Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) Q1 2019 Earnings Conference Call June 11, 2019 5:00 PM ET
Arvind Bhatia - Senior Director, Investor Relations
Brian Jenkins - Chief Executive Officer
Scott Bowman - Chief Financial Officer
- Arvind Bhatia - 投资者关系高级总监
- Brian Jenkins - 首席执行官
- Scott Bowman - 首席财务官
Andrew Barish - Jefferies
Joshua Long - Piper Jaffray
Jeff Farmer - Gordon Haskett
Jake Bartlett - SunTrust
Brian Vaccaro - Raymond James
Jon Tower - Wells Fargo
Stephen Anderson - Maxim Group
- 安德鲁巴里什 - 杰弗里斯
- Joshua Long - Piper Jaffray
- 杰夫法默 - 戈登哈斯特
- Jake Bartlett - SunTrust
- Brian Vaccaro - 雷蒙德詹姆斯
- 乔恩塔 - 富国银行
- 斯蒂芬安德森 - 马克西姆集团
Good afternoon, everyone. Welcome to the Dave & Buster’s Entertainment Incorporated First Quarter 2019 Earnings Results Conference Call. Today’s is being hosted by Brian Jenkins, Chief Executive Officer. I would like to remind everyone that this call is being recorded and will be available for replay beginning later today. Now, I would like to turn the conference over to Arvind Bhatia, Senior Director of Investor Relations for opening remarks.
大家下午好。 欢迎来到Dave＆Buster娱乐公司2019年第一季度收益结果电话会议。 今天由首席执行官Brian Jenkins主持。 我想提醒大家，这个电话正在录制，并将在今天晚些时候开始播放。 现在，我想将会议转交给投资者关系高级主管Arvind Bhatia，以致开幕词。
Thank you, James and thank you all for joining us. On the call today are Brian Jenkins, Chief Executive Officer and Scott Bowman, Chief Financial Officer. After comments from Mr. Jenkins and Mr. Bowman, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster’s Entertainment Incorporated and is copyrighted.
Before we begin our discussion of the company’s results, I would like to call your attention to the fact that in our remarks and our responses to your questions, certain items maybe discussed which are not based entirely on historical facts. Any such item should be considered forward-looking statements and relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on the various risk factors and uncertainties has been published in our filings with the SEC, which are available on our website at www.daveandbusters.com under the Investor Relations section.
In addition, our remarks today will include references to EBITDA, adjusted EBITDA and store operating income before depreciation and amortization, which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings announcement released this afternoon, which is also available on our website.
Now, I will turn the call over to Brian.
谢谢James，谢谢大家加入我们。今天的电话会议是首席执行官Brian Jenkins和首席财务官Scott Bowman。在Jenkins先生和Bowman先生的评论之后，我们很乐意回答您的问题。此电话会代表Dave＆Buster的娱乐公司进行录制，并受版权保护。
Well, thank you Arvind. Good afternoon, everyone and thank you for joining our call today. Before I begin, I would like to welcome Scott Bowman who recently joined us as our Chief Financial Office. Scott has a long proven track record of success working with brands like Home Depot and most recently Hibbett Sports. His strategic vision and financial discipline make him a strong addition to our leadership team and I am extremely excited to have him on board. I would also like to take the opportunity to thank Joe DeProspero for serving as our Interim CFO and congratulate him on his new role as our SVP of Supply Chain and Business Development.
With respect to Q1, we grew overall revenue by more than 9%, EBITDA by over 3% and EPS by nearly 9% reaching new high watermarks for these metrics. That said our results were mixed. While new store performance remains strong, comparable store sales were below expectations as this year’s Easter calendar shift proved challenging, F&B underperformed and competitive headwinds remained stood. As I mentioned on the last call, Q1 tends to be a volatile quarter for us due to the timing of Easter and spring breaks and the impact of weather during the specific time period and this year was no exception. You may recall that our comp sales were tracking up about 1% after the first 7 weeks in the quarter and before the impact of the Easter shift in the back half of the quarter, the net impact of the Easter rollover proved unfavorable resulting in a slight decline in overall comps for the quarter. On a positive note, the comp sales on amusements were up nearly 2% and our Q1 guest poll scores for key metrics improved compared to the prior year, an important indication our strategy is resonating with guests.
As we look forward to the remainder of the year, we are working to drive awareness of our F&B improvements, but expect this will take time. Additionally, we expect increased competition over the balance of the year as we continue to see aggressive entry into our markets. Based on the year-to-date performance, recent trends in our current read of the competitive landscape, we are lowering our full year estimates on key metrics and Scott will provide specific guidance in his prepared remarks.
While we are pleased to have reached new high levels for sales, EBITDA and EPS, we are working with urgency to improve our cost sales performance and we will continue to focus on our four strategic priorities to strengthen the brand and drive long-term shareholder value. Our first priority is to evolve our offering, including our amusements and F&B. In amusements, we continue to differentiate our brand by offering bigger, better and marquee tiles to delight our guests.
Looking at Q1, our new release slates included two proprietary titles, Marvel Contest of Champions and Star Trek: Dark Remnant. Both titles are performing well for us. Combining fan favorite titles with our proprietary gaming technology allows our customers to deepen their connection with our brand through these iconic properties. Star Trek is proving to be a strong addition to our growing library of VR titles and the continued strength of Jurassic World VR Expedition, a year after its launch is the strong sign of its sustainability. Furthering our commitment to our best-in-class VR technology in Q2, we launched Men In Black: Galactic Getaway, our fourth VR title ahead of the release of the new Men in Black: International movie with subtle differences in game play, dialogue that responds to the players’ performance and completely different endings, this game entices guests to play multiple times to get the full experience.
好吧，谢谢Arvind。大家下午好，感谢您今天加入我们的电话。在开始之前，我想欢迎最近加入我们的首席财务办公室的Scott Bowman。斯科特在与Home Depot和最近的Hibbett Sports等品牌合作方面有着悠久的成功记录。他的战略愿景和财务纪律使他成为我们领导团队的强大补充，我非常高兴能让他参与其中。我还要借此机会感谢Joe DeProspero担任我们的临时首席财务官，并祝贺他担任我们的供应链和业务开发高级副总裁。
看看第一季度，我们的新版本包括两个专有游戏，Marvel竞赛冠军和星际迷航：黑暗残余。两个冠军都表现得很好。将粉丝最喜爱的游戏与我们专有的游戏技术相结合，让我们的客户通过这些标志性特性加深与我们品牌的联系。 “星际迷航”被证明是我们不断增长的VR游戏库的强大补充，侏罗纪世界VR探险的持续力量在其推出一年之后是其可持续性的强烈信号。为了进一步推动我们在第二季度推出一流的VR技术，我们推出了Men In Black：Galactic Getaway，这是我们在新版黑人男装发布之前的第四个VR冠军：国际电影在游戏中的微妙差异，对话响应球员的表现和完全不同的结局，这个游戏吸引客人多次玩，以获得完整的体验。
Turning to F&B, our focus remains on simplification of quality and accessibility. With a 35% smaller menu today compared to the beginning of last year, we have reduced complexity in kitchen processes and improved our ability to deliver items quicker on busier nights. Our guest poll scores for speed of service in both the dining room and bar were up in Q1 this year compared to the same period last year indicating our simplification efforts are beginning to payoff. With the strides, we have made in improving culinary efficiency, our commitment to quality remains unchanged. Our mantra is crafting craveability and we lived into the standard by enhancing techniques for creating craveable flavors and textures using premium choice steaks and chicken, elevating our plated presentations and perfecting final execution to our guests. Overall, more than 75% of our menu has been re-crafted or re-branded.
