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Edited Transcript of SAUC earnings conference call or presentation 7-Nov-18 3:00pm GMT

Q3 2018 Diversified Restaurant Holdings Inc Earnings Call

Southfield Nov 20, 2018 (Thomson StreetEvents) -- Edited Transcript of Diversified Restaurant Holdings Inc earnings conference call or presentation Wednesday, November 7, 2018 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David Gregory Burke

Diversified Restaurant Holdings, Inc. - President, CEO & Director

* Phyllis A. Knight

Diversified Restaurant Holdings, Inc. - CFO & Treasurer

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Conference Call Participants

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* Jason Smith

* Jeremy Scott Hamblin

Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail

* John Sturges

* Michael Scott Wallace

White Pine Capital, LLC - CIO, Managing Partner, Principal and Portfolio Manager

* Craig Mychajluk

Kei Advisors LLC - SVP of Operations

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Presentation

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Operator [1]

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Greetings, and welcome to Diversified Restaurant Holdings' Third Quarter 2018 Financial Results. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Craig Mychajluk, Investor Relations.

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Craig Mychajluk, Kei Advisors LLC - SVP of Operations [2]

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Thank you, and good morning, everyone. We appreciate your time today and your interest in Diversified Restaurant Holdings. Joining me on the call is David Burke, our President and CEO; and Phyllis Knight, our Chief Financial Officer and Treasurer.

You should have a copy of the financial results that were released after markets closed yesterday, and if not, you can access it at our website, diversifiedrestaurantholdings.com. There's also a slide presentation posted on our website that we will refer to during today's call.

If you would, please refer to Slide 2. As you are aware, we may make some forward-looking statements on this call during the formal discussion as well as during the Q&A. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. These risks and uncertainties and other factors are provided in the earnings release as well as with documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at sec.gov.

During today's call, we will discuss non-GAAP measures, which we believe will be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of non-GAAP to comparable GAAP measures are provided with the tables accompanying the earnings release.

So with that, let me turn it over to David to begin. David?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [3]

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Thank you, Craig. Good morning, everyone.

While our third quarter results are most certainly not the level we're happy with and a reflection of the challenges we faced this year, I truly believe these reflections are in the rearview mirror. We've never been more confident or excited about what's happening with the Buffalo Wild Wings brand. Inspire Brands has rapidly built a first-class management team and are in the early stages of executing a comprehensive strategy to reposition the brand. These efforts, even at this early stage, are already showing positive results, which I'm very excited to discuss after Phyllis provides a review of the third quarter results. Phyllis?

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Phyllis A. Knight, Diversified Restaurant Holdings, Inc. - CFO & Treasurer [4]

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Thanks, David, and good morning.

Sales for the third quarter totaled $37.5 million, a decline of 4.5%. This was the fourth consecutive quarter where our sales diverged sharply from the broader industry, a trend we believe was driven by missteps in the systemwide media and promotional strategies implemented last year.

Same-store sales were down 5.2%, with traffic down 4.9% and average check down 30 basis points. Adjusted for the huge pay-per-view boxing events that occurred during last year's third quarter and included significant cover charge revenue to offset the price to carry the fight, same-store sales were down only 3.6%, a result that we believe is more representative of the actual Q3 trend.

Slides 4 through 7 provide further details on traffic and average ticket trend as well as a bridge of period-to-period sales.

Adjusted EBITDA for the quarter totaled $3.3 million, and restaurant-level EBITDA totaled $5.3 million. Despite a 70 basis point improvement in cost of sales, largely as a result of lower traditional wing costs, adjusted and restaurant-level EBITDA margin were down 2.3 and 1.7 points, respectively, driven by sales deleveraging on lower AUVs and higher labor costs.

As I mentioned, our cost of sales benefited again this quarter from lower traditional wing costs, coming in at 28.5% of net sales, which is down 100 basis points in real term before the impact on cost of sales of the fight-related cover charges in last year's numbers.

Traditional wings, as a percentage of total cost to sales, did increase sequentially from last quarter to 20.7% from 19.5%. But this level is still significantly lower than the 25.3% peak hit in last year's third quarter. The wing cost environment remains favorable, even after the seasonal increases that we've seen recently. The history is shown on Slides 13 and 22.

We continue to contend with a tight labor market, which is driving higher average wages, and when combined with lower average unit volume, we saw labor costs as a percentage of sales increase 200 basis points to 27.4% in the third quarter.

Productivity initiatives have helped to offset some wage inflation and sales improved, though we fully expect to reverse the impact of deleveraging, which represents about 60% of the negative labor trend year-to-date. We break those components out on Slides 14 and 15.

