Red Robin (RRGB) Q4 2025 Earnings Call Transcript

DATE

Feb. 25, 2026, 4:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — David A. Pace
• Chief Financial Officer — Todd Wilson

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TAKEAWAYS

• Comparable restaurant sales -- Down 3.3% in the fourth quarter, excluding deferred loyalty revenue; reflects a 0.3% lift in average check and a 3.6% drop in traffic.
• Total revenues -- $269 million in Q4, a decline of $16.2 million attributed to lower comp sales and restaurant closures.
• Adjusted EBITDA -- $11.8 million in Q4 (down $2.6 million year over year); full-year adjusted EBITDA reached $69.7 million, a 53% increase compared to fiscal 2024.
• Restaurant-level operating margin -- 11.4% for the quarter, down 10 basis points year over year, attributed to inflation and traffic decline despite cost savings and average check growth.
• General and administrative expense -- $14.9 million in the quarter, down from $18.4 million in fiscal 2024; full-year G&A (excluding stock-based compensation) fell to $71 million, with projected fiscal 2026 range of $65 million to $67 million.
• Selling expense -- $8.8 million in Q4, higher than $5.7 million in fiscal 2024.
• Menu pricing -- A 3.2% price increase implemented with the new menu launch in January, expected to be the primary pricing lever for fiscal 2026.
• Cash and liquidity -- Ended Q4 with $19.9 million in cash, $9.6 million in restricted cash, and $37 million of available borrowing under a revolving line of credit.
• Labor efficiency -- Labor initiatives contributed approximately 180 basis points to restaurant-level margin in the quarter and drove a 250 basis point reduction in total labor costs for the year.
• Technology investment -- Deployment of ChatGPT AI across operations and server handheld/tabletop device upgrades aimed at improving labor optimization and order accuracy.
• Franchise and capital structure actions -- Tactical refranchising efforts ongoing, with proceeds targeted for debt reduction; no shares issued under the now-terminated ATM equity program.
• 2026 guidance -- Comparable restaurant revenues projected to grow 0.5%-1.5% (excluding deferred loyalty revenue), restaurant-level operating margin targeted at approximately 13%, adjusted EBITDA between $70 million and $73 million, and capital expenditures between $25 million and $30 million.
• Media and marketing strategy -- Micro-targeted marketing program is about two-thirds implemented, shifting spend to more efficient, localized messaging; further increased media allocation planned for fiscal 2026.
• Menu strategy -- Big Yum platform expanded to six tiered offerings ($9.99-$16.99) and integrated into the core menu, broadening value and premium options and supporting a barbell guest acquisition approach.
• Store portfolio optimization -- 20 restaurant locations formerly considered for closure were moved off the closure list; about 20 additional underperforming units remain targeted for portfolio review in fiscal 2026.

SUMMARY

Red Robin Gourmet Burgers (NASDAQ:RRGB) reported declining quarterly and annual comparable sales primarily due to reduced customer traffic, while raising average check levels and achieving significant adjusted EBITDA growth. Management outlined strategic progress via labor reductions, targeted value offerings, and micro-marketing, coupled with finalizing a shift to localized advertising and continued cost discipline in general and administrative spending. Franchise engagement, ongoing refranchising, balance sheet improvement, and investments in technology and refreshed physical assets were emphasized as key operational priorities heading into fiscal 2026.

• The fiscal 2025 implemented labor savings and cost efficiency initiatives are set for continued operational margin expansion as more digital and AI-enabled controls are adopted at the restaurant level.
• Management stated that, "Hourly turnover is now at its lowest level since 2017," directly tying improved employee engagement to operational performance.
• The new menu’s expanded pricing tiers and inclusion of categories beyond burgers underpin a deliberate barbell value strategy. Early data suggests this is lifting average check without sacrificing guest mix.
• Expanded media spend and agile marketing are expected to drive incremental comp and traffic upside as the year progresses. Management reported about "two-thirds of the way through the implementation" of the micro-targeted strategy.
• Commodity inflation, predominantly in beef (forecast at 4% for fiscal 2026), was acknowledged as a recognized headwind. Other major input costs are expected to remain within ±1%-2% ranges.
• No material need for new equity issuance is anticipated, as refranchising proceeds and refinancing are intended to support capital structure flexibility and debt reduction efforts.

