Black Rock Coffee Bar, Inc. (BRCB) Earnings Call Transcript & Summary

Hi, everyone. I'm Brian Harbour. I cover restaurants and food distributors here at Morgan Stanley. Real quickly, for important disclosures, please see morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Now we're going to talk Black Rock Coffee. Mark Davis, the CEO; Rodd Booth, CFO. Guys, thank you for coming. Welcome.

Thanks for having us.

Well, Mark, you actually were here last year, but I was going to say, obviously, you're new to the public markets this year, so a little bit different scene here. Maybe just could you quickly intro yourselves and kind of your backgrounds, what brought you to Black Rock.

Sure. First, thanks for having us. My name is Mark Davis. I have been the CEO of Black Rock for coming up on 3 years. And background, I started with Panera when there were about 200 stores and left when there were about 2,000. And I worked within the development, the franchise and the operations and learned a lot of the process, some incredibly good people back then that worked for Panera and learned a lot from them. And so that's going to be a lot of my background.

And then Rodd Booth, I've been with Black Rock for coming up on 5 years now. Black Rock was actually a client of mine before I joined. I was helping Jeff and Dan and the founders on the consulting side as they were looking at growing the business. I spent my entire career in financial services, so large national and West Coast CPA consulting advisory firms. And I like to think I did a good enough job where they couldn't do it without me, and here I am.

Cool. And where -- many people here will know this, but where does Black Rock sort of fit into the beverage ecosystem? What makes people want to come to Black Rock as customers?

So BlackRock, when you look at the concept, we are going to have lobbies in about 75% of our locations. We are going to be -- every location has a drive-through. We recently added the app and online ordering. And then our big point of difference is going to be around the barista and the experience. We're fortunate enough that we run right around 93% to 95% on guest satisfaction. I've never seen anything like it. And that's predicated around these great baristas. Baristas, when you look at our turnover, we run about 74%. Industry runs about 150 to 160. And on a tenure, industry is about 6 months, we're about 3 years. And so when you think about that, these great baristas given the great experience based upon their tenure, you then turn around and you have this great guest satisfaction drives this unbelievably good sales and sales growth, and then we're able to leverage that. And so I would say that lobby is a big point of difference. It's a great place to connect, but the baristas are certainly our big significant point of difference.

Okay. Maybe let's talk about demand and the sales side a bit. Just bigger picture, how do you see demand today into next year? There's been a lot of discussion kind of by customer cohort, if you want to distinguish between some of those. But how are you feeling about the demand side?

So I think first off, we're very fortunate to be in the beverage side of the category. Beverage, as you look at Christine from Dutch, you look at 7 Brew, you look at Starbucks, they all do very, very well. As you think about demand and you look at our third quarter, again, we had significant same-store sales. We were up over 10%. Our 2-year number is really, really strong at almost 10% a year. And as you look at the way our dayparts are growing, our belief would be that the traditional breakfast, lunch and dinner are moving into beverage. And so what you're seeing is growth in the beverage category. We're also going to have a demographic that's 18 to 45. And as you think about that demo, we're going to be about 55% to 60% coffee, more disposable income. And as such, you see that, that's been really strong for us. And so based on all of that, great same-store sales. By the way, that same-store sales is coming from transaction growth. And we think overall, we're in a really great place and really strong for us.

And what's your kind of longer-term same-store sales target? And talk about the different layers that drive that?

Yes. So as Mark mentioned, we've had a lot of great success this last year, 2 years from a same-store sales comp standpoint. I think long term, we're really looking at that mid-single digits from a same-store sales standpoint. It's a pretty good place to be for us. I think when you think about the brand, the growth, the awareness, Mark mentioned, and we've talked a lot about with many of you in this room, the loyalty program and how that's really engaging to our guests. It's really the first time we had a chance to engage with our guests digitally in that way. And that will help, Brian, to your question on what are the layers to that specifically. I mean we've launched the program, it was nothing more than making it available to the guests providing very generic offers. But over time, what you'll see, and we'll probably see some of this next year, we'll layer in segmentation, we'll increase the frequency and really leverage the program to drive the sales as opposed to right now. It's gone really well, but it's really just been making it available. We're finding that our guests want to be a part of a program. They want to earn points, redeem those points, get the free drinks. And then again, even everything we're doing around innovation, be it the fuel category, the food, which helps with the check, all those types of things, we've got a lot of runway, and they're still really early from an adoption standpoint. And I think that will help support same-store sales growth for us for quite a while.