Importantly, our guests appear to be noticing as we saw an uptick in our food quality scores over the course of 2018, a trend that helped earn in Q1. That said, we recognized the games are the primary driver of guest visitation and we expect it will take some time to build awareness of our new food offering and enhance our F&B attachment rate. We will look to feature food more prominently in our marketing campaigns in the future. Now, we wouldn’t be Dave & Busters if we didn’t extend our menu enhancements to flavorful, craveable cocktails. You already know we have added fresh juices and purees system-wide to take our handcrafted cocktails to the next level. We have also standardized our core cocktail recipes and preparation techniques to our drinks, not only taste better, but are easier to execute on a consistent basis. In terms of enhancing accessibility, we continue to test a quick casual offering in our Dallas store. And as I mentioned on the last call, the initial response has been slower than expected and we are evaluating ways to increase in store awareness.
Our second strategic priority is to enhance guest to guest experience. We are laser focused on improving service by delivering a more friendly, available and memorable experience. While results of overall service improvements are best evaluated over a long period, we did see a meaningful uptake in our service scores during Q1. Kronos, our new labor scheduling system is important for improving our scheduling efficiency and guest service and we continue to move up a learning curve with this new technology. The new RFID TAP & PLAY Power Card we rolled out in February is facilitating faster and more accurate game activation and we have recently seen improvement in our guest scores for games working. Meanwhile, we are on track to unveil our new mobile app in the back half of 2019. Our business must remain digitally relevant to attract and retain our core consumer groups and our new assets being designed to offer greater functionality, convenience and reduce friction for our guests. We believe that over time our new app will allow us to drive better guest connection and engagement with our brand ultimately leading to greater frequency and spend.
我们的第二个战略重点是提升客人对客人的体验。我们致力于通过提供更友好，可用和难忘的体验来改善服务。虽然整体服务改进的结果在很长一段时间内得到了最好的评估，但我们确实看到在第一季度我们的服务得分有了明显的提升。 Kronos，我们新的劳动力调度系统对于提高我们的调度效率和客户服务非常重要，我们将继续通过这项新技术提升学习曲线。我们在2月推出的新RFID TAP＆PLAY Power Card正在促进更快，更准确的游戏激活，我们最近看到我们的游戏工作客人得分有所提高。与此同时，我们有望在2019年下半年推出我们的新移动应用程序。我们的业务必须保持数字化，以吸引和留住我们的核心消费群体，我们的新资产旨在为我们提供更多功能，便利和减少摩擦。客人。我们相信，随着时间的推移，我们的新应用将使我们能够推动更好的客户联系并与我们的品牌互动，最终带来更高的频率和支出。
Our third strategic priority is to effectively communicate our offering and value. During Q1, we promoted our two new game titles Marvel Contest of Champions and Star Trek which launched during the quarter. We have publicly featured that on national cable TV with respect to value. We ran our successful Unlimited Wings Unlimited Video Games promotion on Thursdays and also on select days during March Madness. In addition, at the end of March, we introduced a new free $10 videogame promotion with the purchase of the $20 power card. As I mentioned earlier, we must remain savvy to the evolving digital landscape, while national cable TV remains our primary channel, our digital media mix continues to increase compared to last year, including a focus on programmatic social media, search engine marketing and optimization.
Finally, I will highlight our fourth and biggest long-term driver of shareholder value and that is to expand our brand geographically. We have opened 8 stores so far this year, including 5 that are in new markets and 3 in existing markets and in terms of size, 6 of the stores we have opened are large, while the remaining 2 are small. As I mentioned on the last call, for the full year, our new store openings will skew towards large format stores and new markets, although we are going through smaller D&A this year. With 8 stores under construction, our confidence in delivering on the full year target of 15 to 16 new stores representing 12% net unit growth remains very high.
Including stores under construction, we currently have executed commitments for 23 new sites providing us significant visibility on new store expansion really well into 2020. We continue to believe our long-term opportunity is 230 to 250 stores in the United States and Canada alone nearly double our current store base and plan to capture this large opportunity by growing units at a stage annual pace of 10% or more while generating excellent returns. On the international front, we recently terminated our Middle East partnership due to continued delays and missed contractual deadlines from our partners. While we are disappointed with this turn of events, we continue to believe international represents a good long-term growth vehicle for us and we will continue to pursue potential opportunities.
With that, I will turn the call over to Scott to discuss our financial performance and 2019 guidance.
我们的第三个战略重点是有效地传达我们的产品和价值。在第一季度，我们推出了本季度推出的两款新游戏Marvel Contest of Champions和Star Trek。我们在全国有线电视上公开展示了价值。我们在周四以及疯狂三月的特定日期推出了我们成功的Unlimited Wings Unlimited Video Games促销活动。此外，在3月底，我们推出了一项新的免费10美元视频游戏促销，购买了20美元的电源卡。正如我之前提到的，我们必须对不断变化的数字环境保持精明，而国家有线电视仍然是我们的主要渠道，与去年相比，我们的数字媒体组合继续增加，包括专注于程序化社交媒体，搜索引擎营销和优化。
Thank you, Brian and good afternoon everyone. First of all, I would like to say that I feel privileged to be joining such a great company with a great history and long runway for growth. I am very excited to be a part of the team and look forward to helping drive the company’s future success.
Turning to highlights from the first quarter, total revenues increased 9.5% driven by strong contribution from our 28 comparable stores partly offset by a 0.3% decrease in our comparable stores. As Brian mentioned, our comparable store sales were unfavorably impacted by this year’s Easter calendar shift. Also, the combination of competitive intrusion and cannibalization continued to be a greater headwind compared to the same period last year. Sequentially, the impact was flattish.
Looking at overall sales by categories, amusements grew 11.9% and F&B grew 6.1%. Amusements and other represented 59.2% of total revenues during the quarter, an increase of 130 basis points and mix from the prior year period. Breaking down comp sales, our walk-in sales were down 0.6% while special events was up 3%. In terms of category comp sales, amusements was up, 1.8%, while F&B was down 3.3%. Within F&B, food was down 2.8% and the bar business was down 0.4%. The gap between amusements and F&B widened in Q1 relative to Q4 partially due to amusement pricing initiatives taken during the quarter. At the same time, the positive impact of All You Can Eat Wings promo on F&B was less than in Q4, although it was somewhat offset by stronger performance in special events which has the higher mix of F&B. Total cost of sales was $61.7 million in the quarter and was 20 basis points favorable as a percent of sales. This is due to an improvement in amusement margins and higher mix in amusement revenue partially offset by a decline in F&B markets.