Our G&A costs were generally in line with expectations and reflect our cost savings initiatives implemented last year. As a percentage of sales, G&A decreased 60 basis points to 5.3%. We expect total G&A, net of nonrecurring expenses, to come in well under $8 million in fiscal 2018. Our G&A trend and forecast is shown on Slide 16.

During the quarter, we recognized an impairment loss of $900,000, which reflects the full write-off of fixed assets at one small Missouri location that was acquired in 2015. This was a restaurant with a limited market that operates near breakeven restaurant-level EBITDA. We are reviewing our options, and we'll continue to evaluate the viability of this location, particularly in light of the brand-level changes that are beginning to take hold.

Cash and cash equivalents of $7.1 million were up $4.6 million compared with the sequential second quarter, driven by the July equity raise. Year-to-date capital expenditures were $1.3 million and were for minor facility upgrades and general maintenance-type investments as well as improvements to procure an open space for sub-lease adjacent to one of our restaurants earlier in the year.

As previously disclosed, we're not planning to build any new restaurants nor complete any major remodels this year. As a result, capital expenditures are expected to be in the range of $1.5 million this year.

Total debt at quarter end was $105.3 million, down $8.7 million for the first 9 months of this year. We were in compliance with all loan covenants in the third quarter and expect to remain in compliance over the next several quarters.

With that, I'll turn the call back to David.

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [5]

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Thanks, Phyllis.

We're a little over a month into our fourth quarter, and we're seeing early success from the new, more targeted ball-to-ball advertising campaigns known as Escape to Football, along with new many promotions that began in early September, right around the kickoff of the NFL season.

The GAMEDAY MENU has a number of items for $5, including burger and bratwurst, fries, domestic pitchers, select craft beers and a number of specialty cocktail. This promotion has been a hit with our guests and is currently expected to run through the end of the football season. As a result, we're beginning to see a nice uptick in sales, particularly on the weekends, from higher traffic and, importantly, on average check that has been holding up as well as guests spend more time in our restaurants.

Same-store sales for the month of October was a positive 1.6%. This performance in the first month of the fourth quarter is certainly a step in the right direction. We are optimistic that we can maintain this positive momentum throughout the fourth quarter. If it holds, this would be our first quarter of positive same-store sales in over 2 years and a strong indication of improved top line performance into 2019.

It is important to note that we are in the early stages of the brand revitalization, and we continue to believe that the more substantial efforts will be realized throughout 2019 as more impactful changes are implemented and gain traction. This includes improvements to the menu and food presentation, information technology and continued enhancements around advertising and promotions, especially as we move into the March Madness period early next year, another significant sales environment for Buffalo Wild Wings.

And current plans call for a complete relaunch of the brand as we approach the fall of next year. There are a lot of exciting initiatives in the horizon. And in the meantime, we will continue to run a best-in-class operation that focus on the controllable aspects of our business.

Our team continues to drive traffic through renewed energy around customer experience and our local restaurant marketing initiatives. Guest experience scores are strong and trending up, and our push to improve penetration of the Blazin' Rewards loyalty program remains successful with attachment rates north of 23% in September, far outpacing the Buffalo Wild Wings franchise system. Our goal is to reach 35% loyalty attachment, so we remain focused on continuing to push growth in loyalty. See Slides 19 and 20 for additional details.

In conclusion, we remain extremely bullish about the direction Inspire Brands have taken the Buffalo Wild Wings brand. As a franchisee, we've been involved and engaged with the new leadership, consulting on many decisions. They have done a significant amount of due diligence and are firmly now in execution mode on all facets of the brand strategy. We are confident that, together, we will revitalize the brand and get back to being the great American sports bar.

Operator, we can now open the line for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Jeremy Hamblin from Dougherty & Company.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [2]

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Great. Congratulations on getting back to positive territory on comps. Let's hope that continues. I wanted to first come back actually to Q3. And I had a question just in terms of the cover charges associated with last year's fight. That, I think you've said, hit other operating expenses. Or is that where you saw that reflect in margin?