Can you explain sort of the dynamic in 3Q where you did have very strong same-store sales. Some of the non-comp contribution was less. You had some delays in store openings. What -- how do you avoid that issue going forward. Could you just dig into that a bit?

Sure. I think when you look at our system-wide sales, and I'd say to everybody in the room, we're going to grow our sales by 20% a year. We're going to grow our EBITDA by 20% a year and our stores by 20% a year. We had 10 openings that we had guided that we were going to open in the third quarter. Of those 10, we had 4 landlords who came back and said, "Hey, based upon costs, we don't want to build it. We don't want to develop it in this quarter, and we're either not going to do it or we're going to push it out." We have built a very, very strong pipeline for 2026, and we essentially moved 4 from '26 into the fourth quarter. We moved 4 from the fourth quarter into the third quarter, and we were able to actually beat and raise. We opened 11 versus the 10, opportunity being that we lost store weeks based upon the 4 that disappeared. You'll see a little bit of that in the fourth quarter because, again, it just bleeds from the third quarter into the fourth quarter. But generally speaking, what we have done to circumvent that, when you look at the 2026 pipeline, we will guide to 20% growth. That will be 36 units. We have an abundance plus on that 36 to make sure that, that doesn't happen again. And as such, we're protecting on that store weeks moving forward.

Okay. Got it. Makes sense. When we think about next year and sort of sales drivers, I mean, you mentioned loyalty. But what are some of the other things we should think about, whether it's product innovation, there's probably more you can do with marketing. Anything with food, you have food, of course, but new food items. Like what else should we be thinking about into next year?

So when you look at our levers currently, and Rodd spoke to this on the earnings call, we're right about 1.25 pushing 1.3 in AUV. So we've grown substantially here in the last couple of years. When you think about that, Rodd brought up earlier that loyalty is right now not segmented. And so -- and we're doing roughly 1 to 2 offers a month. And so when you think about that, as we accelerate the offers and we segment, you'll see loyalty jump. Food, we recently rolled out -- soft rolled out egg bites. So we did that in July. And we switched back past October, our menu from, call it, donuts, muffins, et cetera, to more savory items. And what we've seen now is that our food mix has gone from 9% 2 years ago to 13%, and our mix is 70% savory. And so what you're seeing is food is jumping in a considerable way, and it will continue. You go a step further, about a year ago, we rolled out frozen fuel. Our fuel mix was about 17% to 18%. It's now pushing 24%. And so energy continues to grow. And then last, we're going to start programmatic marketing, and we're going to start pushing more on the awareness. And so when you see that, even with the IPO, we've seen a halo that's really helped. But we'll continue to see it. So it's loyalty, it's food, it's energy, and it's marketing.

What else is needed to close that AUV -- maybe just compare it to Starbucks, for example, right? Your price point isn't that different. But what else is it that you think gets you closer to something like a $2 million AUV.

I would say time. I mean, when you think about the concept today, 149 stores as we started the year, we're still building the brand. We're still building the awareness. Brian, I know we've talked about it, but -- and as we've talked about it with some of you in the room, as we think about the great same-store sales and the comp that we've had this year, we're not just getting that from the new stores that are coming online and really driving it, but we're getting it from our mature stores. And as we've advanced things like food, as we've advanced things like the frozen fuel and provided the loyalty as a way again to connect with the guests, we're seeing the entire system lift. And I think that's exactly what we want to see and what we want to continue to push into the future. I think 1.2 -- almost 1.3 in AUV, certainly lower than our peers by a considerable amount, for us, particularly at the margins we're at today is really a big opportunity for us as we continue to grow.

And how do you think about the competition here right now, right? I mean this is still probably one of the fastest-growing categories, which I think is good because it sort of helps everyone succeed right now. But how does it sort of play out if somebody -- for example, Starbucks is resurgent, how do you sort of think about the competitive backdrop here over a multiyear time horizon?