Food and beverage cost as a percent of sales was 30 basis points unfavorable compared to last year as the impact of 2% in food pricing and 1% in beverage pricing was more than offset by the unfavorable impact despite commodity inflation, higher cost associated with the All You Can Eat Wings promotion and timing of vendor rebates. Cost of amusement and other as a percent of sales was 30 basis points favorable compared to last year. Amusement margins benefited from our pricing initiatives and the continued shift towards simulation games, including our virtual reality games. Our operating and payroll benefits cost as a percent of sales was 22.8%, a 90 basis point higher year-over-year due to the unfavorable impact of wage inflation, incremental investment in labor-related to virtual reality, and de-leverage on comp stores.
Other store operating expenses were up 100 basis points year-over-year largely driven by higher occupancy costs, primarily at our non-comp stores and increased investments in sports programming. G&A expenses were $16.8 million, up 7% from the prior year, reflecting increases in support of growing store base in higher technology and legal expenses partially offset by lower stock-based compensation expense. As a percent of sales, G&A was down 10 basis points in the quarter. EBITDA increased 3.2% to $88.9 million and was 24.4% of sales reflecting a reduction of 150 basis points versus the prior year. Adjusted EBITDA was $98.2 million and was up 2.4%. EPS was $1.13 per share, up 8.8% over the prior year.
其他店铺营业费用同比上升100个基点，主要是由于入住成本增加，主要是因为我们的非综合商店和增加的体育节目投资。 G＆A费用为1680万美元，比上年增长7％，反映出技术和法律费用增加对商店基础不断增长的支持增加，部分被股票补偿费用减少所抵消。作为销售额的百分比，G＆A在本季度下降了10个基点。 EBITDA增长3.2％至8,890万美元，占销售额的24.4％，与去年相比减少150个基点。调整后的EBITDA为9820万美元，上涨2.4％。每股收益1.13美元，比上年上涨8.8％。
Shifting to the balance sheet, we had approximately $443 million of outstanding debt at quarter end resulting in leverage of approximately 1.6 times EBITDA. The new lease accounting standard that went into effect at the beginning of the quarter resulted in the recognition of $880 million in operating lease right-of-use assets and $1.1 billion in operating lease liabilities. From a P&L standpoint, this change has an immaterial impact on our net income and cash flows in the quarter. During the quarter, we repurchased approximately 1.3 million shares of our common stock at an average price of approximately $49 and currently have over $200 million remaining under the existing authorization. Since its inception, we have repurchased 7.6 million shares on average price of slightly under $52. We paid our third quarterly cash dividend of $0.15 per share during Q1.
Now, turning to guidance, based on year-to-date trends, we are revising our fiscal year 2019 guidance as follows. Total revenues are expected to be in the range of $1.365 billion to $1.39 billion versus prior guidance of $1.37 billion to $1.4 billion reflecting growth of 8% to 10% versus the prior year. Comp store sales are expected to be in the range of negative 1.5%, a positive 0.5% compared to previous guidance of flat to up 1.5%. We are projecting net income to be in the range of $103 million to $113 million versus prior guidance of $105 million to $117 million. Guidance was based on an effective tax rate of 22% to 22.5%, which is unchanged. Finally, EBITDA is expected to be in the range of $283 million to $295 million versus prior guidance of $285 million to $300 million.
Thank you for your interest in Dave & Buster’s. Now, I will turn the call back over to Brian.
Well, thank you Scott. I just want to close by reiterating our firm commitment to the four strategic priorities our team is focused on. These priorities are fundamental to enhancing our brand positioning and for driving long-term shareholder value. Our proprietary and exclusive games’ ability to promote our offering through national advertising, attractiveness for landlords and ability to attract the best talent are only a few advantages that set us apart from the competition. As always, I want to thank our entire D&B team for their continued hard work and to our shareholders for your continued support and interest in Dave & Buster’s. James, at this time, please open the line for Q&A.
好吧，谢谢你斯科特。 我只想重申我们对我们团队所关注的四个战略重点的坚定承诺。 这些优先事项对于提升我们的品牌定位和推动长期股东价值至关重要。 我们的专有和独家游戏能够通过全国性广告，对房东的吸引力以及吸引最优秀人才的能力来推广我们的产品，这些优势使我们在竞争中脱颖而出。 与往常一样，我要感谢我们整个D＆B团队的持续努力和我们的股东对Dave＆Buster的持续支持和兴趣。 詹姆斯，此时请打开问答专线。
Thank you. [Operator Instructions] And we will take our first question today from Andrew Barish with Jefferies.
谢谢。 [操作员说明]今天我们将从Andrew Barish和Jefferies一起提出我们的第一个问题。
Hey, guys. Just wondering on the comp guidance, as we maybe it’s a bigger picture question around virtual reality also as you lap the launch coming up, is it getting you kind of the movement in traffic and interest that you wanted and are we seeing the second half of the 1Q trends kind of continue here into the 2Q, is that part of the reason why we are seeing the lower guidance overall on same-store sales for the year?
大家好。 只是想知道comp指导，因为我们可能围绕着虚拟现实这个更大的图片问题，当你进行推出时，是否会让你获得你想要的流量和兴趣的运动，我们看到的是下半年 第一季度的趋势是继续进入第二季度，这是因为我们看到全年同店销售总体指引下降的部分原因吗？
Rod, I think it’s a couple of questions in there. And just in terms of what VR is doing for our business, clearly, we have featured proprietary titles here in Q1, our comp in amusements were positive just under 2%. And part of that is due to price part of that is due to VR itself and obviously that’s a incremental forecast spend for us. And we are seeing some uptick in percent that VR represents of our overall amusement when we introduced it the title here recently. So, I think we are still – one of the primary avenues that we have on that platform to introduce proprietary contents that we can feature on TV. That said, I don’t think that amusements and alone can drive the whole bus here. So, we have clearly focused on food and bev, trying to drive that attachment rate we need to pull that back in and working very hard to do that drive the awareness and build that business back and close the gap. The choppiness of kind of how we – we actually ended the quarter April was strong month, because spring break and Easter – and Easter and spring breaks fell into April, start of the quarter may have been choppy for us, particularly up the Eastern seaboard in particular. And so that gives rise to the guidance change of kind of down 1 point. And we missed out fundamentally what we were setting out to achieve in Q1.
罗德，我认为那里有几个问题。就VR正在为我们的业务所做的事情而言，显然，我们在第一季度推出了专有游戏，我们的娱乐游戏积极性仅低于2％。部分原因是由于价格的一部分原因是VR本身，显然这是我们的增量预测支出。当我们最近在这里介绍它的标题时，我们看到VR代表了我们整体娱乐的一些上升百分比。所以，我认为我们仍然是 - 我们在该平台上引入我们可以在电视上播放的专有内容的主要途径之一。也就是说，我认为娱乐并不能单独驾驶这辆公共汽车。所以，我们已经明确地关注食品和bev，试图推动我们需要重新投入的依恋率，并努力工作以提高意识并重建业务并缩小差距。我们 - 我们实际上在4月季度结束的那种波动的波动是一个强劲的月份，因为春假和复活节 - 以及复活节和春季休息时间降至四月，本季度的开始可能对我们起伏不定，特别是在东部沿海地区特定。因此，引起了下降1点的指导变化。我们从根本上错过了我们在第一季度要实现的目标。
And just can you quantify the Easter spring break shift in just kind of how you are – how you looked at that in the last quarter?
