Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeff Farmer – Jefferies & Company.
Jeff Farmer – Jefferies & Company
I wanted to get a better understanding of the timing of your theoretical food cost system roll out. When were the managers trained on the system and which quarter do you really think you first began to see the most meaningful impact from that system?
Mary Twinem
Jeff, that system is fully rolled out so our regional manager and our general managers in the store are completely utilizing that system now. I think we saw some of that improvement year-over-year in our cost of sales percent in the first quarter and we would anticipate seeing those same, the operational focus on product preparation and waste controls continuing throughout 2009.
Jeff Farmer – Jefferies & Company
You sort of answered the question, I'm trying to get to a sense of when you potentially might lap this benefit. So they were fully trained as of the end of the third quarter or the end of the fourth quarter? When were they fully trained?
Mary Twinem
I would say the first quarter of 2009.
Jeff Farmer – Jefferies & Company
And in terms of G&A dollars, again, you touched on this as well, but last year they grew by about 12% and I think it was even less than that if you control for stock-based compensation. It looks like Q1 2009 G&A was up about 23% so just curious, from a spending perspective, on the corporate side why that rate of growth would be higher, considering you are still putting up some extremely high revenue growth numbers.
Mary Twinem
You are talking on an annual basis?
Jeff Farmer – Jefferies & Company
Yes. So as relates to 2008. So for the full year I think you drew revenues somewhere along the line of 28%. Your G&A grew by about 12% so less than half of that. Q1 2009 revenues were 35%, G&A was 22% so it's about two-thirds of that. Just curious because again, you 're still delivering these enormous revenue numbers. What on the corporate infrastructure side are you still adding to the business that's not allowing you to see even greater leverage on the G&A line?
Mary Twinem
Obviously we have an overall commitment to leverage G&A and I think even in the first quarter we have shown that we are able to do that and control our growth and that we will be spending more dollars year-over-year in 2009. I think we're pretty strategic about how we spend them and we're mindful of making sure that we do leverage on an annual basis, but we don't put brackets around what that leveraging is going to be for the year. When we give our annual guidance of 20% to 25% and that earnings growth, it implies leveraging of the G&A dollars but we don't give you a range for it.
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