Sure. So when you look at beverage, and we spoke to this earlier, I think our point of difference around the lobby is important. When you look at Dutch Bros as an example, Dutch Bros is going to be drive-through only, and they are predominantly energy. That's what they sell. It's going to be a different demographic. I would use the -- for any of you that have been in Denver, we just -- we took over a conversion of a [ needeters ] that sits literally 50 yards away from a Dutch, sits right next to it. And what you can see is a different customer. We, again, being more coffee, demo being 18 to 45, I think it really serves us. When you compare us to, say, a 7 Brews, 7 Brews is going to have a similar mix, but it's going to be drive-through only. And again, because it's franchise, we believe we're more predictable, more consistent, better experience and all those things really, really help. And so to your point, Brian, while I believe that the beverage category is jumping in a significant way and will continue to, we've competed with Dutch and Starbucks and the rest for a long, long time and continue to grow our AUV and our same-store sales and our transactions.

Okay. Maybe I'll shift to the development side a bit. So you talked about 1,000 units over 10 years, 20% plus annual unit growth. Why was that the right number? What markets will drive that 1,000 store target 10 years out?

So we're currently in 7 states, nothing west of Texas at the moment. Texas up to Idaho, Idaho over to Washington, Oregon, California, Colorado and Arizona. If you think about people being our most precious resource, we don't want to grow more than 20% because we want to make sure we have the right people running the right stores and provide the right experience. As you think about that growth and how we're moving through the states, we are putting 70% of our new openings in our high-performing markets. And what that does is allows us to have a cohort that has the right cost, has the right cash on cash, call it, at maturity north of 40%, but it also has the right experience, which we like very much. And when you think about our newer markets, we're able to sprinkle them in and give them time to develop that awareness to grow, and it works out really, really well. What we have committed to and spoken to when we have had our calls is that we will add a state within the next 18 months. And then you'll see states come about every 2 years thereafter and make sure that we keep up with the growth, and we can do it while taking care of our people.

Okay. What define the best markets, those ones that are standouts, what defines that? And I guess as part of that, sort of talk about Texas and your lessons learned from entering there?

Sure. So I think when you look at every market we are in, I would say this, one, last year, every DMA was up in same-store sales and transactions. Same thing this year. So we're very strong across every market that we're in. I think when you talk specifically to locations, when we were originally Jeff and Dan founders, I think as founders, when you think about how they think about the business differently, they want to go in and find the cheapest real estate they can get and make the most money so that they can go and build the next one. As we become public, you and I have talked about this, the desire to have higher AUVs and everything that way, we've implemented a development committee where we literally have the development team, the operations team, Rodd and I sign off on every site, and it's run through calibrate. Rodd spoke to earlier, and it's compared on analogs. But this year's cohort has been stronger than any other cohort we've had. So that's exciting. And then the last thing on Texas, when you think about it, Jeff and Dan initially would pick cheapest real estate. And what you would find is the first 4 stores we opened in Dallas were 150 miles apart. We now do concentric circles where when you drive and you go to work, when you take the kids to school, when you turn around and go out to dinner or go to the high school football game, you see Black Rocks continuously. And it's really helped with the awareness, which has, in turn, really helped with the frequency of visit and driven the AUV.

Is there -- when you think about site selections, is there sort of a speed-to-market advantage today? And I mean, just among a few of your peers, right, there's probably 500 or 600 stores that are going to be added this year, right? What -- how do you think about that?

Yes. Again, I think it's so important that when any of you come in that you're going to have the right experience. And we drive that in the most influential way. We want you to have the speaker box or the register that 90 seconds later, you get your drink and your food, which is really unparalleled at the moment, and we're really, really proud of that. And so if you were to say to me, is it more important to get to market faster? Or is it more important to deliver on the experience with the stores you're going to open, we would always pick experience first. We think 20% is right for us.

Okay. You mentioned sort of your unit economics, but could you run through that again? And I mean, is it fair to assume you're running ahead of those numbers, maybe on margins, right, maybe not on build costs, but margins and AUVs, you may be running ahead of those today. But what could drive upside to those over time?

Yes. So I think as we've spoken to already, and I'm sure many of you know, almost 1.3 AUV and then in the third quarter up 29.6% on a store level margin. So really, really giant success from a team member standpoint in understanding the importance of how do their stores operate, what are the levers to pull to drive it. And I think when you think about where can it go, maybe to your question, Brian, have we run ahead of it. I think when you think about the business today, we finished the year right around 179 stores. We still have a lot of opportunity, by the way, we've got 35 stores right now in the non-comp base that are still ramping and growing. And so I think there's a lot of opportunity. I think our team's ability to understand what it is we're going after, what are the levers they have to pull and how are they really driving the performance, whether it's a sales standpoint, what are they doing from a cost of goods and their variance standpoint, how are they managing their labor. And then really, at the end of the day, I think from a margin standpoint, our biggest opportunity is just more sales, more transactions and the leverage they provide to the P&L. And so as we continue to grow those, the question will be how do we reinvest those things back into the business, back into the team, making sure that we can continue to sustain this long into the future.