你能不能用你的方式量化复活节春假班次 - 你怎么看待上一季？
As we said, we were kind of – we were up 1% in the first 7 weeks heading into the really big weeks. Week 9 was Easter, the prior year, lot of spring breaks and it pushed back 3 full weeks into week 11, 12. As we look at sort of the – and you have to kind of look at the spring break Easter time and associated weather during that time. Obviously, we would like a rainy spring break. The combination of the two weeks, we track at about 150 bps of headwind that we have. So, it’s between the two in the quarter.
正如我们所说，我们有点 - 在前7个星期我们上升了1％，进入了真正的大周。 第9周是复活节，前一年，很多春假，它推迟了整整3周到第11,12周。当我们看一下 - 你必须看看春假复活节时间和相关的天气 在那段时间内。 显然，我们想要一个多雨的春假。 两周的结合，我们跟踪了大约150 bps的逆风。 所以，它在本季度的两者之间。
Okay, thank you.
Next we hear from Joshua Long with Piper Jaffray.
接下来我们会听到来自Joshua Long和Piper Jaffray的消息。
Great. Thank you for taking my questions. Just curious on the mobile app and what you believe you could accomplish there as you rolled that up the back half of the year, I think high level you mentioned increased opportunity for connection with your guests. And I think in prior calls and over – we have talked about your guests coming a few times a year. So just curious how you think you might be able to bridge that gap and develop more touch points or maybe even increased frequency with that gap going forward?
非常好。 感谢您提出我的问题。 只是对移动应用程序感到好奇，以及你认为你可以在今年下半年推出的内容，我认为你提到的高级别与你的客人联系的机会增加了。 我认为在之前的电话会议中，我们已经谈过你的客人每年都会来几次。 所以只是好奇你认为你可能能够弥合这个差距并开发出更多的接触点，甚至可能会在未来的差距中增加频率？
Yes. Clearly, we will provide some more details on the functionality as we get closer to that app launch which will be in the back half of the year, but in general, our focus areas with the app are to reduce friction, with the guests improved experience with the guests, improve our ability to communicate and connect with them and really be a platform that will culminate new features over the course of the years. So, we will be focusing on and I think I have said this last call creating a true guest account of first party data relationship with our guests, streamlining the mobile payment, connected with our loyalty program and also have some easy recharge features. So there is a number of features and there is some others, but we think the app over time will be a good deal flow for us, because as you said and we have said previously, our visit frequency is very low with the brand. It is a big opportunity and we do not know enough about our guests on the first party data basis. And that’s something that we want to leverage over time and are working. The IT and the marketing team are highly focused on that initiative right now.
Great. Thank you for that. And then one quick one if I could on the competition piece, it seems like that’s still weighing on the overall environment, is the messaging that it’s flat more or less quite sequentially, but still on a year-over-year basis you are still having that year-over-year impact. Can you imagine when do you expect to see that year-over-year impact level off and providing sort of qualitative details on other venues or areas you are particularly seeing that to impact in your system?
非常好。 谢谢你。 然后一个快速的，如果我可以参加比赛，看起来这仍然在整体环境上的压力，是消息，它或多或少相当顺序，但仍然是在逐年的基础上，你仍然有 与去年同期的影响。 您能想象您何时会看到年度影响水平下降并在您特别看到影响系统的其他场地或区域提供一些定性细节？
Well, I mean the competitive environment is something that we are tracking regularly trying to read over two dozen brands out there building some form of combined dining and entertainment space and we are doing our best to track their indications about stores that they are opening. And right now, we think that headwind is going to increase over the balance of the year just in this past quarter. We have about 40% of our comp stores were either competitive or one of our own stores is open on them. So it’s a meaningful headwind for us and our most recent intelligence on at least indicated openings by the competitive set is a number of units is going to be increasing year-over-year. So that’s something we don’t see abating for some time. I think what we have to do is focus on what we do best. We have a large nucleus in our stores that are very healthy. Our guest metrics are improving. And as we think about the competitive set for the long haul – long-term, I am not convinced that all the brands that are building towards will have sustainability. Many of them are small independent players. And candidly, we have significant advantages over them. We have a strong proven business model which is why I think we see a lot of investment in the space. We have some of the best AUVs, margins and returns in this space. We have scale. We have access to real estate, human capital and we have a great balance sheet as well. So a lot of flexibility to invest in my view, very well positioned for the long-term and I am confident that we are working on the right thing as a brand to sustain the leadership position here.
Great. Thank you.
Andrew Strelzik with BMO Capital has our next question.
BMO Capital的Andrew Strelzik有下一个问题。
Hey, guys. This is actually Dan on for Andrew today. Thanks for taking the question. Firstly I guess just understanding that there has been a lot of evolution in the food and beverage business over the last year or two, what’s the reasonable timeline to expect the food business to improve and do you think you can improve it independently of the game business maybe through shifting advertising spend or through some other initiatives?
大家好。 今天安德鲁实际上是丹。 谢谢你提出这个问题。 首先，我想只是理解食品和饮料业务在过去一两年中有很多变化，期望食品业务改善的合理时间表是什么，你认为你可以独立于游戏业务改进它 也许通过改变广告支出或通过其他一些举措？
Really good question. We have – we do believe we are pursuing the right F&B strategy really for the long-term of this brand. We have new leadership and the team is extremely passionate about food. And we are proud of the changes we have made. We have simplified our menus significantly, have made a substantial quality improvements and our execution is improving. We are seeing results from that on a qualitative basis. In other words, food quality scores, speed of service and value scores are all improved. And obviously we want that to translate the better quantitative performance. But as I said on the call, increasing guest awareness of the changes that we have made in food and bev really improving that attachment rate to amusement, I think it’s going to take some time since guests are primarily coming in for amusements and our visit frequency is low. And we are going to work hard to drive that awareness. We have just launched our new craveable combo promo, which is going to be combined offer of some of our new craveable items along with game play. And we are also encouraged by what we have seen as the strong guest response in a dining room repositioning that we have made in our Dallas store. We have done a couple of tests in that store. In this particular store, we have created what we call formally a wide wall, basically a 15/50 foot multi-projector, laser projector screen. And we have seen a fairly significant uptick in food comps in that store. So, that’s an area that we are going to explore further as a brand over the balance of this year.
真好问题。我们确实 - 我们相信我们正在为这个品牌的长期发展寻求合适的餐饮战略。我们拥有新的领导力，团队对食物充满热情。我们为我们所做的改变感到自豪。我们大大简化了菜单，提高了质量，我们的执行力也在不断提高。我们在定性的基础上看到了这一结果。换句话说，食品质量得分，服务速度和价值得分都得到了改善。显然，我们希望这能够转化更好的定量表现。但正如我在电话会议上所说的那样，提高客人对我们在食品方面所做出的改变的认识，并且正在提高对娱乐的依恋率，我认为这需要一些时间，因为客人主要是为了娱乐和我们的访问频率而来低。我们将努力提高认识。我们刚刚推出了我们新推出的可爱的组合促销，它将结合我们的一些新的可爱物品以及游戏玩法。在我们在达拉斯商店重新定位的餐厅中，我们也看到了强烈的客人回应，我们也感到鼓舞。我们在那家商店做过几次测试。在这个特定的商店，我们创造了我们称之为正式宽壁，基本上是一个15/50英尺的多投影仪，激光投影仪屏幕。我们已经看到该商店的食品配件相当显着的增长。所以，这是我们将在今年余下作为品牌进一步探索的领域。
Great. That’s helpful. Thanks. And then just one follow-up on the amusement side, I guess I am just curious how did customers react to the increase in the VR pricing I guess was there any noticeable or measurable impact on traffic or anything you guys noticed maybe qualitatively after the price increase?