INDUSTRY GLOSSARY

• Comp sales: Same-store sales, representing revenue growth or decline from restaurants open at least a year, adjusted to exclude deferred loyalty revenue per company disclosures.
• RLOT margin: Restaurant-level operating margin, a measure of profitability from direct restaurant operations before corporate allocations.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring or exceptional items; a key measure cited by management for company performance evaluation.
• Big Yum: Proprietary value-focused menu offering from Red Robin Gourmet Burgers, featuring multi-tiered meal deals with bundled sides and beverages, referenced as a traffic-driving initiative.
• ATM program: At-the-market equity offering—allowing the company to sell shares incrementally into the open market at prevailing prices; terminated with no shares issued as disclosed in this call.

Full Conference Call Transcript

David A. Pace: Good afternoon, everyone, and thank you for your interest in Red Robin Gourmet Burgers, Inc. As we close out 2025, our fourth quarter results reflect the steady momentum we are building as we execute against our First Choice plan. We introduced this plan in 2025 to focus our priorities and outline how we intend to strengthen our competitive position and improve our overall performance. Today, I will provide an update on our progress against its key pillars, and how we intend to build on that progress in 2026. Before I get into the details, let me begin with some context around our full year and fourth quarter sales performance.

For the full year, comp sales were down 0.3%, excluding the impact of deferred loyalty revenue. This included a 3.5% increase in average check offset by a 3.8% decrease in traffic. Our traffic improved in the back half of the year as we rolled off 2024 pricing actions and saw traction with our Big Yum value offering. For the fourth quarter, comp sales were down 3.3% excluding deferred loyalty revenue. This included a 0.3% increase in average check and a 3.6% decline in traffic. Now, like the broader industry, trends softened in October and November to where we exited the third quarter.

In addition, we made the intentional decision to shift marketing spend into December to maximize reach during the holiday season. That strategy proved effective. Increased support behind our Big Yum value offering and our holiday promotions drove a notable inflection in December as we outpaced the Black Box Intelligence Casual Dining Index in traffic for the first time since 2024. Encouragingly, momentum continued into January, where traffic was positive before weather events starting in late January with Winter Storm Fern made results choppy in subsequent weeks. On profitability, we exceeded our expectations for both restaurant-level margin and adjusted EBITDA in the fourth quarter.

Full year adjusted EBITDA of $69.7 million represented 53% growth over 2024, and RLOT margin grew by 190 basis points. Importantly, we achieved this result with only modest pricing in 2025. For perspective, in the fourth quarter, net pricing contributed just 1.6% to results, underscoring that our performance improvement is increasingly being driven by a stronger consumer proposition and improved operating efficiency. With that context, let me walk through our progress against each pillar of the First Choice plan, and our strategic priorities for 2026. First, let us start with Hold Serve. Our Hold Serve pillar requires that we sustain the progress that we make each quarter, and then extend that improvement even further as we move forward.

During the fourth quarter, our labor efficiency initiatives contributed approximately 180 basis points to restaurant-level margin. These gains were consistent throughout the year and were a primary driver of a 250 basis point reduction in total labor costs for 2025. Importantly, we achieved these efficiencies while maintaining our guest satisfaction scores, demonstrating that productivity and hospitality can coexist. These improvements also reflect the increased accountability and ownership embedded in our managing partner model, which rewards our partners for improvements that they drive in restaurant-level profitability. This leads me to our next pillar, which is our Drive Traffic initiative. As noted earlier, we saw industry outperformance in December.

We believe this improvement is driven by two primary factors: one, the power of our Big Yum Burger offer and two, our improvements in how we market and message to our guests. First, our $9.99 Big Yum value offer continues to resonate. Within our dine-in channel, it delivered 10% guest mix in the fourth quarter, strengthening our relevance with value-seeking guests and supporting incremental traffic and trial. Building on that success, we expanded our platform with the January 2026 launch of our new menu, integrating additional Big Yum deals directly into our core offering.

This expanded platform now features six meal options across a tiered price range of $9.99 to $16.99, extending beyond burgers into categories such as our hand-breaded Classic Crispy Chicken Sandwiches, Donatos pizza, and Whiskey River barbecue wraps. Importantly, each meal includes our signature bottomless sides and beverages, reinforcing value while preserving the full Red Robin Gourmet Burgers, Inc. experience. The new menu also broadens our premium offerings, creating a deliberate barbell approach that balances compelling value with higher-priced indulgent options to expand guest choice across dayparts and occasions. Early results indicate that the menu is performing as expected, and that average check has increased and remains healthy as guests engage across the menu.