Okay. What work have you done to sustain build costs where they are. I mean you have pretty favorable build costs, but what -- how sustainable are those? What work have you done on that?

Yes. I think it's balanced. I mean when you think about how we're entering each market, how we're signing leases, how we're really building new stores, we're trying to take a balanced and intentional approach with our capital. And so we've been really flexible and we'll continue to be flexible in the different types of deals that we do, whether it's build-to-suits all the way up to ground leases or as Mark mentioned, conversions. And we're really trying to think about each class as far as how are we balancing the markets that we're in the 70% growth markets, 70% high-performing, 30% growth markets, but also what does the capital look like with the types of deals that we're doing, really making sure that as we continue to grow, one of the things we've talked about a lot as a business is we really want to leverage our margins, leverage our profitability and really become a company that could be free cash flow positive in the future. And I think for us, a big, big part of that is just balancing the build costs and the different deals that we do because we'll essentially do all the different deal types to manage the cost across the cohort.

And how does your supply chain need to evolve to support that unit growth as well. And I guess any other sort of constraints or how do you get around those? I mean people is certainly one of them, but you've kind of talked about how you develop your people. But what else is key to driving that unit growth rate.

Yes. We have national partners that support us as we've grown. And I think when you look at the 7 states, that's -- it's 1/3 of the United States right now. We just -- we're growing within those 7 states. We use Sysco, and that's worked out really, really well for us. And then where we will go into some markets and have local partners that we partner with. I'll use -- for some of you in Austin, we use Tacodeli. And that relationship has worked out really, really well. But generally speaking, we don't have any constraints around the growth outside of making sure we keep up with the people pipeline. We're about 5 quarters ahead right now.

Got it. Just capital priorities. Obviously, most of it goes to new stores, but anything else, tech projects, any other big buckets that we should think about.

Yes. No doubt, new stores is the biggest allocation of capital, as you mentioned. As we think about technology, how do we support the team, I mean, everything we do is really in support of our team, making sure that we're driving process, we're driving efficiency. That in turn drives a great guest experience. At the moment, I wouldn't say we have any big tech initiatives that support those things. I'd say the biggest capital project in the future is we're potentially looking at a third roasting facility really so that we can maintain high-quality fresh beans. It's really one thing that we do. We're very, very proud of Jeff and Dan, who started the business, really started with we got to have a high-quality premium product. And so really all of our beans from the time they're roasted to the time they're in the stores is about 7 days. And then really from the time they hit the store to the time they're used, it's about 7 days. So the vast majority of our stores have beans that have been roasted and used within 2 weeks, and it's a big part of who we are. And so that's why we're looking at a third roasting facility just to maintain that small batch quality roast.

And I mean, you've sort of -- you're mostly debt-free at this point post IPO. But when do you think you'll be free cash positive. Do you have a view on that?

Yes. So we have a very manageable amount of debt coming out of the IPO, which we're very proud of. I think as a business, free cash flow positive is something that we're certainly focused on in the short to near term. And I think from a debt standpoint, the quicker we can get to free cash flow positive, the quicker we can make sure we're managing the debt, there's no reason why we, as a business can't self-fund our growth long into the future.

Okay. Let's start with the margin side a bit. I guess just as we think about puts and takes on store margins into next year, what should we be thinking about that could shift versus '25.

Yes. So I think we've had great success in managing to a really strong margin as a company. That's a testament to our team. We are an operations-based business, and we spend a lot of time with our operators to drive margin. I think in terms of puts and takes, we've gotten a lot of questions today from many of you in the room about coffee costs, commodity costs. Really, the exemption -- tariff exemption on beans, we think could help us. It's still early. We won't see much of that in the fourth quarter, but potentially, there's some upside there into 2026, and that's something we're watching very closely. I think as we continue to grow, the question we'll always have is how do we take the profitability of our stores and either continue to grow that or reinvest that back in our teams, be it tools to help them grow, be it additional marketing dollars from a G&A standpoint to really help drive the business forward. And so just trying to take a balanced approach to it. I think really, there's puts and takes across the entire P&L, and we really look at it as what's our expectation from a performance standpoint year in and year out. We really want to continue to grow and build and maintain our margins at a high level, and that's really what we're focused on.