非常好。 这很有帮助。 谢谢。 然后只是娱乐方面的一个后续行动，我想我只是好奇客户如何对VR定价的增加作出反应我想是否有任何明显或可衡量的交通影响或者你们注意到的任何东西可能在定价之后定价 增加？
Yes. As we mentioned, we took amusement price increase, basically a $1 increase and little over half of our store base after doing some testing. And anytime you take the price, you are going to see a little better traffic decline, which we did but incrementally it has been additive to our comps. The price increase in our view is we will begin to think about how we package multiple VR experiences in one package and we have not done that yet, but there are some opportunities for us to think about how we package price, multiple experiences. We think that was the right move after looking at what many others are doing in the VR space and I think it was the right strategic move.
是。 正如我们所提到的，我们采取了娱乐价格上涨，基本上增加了1美元，经过一些测试后我们的商店基数只有一半多一点。 无论何时你拿到价格，你都会看到一个更好的流量下降，我们已经做了，但逐渐增加它已经添加到我们的comps。 我们认为价格上涨是因为我们将开始考虑如何在一个包装中打包多个VR体验，而我们还没有这样做，但我们有机会考虑如何打包价格，多种体验。 在看到许多其他人在VR领域做的事情后，我们认为这是正确的举措，我认为这是正确的战略举措。
Great. That’s helpful. Thanks so much.
非常好。 这很有帮助。 非常感谢。
You are welcome.
Next, we will hear from Jeff Farmer with Gordon Haskett.
接下来，我们将听到Jeff Farmer与Gordon Haskett的谈话。
Thank you. You guys have been more aggressive with your value-oriented offers, but I am just curious what has worked, what hasn’t worked and where do you see the opportunity moving forward?
Good question, Jeff. I think the value – our work in driving the promotional engine is the continued effort on the part of the marketing team. And we have been focused I would say primarily on some of the off-peak offers around our Wednesday offer and most recently, our Unlimited Wing Video Play on Thursdays which was our strongest day of the week in terms of the first quarter. So we are going to continue to look for ways to drive traffic, particularly off-peak, we have a lot of capacity and we are going to be more – we are going to clearly be more thoughtful and careful about how we lean into discounting and value related things on our peak times. We did introduce a national promo free video, free $10 video, a $20 power cord in the first quarter, didn’t really see the traction we were hoping for on that. That was a broad offer across the chain. And so this is an effort work that we are continuing to try to unlock. We clearly believe value starts first with the numerator and the question the offering the experience and the service level that we provide and that we are moving the needle on in our view. But we know we are going to need to terrifically and maybe in some cases more broadly put in value to drive traffic particularly around off-peak daypart.
好问题，杰夫。我认为价值 - 我们推动促销引擎的工作是营销团队的持续努力。我们一直专注于我周三提供的一些非高峰优惠以及最近的周四我们的无限翼视频播放，这是我们在第一季度最强劲的一天。因此，我们将继续寻找提高交通流量的方法，尤其是非高峰时段，我们拥有大量的容量，而且我们将会更多 - 我们将更加周到和谨慎地看待我们如何倾向于折扣和与我们的高峰时期相关的价值观。我们确实在第一季度推出了全国促销免费视频，免费的10美元视频，20美元的电源线，并没有真正看到我们希望的牵引力。这是整个供应链的广泛报价。所以这是一项努力工作，我们将继续尝试解锁。我们清楚地认为价值首先是分子和问题，我们提供的经验和服务水平以及我们在我们看来正在发挥作用的问题。但是我们知道我们需要非常谨慎，并且在某些情况下可能更广泛地投入价值来推动交通，特别是在非高峰时段。
Okay. And just one more sort of a follow-up question, so the same-store sales guidance reduction, lot of moving pieces there, so in terms of what proved to be the greatest surprised to you relative to the expectations that you set in April was just a traffic shortfall you alluded to this was just more about the food and beverage gap being greater than you expected. What did prove to be the greatest surprise relative to what you had expected back in April?
好的。 还有一个后续问题，所以同店销售指导减少，那里有很多动人的作品，所以对于你相对于你在4月份设定的期望而言最让你感到惊讶的是 你提到的只是一个交通缺口，更多的是食品和饮料差距大于你的预期。 相对于你在4月份的预期，最令人惊讶的是什么呢？
Clearly, we were – in our guidance was expecting a stronger first quarter than flat. We were up one. We were counting on a good spring break Easter calendar and that didn’t prove to be the case. So the miss to our internal estimates for Q1 is not at an insignificant part of the 1 point decline in the top end of our new guide right on comps. And then there is more choppy start to the first quarter – I am sorry the second quarter. So we have a lot of the year in front of us. We have a lot of things that we are working on to drive the positive comps where we have a huge sense of urgency in this team to do so. And we have a lot of this quarter left to go big weeks, summer weeks and kids are out of school and we are doing everything as a management team we can to drive the comps to a positive place.
显然，在我们的指导下，我们预计第一季度比第一季度更强劲。 我们起来了。 我们指望一个很好的春假复活节日历，事实证明并非如此。 因此，我们对第一季度内部估计的失误并不是我们新指南权利最高点1点下降的微不足道的一部分。 然后第一季度的开局更加不稳定 - 我很抱歉第二季度。 所以今年我们有很多年。 我们正在努力推动积极的合作，我们在这个团队中有着巨大的紧迫感。 我们这个季度还有很多时间需要大周，夏季和孩子们都不在学校，我们正在做一切管理团队，我们可以将比赛推向积极的地方。
Right. Thank you.
We will now hear from Jake Bartlett with SunTrust.
Great. Thanks for taking the question. Brian, I wanted to better understand the comments around Easter. You have talked about the impact of the calendar shift. I am just trying to understand whether it was a calendar shift that impacted it or whether it was just worst results during the spring break period or the Easter period maybe due to competition or other factors, just trying to understand what – how the shift aspect impacted the results?
非常好。 谢谢你提出这个问题。 布莱恩，我想更好地理解复活节前后的评论。 您已经谈到了日历转换的影响。 我只是想了解这是一个影响它的日历转变，还是春假期间或复活节期间最糟糕的结果可能是由于竞争或其他因素，只是试图了解什么 - 转变方面如何影响 结果？
There is a bit of an exact science to some of that stuff, Jake, but what we look at – what we did look at – and again being coming into the Easter calendar shift through week 7 we were up a lot. So we had some confidence in how the quarter was going to end up. When we take week 9, week 11, 12 and we look at some of those weeks where spring breaks were shifting, we lost and our estimation about 150 bps was some of that competition, really hard to keep that up. Clearly, the competitive headwind is good for us. But a lot of this has to do, because later Easter calendar spring break calendars can work through our favorite and work against this and a lot of it has to do with the combination of the timing of the Easter and spring breaks and the associated weather at that time. And as it turned out for us, we had our earlier colder spring break time period in 2018 followed by later and unfortunately better weather, warmer weather and sometimes it can go the upper way, a rainy spring break in April shower so to speak. We can have big weeks. So, it just didn’t fall on our way, I am not saying that’s the whole thing for the quarter, but it was a headwind for us.
