Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Brad Ludington - KeyBanc Capital Markets.
Brad Ludington - KeyBanc Capital Markets
If fuel costs stay down at current levels, since you haven’t been passing that through to the franchisees, what kind of impact could that have on financials on the commissary margins?
J. David Flanery
The easiest way to give you a feel for that is to say we use a little over 3 million gallons of diesel a year and at the high point this year I think we were in excess of $4.50 a gallon in the market place on an original budget for the year under $3. That’ll give you a range for every dime change in fuel costs that could be about $300,000 of potential margin improvement at food service.
Julie L. Larner
Also keep remembering that we’re still seeing not as much of an improvement on the diesel side as we are certainly on the crude and the gasoline side. The trends are improving but yea-rover-year we’re still paying significantly higher diesel prices on both our inbound and our outbound transportation.
Brad Ludington - KeyBanc Capital Markets
Looking at G&A, should we expect that third to fourth quarter lower as a percentage of revenue even though may be same-store sales might be a little strained?
J. David Flanery
Yes. I think the idea there is we’ve certainly pulled out a lot of the same efforts that other companies are doing to control G&A and travel and open positions and those sorts of things, so I think that’s a fair assessment that we will try certainly to manage our G&A very tightly in this environment.
Nigel Travis
I think we’re saying that as a percentage of sales, G&A expense year-to-date in 2008 was 9.5% compared to 10% in the same period last year and that’s even taking into account the one-time benefit that we had in 2007.
I think it’s also worth pointing out that I know some people are slightly skeptical of our ability to get to the low end of our range. One of the ways our finances work and I guess most companies work the same way is that there are various self-correcting elements that if we don’t hit a certain number effectively bonus accruals, and that’s probably the easiest example to describe, go down. It’s self correcting and helps balance out any shortfall elsewhere.
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