I guess is there anything specific that would help kind of offset -- including in coffee, but offset inflation, any specific initiatives you'd highlight.

Yes. I'd say a big initiative for us this year, which is still new and the team is doing a great job of it, but we certainly have opportunity is really looking at this year, we talked about 3.9 was our price in the comps. And really from a pricing standpoint, we always try to look at it as balancing to be margin neutral with inflation. I think that was a lot more challenging in 2025, and we didn't take full price to stay neutral with inflation. But ultimately, we're rolling out initiatives to the team like inventory management, bringing down waste, helping from a cost of goods standpoint. And I think the team has done a great job, and I think there's still opportunity and some runway into 2026 on that as well.

What is the right level of price over time in your view?

So we have historically taken an approach that 3% to 4% is where we've been from a pricing standpoint. And I think we always look at price again as where are labor rates within the markets that we're in, where do we think costs from a cost of goods standpoint are going? And ideally, like I said, we'd like to be margin neutral. I think this last year has made that a little bit more challenging. So we're sort of driving the initiatives to close that gap and still maintain strong margins. And I think more than anything, it depends. We also understand that at the end of the day, we want to provide a high-quality products, great speed of service and a great experience for our guests. And so we're also trying to balance our pricing against our peers so that from a guest standpoint, it doesn't feel like it's getting expensive, and that's really a goal for us as well.

Are there specific pieces that you think will continue to go up as a percent of sales. Maybe marketing is one area, maybe rents also just based on some of your lease mix, but what else.

Yes. I think occupancy is a great one. I mean I think most of the leases we're signing today are higher than they were 5 or 10 years ago. And so I think while occupancy rates can go up, our focus on those higher-performing markets, those higher AUVs sort of leverage that and really leverage the system. And then I think in terms of just G&A and continued investment, no question, marketing is one where we will continue to invest more. We spend about 1% of our sales on marketing today. We've driven really strong comps with that, but at the same time, understanding that as we continue to grow, build out the brand, build out the awareness that there will be more investments in that as well.

Okay. What should we think of -- so coffee, the tariffs have been removed, right? Maybe just ex that, right, spot coffee prices are still high. I mean what -- I don't know, what are your wholesalers saying about coffee at this point.

Yes. I mean it is a conversation -- that's a new one in the last couple of weeks, but it's certainly a conversation that we're having with our brokers. And at the end of the day, there is a belief that coffee should come down. Historically, you'll see a couple of peaks and a couple of valleys like anything in a commodity standpoint year in and year out. This year, they started high, stayed high and they continue to be high at the moment. But a lot of that is just supply and demand. I mean Brazil is the biggest producer of coffee. And when they had the large tariffs, even though we were moving our origins around to sort of help offset, when other countries know that Brazil isn't driving it, they're also increasing their prices. And so I think there's certainly an opportunity. And the thought is that with tariffs removed or coffee being exempt from tariffs that really it should create some relief in the market. And then ideally, it should come down. But still early, and we haven't seen that just yet, but it certainly is an opportunity next year.

We'll see, right. What drives your -- you have a very favorable labor cost ratio? What drives that?