对于其中的一些东西，有一些确切的科学，杰克，但我们看到的 - 我们看到的是什么 - 再次进入复活节日历转换到第7周我们已经很多了。因此，我们对该季度的结局有了一些信心。当我们选择第9周，第11周，第12周时，我们会看一些春季休息时间正在转变的部分，我们输了，我们估计大约150个基点就是一些竞争，真的很难保持这种状态。显然，竞争逆风对我们有利。但其中很多都要做，因为后来的复活节日历春假日历可以通过我们最喜欢的工作并与之对抗，其中很多都与复活节时间和春假以及相关天气的组合有关。那时。而事实证明，我们在2018年之前有较早的寒冷春假时间，随后是不幸的天气，温暖的天气，有时它可以走上坡路，四月淋浴的多雨春天可以说。我们可以有很长的一周。所以，它并没有落在我们的路上，我并不是说这是整个季度的全部事情，但这对我们来说是一个逆风。
Got it. And you mentioned the big summer weeks that are coming up and wanted to gain ground, but how confident are you or can you provide us any insight as to the gains that you have coming up, you are right about now starting to lap Jurassic Park, but last year you had Halo, which was I think a pretty successful game in late July. Anything you couldn’t talk about in terms of your content that you have that will – should give us some confidence that those big summer weeks will really come through?
得到它了。 你提到了即将到来的大夏周，想要获得成功，但是你有多自信，或者你能否为我们提供有关你所获得的收益的任何见解，你现在正好开始侏罗纪公园， 但去年你有Halo，这是我认为7月下旬相当成功的比赛。 根据你所拥有的内容，你无法谈论的任何事情 - 应该让我们相信那些大夏周真的会来临吗？
Well, I mean, clearly we just launched Men in Black, which is an impressive title, very telegenic and we will continue to try to drive business with our VR platform over the course of the summer. And we are going to be looking at our offer – promotional offers. We have launched our craveable combo offer here just yesterday really trying to drive consumption of both parts of our offering. This particular offer will also include a potential to upgrade to unlimited video for just $8. So we are trying to drive traffic with both combination of content, but as I said my view is we will need to do it with two batches this year.
嗯，我的意思是，很明显我们刚推出了Black in Men，这是一个令人印象深刻的标题，非常有远见，我们将继续尝试在夏季推出VR平台业务。 我们将会看到我们的优惠 - 促销优惠。 我们昨天在这里推出了我们可靠的组合产品，真正试图推动我们产品的两个部分的消费。 此特别优惠还包括仅需8美元就可以升级到无限制视频。 因此，我们正在努力通过两种内容组合来增加流量，但正如我所说，我认为今年我们需要分两批进行。
Got it. And then lastly I am wondering just the differential between amusements and the food and beverage, how much of that might have been attributed to just the shift in your consumers, so maybe more families, less adults as a mix of your business and whether that’s more of a longer term problem than kind of shorter term?
得到它了。 最后，我想知道娱乐与食品和饮料之间的差异，这可能有多少可归因于消费者的转变，所以也许更多的家庭，更少的成年人作为您的业务的混合，以及是否更多 一个长期问题而不是短期问题？
Well, I am not going to mince words on the food and bevs but our challenge we have. We have had a fairly significant gap for some time. It was significant early part of last year and closed with some of our Wing offering, particularly in Q4 to wide and back out somewhat in Q1. That is why we are looking at trying to do things in combination where we are trying to drive attachment rate of both offerings in Wings that has been very successful in doing that, narrow a lot. We didn’t have as many days. We did that around footfall. We want to be careful not to have that offer grow stale. But you are going to see us continue to look at ways to drive the combination of both offerings over the course of the summer to try to narrow that gap, but obviously the best thing we do about comps is drive amusements up first, but the gap we need to narrow as well.
好吧，我不会对食物和bevs说些什么，但我们挑战了。 我们有一段时间有相当大的差距。 它在去年早些时候很重要，并且在我们的一些Wing产品上结束了，特别是在第四季度，在第一季度有所扩大和退出。 这就是为什么我们正在考虑尝试组合我们试图推动Wings中两种产品的附加率的原因，这种方式非常成功，缩小了很多。 我们没有那么多天。 我们在脚步附近做到了。 我们要小心，不要让这个提议变得陈旧。 但是你会看到我们继续寻找在夏季推动两种产品组合的方法，以试图缩小差距，但显然我们对comps做的最好的事情是首先推动娱乐，但差距 我们也需要缩小范围。
Got it. Thank you very much.
Next, we will hear from Brian Vaccaro with Raymond James. Mr. Vaccaro, your line is open.
接下来，我们将听到Brian Vaccaro和Raymond James的消息。 瓦卡罗先生，你的线路是开放的。
Sorry, still learning that mute button. Thank you and good evening. I just wanted to circle back to the first quarter comp performance and I am curious if you are seeing a noticeable difference in your mall versus non-mall locations and Brian, back to your quarter-to-date, you said I think the Eastern seaboard was maybe a soft patch or particularly soft, curious what you think is driving that is competitive intrusion concentrated there or something else you call out?
对不起，还在学习那个静音按钮。 谢谢你，晚上好。 我只是想回到第一季度的性能表现我很好奇，如果你看到你的购物中心与非购物中心位置有显着差异，Brian，回到你的季度至今，你说我认为东部沿海 可能是一个柔软的补丁或特别柔软，好奇你认为是什么驱动，那是集中在那里的竞争入侵或你呼唤的其他东西？
I guess first on mall stores, two questions in there. The long-haul, our mall stores have outperformed in Q1 they did under perform and have kind of for the last 2 years. So they did our trail, inline stores and freestanding stores in Q1. In terms of Eastern seaboard, you know weather was – in fact, I think I saw ships went out yesterday, Brian on May. The Eastern seaboard for us unfortunately on some Memorial Day weekend and the week following was extremely dry relative to what we saw in the prior year. So, I think I have even showed on your analysis. So we struggled on the East Coast, up and down, particularly around Memorial Day weekend.
我想首先在商场商店，那里有两个问题。 从长远来看，我们的商场商店在第一季度表现优异，表现不佳，并且在过去的两年里表现出色。 所以他们在第一季度开设了我们的商店，直营店和独立商店。 就东部海岸而言，你知道天气 - 事实上，我认为我昨天看到了船只，5月份布赖恩。 不幸的是，在一些阵亡将士纪念日的周末以及随后的一周，我们的东海岸相对于我们在去年看到的情况非常干燥。 所以，我想我甚至已经展示了你的分析。 所以我们在东海岸上下挣扎，特别是在阵亡将士纪念日周末。
Okay. And on the malls could you remind us what percentage of your comp base is mall based and would you be willing to quantify the differential that you saw this quarter just kind of gauge the range that you see in the last several quarters between the two cohorts?
