Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Robert Brown – Craig-Hallum.
Robert Brown – Craig-Hallum
[inaudible] in your comp base units and compare to the non comp units?
Mark Robinow
I’m sorry we didn’t hear the first part of your questions.
Robert Brown – Craig-Hallum
I was wondering what the margins were in your comp units compared to your non comp units. It sounds like the non comp units were really break even, I’m just wondering what the unit level margin was in the comp units.
Mark Robinow
As a group it was in the lower single digits with most of our restaurant operating profit coming from the comp base unit.
Robert Brown – Craig-Hallum
That was my question. What was the margin in the comp base units?
Mark Robinow
It was about 17.8%.
Robert Brown – Craig-Hallum
Do you have some color on why the non comp units struggled? Are they having trouble ramping up or are they in economic areas that are weaker than your average? Do you have a sense on why those are trailing the pack?
Mark Bartholomay
The four restaurants discussed, two of the restaurants are in father out suburbs of Phoenix where the housing and the economy have been very difficult. At the West Palm Beach location we’ve heard from established operators in the market that told us the season didn’t show up due to the winter birds not showing. So we’ll see how that goes in our second.
And the last one mentioned was Richmond which we’re very happy with our acceptance there and the bonds that we’re getting through late summer. And as we anticipated, about August it really slowed down there.
Mark Robinow
As we said in the script, four of the five restaurants in the non base are in southern climates and you would expect the third quarter or summer months to be the lowest seasonal sales for that group of restaurants, and also affected their performance during the quarter.
Robert Brown – Craig-Hallum
What is your sense of how things have gone since quarter end? Have you seen any degradation or improvement relative to the trends, or how are the trends in Q4?
Mark Bartholomay
Q4 trends to this point during October are actually the same as we experienced in the third quarter.
Robert Brown – Craig-Hallum
I wanted to get your strategy on pricing in November. It sounds like you’re raising the pricing in November but you also indicated that the price of competition is affecting you. I’m just wondering why you’re choosing to raise price with the next menu increase. Do you see that as a risk?
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