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Phyllis A. Knight, Diversified Restaurant Holdings, Inc. - CFO & Treasurer [3]

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The cover charges would have been part of the sales line, Jeremy, but the expense to carry the fight was in OpEx.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [4]

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Got you. Okay. I'm sorry, the expense, okay. And in terms of -- I have to ask a little bit forward-looking here. But this change in sales trend to getting back to positive, some of that I would guess is being driven by the new GAMEDAY MENU, obviously some nice promotions there. But can you give us a sense for how it's impacting the P&L? Wing prices are off the lows but still lower on a relative basis. How is this change in same-store sales trend impacting overall profitability?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [5]

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Well, we -- it's actually been beneficial to us. I mean, net-net, this promotion has been very favorable to us, not only the way it is contributing to the traffic-driving nature, the performance that we're seeing. But it's not all completely offset with price. I mean, it's clearly going to be some price erosion, but it is offset by traffic. So we're, overall, pretty pleased with it. Now I don't think that's the silver bullet. I think our team has worked very hard this year to improve our quality of service since, basically, this time last year. And I think that's also contributing, but it takes a little bit more time. And then obviously, we're comping over a relatively weak prior year. So all of these factors, I think, are contributing to the subject of traffic.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [6]

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Okay. But overall, the net gains on comps now, that's having a positive impact overall on profitability?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [7]

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Yes.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [8]

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Okay. And then just in terms of thinking about the components on as we're looking for -- where does menu pricing stand here in the fourth quarter on a year-over-year basis?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [9]

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Yes, sure. We've been reluctant to take price and very cautious in the most recent past and guided -- we're aligning ourselves with the Buffalo Wild Wings strategy, and they're measured on and to do -- and I think we've discussed this briefly in March for the March Madness campaign. And that's going to entail some updates to the menu, et cetera. There's some new food items, et cetera, but it's really -- that's an opportunity for us to revisit the pricing. And since we haven't taken price in a little while, we're starting to see the momentum. We are being saddled with some inflationary pressures right now. There's no question if we want to be taking price during next year.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [10]

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Okay. And then in terms of -- the other thing that seems to be resonating with customers is certainly the $5 domestic pitchers. I wanted to get a sense for the change that you're seeing maybe in mix contribution and whether or not the kind of the downside from the promotion on, let's say, a burger and fry basket or brat and fry basket. Is that offset by maybe higher alcohol as a percent of total sales? Can you give me any color on where alcohol stands as a percent of total sales today? And then what you've been seeing now over the last, let's say, 6 weeks since the promotion was put in play?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [11]

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Yes. I think you may be surprised. I mean, the promotion is working in that it has a great value message to the guests. But also keep in mind that there's new creative out there that's driving just some awareness in the brand experience. That's better just driving the line of traffic as well. There has not been a substantial mix change as a result of this promotion. We are clearly from a unit perspective selling more burgers than we did prior to the promotion. We didn't have brats, so we're selling more of those. We did not have pitchers, so we're clearly selling more of those. We also have some tall drafts built into that, which were actually unit-by-unit are selling a little bit more than the pitchers. So although it is popular, it's not -- from a total product mix perspective, it's not really moving the needle that much. So that's a good thing, in my opinion, just from a cost of sales perspective.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [12]

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And within your system specifically, where -- what is alcohol as a percent of sales today?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [13]

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We're -- from a total sales, it's right around between 17% and 18%. But keep in mind that we continue to drive carry-outs and delivery traffic so that's a -- which you don't have any alcohol that goes along with that bill. I haven't done the calculations for Q3 yet, but we're in the low 20% from a dine-in perspective, about probably 22-ish or so.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [14]

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Okay. And then as we look forward though to the strategy, it appears as though it's -- we're getting or we're moving as a brand a little more back to a traditional sports bar environment. Is that some -- an opportunity that you expect, new ownership to be driving alcohol mix higher? Is that part of kind of the overall goal?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [15]

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Yes. Definitely, definitely. I think we -- the entire system has recognized that it's deteriorated over time. And we have the right, frankly, as a brand as the great American sports bar to have an alcohol percentage that's higher than where it is today, despite the increase in delivery and carry-out in general. So there's no question. We're working on not only enhancing the beer program, but also enhancing a relatively nonexistent spirit program within the brand. So I think the 2 of those go together. And it's not just about the alcohol program itself, but it's the experience in in-store and making adjustments to make the bar a little bit more enticing and more appealing to the guests just to drive overall alcohol sales.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [16]

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Okay. And then in terms of -- you touched on it a little bit. In terms of what we're seeing either from digital ordering or carry-out, and I may have missed it, but we went through a lot of stuff. What is that as a percent of sales today versus a year ago?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [17]

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Are you talking about total carry-out, total nondine-in sales?

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Phyllis A. Knight, Diversified Restaurant Holdings, Inc. - CFO & Treasurer [18]

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Including delivery?

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [19]

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Yes.