I am not going to probably answer the latter, but our mall stores are about 33% of our overall comp stores and about 39%, 40% of our overall store base.
Okay, great. That’s helpful. Shifting gears just to the COGS outlook and I wanted to ask about amusement cost specifically and could you walk through the impact of China tariffs and remind us what percentage of your amusement costs are imported from China and of that, what percentage might be impacted by tariffs events, have you or are you planning to make any changes in how you source certain items as a result?
好，太棒了。 这很有帮助。 转向COGS的前景我想特别询问娱乐成本，你是否可以了解中国关税的影响，并提醒我们从中国进口的娱乐成本的百分比，以及可能受关税影响的百分比 事件，您是否计划对结果来源某些项目进行任何更改？
Yes, I will start off on that. As we look at tariffs, what we have seen so far, we have made some adjustments internally and also working with the vendors, we have been able to offset – mostly offset the impact of what we have seen so far. It’s mainly in our redemption area category that applies to. And so far what have seen we have been mostly able to mitigate or offset. Now for future tariffs who knows I mean, there is still kind of that lingering tariff out there that could or could not be put into place, 25% tariff on the remaining $350 billion or so of goods. So obviously that would be a larger impact. We would be able to mitigate some of that, but much tougher as you could imagine with that amount of goods coming in. So, right now we are in pretty good shape, but we will continue to monitor the possibility in the magnitude of the future tariffs down the road and give those updates when the possibility and timing is more clear, but we will continue to monitor it and put plans in place to mitigate best we can.
是的，我将从那开始。在我们看待关税时，我们到目前为止已经看到过，我们已经在内部进行了一些调整，并且与供应商合作，我们已经能够抵消 - 大部分抵消了我们迄今为止看到的影响。它主要在我们的兑换区域类别中适用。到目前为止，我们已经看到我们大多能够减轻或抵消。现在对于未来的关税谁知道我的意思，仍然存在那种可以或不可能实施的关税，对剩余的3500亿美元左右的商品征收25％的关税。显然这会产生更大的影响。我们可以减轻其中的一部分，但是随着你可以想象的那么多的货物就会变得更加困难。所以，现在我们处于相当不错的状态，但我们将继续监控未来规模的可能性如果可能性和时间更加明确，我们将继续对其进行监控，并制定计划以尽可能减少最佳状态。
Alright, thank you. And then just last one if I could, I think your updated EBITDA guidance in the past when comps have been soft, there has been declines in store level and corporate bonuses in G&A, curious if you had bettered any assumptions on either of those explicitly in the rest of your guidance on either labor or G&A?
好的，谢谢。 如果可以的话，我认为你的最新EBITDA指导在过去的情况下是比较柔和的，G＆A中的商店水平和公司奖金都有所下降，如果你对任何明确的任何一个假设有任何假设，那就太好奇了。 您对劳动力或G＆A的其他指导意见？
Well I mean we have lowered the top end of the EBITDA guide by about 5 million a share, there is some adjustment in that correction, implicit in that $5 million reduction and as on the lower end of the range. So that’s inclusive of that guide.
Alright. Thank you.
Next, we will hear from Jon Tower with Wells Fargo.
接下来，我们将听到Jon Tower与Wells Fargo的消息。
Great. Thanks. Just on the marketing side of the equation, I know you are pivoting a little bit more towards digital mix relative to years passed, but one could argue that perhaps your brand awareness is where it needs to be there and that could also argue that you need to take up the actual marketing spends. Could you talk about that and your thoughts around where the marketing spend optimally could be for the business over time?
非常好。 谢谢。 就这个等式的营销方面而言，我知道你相对于多年来的数字组合更倾向于转向数字组合，但有人可能会说，也许你的品牌知名度是它需要的地方，也可能是你需要的 占用实际的营销支出。 您是否可以谈谈这一点以及您对营销在一段时间内最佳营销方式的看法？
Well, it’s a very good question and something we discuss and debate regularly, the corporate marketing spend. It’s clearly been an area that we have leveraged as we have grown our store base over the years. And from a national payroll standpoint, we are advertising the majority of the weeks already. So what we are doing and we did spend more money marketing in Q1, primarily on digital and that is a, let’s move from essentially no spend, no allocation, a few years ago to a meaningful allocation, but in our view, this is sort of a test and measure kind of activity. We are looking for real results when we go out digitally. It does allow us to be more targeted in our view with both message as well as where we go and we would like to get traction in that area and have great reason to continue to invest, but you make a valid point, the marketing team is continuing to evaluate both the mix and the spend. And right now, we are pivoting it to digital.
嗯，这是一个非常好的问题，我们经常讨论和讨论企业营销支出。 这显然是我们已经利用的一个领域，因为我们多年来一直在增加我们的商店基础。 从国家工资单的角度来看，我们已经在大部分时间内做广告。 那么我们正在做什么，我们确实花了更多的钱在第一季度营销，主要是数字，这是一个，让我们从几乎没有支出，没有分配，几年前转向有意义的分配，但在我们看来，这是排序 测试和衡量一种活动。 当我们以数字方式外出时，我们正在寻找真实的结果。 它确实让我们在我们看来更具针对性，包括信息和我们去的地方，我们希望在该领域获得牵引力并有充分的理由继续投资，但是你提出了一个有效的观点，营销团队是 继续评估组合和支出。 而现在，我们正在将其转向数字化。
Jon, this is Scott. I will just hang on to that with one other comment. As we talk about the mobile app I mean that’s all tied into kind of our strategy around digital marketing. And one of the things that we have clearly put a lot of work into and when we thought about the mobile app, there is how do we connect with customers, how do we acquire customers through that vehicle. And so from the way that we look at it that mobile app will be a great intake mechanism for customers. It will help them as they use that app inside the store, reduce friction and so forth, but it will also provide us wealth of customer data to be able to use that in the future to be more segmented and targeted marketing to our customers to what’s the most relevant to them. And that’s not just promo, that’s also just informational type things of what’s new and so forth. And I have seen that in my past work be very effective. And so I think we are on the right track with that and that will just accelerate digital market even more as we build that customer database.
Can you just remind us what percentage of sales marketing is today?
It’s just slightly over 3% of sales.
Okay. And then just pivoting a little bit here, but in terms of thinking about the balance of the unit growth versus say shareholder payouts given where the stock is traded over time in discount to a lot of the peer group, it looks like public investors aren’t necessarily willing to pay you for the unit growth that you are putting up at that double-digit level that you have been at. So why continue to grow units at this pace if these public market investors aren’t willing to pay for it versus say slowing the unit growth in more aggressively attacking same-store sales growth and in the interim perhaps enhancing shareholder payouts?
