result of some of these changes we've seen in the competitive environment?
I think, we look at it as a sort of a barbell strategy where value is certainly a driver in some occasions where people are attracted by a price point, I mean, I point to our $5 Corona promotion that's going on right now for our patio business. It's very simple offering and it's compelling and we see that in the results of the sales and the traffic that its generated and BP bundles earlier in the year, which is a combination of items that are sold at a price point either 19.99, 29.99, or 39.99, people who are looking for value, there are lots of ways within the Boston Pizza promotional environment whether it's Pasta Tuesdays or paired up pizza for online ordering or BP bundles as I mentioned.
So we always keep the value offerings there for those value driven occasions , but the lot of our occasions are driven by convenience and celebration, indulgence, game night activities and things where people are thinking more about enjoying great food and try something new or getting together with friends and celebrating. And so in those occasions, it's not really driven by value, it's more about what's the, what's the environment like, what's the food offerings. Am I going to have a great time in the - well served there. And so things like bringing up Thin Crust Pizzas, which is obviously a big culinary trend in the pizza category. We were underrepresented on Thin Crust Pizza sales and bringing them with gourmet topping, so you're appealing not just to the perogy pizza and pepperoni pizza crowd which we serve very, very well. But, but also bringing in more elevated culinary offerings, prosciutto or rugelach sort of modern taste. So I guess at a barbell strategy, they place both on value and on the overall guest experience side and we try to work hard on both.
Great. And nearly finally from me just on off-premise sales your delivery and take-out. I know that in the past, you've talked about how in the East of Canada versus the West, there's been a lower take-out rate. Have you seen any changes to that since you mentioned specifically seeing improvements in delivery.
Yes, we continue to see an opportunity to essentially balance out the percentage of our overall business that's done through take-out and delivery. So we are still working on that Ontario, Quebec would be at a mid-single digits on overall delivery as a percentage versus the West where we've been in the market for a long, long time, and we are very established in take-out delivery. The good thing is take-home delivery as a whole is just growing in our industry and we are well positioned to take advantage of that. So we continue to grow to take-out delivery organically and through partnerships like Skip. But the ratio of take-out delivery is still much higher in the western provinces where we just established that in the minds of consumers for so long, when they think about full service, our take-out delivery that is our full menu not just pizza but we deliver pasta and wings and all kinds of different offerings. So we still see 15% to 20% average kind of take-out delivery in our locations in Western Canada and more mid-single digits to 10% in the eastern regions where we're newer and we see that as a growth opportunity, continue to promote the growth of take-out delivery, overall, in our business , but particularly in that - the areas where it's under-represented as a percentage of our total sales.
And in terms of the partnership with Skip the Dishes, if you could give me a couple of points on why Skip the Dishes was chosen. And if you intend to pursue further third-party partnerships particularly in the context of the fact that you already have your own in-house delivery platforms?
So the reason we chose to partner with Skip the Dishes was mainly based on two things. I guess, number one, they do have a good track record in foodservice, unlike some of the competitors who may be come from transportation or other focuses. Skip, I think was built to do what they're doing, not just to deliver food quickly and to provide a marketplace, an online marketplace to process orders and engage with an audience that liked that approach. We also found that their coverage of our restaurants nationally means having 392 restaurants, Skip is covering currently almost 300 of those with service in all those regions. So it was available to 2/3 of our stores currently and they continue to add drivers and territories and provide that service more broadly.
We do use some of the other services in dense downtown areas like Toronto, but Skip provides the service standard and they provided the most coverage for us across the country. So that was the reason we decided to partner with them nationally.
And further to my first question there, is there any plans to have another national relationship with another aggregator?
Not at this time. I mean, we really want to see how this goes with Skip. We've rapidly onboarded over the last couple of months, we're watching the results very carefully. We believe this is an organic growth opportunity, an area of the industry like I said that is growing, and we've always played a part in it and we want to continue to do that, and this is a guest that's looking through a different angle, but still looking for Boston Pizza food and so we want to be able to service that. And so far the results have been very promising. We're going to wait and see how that works. In the meantime, we still got lots of direct channels - still lots of telephone calls, believe it or not, but also like I said, rapid growth in the bostonpizza.com website platform that we relaunched last August. The MyBP app is now been downloaded by more than 1 million people across the country and that provide with great not just online ordering, but also other kind of direct relationships with BP offers and loyalty and those kind of things.
So we're pleased to try different avenues of reaching our guests in a way that they want to be targeted or communicated with and Skip is one new way that we're trying that and we'll wait to see how it turns out, but early signs are quite promising.
We have no further questions at this time. I would like to hand the call back over to Jordan Holm for any closing remarks.
Sorry. Thank you, operator and thank you everyone for listening in. Since there are no questions at this time, I will look forward to speaking with you all at our third quarter conference call in November. Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.