The second key driver of our fourth quarter traffic improvement was the deployment of incremental investment behind the data-driven First Choice marketing strategy we initially introduced in Q3. This strategy enables us to engage mass guests more personally and precisely than traditional broad-based campaigns. We have now mapped every restaurant across six to eight competitive categories and clustered locations based on similar trade area dynamics and messaging needs. This analysis supports more focused and locally relevant messaging, allowing each restaurant to compete more effectively within its specific market.

In short, we continue to transition from a broad, one-size-fits-all approach to a marketing model that is more precise, more disciplined, and more efficient by ensuring that the right message reaches the right guests at the right time, improving the overall return on our marketing spend. The third pillar of our First Choice strategy is Find Money. As discussed last quarter, our corporate efficiency actions have meaningfully reduced general and administrative expenses, and those savings will continue to benefit us in 2026. For perspective, excluding stock-based comp, we reduced G&A by over $4 million in 2025 and expect to have a similar step down in 2026 driven by the efficiency initiatives implemented in 2025.

With respect to our work to strengthen our balance sheet and capital structure, we continue to progress on tactical refranchising as a key enabler to this initiative. As previously communicated, we plan to use proceeds from any completed transaction to reduce debt and further strengthen our balance sheet. We are encouraged by the interest level expressed and the progression of discussions to date. We remain confident that we will achieve our targeted capital structure objectives. Unrelated to our work to reduce debt, but as further reflection of franchisee confidence in our system improvements, three of our current franchise groups have indicated that they are currently pursuing new unit development opportunities within their territories.

With respect to overall refinancing efforts, our improved financial performance has strengthened our liquidity position and, along with our progress on refranchising, is expected to expand our options to improve our capital structure. We continue to work with our advisers to advance this process, and expect to refinance our debt consistent with our previously outlined objectives. Additionally, as a result of improved business performance and further progress in our refranchising work, we no longer believe that we need to preserve the option to conduct an at-the-market equity offering, and so we have terminated the ATM program announced last November. No shares were issued under that program before it was terminated.

Turning to our Fix Restaurants pillar, in 2025, we completed 20 light-touch refreshes to help our physical environment maintain competitive standards and reflect the quality of our food and service. Our 2026 capital plan allocates additional investment toward restaurant refreshes. We plan to resume refresh activity later in the first quarter, continuing a disciplined light-touch approach designed to maximize guest impact. In addition to our facility refreshes, we began to roll out replacement devices for our server handheld technology, and we will also introduce an upgraded version of our Xeos tabletop devices.

We believe that both of these actions will improve server efficiency, order accuracy, and speed of service, returning the gift-of-time benefit that Red Robin Gourmet Burgers, Inc. has historically been known for. In the 10 months I have served as CEO, what stands out most for me is the growing sense of ownership and pride across our restaurants. Our team members are not simply executing initiatives. They are owning the challenge, putting guests at the front of everything we do, and actively contributing ideas that have improved operations and enhanced the guest experience.

It is also important that we continue to challenge the status quo and identify insights and potential competitive advantages that will enhance our ability to differentiate ourselves in the marketplace. With that in mind, in the fourth quarter, we launched an enterprise version of the ChatGPT AI platform. Since our launch, we are seeing expanding utilization across the organization with tangible results. We are now in the process of introducing it to our managing partners along with custom GPT tools, and are already seeing adoption and application that assist our managing partners in further optimizing labor cost, COGS, and guest service. The overall impact of our investments in our teams is tangible.

Hourly turnover is now at its lowest level since 2017, and engagement scores continue to improve. This translates directly into how we serve our guests and support one another. As we look ahead, we will remain focused on creating an environment where great people can build meaningful and rewarding long-term careers. To our entire Red Robin Gourmet Burgers, Inc. team, thank you for your continued commitment to our guests and to each other. The foundation we are building together positions us well to be able to capture the opportunities ahead. With that, I will turn the call over to Todd Wilson to review our fourth quarter results.

Todd Wilson: Thanks, Chris, and good afternoon, everyone. I would like to start by providing a recap of our financial performance for 2025. Total revenues in Q4 were $269 million, a decrease of $16.2 million from 2024. This change in revenue was primarily due to a decrease in comp sales and the impact of restaurant closures. Comp sales, excluding the impact of deferred loyalty revenue, were down 3.3% in Q4. Including deferred loyalty revenue, comp sales were down 3.1%. This result was in line with the expectations we discussed in our last earnings call. Q4 comp sales included a 0.3% increase in average check, offset by a 3.6% decline in traffic.