好的。 然后在这里稍微调整一下，但是考虑到单位增长的平衡而不是说股东支付，因为股票的交易时间与很多同行的折扣相比，看起来公共投资者并不是 我们一定愿意支付你所提供的两位数水平的单位增长。 那么，如果这些公共市场投资者不愿意支付费用，那么为什么继续按照这种速度继续增长单位呢？相比之下，如果通过更积极地攻击同店销售增长来放缓单位增长，以及在中期可能增加股东支出？
Well, I think we are attacking comp sales growth. That is major focus for the team here and that’s why we are focused on three of our strategic priorities of the four are focused clearly on that. And so to say we are not focused on it wouldn’t be so, we definitely are. Our view is right now that this business generates a significant amount of free cash flow that our returns on the stores are extremely high. If you look at our historical track record and in our view, it doesn’t make sense to slow down that growth as we can accommodate it with the team. We certainly have the cash flow to accommodate it and more than enough left over to continue to return value to shareholders and we can do all things. And then I think that to the extent that we allow competitor or someone else looking to take what we view as a market fit is on our radar and get there in front of us and it does inform our go-forward plan in the market. So we are not really looking to handover the keys to some of these markets many names that are out there trying to build sites right now.
Okay. Thank you.
[Operator Instructions] We will now hear from Stephen Anderson with Maxim Group.
[操作员说明]我们现在将听取Stephen Anderson与Maxim Group的联系。
Yes, good afternoon. Two quick questions mostly regarding your test locations, first of all, you say the taco trust testing really hasn’t had great deal of awareness at this point, but have you given any thought ultimately broadening the menu to maybe appeal to more of the guests, so there can be maybe somewhat higher guest attraction? And I have a follow-up.
是的，下午好。 两个快速问题主要是关于你的测试位置，首先，你说taco信任测试在这一点上真的没有很多意识，但你有没有考虑过最终扩大菜单以吸引更多的客人 ，所以可能会有更高的客人吸引力？ 我有一个后续行动。
We have considered that. And we may in fact do that. But we did two tests in Dallas. One was our wide wall TV and one was taco truck. Our guest research focus group works at fast casual. There are a meaningful number of people that were looking for that. And we expected that to perform better than it has. So, we are exploring what to do with the taco trucks, what to do with the particular offering. And so I hear you. The flipside is the other test looks to be more impact so far and that is the wide wall we made an investment and we do need to increase the energy in my view in our dining rooms, but really the lowest utilization space in our stores and that test is performed very well and it’s something…
我们已经考虑过了。 事实上我们可能会这样做。 但我们在达拉斯做了两次测试。 一个是我们的宽屏电视，一个是墨西哥卷饼卡车。 我们的客座研究焦点小组致力于快速休闲。 有相当数量的人正在寻找这一点。 而且我们期望它的表现要好于它。 因此，我们正在探索如何处理塔科卡车，如何处理特定产品。 所以我听到你了。 另一个测试看起来更具影响力到目前为止，这是我们投资的宽壁，我们确实需要在我们的餐厅增加能量，但实际上是我们商店中最低的利用率空间 测试表现非常好，这是......
Has that resulted to increase in F&B?
Yes, it has. Dallas is essentially one of our top performing stores in the system right now so. And Texas in general is performing well but it’s comp pacing. So, this is an area that we are going to look to expand and a few more stores over time.
是的，它有。 达拉斯基本上是我们系统中表现最好的商店之一。 德克萨斯州总体上表现不错，但它正在进行中。 因此，随着时间的推移，这是一个我们将要扩展的领域以及更多的商店。
With regard also to the some of the – actually, I went to go visit by location, I saw there are two VR machines in operation there, which I haven’t seen rollout to any other store at this point. Is there another test you are doing or is that something that you continue on a case-by-case basis?
还有一些 - 实际上，我去了位置访问，我看到有两台VR机在运行，我还没有看到在这一点上推出到任何其他商店。 您是否正在进行另一项测试，或者您是否会根据具体情况继续进行测试？
Yes. We have two VR machines. And I believe it’s roughly 10 stores. We did that at launch stores that with some higher volumes we elected to put through machines in to be able to handle peak capacity. And Dallas happens to be one of them and there are few others as well.
是。 我们有两台VR机器。 我相信它大约有10家商店。 我们在发布商店做到了这一点，我们选择通过一些更高的产量来处理峰值容量。 而达拉斯恰好是其中之一，其他人也很少。
Okay. And in terms of like the labor considerations, are they running mostly in line with some of the other locations that one VR machine in operation?
No, I would say they are going to tend to be a little higher, because we have each machine requires two dedicated people – I am sorry, require dedicated person in that peak. Sometimes we run more than that. So I would – I don’t have those numbers in front of me, I would say they run a little less efficiently, but from a profitability – overall bottom line profit, we elected to do that, because we think it’s incremental to overall profit.
不，我会说他们往往要高一点，因为我们每台机器都需要两个专门的人 - 对不起，需要那个专注的人才。 有时我们运行的不止于此。 所以我愿意 - 我没有这些数字在我面前，我会说它们运行效率稍差，但从盈利能力 - 整体盈利，我们选择这样做，因为我们认为它是整体利润的增量。
Alright. Thank you.
We have a follow up from Jake Bartlett with SunTrust.
Great, thanks. I just wanted to ask about your philosophy on the balance sheet and taking leverage up a little bit here. Is there a level of leverage that you are comfortable with maybe taking that up through buybacks – a little more aggressive buybacks going forward?
十分感谢。 我只是想在资产负债表上询问你的理念，并在这里稍微调整一下。 是否存在一定程度的杠杆作用，您可以通过回购来实现这一目标 - 即将进行更积极的回购？
We haven’t really given a targeted range on our leverage with where it is right now 1.6 we are fairly comfortable with where that is. And so we don’t think at least near-term on the base business is really going to flush away a lot from kind of where we are today, but as we say that we will continue to look for opportunities in buyback and things like that, so that could fluctuate somewhat just based on how things trend in the near future, but we are fairly comfortable with where it is with the base business.
我们现在还没有真正给出目标范围我们现在所处的位置1.6我们对这里的情况非常满意。 因此，我们认为至少近期的基础业务并没有真正从我们今天的地方冲走，但正如我们所说，我们将继续寻找回购机会以及类似的东西 ，这可能会在不久的将来根据事物的趋势而有所波动，但我们对基础业务的位置相当满意。
And Jake currently we have been pretty active in Q1. When you repurchase 1.3 million shares over $63 million, I think that’s our most active of any course so far obviously with the multiple in the stock the way it is, but so we have been pretty active with our share repurchase program which is as you know our board authorized an expansion of that. So we have little up whatever $200 million available to us right now.
而杰克目前在第一季度我们非常活跃。 当你回购超过6300万美元的130万股股票时，我认为这是我们迄今为止最活跃的任何一种方式，显然存在股票的倍数，但我们对我们的股票回购计划非常积极，正如你所知道的那样 我们的董事会批准了扩展。 因此，我们现在可以获得2亿美元的资金。
Great. I appreciate it.
That will conclude today’s question-and-answer session. At this time, I would like to turn the conference over to Brian Jenkins for closing remarks.
这将结束今天的问答环节。 在这个时候，我想把会议转到Brian Jenkins的闭幕词。
Well, thank you for your time this afternoon. We look forward to reviewing our second quarter results with you in September. You guys have a great evening.
好的，谢谢你今天下午的时间。 我们期待在9月份与您一起审核我们的第二季度业绩。 你们晚上过得愉快。
That will conclude today’s conference call. Thank you for your participation.
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