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Phyllis A. Knight, Diversified Restaurant Holdings, Inc. - CFO & Treasurer [20]

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It's running 22%, 23% in total delivery and carry-out combined, which has been fairly consistent. I mean, we are seeing some uptick in our delivery business, and we've got a lot of work to do in the fourth quarter. I think to look at the various programs that are out there and make sure that we're doing the best thing we can, both for driving sales and managing margins. We've got at least the latest number is 50 of our restaurants on delivery now. So we've continued to push it up. The fact that carry-out and delivery as a percentage has stayed kind of consistent would tell you that you could guess there's probably a little bit of cannibalism on the carry-out side right now, and we're doing some work to kind of assess and see how we can try to mitigate that.

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [21]

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Yes. So well, strategically, I'm a firm believer in that we -- the upside of whether you want to be in the delivery game or not, right? And I would much rather be in it because it's just the way that the -- the decision-making process for guests is not that, hey, I want to go to Buffalo Wild Wings, and then I'm going to make a decision of whether I actually go there or I want to get it delivered. You make a decision on I'm going to get delivery, and then you determine where you're going to get delivery. So there is definitely a cost to that. I think as we scale up and those match the work, 80% of the restaurants plus have delivery now between Uber Eats, Grubhub, DoorDash and then some mom-and-pops that we're slowly filtering out. We're learning every day on how to improve that whole process and increase the experience for the guest. And then at the same time, from a P&L perspective, just to ensure that you mitigate any cost pressures because everyone knows there's a -- from a margin perspective, it's expensive. But we do believe that is incremental in nature. Though you can look at this from a contribution perspective, but we have to be cautious about it as well.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [22]

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Okay. The other thing I want to ask about that's new is the DraftKings partnership kind of game-day game that they have. That doesn't seem like it's been supported a ton in terms of any advertising and awareness. It still appears to be fairly low on that. Any commentary you could provide or insight on that partnership, the type of impact that it's having maybe on loyalty program sign-up? Any color you can provide would be helpful.

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [23]

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Yes. I hear you. We see the same, and it's going to be addressed. There's going to be an evolutionary process to this. We were all excited that we actually got it placed prior to football, and I think that's an incredible accomplishment given the amount of time that they had. But on the same token, the amount of time they've had to really plan it out and the complexities that can arise from it, I think it's just a matter of kind of taking some baby steps to walk in there and understand what problem we're trying to solve, what's the demand of the guests, what do they want. And there's been discussion around potentially simplifying a little bit for nonfantasy sports players, right? It's complicated to walk into that if you're not familiar with it. So I think there's been some opportunity there to simplify a little bit to try to attract people who normally wouldn't do that. And that can take all kinds of different shapes and forms there. And we've talked about the future, what it holds. I'm not trying to predict exactly with this business. Obviously, there's a lot we're just working through right now. But I think it's pretty evident just given what DraftKings' platform looks like and all the other sports that you can evolve over time once we get out of football season and how we can evolve that process. Keep in mind that the loyalty program platform, a lot of these things are relatively new. The Inspire team and Buffalo Wild Wings is taking all that together, integrating it and to really kind of make them leverage a much more powerful system going forward. So I have every bit of confidence that at this point, [the drink] gain more traction as we go along. And we're doing some work. We're doing some in-store more promotional activity to help incentivize our management teams to push it a little bit more, get them better training, et cetera. So that it does get more traction as this football season evolve.

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Jeremy Scott Hamblin, Dougherty & Company LLC, Research Division - VP and Senior Research Analyst of Consumer & Retail [24]

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Okay. Great. I'll ask just one more and then hop off, let others ask some questions. The wage inflation year-to-date is running at what level?

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Phyllis A. Knight, Diversified Restaurant Holdings, Inc. - CFO & Treasurer [25]

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4%, 4% to 5%.

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Operator [26]

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Our next question comes from the line of Jason Smith from Kanen Wealth Management.

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Jason Smith, [27]

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Just a quick question from me. I just had a question about the loan covenants and compliance. We're already getting compliant this quarter. And then how close were we to violating them? And then also how those are evaluated? Is it per quarter? Is it trailing 12 months? That's it.

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Phyllis A. Knight, Diversified Restaurant Holdings, Inc. - CFO & Treasurer [28]

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Yes. It's a trailing 12-month calculation. I mean, we were in compliance in Wild Wings, so and the reason for that is as we've talked about before, the equity raise, we basically had a equity cure-type mechanism built into the covenants. And so the close to $5 million of net proceeds that we took in from the July equity raise kind of buffered the covenants and will buffer it from Q3 of this year through Q2 of next year on that trailing 12-month basis.