As it relates to other aspects of our Q4 financial performance, restaurant-level operating margin was 11.4%, a decrease of 10 basis points compared to 2024. The benefits of cost savings, restaurant closures, and check average increases were offset by inflation and lower traffic. General and administrative costs were $14.9 million as compared to $18.4 million in 2024. The reduction is primarily due to reduced people costs from our corporate initiatives and lower stock-based compensation expense. Selling expenses were $8.8 million as compared to $5.7 million in 2024. Adjusted EBITDA was $11.8 million in Q4 2025, a decrease of $2.6 million versus 2024. This result was ahead of expectations we discussed on our last earnings call.

We finished 2025 with $69.7 million of adjusted EBITDA, which represented 53% growth over 2024. As it relates to our balance sheet and capital structure, we ended the fourth quarter with $19.9 million of cash and cash equivalents, $9.6 million of restricted cash, and $37 million of available borrowing capacity under a revolving line of credit. Our strong results in 2025 have improved our liquidity and position us well heading into 2026. Turning to our outlook, we will now provide the following guidance for 2026. First, we expect comparable restaurant revenues to be between 0.5% and 1.5%, excluding the impact of deferred loyalty revenue. Second, restaurant-level operating profit margin of approximately 13%.

Third, we expect adjusted EBITDA of between $70 million and $73 million. And finally, we expect capital expenditures to be between $25 million and $30 million. Our financial guidance suggests that we expect to make progress in 2026 across all of our key financial metrics. In summary, we are pleased with our financial performance in 2025. We have made significant progress towards increasing restaurant-level profitability, reducing debt, and growing EBITDA. We will remain disciplined in executing against the First Choice plan in 2026 and continue strengthening the operational and financial foundation of the company. David, I will now turn the call back to you. Thanks, Chris.

David A. Pace: As we look ahead to 2026, I am confident that the progress we have made across each pillar of our First Choice plan positions us well for continued performance improvement. Our December results, where we outpaced the Black Box Casual Dining Traffic Index, reinforce that when we execute with precision, combining compelling value, targeted marketing, and exceptional hospitality, we can compete effectively. Our menu enhancements launched in January give our guests expanded options at both ends of the menu and across dayparts and occasions, and we have a robust new product pipeline that we will introduce throughout the year.

Simultaneously, our ability to continually refine and focus our marketing messaging and spend means that we can confidently reach our guests where they are in the most efficient way possible. Our capital structure initiatives are progressing in line with our plan. We expect the combination of tactical refranchising and refinancing to strengthen our balance sheet and provide the flexibility needed to continue investing in our people, restaurants, and technology. Further announcements will be made as we achieve significant milestones on that journey.

While there is much work ahead, our team is focused and committed to building a Red Robin Gourmet Burgers, Inc. that guests choose first, team members are proud to work at, and shareholders can rely on for sustainable returns. We will now open for questions. Operator, please open the lines.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. One moment while we poll for questions. Thank you. Our first question is from Todd Morrison Brooks with Benchmark Stonex.

Todd Morrison Brooks: Hey, thanks for taking my question and congrats on the inflection of the business in the second half of last year, guys. Two quick questions. One, kind of a block and tackle. But within the 50 basis point to up 150 basis point same-store sales guidance for 2026, thoughts on pricing? I think you said you were running about 1.6% price in Q4. What kind of pricing assumption is baked into that guidance for same-store sales? And then more of a strategic question, but it sounds like the micro-targeted marketing has been a real revelation for you all.

Can you—I know we are a couple quarters into that—walk us through how far through the process of really implementing that with kind of a full-year plan behind it? And any thoughts—I know selling expense was up in Q4 versus prior year—but for the full year, there was some efficiency around selling expense. So any color you can give on the selling expense plan needed in 2026 to support the micro-targeted marketing efforts? Thanks.

Todd Wilson: Yeah. Hey, Todd. It is Todd. So we took a 3.2% menu price increase when we rolled out our new menu in January. We did not have a whole lot of carryover from last year, so we are expecting that to carry through for the full year. So the full-year pricing impact this year will probably be up 3.2% as well.

David A. Pace: Yeah. Thanks, Todd. This is—it is a pretty holistic shift in the way we are approaching marketing. So not only is it a change in the absolute spend, but it has been a change in the efficiency of it in the allocation of working versus non-working dollars. So we are able to put a lot more working dollars to work to just that point. I would say we are probably, I am saying, two-thirds of the way through the implementation of this. I mean, the stuff that I referenced in the remarks around clustering, identifying competitive groups, understanding trade area dynamics, and then, you know, allocating messaging priorities to each of those, we have got those in place.

