Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Joseph Buckley - Banc of America Securities
Joseph Buckley - Banc of America Securities
You talked about the value menu and the impact on sales the first 10 days of the program could you give us a quarter to date update just how December was before the value menu went into play and then maybe with the value menu just talk about the mix of traffic and check and how comfortable you are from a margin perspective as you advertise the value menu.
Clifford Hudson
The progression I’ll give you, November December January and from a general trend standpoint, so November value because we did this brown bag special on a national television, two burgers, two fries, two drinks, something we’ve done historically a low price. We did $6.99 for that. Something we’ve done historically but we haven’t done with national television in a good while anyway but it clearly hit a value vein you might say with consumers because in that first fiscal quarter September, October, November, it was our best month from a comp standpoint.
We saw sales substantially negative from a comp standpoint in September without that value promotion in October so it improved October versus September and then boom, and then November with the value message on a nationwide basis it was our strongest month. It was widely negative but much improved over September and improved over October.
In December without the value message we went back negative. Historically we’ve done a full price, but the bigger thing is it’s a nicer fuller promotion, full price, unique sandwich, rings, steak and rings, etc. but it was not value and that strategically, we relied on what we’d done historically and this environment didn’t work.
January we’ve come back to the value menu. We anticipate sticking with that value menu and sales have gone, swung positive multiple day parts and so it is quite a contrast to December and its clear that that value message rings with certain customers in terms of their usage but it also is an enticement to a lot of customers who don’t use it when they come in anyway.
Stephen Vaughan
With regard to margins, we did craft that with the idea of giving our customers value so it does have a little higher due to packaging costs and with only 10 days of data we don’t have where we’ll end up in terms of a mix percentage of our sales but I would say that its probably, our best guesstimate is in the range of maybe a 50 basis point or less impact on operating margins, so not a significantly negative impact but still a nice value for the customer.
- To read the full transcript on Seeking Alpha, click here »