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Operator [29]

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(Operator Instructions) Our next question comes from the line of John Sturges from Oppenheimer & Co.

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John Sturges, [30]

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Yes. I'm curious about the loyalty attachment rates. What are you doing -- what execution process are you using that makes you roughly twice what the franchise system is currently seeing? And then this -- then of course the follow-up is how do you get to 35% from your current 23%?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [31]

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Yes. Sure. Well, we incentivize it. I mean, it -- we encourage it, frankly. We pulsed having loyalty as part of the quarterly bonus, a component of that. We talk about it all the time. We've set some goals for the teams to get there. And that's really half about it, the constant communication and pushing the teams to do it. And really, explaining the benefits, not just to the company, but to the servers for like they can make more money from a tip perspective if the average ticket is a little bit higher, et cetera. So that's enough to bolster it, to be frank. And how do we get to 35%, we just continue doing what we're doing. There's other incentive programs we can have put in place, and frankly, Buffalo Wild Wings has also had some incentives that they're laying on top of that, which is systemwide for our management teams. So it's competitive, it's kind of fun and good-natured, which I complete -- I appreciate. And it's really getting everybody educated on -- I think as it goes forward and people starts seeing the fruits of the labor, it will gain more and more and more traction. In addition to that, some of the other added benefits to it as we improve the offerings, as we improve the -- not necessarily food offerings, the merchandise-type offerings, as we integrate the fantasy program a little bit more, and that gains more traction. A lot of other elements will come to life and make it a much more valuable experience and more attractive for people to utilize.

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John Sturges, [32]

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Okay. And will that be -- while we're talking about this, will that be a seasonal peak that we'll see? I mean, it will be in the fall that we see that peak? I'm just curious. And how do you...

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [33]

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The 35%? What do you mean when you say seasonal peak?

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John Sturges, [34]

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Yes, right.

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [35]

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Yes. I mean, we hope to be there before the fall next year, frankly. But we'll spend the rest of this year and the beginning of next year really trying to get that up.

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John Sturges, [36]

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Okay. And the other -- of course, I'm just curious, what are the -- can you reveal some of the details of how you actually measure loyalty? And what are some of the factors that factor -- that get in there?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [37]

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How we measure loyalty? Well, the calculation that we're talking about is attachment rates. So it's literally the number of tickets that have a loyalty number attached to it, the buy-to-buy that holds a ticket. So we're -- 1 in 4 people are loyalty members or loyalty customers.

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Operator [38]

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Our next question comes from the line of Mike Wallace from White Pine Capital.

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Michael Scott Wallace, White Pine Capital, LLC - CIO, Managing Partner, Principal and Portfolio Manager [39]

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I'm thinking about impact that the same-store sales improvement could have on EBITDA and EBITDA margins. Could you give us some sense of how much of that flows directly through to EBITDA and the margin impact?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [40]

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Yes. We discuss it at a high level. You can see, particularly with dine-in, you can see contributions upwards of 40%. Now there's some as we -- probably mix in carry-out and mix in delivery that may be pushed down a little bit. So I think conservatively, you could look at 35% as a nice contribution in total. And that's without any price, but we are buck up some pretty heavy inflation on labor side right now. But we'll tend to offset that part next year.

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Michael Scott Wallace, White Pine Capital, LLC - CIO, Managing Partner, Principal and Portfolio Manager [41]

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And the EBITDA number?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [42]

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I'm sorry?

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Michael Scott Wallace, White Pine Capital, LLC - CIO, Managing Partner, Principal and Portfolio Manager [43]

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1/3 of the improvement in sales would flow right down to EBITDA?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [44]

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Yes, about right.

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Michael Scott Wallace, White Pine Capital, LLC - CIO, Managing Partner, Principal and Portfolio Manager [45]

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It flows through. So we're at -- you're saying October was 1 -- running at 1.6% -- ran at 1.6%?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [46]

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Yes.

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Michael Scott Wallace, White Pine Capital, LLC - CIO, Managing Partner, Principal and Portfolio Manager [47]

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And any sense on -- any first few days of November, are we trending similar range or better?

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [48]

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Frankly, the quarter-to-date is about the same.

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Operator [49]

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Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to management for closing remarks.

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David Gregory Burke, Diversified Restaurant Holdings, Inc. - President, CEO & Director [50]

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I'd like to thank everyone for joining us today on the call and your interest in Diversified Restaurant Holdings. Feel free to reach out to us any time, and we look forward to talking to you again after the fourth quarter results. Thanks, again, and have a great day.

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Operator [51]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.