We are kind of putting them in action and trying to understand then what is the response. So as we see these responses, we will continue to reallocate among those clusters. So if we see something that is not showing the elasticity that we think it should, we will try it and move it to another. So I would say we are two-thirds into the implementation. We still have a little bit to go.

Todd Wilson: Yeah, and the only thing I would add as it relates to 2026 is, you know, if we continue to see success that we, you know, we have seen, we have the agility to deploy more dollars against the full-year thought. And I think right now, the expectation is that we will be up in selling expense in 2026 relative to 2025, and I think I can go so far as to say that we would expect to be up in each quarter, particularly given the success that we have seen here late in Q4 and early in Q1.

Todd Morrison Brooks: Okay. Thanks for the color. Appreciate it. Yep.

Operator: Our next question is from Jeremy Scott Hamblin with Craig-Hallum.

Jeremy Scott Hamblin: And I will add my congratulations on the improved profitability last year. I wanted to start with thinking about the same-store sales guidance for the year. And, you know, Q1, by far, your toughest compare for the year. Wanted to get a sense for how you expect things to flow given what you saw in January. Do not know if in February you have seen some bounce back post weather, although there have obviously been a couple of storms impacting a wide swath of the country. But how do you expect kind of that cadence to play out during the year? I mean, are you thinking that Q1 is a negative comp quarter and then improvement from there?

David A. Pace: Yeah. I think as we kind of map it out—I will let Todd talk about it as well—but I think we see it kind of strengthening in the back half of the year more than the front for the points that you raised, given where we are lapping and then the introduction of Big Yum and how that plays out. But I think your assumption is right, Jeremy.

Todd Wilson: Yeah, and I will just add a little color as it relates to Q1. Not going to give a guide, obviously, for Q1, but we do have some perspective. So quarter to date, comps are down in Q1 about 1%. But it is important to provide context around that because, you know, we talk about we took very limited pricing in 2025. We did take that 3.2% increase that I mentioned. But that pricing as well as some of the indulgent offerings that we added to the new menu that we think is going to offset the negative mix associated with taking our Big Yum Burger deal and putting it on our core menu.

So I think if you think about check average, it is probably going to be positive, marginally positive, in Q1. In terms of traffic, you know, before Winter Storm Fern hit, traffic was positive in January. And, you know, since that winter storm hit, traffic trends have been negative, mostly due to weather, right? So we think the weather impact will cost us maybe 50 basis points as it relates to Q1 in total comp. We lost about 179 operating days, quarter to date. We even had some restaurants still closed as of yesterday from this most recent storm over the weekend.

It is also important as you think about Q1 and the construct of Q1, we had less media weight in February versus what we expect in March or April. So there is a lot going on, but we feel really good about the underlying business and the progress we have made. And so that kind of sets up Q1. And then as you sort of shift towards the back half of the year, that price increase—we start to lap the Big Yum Burger deal in July—and you will start to see more of that pricing that we took start to flow through. So PPA is going to be higher in the second half than it was in the first half.

And then I think in terms of traffic, just for the reasons I laid out, it is a little bit of the opposite. Traffic will probably be a little higher in Q1 and in Q2. Again, it is a product of lapping the Big Yum Burger deal. We are getting some traffic momentum. But given the media weight and the strong LTO calendar we have in 2026, we feel like it is going to be a better year overall in same-store sales with a stronger second half comp than first half.

Jeremy Scott Hamblin: Thanks for that color. Switching gears and looking on the expense side, we know that there has been some pressure from commodity cost, beef pricing, but wanted to get a sense for your expectation on that. It was basically flat year over year in 2025 as a whole, but you did note on the November call that there had been a little bit of pressure. So wanted to get an update on what you are seeing on that end.

David A. Pace: Yeah. I think, again, look, I think we are going to continue to see beef prices rise. We are factoring that in. We will see some offsets obviously with that. I think Todd can give you more of the specifics in terms of, you know, percentage shift between the two, but we are expecting those to continue. We will still see some headwinds on the COGS side.

Todd Wilson: Yeah. I think that is right. We were up roughly 4% in commodities in 2025. We are looking at basically the same number in 2026. Beef inflation is still expected to be high. But the other major categories are going to be kind of plus or minus 1% or 2%. Really, beef is the outlier for 2026.

Jeremy Scott Hamblin: Got it. And then I wanted to ask about your refranchising efforts. You know, it is something where my sense is that there is some engagement there and interest. You had outlined 25 to 75 units. Any update you might be able to share on progress on that initiative? I noted, obviously, you must feel pretty good about where the balance sheet is. No need to raise capital in the near term. Given that you are going through kind of the debt refinancing process as well, wanted to see if you could update us on refranchising.