So we, as a group, have tried to invest in the team members, and we think that's really important. We want them to see it as a career versus a job. And so when you look at our overall culture, we have a big push around acumen. And what we essentially teach the team is you will receive, we have a budget, an external budget. We're going to push that down and you'll have an external budget. And in turn, you'll get a chance to write your own internal budget where you will forecast sales. You will understand that retention is more than a number. We want you to understand that when you retain, they drive a better experience. Guest satisfaction instead of the strive for 5 or I need a 10, we want you to understand that when people like your business, they're going to come more frequently. And as such, you're going to have more sales and you're going to leverage. We then turn around and we teach them that on the profitability, the whole idea of flow-through. And so I think, first off, the teams are unbelievably excited about the acumen that they learn. We then have profit sharing. And I would tell you that as I look back on my career, I can think of many concepts that started with it and did so, so very well. Some have left it. Now I would say there are some that have kept it, Texas Roadhouse that have done exceptionally well with it, and we have profit sharing. And so when you think about it, if Rodd were to have an external budget, he writes an internal, he then turns around and grows his business, he receives profit sharing. We have a performance culture where we have driven essentially if you're on the scorecard, you get ranked on sales, on people retention, on satisfaction and then how you beat your budget. And then you are able to produce a winner for the quarter, for the month and for the year, and we can stack rank. And what we've found is as much as people love the acumen and as much as people love the profit sharing, what they really love is the ability to compete with one another and give each other a bad time about where they are on the scorecard. And then last, we have a top quartile meeting where we take the top 25% and we take them to a great hotel. Think back to when each of you were 21, 22 years old. They go to a JW Marriott. They get the float in the Lazy River. They get to do the casino night with the leadership team and they win prizes. Next day, they learn about their company. And then last, we give away trips, and we basically give the trip away for 2 anywhere within the United States. And the whole idea there is Brian wins, Brian comes back with pictures. And when this whole group comes back and says, "Hey, we were the top 25%," the other 75% wants to go to the meeting. And what that has done is basically driven this unbelievably great performance over the last several years where you've seen great same-store sales, great transaction growth, retention satisfaction, but also these great profitability growth. And I think for any of us that have kids, and I believe this in my soul, you want your kids to do better than you have. And when you think about it, they have a voice, they're a part of it and they see it as their company. We had talked about this earlier. We had our first earnings call, and we have about 3,000 employees and about 25% of them called into the earnings call because they wanted to hear about their company. And I would say that, that engagement is what drives the company and certainly drives it forward, and I think it's a big point of difference on what we do.

Okay. Got it. That said, I mean, any areas for investment in labor, anything about new markets we should think about over the next year or 2?

Yes. I think when you look at the labor, most restaurants have a real hard time because they push on that labor, hey, hit labor, run labor. When you think about what we're teaching, they're running a complete business and they're running it as if it's their own. It's fantastic. I think when you look at our investments in labor, we are always looking at keeping the spans small. I think that's important. And then secondarily, Will, who's in the front row is our Chief People Officer, we are doing all sorts of ways that we invest to drive that retention, which is so important. And so you'll see more of that. I would say at that 29.5 store level EBITDA, we don't have a margin issue. We want to continue to grow the sales and taking care of the team is the best way to do that.

Okay. And remind us, so you have good store margins. How much is G&A leverage a driver of kind of the future EBITDA growth.

Yes. I think certainly, as we grow, the expectation from us is that the G&A will leverage. I know, Brian, we've talked about it. certainly, we think about, hey, we just went out public company, all the costs that come with it. I think it's going to be harder to find opportunities to leverage G&A in the next, call it, 12 months. But certainly, with time, with sales growth, that's really our goal and our focus. We're trying to build the business, but also make sure we're taking care of the team to support the business. And no question, as a public company, there are significant incremental costs that come with it. And at the moment and in the short term, those certainly outpace the sales, but that's really a product of investments to be a public company, not continued investments long term.

Yes. Makes sense. Okay. Maybe I'll finish with my lightning round question. These are the same for everyone, right. Demand outlook relative to recent trends, how do you expect demand over the next 12 months, accelerate, decelerate, remain stable.

We have seen nothing but acceleration. I think to your point, our benefits starting at the lower AUV, when we add all of these strategic initiatives, our AUV has grown. And even with the IPO, the halo of it has helped. And so we would say acceleration.

Okay. Margin outlook, same thing over the next 12 months, more tailwinds, more headwinds, balance of the 2.

I'd say it's probably a balance given 2025 had certainly its challenges and opportunities. But again, going back to it, I think there are some things, particularly on beans, tariff exemption that certainly have some opportunity that can help. But there is really nothing else that we see that should actually cause margins to really be impacted from a negative standpoint. If anything, I would say neutral with certainly opportunity.

Okay. Capital allocation, well, prioritization for you, it's just CapEx. So I'll answer that one. But a subquestion of that, maybe CapEx intensity related to technology, would you expect that to increase, stable, decrease?

Yes. I would say stable. I mean, again, when we think about the tools we're providing the team to really grow and really drive performance of their business, we're going to continue to do that. I would say at the moment, there are no big initiatives from a technology or an AI standpoint that we think really support the growth of the business today, but it's something that we're always continuing to monitor. And again, as long as it supports the team, it supports a great guest experience, that's certainly something we're going to continue to explore.

Okay. Great. I'll leave it there. Thank you guys for being with us.