Question-and-Answer Session
Operator
(Operator Instructions) We’ll take our first question from Matt DiFrisco from Oppenheimer.
Matt DiFrisco - Oppenheimer
Thank you. I’ve got a couple of questions -- one, looking at the rent expense, I understand there is deleverage obviously occurring but it looks as though the rent on an operating week basis, is that that 3,000 weeks -- is that operating weeks or is that excluding the weeks closed from stores maybe lost during Texas? Because if I divide that 3,000 into your dollar amount spent on rent, it comes up to a little over $1,400 per week, which is a pretty sizable jump from the pace you were doing in the first and second quarter, and about 20% higher than it was in the third quarter. I’m just trying to understand what happened in that line item.
Scott M. Colosi
I can’t speak to the dollars per week. I can tell you that what is somewhat different about the restaurants we acquired, so it’s 12 in total this year and all 12, we’re leasing both the land and the building, which is a much, much, much higher rent as a percent of sales versus our typical other lease that we have, which is typically just a ground lease. So that may be part of the difference. I’d have to sit down and look at the dollars per store week.
Matt DiFrisco - Oppenheimer
No, that’s understandable. I also see it coming back a little bit then in the depreciation line. It looks like they carry a little bit less depreciation, obviously.
Scott M. Colosi
They have a lot less, yeah.
Matt DiFrisco - Oppenheimer
Okay, and then also looking at your guidance for ’09, I understand it’s a time to be conservative and there’s little things out there for us to give us guidance for ’09 but with the slower growth, I would think you are having less pre-opening, less dilution from new stores or inefficient labor lines, et cetera, from those new stores. How come we wouldn’t be getting at least maybe 50 to 60 basis points back to start off with in a head start and lower pre-opening? Where are you forecasting continued inflationary pressures, or is it just being conservative and not knowing the end of negative comps and deleverage?
Scott M. Colosi
I think you are correct in saying that if we were to open 15 stores next year, we would have lower pre-opening costs and we are lapping an extra week, so we do have that going against us this year but I think suffice it to say, given all the turmoil in the market today and we are sitting here at the end of October, you know, we just aren’t prepared right now to get anymore specific about what our assumptions might or might not be.
- To read the full transcript on Seeking Alpha, click here »