David A. Pace: Yeah. I mean, the truth is, Jeremy, I cannot say a whole lot about where we are specifically, but your tone and your assumptions are accurate. We feel better about the overall liquidity of the business. We feel good about the process that we are in. We feel good about the interest that we saw in the franchising exercise, and we feel good about the progression of discussions that we have had. Beyond that, I cannot say a whole lot right now, but your kind of underlying tone is accurate.

Jeremy Scott Hamblin: Right. Last one for me. You made remarkable progress in labor last year. And just to follow up on the other question, in terms of how much more you feel like you can squeeze there, you noted that your satisfaction scores remain strong. Clearly, you are seeing a little bit of a turn here in traffic. Do you look to drive additional labor savings through comp improvement, or do you feel like there is a little bit more to squeeze out there?

David A. Pace: I think it is going to be both. I think we think comp improvement certainly will give us some air cover. But I also think that there is room in the middle of the P&L in the labor spend, and I think our operators feel the same way. I have been extremely pleased with their bullishness on this. This is not just us pushing from the top. They are looking at it saying, yeah, we have better tools than we have ever had to be able to understand where our opportunities are. We have better visibility into who our outliers are and how we have to work with them and coach them and make progress there.

And I do not want to underestimate it, and we are just in the very early stages of this, but we have introduced the AI tool, and our ops team has grabbed that and run with it and created some custom GPTs that they have introduced at the restaurant level that give our managing partners the ability to understand labor spend on a daily basis, forecasting more effectively, and then allocation. There has been a great adoption of that tool at the restaurant level. So we think the combination of all of those things is going to give us room to go even further than we have so far.

Jeremy Scott Hamblin: Great. Thanks so much for the color, and best wishes this year.

David A. Pace: Thanks, Jeremy. Appreciate it.

Operator: Our next question is from Mark Eric Smith with Lake Street Capital.

Mark Eric Smith: First, just wanted to ask a little bit about G&A outlook. David, you talked about in your commentary—I think that you said kind of similar decline in dollars year over year. Correct me if I am wrong on that, and then maybe walk us through what is driving some savings there.

Todd Wilson: Yeah. I will start with the numbers, then I think David can add the color. So we finished—if you exclude stock-based comp—we finished last year G&A at $71 million. I would say in 2026, we are looking at somewhere between the $65 million and $67 million range for the year. So that would incorporate the $4 million that David talked about, and there is potentially opportunity for a little bit more than that.

David A. Pace: Yeah. I think just to build on that, we think this is the combination of figuring out efficiencies. We are going to be looking at this every day, every month, every quarter to see how we build efficiencies into the business further and get smarter about how we operate. So I do not think that is a one-and-done process. That is something that we will continue.

Mark Eric Smith: Perfect. And then I just want to ask kind of about the restaurant base. You know, it sounds like some positive movement and thoughts from franchisees around maybe some expansion and opening new restaurants. Curious on company-operated side, maybe what is built in as far as closures and then any appetite to begin opening some company-operated restaurants.

David A. Pace: Yeah. Look. I think in terms of the restaurant size, we are still trying to optimize the portfolio. We have, going back a ways, made improvements on about 20 restaurants that we had previously identified as potential problems for us or potential closures. We have moved them off the closure list to where we think we can operate them and are hopeful that we can get them back to a performance level that equals the rest of the system. I think there is still probably—if you are thinking about that, Mark—I would assume 20 for this year is the number that we are thinking about.

So that is kind of what we still have that is out there that we need to work our way through the system. So we are trying to clean up the portfolio and figure out a way. The significance of this is if you go back to when this was first brought up, I think we identified $6 million of headwind against the business from these potential closures. That number is now down to about a $1.5 million headwind, and shrinking, as leases expire and we roll off. So I think we have made huge progress on that and feel good about the state of the portfolio that is moving ahead.

Mark Eric Smith: Excellent. Thank you, guys.

Todd Wilson: Thank you. Sure, Mark.

Operator: Thank you. There are no further questions at this time. I would like to hand the floor back over to David A. Pace for any closing remarks.

David A. Pace: Okay. Just quickly, look, thanks. Really appreciate folks dialing in and hearing our story. We feel good about the progress that we are making. And we look forward to talking to you again in May. So thanks for coming on, and we will talk to you soon. Thank you.

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

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